Barratt Redrow today bolstered profit guidance amid resilient levels of customer demand at the start of 2025.
The housebuilder’s shares led the FTSE 100 index as cheaper mortgage deals also boosted confidence.
Meanwhile, Thames Water is facing an Ofwat investigation into the delayed delivery of environmental improvement schemes.
FTSE 100 Live Wednesday
- Barratt Redrow boosts profit guidance
- Ofwat probes Thames Water delays
- Ex-RBS chief named BHP chair
Mortgage market cheer as sub-4% deals return
10:32 , Graeme EvansThe housing market received a significant boost today when two major lenders dropped headline mortgage rates back below 4%.
The moves by Barclays and Santander represent the return of sub-4% lending for the first time since November.
Barclays unveiled rate cuts across its mortgage range from today, including a 3.99% 5-year fixed-rate home loan for borrowers with a deposit of at least 40%.
Market update: Barratt Redrow rallies on new guidance, Croda shares backed
10:22 , Graeme EvansTop-end profit guidance and new mid-term targets today helped Barratt Redrow counter some of the gloom around valuations in the housebuilding sector.
The first set of results since the autumn acquisition of Redrow by Barratt Developments helped shares to jump 6% or 24.5p to 461.5p at the top of the FTSE 100 index.
Shareholders were encouraged by Barratt Redrow reporting some recovery in customer demand and solid reservations activity since the start of January.
The company now sees profits towards the upper end of market expectations, which had been in a range between £506 million and £588 million.
The City also cheered targets for the enlarged group, particularly a recovery in operating margin to 15% from 7.2% seen in today’s results.
It also expects to deliver about 22,000 homes per annum in the medium term, with improved cash generation prospects set to mean £100 million a year of share buybacks.
The stock has struggled to make headway since the acquisition, reflecting ongoing industry cost pressures, economic uncertainty and squeeze on mortgage affordability.
Broker Peel Hunt believes Barratt deserves to be trading at 585p. It said: “The mood around the housebuilders remains fragile, but with further interest rate cuts potentially in sight we should start to see sector returns improve.”
There was a further boost today when two major lenders dropped headline mortgage rates back below 4%.
The rally for shares came in a session shaped by uncertainty ahead of today’s US inflation figures. The FTSE 100 index stayed in record territory by adding 6.37 points at 8783.76.
The next best stock was specialty chemicals firm Croda International, which jumped 4% or 113p to 3163p as UBS analysts outlined a pathway to recovery following a 70% reverse for shares since early 2022.
The bank has a price target of 5100p, believing that the current valuation fails to give credit for the potential for significant profitability improvement over the next few years.
Other blue-chip risers included JD Sports Fashion after an advance of 2.3p to 88p and B&Q owner Kingfisher with a gain of 5.6p to 252.1p.
Weaker oil prices meant Shell and BP featured on the fallers board, alongside the defensively positioned Imperial Brands and BAE Systems.
Consumer healthcare firm Reckitt Benckiser declined 1.3% or 68p to 5144p as the worst performing stock in the FTSE 100.
The FTSE 250 index rose 0.6% or 116.39 points to 21,036.11, with builders Vistry and Bellway up 2% on the back of today’s Barratt Redrow update.
Barratt Redrow targets margin recovery, unveils buyback plan
09:36 , Graeme EvansBarratt Redrow used today’s half-year results as an opportunity to set out targets for the combined group following last autumn’s acquisition of Redrow.
It expects to deliver about 22,000 homes per annum in the medium term, with the operating margin recovering to 15% from 7.2% seen in today’s results.
Improved cash generation prospects mean the company has initiated a £100 million a year ongoing share buyback programme and refined dividend cover from 2026 onwards.
The shares have struggled to make headway since the Redrow acquisition, although Peel Hunt believes they deserve to be at 585p. This compares with 463.5p after today’s 6% rise.
The broker added: “The mood around the housebuilders remains fragile but with further interest rate cuts potentially in sight we should start to see sector returns improve, which should drive Barratt Redrow and the sector’s share prices higher.”
