Sector movers: Housebuilders rise as rate-hike concerns ease

17th Jun 2014 14:12

Housebuilders were making gains in London on Tuesday as stocks rebounded from heavy losses last week on concerns that a sooner-than-expected rate rise could curb the demand for new homes.Bank of England (BoE) Governor Mark Carney warned on Thursday that an interest rate hike - which would be the first change in borrowing costs since March 2009 - could happen in as soon as six months. Prior to that, analysts had expected policy not to tighten until the second quarter of 2015.Chancellor George Osborne also moved to quell fears of rampant house-price inflation by giving the BoE powers to cap risky mortgage lending. JPMorgan Cazenove attempted to repair sentiment among housebuilders today by saying that companies are unlikely to take a major hit from rising rates. "Given we expect a rate hike to be associated with improving economic conditions, we expect limited impact on market conditions," the bank said, adding that the housing market recovery is "still in its relatively early stages".Inflation data from the UK also eased concerns among investors today after consumer prices rose at an annual rate of just 1.5% in May, down from 1.8% in April. This was below the 1.7% rate expected by analysts and well below the BoE's 2% target.Martin Beck, Senior Economic Advisor to the EY ITEM Club, said that inflation is likely to remain below target "for some months to come". He added: "the case for a near-term rise in rates is looking far from strong."In stark contrast, separate data released today showed that the average house price across the UK increased by 9.9% year-on-year in April to £260,000, the largest yearly increase since June 2010.Surrey-based housebuilder Crest Nicholson was a standout performer in the category today with shares rising 3.5% after the company's interim results. The group reported a 37% jump in first-half profits to £38.4m and reinstated its dividend.Other stocks in the household goods and home construction sector such as Redrow, Persimmon and Barratt Developments were also on the rise today.Top performing sectors so far todayTobacco 39,979.19 +0.26%Household Goods & Home Construction 11,477.60 +0.21%Forestry & Paper 11,320.70 +0.10%Technology Hardware & Equipment 1,074.81 +0.07%Food Producers & Processors 7,838.78 +0.06%Bottom performing sectors so far todayIndustrial Metals & Mining 1,097.32 -2.39%Construction & Materials 4,272.02 -2.27%Electronic & Electrical Equipment 4,072.89 -2.13%Industrial Transportation 2,872.41 -1.36%Fixed Line Telecommunications 4,379.96 -1.22%BC