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FTSE continues steep decline even as housebuilders rally
by Chris Marshall on Oct 09, 2013 at 08:58
Political deadlock in the US continued to wipe value off shares listed around the world, with Britain’s FTSE 100 falling for a third straight day, even as house builders rallied.
Entering day nine of the US government’s partial shutdown – leaving not much more than a week until the government could default on its debts – global financial markets seem increasingly flustered. The FTSE 100 dropped 0.5% to 6,333, meaning the benchmark index is now down 1.3% over three months. Europe’s Stoxx 50 gauge dropped 0.3%.
Not even the news that Janet Yellen is to be formally nominated today by US president Barack Obama as the next chief of the US Federal Reserve could spark market gains.
Yellen, if confirmed by the US Senate as the next chair of the Federal Reserve, would replace Ben Bernanke when he steps down in January.
The promotion of the current vice chair at the central bank – a ‘dove’ who advocates keeping rates low and hence a happy choice for equity markets – would come at a critical time, with the Fed set to start reducing the scale of its market-supporting stimulus scheme.
The guessing game about Fed policy continues later today with the publication of the minutes from the bank’s September meeting. This was when markets were caught off-guard by a continuation of the $85 billion a monthly bond-buying scheme.
In London, shares trading ex-dividend took their toll. Aviva (AV.L), Kingfisher (KGF.L), Smith & Nephew (SN.L), Tesco (TSCO.L), Travis Perkins (TPK.L), WPP (WPP.L) and Wolseley (WOS.L) were all trading without their dividend appeal.
House builders rally
But house builders, enjoying a resurgent UK housing market backed by the government, bucked the downwards trend. A bullish note on the sector from Goldman Sachs was mostly to thank. Taylor Wimpey (TW.L) shares rose 2.7% to 101p after Goldman added the company to its conviction buy list. Bovis Homes (BVS.L) and Barratt (BDEV.L) gained around 2.5% on upgrades to buy from neutral from the bank.
Blue chip competitor Persimmon (PSN.L) shared in the gains, up 4% at £11.20 as the stock also made it onto the bank’s buy list.
Bellway (BWY.L) rose 2% to £12.94 after Panmure Gordon raised the stock to ‘buy’ from ‘hold’. Analyst Mark Hughes said the shares look ‘good value’ after a recent fall.
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- Vedanta Resources PLC (VED.L)
- Man Group PLC (EMG.L)
- Bellway PLC (BWY.L)
- Persimmon PLC (PSN.L)
- Bovis Homes Group PLC (BVS.L)
- Barratt Developments PLC (BDEV.L)
- Taylor Wimpey PLC (TW.L)
- Wolseley PLC (WOS.L)
- WPP PLC (WPP.L)
- Travis Perkins PLC (TPK.L)
- Tesco PLC (TSCO.L)
- Smith & Nephew PLC (SN.L)
- Kingfisher PLC (KGF.L)
- Aviva PLC (AV.L)