By Patrick Munnelly, Market Strategist, Tickmill
On Thursday, UK stocks made slight gains, although they trailed a broader market rally in Europe.
The UK market was affected by the performance of heavyweight stocks such as HSBC LON:HSBA, which declined by 0.63%, and Rio Tinto LON:RIO, which saw a significant drop of 3.4%. The impact of these declines was exacerbated as these stocks were trading without dividend entitlement.
Despite these challenges, the blue-chip index of British stocks remained on a trajectory to extend its gains. It had already experienced its most substantial daily increase in three weeks on the preceding day, rising by 0.79% heading into the close.
FTSE 100 biggest movers
On the positive side of the ledger, UK-based housebuilder Persimmon LON:PSN witnessed an increase in its shares, rising as much as 2.53% during the session. This performance earned the company a spot among the top percentage gainers in the FTSE 100 index.
Persimmon expects its annual profit to align with its own projections. The company-compiled median analysts’ consensus for the full-year profit is approximately £348 million. The housebuilder also reported a significant 65% decline in its half-year profit, a result of subdued demand in the housing sector due to rising mortgage rates.
Despite the challenges faced by the housing sector, Persimmon’s CEO Dean Finch expressed a positive outlook for the industry, noting the historical undersupply of homes. The company remains steadfast in its goal to construct 9,000 housing units for the full year. As of the most recent closing, the company’s shares had experienced a year-to-date decline of 7.6%
On the negative side of the ledger Spirax-Sarco Engineering LON:SPX, a UK-based valve manufacturing company, faced a decline of 2.77% by the end of the session. This performance earned it a place on the FTSE 100 index biggest fallers.
The company anticipates a challenging fiscal year outlook, foreseeing a negative impact on both sales and adjusted operating profit in the range of 2% to 2.5%. The factors contributing to this outlook include mounting foreign exchange headwinds and difficulties in the Biopharm and Semicon Wafer Fabrication Equipment (WFE) sectors.
Spirax-Sarco expects its sales growth for the fiscal year to fall within the range of 0% to 4%, with adjusted operating margins experiencing a decline of 100 to 200 basis points.
Following this announcement, JPMorgan Chase lowered the company’s price target from 11,900p to 11,300p and decreased its estimates for FY23/24 Adjusted EBITDA by 8%. The bank also noted an expected decrease in consensus forecasts by more than 6%, as estimates are adjusted downward to align with the midpoint or lower of the projected range. Despite these challenges, the company reported a 13% increase in revenue for the first half of the year. However, its operating profit for the same period experienced a 7% decrease.
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