Monday, September 28, 2020
UK

UK housebuilders’ shares plunge due to coronavirus disruption

UK housebuilders

Shares in housebuilders fell sharply into the red, with the FTSE 100-listed companies Barratt and Persimmon dropping by 5.3 per cent and 11 per cent, respectively

Shares in housebuilding companies plunged as the latest government restrictions brought the property market grinding to a halt.

People were advised to avoid moving house wherever possible and to postpone moving dates where a sale has already been agreed, with strict lockdown rules preventing viewings. As a result, shares in housebuilders fell sharply into the red, with the FTSE 100-listed companies Barratt and Persimmon dropping by 5.3 per cent and 11 per cent, respectively.

Redrow followed the lead of other industry players in announcing the closure of its building sites and offices, adding that it was in talks with banks over securing more cash. The firm’s shares fell by 8.6 per cent.

Russ Mould, an investment director at the stockbroker AJ Bell, said: In any normal year, [housebuilders] would be in the middle of their key spring selling season. This year is already going to be very different.

The drop in construction stocks came against a wider backdrop of losses on the markets, as investors became more cautious after three days of gains. The FTSE 100 index closed 5.25 per cent lower at 5,510.33.

Despite the decline, it was the best week for the index since July 2016, as it notched up three days of gains in the middle of the week.

Most companies on the blue-chip index lost value on Friday, with just a handful of leading companies including Sainsbury’s supermarkets and the hygiene products maker Reckitt Benckiser escaping the rout as their share prices inched up.

Next was among the biggest losers after it closed its online store, citing the safety of its staff. The fashion retailer’s shares fell by 11.1 per cent.

Patrick O’Brien, a UK retail research director at GlobalData, said the decision would “reverberate across the retail industry”.

He added: River Island, TK Maxx and other smaller players have also shut online operations, and as demand for fashion continues to fall we expect other retailers to follow suit, unless they can find a way to operate warehouses safely.

Meanwhile on the currency markets, the pound briefly dipped as Boris Johnson said that he had tested positive for coronavirus, but it later recovered and was above $1.24 by late afternoon.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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