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FTSE builds on gains as Berkeley jumps on upgrade

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The FTSE 100 continued its winning streak this morning although gains were more modest as markets paused for breath, with Berkeley (BKG) leading housebuilders higher on the back of strong interims.

The main market added 0.44%, or 31 points, to 7,371, as Russ Mould, analyst at AJ Bell, said investors had ‘brushed off fears over the omicron variant and regained their appetite for risk’.

‘Even Asian stocks pressed ahead despite gigantic Chinese property developer Evergrande being on the verge of collapse,’ he said.

‘A few months ago, Evergrande’s failure to make bond repayments spooked global markets and led to speculation of a potential crisis in China’s property and financial system. Now it seems as if markets have just accepted that Evergrande could collapse and there is no panic.’

Berkeley led the blue chips higher, adding 5.2%, or 130p, to £48.79 after the southern England-focused housebuilder reported improved earnings expectations.

Sales at the group have recovered to pre-pandemic levels, pushing earnings guidance 5% higher, with 5% annual profit growth expected over the next three years.

Richard Hunter, analyst at Interactive Investor, said the upbeat outlook and earnings upgrade ‘may signal something of a change in fortunes’.

‘It could also mean that the market consensus of the shares, which currently stand at a strong “hold”, may also be subject to some positive uplift,’ he said.

The positive outlook at Berkeley pushed Persimmon (PSN) 2.4% higher to £28.87 and Barratt Developments (BDEV) up 1.8% at 745p.

The FTSE 250 added 0.5%, or 130 points, to 23,368, with Man Group (EMG) leading the mid-caps higher. The asset manager jumped 5.2%, or 11p, to 227p after starting the first tranche of its $250m (£189m) share buyback programme today. The plan follows a $100m return of capital in August.

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Mid-cap darling Games Workshop (GAW) took some of the shine off this morning’s gains, dropping 4.4%, or 435p, to £93.20 after profits were hit by unfavourable exchange rates and higher shipping and staff costs.

The fantasy hobby shop chain is, however, expecting an increase in sales, which will be no less than £190m for the six months to end of November compared with £186m for the same period in 2020.

 

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