Markets end week on a high note and Taylor Wimpey’s land grab

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“The market rally is back with a bang as the trading week draws to a close. The FTSE 100 jumped 1% to 6,401, putting it on track for a decent 5.3% gain on the week,” says Russ Mould, Investment Director at AJ Bell.

“Even more impressive is the rally in Asian stocks with the MSCI Asia ex-Japan index up 6.6% on the week.

“Helping to drive the rally was Europe’s central bank providing more stimulus with a plan to buy an extra €600 billion of bonds in a bid to revive the eurozone’s struggling economy.

“In the UK, investors flocked to buy shares in banks, oil producers, miners and insurers, implying a “risk-on” market. More defensive stocks like healthcare, pharmaceuticals and consumer goods were out of favour, with Pennon, Hikma and Smith & Nephew being the top three fallers in the FTSE 100. Gold was also in decline, slipping 0.4% to $1,706 per ounce.

“Investors continued to bid up airlines despite the sector being in turmoil, betting that they will survive the crisis and that their shares have been oversold. International Consolidated Airlines soared by 10.3%, EasyJet jumped 8.6% and Jet2-owner advanced 5.4%."

Taylor Wimpey

“The latest update from housebuilder Taylor Wimpey repeats the surprisingly upbeat tone from the sector through lockdown.

“Housing market in hibernation? ‘No problem,’ says Taylor Wimpey. Order books are still going up, sales are still going through, cancellations are low, and construction has resumed with social distancing measures in place.

“That confident outlook is building now that the property sector is stirring back into life. Taylor Wimpey’s bookings are up markedly as sales centres reopen.

“In another sign of a return to some form of normality, the company hopes to have meaningful construction capacity in place by the end of this month.

“A notable feature of this latest announcement is its appetite to acquire land. One of the reasons why the industry has been so profitable in recent years, alongside the Help to Buy scheme and the availability of cheap mortgages, was it was building on land picked up cheaply in the wake of the financial crisis.

“By moving now, when demand is again low, Taylor Wimpey will hope for a similar boost to profitability down the line.

“Amid all these positive bits of news and the impressively resilient customer demand, it is worth noting that the full economic impact of the coronavirus crisis and the lockdown is yet to feed through. This is a cloud hovering over Taylor Wimpey’s otherwise sunny horizon.”

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