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FTSE 100 recovers after four days of decline, but housebuilders slip

Discussion in 'Market News' started by Lily, Nov 11, 2015.

  1. Lily

    Lily Forum Member

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    Investors shrug off weak Chinese data, while UK jobless rate falls again

    Despite more weak data from China - this time industrial production and retail sales - as well as concerns about a US rate rise in December and renewed problems in Greece and Portugal, leading shares are recovering in early trading after four days of decline.

    In China, industrial production in October fell from 5.7% the previous month to 5.6% while retail sales disappointed despite an 11% rise. But this was by no means a disaster, and investors seemed unfazed by it. Tony Cross, market analyst at Trustnet Direct, said:

    We’re picking up some modest gains in early trade for the FTSE-100 with a strong finish on Wall Street last night and no great surprises in the Chinese data helping serve up a little positive sentiment shortly after the open.

    The average wage index was a mite lighter than expected at 3% growth against the consensus for a 3.2% lift – there may be signs that this metric is losing momentum and could vindicate the lack of action form the Bank of England.

    Our fair value estimate remains at 550p and we remain concerned still about: the group’s ability to continue to run with so high of level of ‘land creditors’ (almost £1bn at the last year end); the still relatively low return on invested capital if calculated on average debt (still much higher than period end) and including land creditors – after tax, returns will be just 14% in 2016. Consensus sell-side recommendations continue to roll towards the negative with now 2 sells, 8 holds and 5 buyers. We remain at hold (not more negative because of high yields) but would still be talking profits despite the recent fall.

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