Market Report: Housebuilders got boost from UK floods

The floods are predicted to knock 0.2 per cent off GDP

The River Foss flood barrier is pictured in York, December 29 (Reuters)

Housebuilders got a boost from an unlikely source yesterday: the floods that have devastated parts of northern England over the holiday period.

The reason was the early estimates about the cost. KPMG’s forecast was between £5bn and £5.8bn in the long term, while economists predicted that the floods could knock 0.2 per cent off GDP due to businesses being forced to close, loss of agriculture output, and people not being able to go shopping or travel.

Trustnet Direct’s Tony Cross said the City traders in action during the shortened trading week may have taken this as a sign that interest rates will stay at record lows for longer.

Taylor Wimpey jumped 7p to 204.2p on the back of that interpretation, while Persimmon gained 67p to close at 2,040p. Barratt Developments ended 18p up at 634p, and Berkeley Group was 98p higher at 3,711p.

After a lacklustre morning, the FTSE 100 picked itself up in the afternoon, helped by a strong opening on Wall Street triggered by better-than-expected US economic data. It closed up 59.93 points at 6,314.57, shrugging off more losses among mining stocks.

Anglo American was the punching bag yet again on concerns about weak demand for industrial metals. It lost 20.7p to close at 307.35, taking its share price decline so far this year to 74 per cent. Fellow miner Rio Tinto fell 28.5p to 1,978p, Antofagasta slipped 1.9p to 460.7p, and Fresnillo finished 5.5p lower at 710p.

Stabilising oil prices did nothing for BP, down 5.2p at 360.75p, while the supermarket chain Sainsbury’s was also in the red, down 1.5p at 264.9p. The Competition and Markets Authority yesterday decided to refer the sale of its pharmacies to Lloyds Pharmacy, a subsidiary of Germany’s Celesio, to a more in-depth phase two investigation.

Back at the other end of the leaderboard, Hikma Pharmaceuticals was the top riser, up 107p at 2,358p, while FTSE 100 new boy Provident Financial rose 82p to 3,381p following a report that it was in talks with insurance companies to sell their home and travel policies to its customers.