Published: 19 June, 2009
LONDON: Shares in builder Taylor Wimpey rose 8.1% to 331/2p in early trading today (Friday). The news lifted shares in other UK house builders, with Bellway, Redrow, Persimmon and Bovis rising.
In a statement, Taylor Wimpey said stabilising house prices, lower debt and growth in its order book were causes for cautious optimism for Taylor Wimpey and the house builder tentatively looked forward to a slight upturn in the UK market toward the end of the year.
Earlier in the week, merchant shares suffered on news of the fall in May retail sales. Falling stocks mid week included Travis Perkins at 467.25p, Wolseley £10.25p, and BSS Group 257.25p.
Retail sales in May lost 0.6% from April, confounding forecasts of a rise of 0.4%. The decline amounted to a 1.6% retreat year-on-year, much wider than the 0.2% dip expected.
Analysts are sceptical about Taylor Wimpey's update, saying that in the absence of definite increases on pricing, it would continue to suffer from falling margins.
Robin Hardy at KBC Peel Hunt in a note to investors said: "We continue to question whether the green shoots are real, given the economic and banking environments, and see the valuation base for the sector using net asset value as very weak still."
"There has been a sharp correction in the sector in the last few days and this may trigger a bounce, but we would continue to recommend selling into any strength across the sector."
Analysts Rachael Waring and Mark Hughes said: "Although the market may take confidence from today's statement, we believe it is too early to predict a sustained recovery in market conditions."