Persimmon shares rises 1,5% despite weak UK Construction PMI 📊

3:01 pm 5 October 2023

The UK's construction PMI reading came in well below forecasts at 45 versus 49.9 forecasts and 50.8. The downturn came from a slump in housing construction. Manufacturing also recorded the steepest decline since May 2020. New orders also recorded the fastest decline in more than three years. previously. 

S&P Commentary 

  • September's downturn marked the worst overall performance since the early stages of the 2020 pandemic. Construction frms widely commented on cuts in new development projects due to weak demand and rising borrowing costs.
  • Concerns about the outlook for the domestic economy curbed customer spending in September, contributing to the fastest decline in new commercial building completions since January 2021.
  • Forward-looking indicators in the survey once again remained relatively pessimistic, with orders falling at an accelerated pace. Expectations for business activity fell to the lowest level ever this year.
  • Fewer project starts meant that the availability of subcontractors increased at the highest rate since the summer of 2009. Lower demand across the supply chain contributed to a significant improvement in delivery times for construction products and materials, as well as a stabilization of purchasing costs in September.

Source: S&P Global, CIPS

Despite a devastatingly weaker-than-forecast reading (analysts had anticipated a very slight weakening), shares of one of the UK's largest property development and construction companies, specializing in house building Persimmon (PSN.UK), are gaining nearly 1.5% and attempting to stem the recent dynamic sell-off at the lower boundary of the symmetrical triangle formation. We can relate the increases more to 'selling the news'. At the same time, however, the macro environment in the UK, according to the 'Construction PMI' reading, is not positive for the momentum of the property development sector, and thus shares may still extend the downward trend. If the rebound proves unsustainable, a potential breakout from the bottom of the triangle formation could result in a dynamic sell-off. Key support is currently located around GBP 10 per share.

Source: xStation5

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back

Join over 1 600 000 XTB Group Clients from around the world.