UK shares slip as retailers and housebuilders disappoint

Investors were unimpressed with strong Christmas trading announced by retailers this morning, while profit problems at Countryside Properties pulled housebuilders lower.

UK equities slipped this morning as strong trading from retailers failed to buoy markets and bad news from housebuilders added to weak sentiment.

The FTSE 100 slipped 0.15%, or 11 points, to sit at 7,539 following a slew of trading updates, while the FTSE 250 was also down 0.15%, or 35 points, to trade at 23,012. Sainsbury’s (SBRY), JD Sports (JD) and Dunelm (DNLM) all reported strong Christmas trading earlier this week and while Tesco (TSCO) and Marks & Spencer (MKS) continued the theme today, markets were less enthusiastic about their shares.

Tesco posted strong numbers for the festive season and latest quarter, with market share the best it has been for four years and Christmas sales up 9% against 2019. Profit for the full year is expected to be ‘slightly above’ the top end of previous £2.5-£2.6bn guidance. However, the shares dipped 1.8%, or 5p, to 286p.

‘How Tesco uses its scale and Clubcard to weather inflation headwinds will be key to the year ahead, though it comes into it in very strong shape,’ said Markets.com analyst Neil Wilson.

‘Investors should be mindful that Tesco is starting to throw off a lot of cash and dividend yields are attractive.’

‘Mid-cap’ M&S was down 4.2%, or 10p, at 242p, also reporting good progress over the festive period thanks to a jump in food sales, with its highest ever Christmas sales. This led management to upgrade full year profit expectations to ‘at least £500m’ from the £300-350m range set previously.

However, Wilson said a rally following November’s profit upgrade means the strong performance ‘had been baked in’ already. 

Staying with mid-caps, bicycle and car accessories retailer Halfords (HFD) stuck to full year guidance and reported third quarter sales up 5.6%. Its shares dropped 3.2%, or 11p, to change hands at 350p.

Housebuilders added to market woes. FTSE 250 stock Countryside Properties (CSP) tumbled 15%, or 65p, to 345p as it reported profits dropping to £28m in the final three months of the year, down from £60m, and a 28% slide in revenue, as well as the resignation of its chief executive. Redrow (RDW) was also pulled lower on the news, down 2%, or 13p, at 631p.

Large-cap housebuilders fell too with:

  • Persimmon (PSN) down 2.9%, or 78p, at £25.43;
  • Barratt Developments (BDEV) down 1.5%, or 10p, at 674p;
  • Taylor Wimpey (TW) down 1.3%, or 2p, at 159p;
  • and Berkeley Group (BKG) down 0.9%, or 44p, at £45.18.

Private equity exit

In investment trust news, a big shareholder in BMO Private Equity (BPET ) is looking to sell a £13.9m or 3.8% stake in the company, taking profits in a trust that soared 63% last year but still stands on a 15% discount to net asset value (NAV).

The 2.8m shares are expected to be sold no later than 21 January. The shares initially slid 4.2% to 473p before settling at 481p, down 2.8%.

HydrogenOne Capital Growth (HGEN ) dropped 3% or 3.5p to 113.7p from a 23% premium as it considered issuing more shares having deployed 46% of capital raised in last year’s flotation. It expects to be fully invested in the second quarter.

 

 

Digital 9 Infrastructure (DGI9 ) shed 1.1% to 108p from a 6% premiuming after announcing a £200m share placing to help fund its pipeline, having just bought a majority stake in Tetra, which operates the public safety wireless network in the Republic of Ireland. The new shares will be placed at 108p, a 1.5% discount to the closing price yesterday.

Other fallers included JPMorgan China Growth & Income (JCGI ), down 2.8% at 470.5p, and JPMorgan Japanese (JFJ ), off 2.2% at 604.2p.

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