Bricks and mortar build FTSE 100 rally
23rd August 2016 14:47
by Harriet Mann from interactive investor
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London's FTSE 100 this month made a potentially significant technical move on the charts that could make 7,000 very possible. Led by the housebuilders and miners, there was plenty to cheer Tuesday as the premier pack recovered a chunk of recent lost ground.
Falling as much as 9% after the European referendum, London's blue-chip index has since rallied by 20%, breaking above chart resistance this month as investors look to non-domestic earnings and themes.
A surprisingly good first half from handed another round of ammunition to the housebuilder bulls as the sector moved closer to filling the dramatic post-Brexit gap-down. Persimmon is up 3.6% at 1,857p after boss Jeff Fairburn said visitors to sites was up 20% year on year and the private sale reservation rate was up 17%.
Overtaking Persimmon to take the top spot is
, however, which jumped 3.7% to 481p. rose 3% and 3.1%. Clearly, investors remain happy to take on the risk associated with this highly cyclical but lowly-rated sector, which currently offers prospective dividend yields of at least 6%.Miners, the standout performers in 2016 so far, also went some way to making up for a two-day losing run.
, up 3.8% growth at 863p led the way, followed by following a broker upgrade on better-than-expected potential for free cash flow. , and chipped in, too.Supermarket
was also basking in the sun, up at a five-week high as the recent good weather and Olympics helped slow falling sales. Latest data from Kantar Worldpanel showed sales down just 0.4% in the 12 weeks to 12 August, its slowest rate of decline for six months. A 17-month trend of falling sales could be about to reverse.Losses were subdued on the other side of the blue-chip coin, with
the worst performer, down 1.4% at 1,071p. London Stock Exchange, caterer and high-flying Irish builder also feature among the dozen laggards.With the oil price losing ground, growth is more subdued among the explorers and producers, too, with
up a fraction and tipped into the red.Among the mid-caps,
is rocketing. The group, merged from the Just Retirement and Partnership businesses, has had a rotten run, but is up 17% Tuesday following a positive trading statement ahead of interim results on 15 September."Trading at c52% of our 2016F IFRS [net asset value] of c170p and at 44% of the end June 2016 embedded value, the stock is materially undervalued," reckons Eamonn Flanagan at Shore Capital.
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