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MARKET REPORT: Housebuilders offered much needed respite

Respite: With housing construction stocks already down around 50% this year, Deutsche Bank issued a number of notes

Homebuilders were given a well-deserved respite as analysts suggested a ‘relief rally awaits’ for the sector following a ‘sharp’ sell-off.

Deutsche Bank warned the housing market was in a “state of flux” as mortgage rates tripled and loan availability dwindled.

He expects falling house prices, reduced sales and rising costs of building materials to persist.

Respite: With housing construction stocks already down around 50% this year, Deutsche Bank issued a number of notes

Respite: With homebuilding stocks already down around 50% this year, Deutsche Bank has issued a number of ‘buy’ ratings

As such, the bank has reduced the target price of a host of stocks in the sector.

But with homebuilding stocks already down around 50% this year, it has also issued a number of “buy” ratings.

“After a sharp selloff, we believe the price is now significant and a relief rally awaits,” Deutsche analysts said.

This helped push Barratt Developments up 2.6%, or 9p, to 353.2p, Bellway gained 1.3%, or 23.5p, to 1,798.5p and Taylor Wimpey added 1.2%, or 1.04p, at 89.78p.

Redrow climbed 0.9%, or 3.6p, to 404.4p, Crest Nicholson was up 0.5%, or 1p, at 191.4p and Persimmon gained 0.5%, or 6p, at 1,239p . Despite a glimmer of hope for the sector, that was not enough to lift shares of Vistry Group, which fell 0.2%, or 1p, to 559.5p, while Berkeley Group fell 0 .5%, or 16p, to 3357p.

On another dramatic day in politics, the FTSE100 rose 0.27%, or 18.92 points, to 6943.91 and the FTSE250 added 0.82%, or 141.38 points, to 17,388, 93.

London’s stock market rallied after Liz Truss resigned and became the country’s shortest prime minister.

The British pound was also up against the dollar.

After plunging to a record low of around $1.03 during Truss’ premiership, the pound hit $1.1335.

But analysts have warned of further volatility to come with the announcement of the new prime minister a week away.

“With the third prime minister in a year expected to be announced by the end of the month, the UK will still be seen in financial markets as politically unstable,” said Hargreaves Lansdown analyst Susannah Streeter.

“What investors are looking for is more stability and reliability, but until they know who will support and lead an economic recovery, that stability still remains very elusive, which means that neither the pound sterling nor equities are likely to make great headway.”

Oil prices rose slightly on hopes that China, the world’s biggest crude importer, could ease its zero-Covid policy.

BP added 1.3%, or 5.7p, to 460.95p and Shell rose 2.1%, or 47p, to 2320p as they received an additional boost as Citi raised its target prices.

Budget retailer B&M rose 0.1%, or 0.4%, to 308.8p despite HSBC slashing the target share price to 480p from 600p.

Shares in Segro rose 2.8%, or 20p, to 735.4p as the property investment firm revealed tenant demand remained strong.

Dechra Pharmaceuticals slipped 0.7%, or 18p, to 2,590p despite its results for the year meeting expectations.

The pet drug maker also welcomed the integration of two U.S. acquisitions it made earlier this year.

At Bunzl, shares fell 2.1%, or 58p, to 2,720p even though the group expects “very good” revenue growth this year.

Meanwhile, Relx, the telecoms, media and technology group, fell 0.5%, or 11p, to 2,212p, even after its revenue in the first nine months of the year rose 9 %.

After failing to impress City with its annual results on Wednesday, Asos shares fell 2.4%, or 13p, to 537p. Analysts from JPMorgan, RBC, Deutsche Bank and Societe Generale all slashed the fast fashion brand’s target price.

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