Close Brothers reveals motor finance provision
08:40 , Graeme EvansClose Brothers today said half-year results will include a provision of up to £165 million as cover for possible legal and compensation costs in the car loans commission scandal.
The lender said the estimate follows a “thorough assessment” of recent developments in the saga, but warned there remains “significant uncertainty” over the outcome of appeals and an ongoing review by the Financial Conduct Authority (FCA).
It added: “The ultimate cost to the group could be materially higher or lower than the estimated provision.”
Close Brothers said the hit will impact its capital buffer but that it will remain above regulatory requirements, adding it is “well placed to absorb the impact of the estimated provision”.
Shares fell by about 1%, have rebounded by more than 50% so far this year.
Barratt Redrow shares lead robust FTSE 100, oil stocks lower
08:24 , Graeme EvansBarratt Redrow shares have jumped 6% after it bolstered the City’s expectations for profits in the 2024/25 financial year.
The builder lifted 24.7p to 461.7p in a session when rivals Persimmon and Taylor Wimpey also rose by just under 1%.
The FTSE 100 index consolidated its position at a record high by adding 2.2 points at 8779.61.
Fallers included BP and Shell after declines of 1%, while Fresnillo and Endeavour Mining lost ground after the price of gold fell back.
Ofwat investigates Thames Water project delays
08:14 , Graeme EvansOfwat has opened an investigation into whether Thames Water breached obligations through the delayed delivery of more than 100 environmental improvement schemes.
The company committed to deliver 812 schemes as part of the Water Industry National Environmental Programme during the period 2020 to 2025.
Ofwat enforcement director Lynn Parker said: "Customers have paid for Thames Water to carry out these essential environmental schemes.
“We take any indication that water companies are not meeting their legal obligations very seriously.
“Therefore, we have launched an investigation to understand whether the delayed delivery of environmental schemes means that Thames Water has breached its obligations.
“If we find reason to act, we will use our full range of powers to hold Thames to account for any failures and will require them to put things right."
Former RBS chief to lead BHP board
07:53 , Graeme EvansFormer Royal Bank of Scotland chief executive Ross McEwan has been named as the new chair of mining giant BHP.
He succeeds Ken MacKenzie, who will retire at the end of March after eight years in the role.
McEwan has been a non-executive director of BHP since April, having led National Australia Bank in the five years prior to that. He was RBS chief executive from 2013 to 2019.
MacKenzie said BHP had become “a simpler, more productive and more resilient company” during his tenure.
Last year, the company abandoned attempts to buy Anglo American after its rival rebuffed a series of proposals worth up to £39 billion.
McEwan said: “Ken will be remembered for his strategic decision-making, active institutional and retail shareholder engagement and outstanding capacity to see value, whether that's in strategy, portfolio, operational excellence or capital allocation.”
Barratt Redrow bolsters guidance, sees recovery in demand
07:15 , Graeme EvansBarratt Redrow today forecast annual profits at the upper end of City expectations.
The new guidance came as the recently-merged housebuilding company reported 6846 total completions and adjusted profits of £167.1 million in the six months to 29 December.
Whilst dependent on how the market evolves through the Spring selling season, reservation activity since the start of January points to home completions of between 16,800 and 17,200 in the 2025 financial year.
Chief executive David Thomas said: “As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position.
“As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations.”
FTSE 100 stays in record territory, US inflation figures due
07:02 , Graeme EvansWall Street last night posted a mixed performance ahead of today’s release of inflation figures for January.
The Dow Jones Industrial Average rose 0.3%, while the S&P 500 index was broadly unchanged and the Nasdaq Composite down 0.4%.
The headline reading for US CPI is forecast to stay at 2.9%, which together with a robust jobs market is likely to limit the scope for interest rate cuts.
Asia markets have performed strongly, led by the Hang Seng index after a rise of more than 2%.
The advance was driven by the tech sector, with Alibaba up 8% on speculation of a strategic partnership with Apple to develop AI features for iPhones in China.
The FTSE 100 index yesterday gained 10 points to finish the day at another record high of 8777, or a 0.1% rise. IG index expects the top flight to open six points higher at 8783.
