Market report

Bellway orders hit | RICS slowdown | Disney cuts


4.30pm: London closes higher

The FTSE 100 index of leading shares hit another record high today as largely benign words from the Bank of England governor lifted the mood.

The index hit a fresh intraday high of 7,949.57 points and achieved a new closing record closing 25.98 points higher at 7,911.15.

The Bank of England said inflation is almost “guaranteed” to come down rapidly this year unless there is a new, unexpected global event.

Andrew Bailey, the bank’s governor, eased back from last year’s aggressive tone and told MPs during the Treasury Committee hearing that he expects the inflation rate to halve this year.

7am: Bellway

Housebuilder Bellway said demand had softened after record completions in the first half which saw it complete 5,695 homes (2022 – 5,694 homes) and a 1.6% increase in the average selling price to £316,900 (2022 – £311,849).

The reservation rate reduced by 31.7% to 138 per week (2022 – 202), with weaker private demand partially offset by the group’s programme of accelerating the construction of social homes

In a trading update for the six months to the end of January, the company said higher mortgage rates and the end of Help-to-Buy contributed to a 43.8% decrease in the private reservation rate to 91 per week (2022 – 162). 

Softer demand will see almost £600m wiped from its forward order book, which comprises 5,108 homes (2022 – 6,628 homes), with a value of £1,386.8bn (2022 – £1,940.9bn).

Visitor numbers and reservation rates in January have improved from the levels in the fourth quarter of calendar year 2022. If sustained through the spring, the group said it is on track to deliver full year volume output of around 11,000 homes (31 July 2022 – 11,198 homes).

7am: Redrow

Redrow held its dividend as it reported a fall in interim profits, but noted that early indications for the rest of the year were better than expected.

The company reported pre-tax profits of £198m, down 5% as revenue fell 21% to £1.03bn.

“We have experienced a positive start to second half trading. Whilst 2023 will be a challenging year as the market resets, early indications are better than anticipated and the market appears to be finding a new, natural level,” the company said.

“Our net private reservation rate per outlet per week over the first five weeks of calendar year 2023 was 0.51 compared to 0.38 for the first half of the financial year. We also entered the second half with a total order book of £1.1bn, of which £0.8bn was private.”

12.01am: RICS housing update

New buyer demand, sales and listings in the Scottish housing market were all reported to be on a downward trend in January according to the latest RICS (Royal Institution of Chartered Surveyors) Residential Market Survey.

The figures show the lowest net balance for new buyer demand outside of Covid restrictions since May 2008.

Simon Rubinsohn, chief economist at RICS, said: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.

7am: Unilever

Household products giant Unilever reported quarterly underlying sales growth above expectations, helped by higher prices for its detergents, soaps and packaged food.

The company said it expects cost inflation to continue in 2023, forecasting net material inflation in the first half of around €1.5 billion.

Prices have risen sharply in the packaged goods industry.

Underlying sales rose 9.2% in the fourth quarter, beating company-provided analyst estimates of a 8.2% increase.

Disney to cut 7,000 jobs

Disney is to cut about 7,000 jobs – 3.6% of the workforce – in a restructuring was announced by returning chief executive Bob Iger.

Mr Iger’s revealed the plan in his first quarterly results announcement since taking back control of the entertainment giant in late November following a shareholder backlash over its performance.

The plan will save $5.5bn under a “significant transformation” to improve profitability at the company’s streaming business, which lost more than $1bn in the October-December quarter as Disney+ subscriptions fell.

An earlier $1.5bn quarterly group loss led to the departure late last year of Iger appointee, Bob Chapek.

Global markets

Following yesterday’s record high, analysts expected stocks in London to open higher, despite investors on Wall Street fretting over hawkish comments from Federal Reserve officials.

Fed Vice Chair John Williams called for a “sufficiently restrictive stance of policy”, adding that interest rates were “barely into restrictive territory”.

The Dow Jones Industrial Average closed down 0.6%, the S&P 500 down 1.1% and the Nasdaq Composite down 1.7%.

In Tokyo, the Nikkei 225 index closed down 0.1%. In China, the Shanghai Composite was up 1.1%, while the Hang Seng index in Hong Kong was 1.5%.

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