Market snapshot: stocks recover and a boost to Bellway 

Barely a week since recessionary concerns rocked markets, investors have regained some poise, with share prices largely recouping the steep losses of the last few days.

As things stand, the main indices in the US are now down by between just 0.5% and 0.7% for the week. The most violent swings were experienced in Japan, where the Nikkei index is also down by a marginal 0.5% over the last five days, as fresh weakness in the yen restored order and eliminated carry trade unwinding concerns.

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In the US, the initial jobless claims number – which on a weekly basis is of limited interest to investors – took on fresh significance, with the better-than-expected reading breathing new life into what has generally been a positive year for markets. It adds to a pleasing service sector report earlier this week, implying that perhaps the non-farm payrolls figure was an exception to the rule, and that the US will be able to manage a soft economic landing after all.

Corporate numbers also added to renewed optimism, with pharmaceutical giant Eli Lilly and Co (NYSE:LLY) beating earnings expectations and raising its outlook, leading to a surge of 9.5% to its share price. Some of the mega caps also fought back from the torrid events of the last few days, with NVIDIA Corp (NASDAQ:NVDA) gaining by over 6%, Meta Platforms Inc Class A (NASDAQ:META) by more than 4% and Apple Inc (NASDAQ:AAPL) by almost 2%.

The positive swing also shores up the year to date performance of the main indices, where the Dow Jones has now added 4.7%, the S&P500 11.5% and the Nasdaq 11%.

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In the UK, there were broker upgrades to the likes of Entain (LSE:ENT) and Beazley (LSE:BEZ) after some highly reassuring numbers yesterday. There was also something of a risk-on approach in evidence as investors reacted to the strong showing from Wall Street and then Asia overnight, with mining stocks rising almost in tandem to the slight detriment of defensive stocks.

The premier index is now ahead by 5.7% this year and the FTSE250 by 4.4% as it becomes increasingly apparent that steelier investors have been using the experience of the last few days as an opportunity to buy on the dip.

Bellway trading statement

Bellway (LSE:BWY) echoed the positive noises of Persimmon (LSE:PSN) yesterday as it revealed a quickly improving trading backdrop.

Its forward order book rose to 5,144 homes from 4,411 previously, at a value which jumped from £1.19 billion to £1.41 billion. At the same time, house completions and the average selling price also rose above the previously guided numbers, while the reservation rate per outlet per week of 0.51 represented an increase of 10.9% on the previous year.

The recent interest rate cut, improving affordability and the possibility of less planning permission red tape have all recently worked in favour for the sector. On the corporate front, there has also been some merger activity, with Bellway’s planned acquisition of Crest Nicholson Holdings (LSE:CRST) now working to a revised deadline of 20 August, in a complementary move which should strengthen the combined group’s footprint. 

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The relative stability of mortgage rates has also reignited some customer buying interest, and it seems that the pressure on rates amid a healthily competitive arena will be downwards.

Despite a cut to the dividend in July, Bellway still yields 4.2%, which is of some attraction to income-seeking investors. The shares have risen by 20% over the last year, as compared to a gain of 8.3% for the wider FTSE250, with the market consensus of the shares as a 'cautious buy' reflecting the guarded optimism which is beginning to pervade the UK housing sector.