​Construction stocks help FTSE hold steady

<p>​Gains in construction, particularly from Berkeley, prevented a fall in the FTSE.</p>

​The FTSE 100, Britain's major share index, looked likely to fall on Wednesday (June 17th) thanks to negative results from the supermarket sector. However, a positive construction market helped to boost the index back up into holding steady. It eventually ended up being down by just 0.1 per cent, as of 08:13 AM.

The FTSE's level at this time was 6,701.03​ points​. During the previous trading day, it had fallen to a low of 6,656.90 – the worst seen since January – but eventually managed to close even. The outlook for the index is not known, as it depends on the performance of two sectors: construction and groceries.

Construction

The construction industry was the big winner on Wednesday, especially Berkeley. The housebuilding firm saw its shares rise by an impressive 7.7 per cent, which provided a significant boost to the entire sector. This increase was caused by the company's announcement of its full-year profits, which were better than most shareholders expected.

Another housebuilding business, Persimmon, managed to rise 1.4 per cent on the index. Persimmon shares have grown steadily since the general election, thanks to predictions that the Conservative government will take steps to boost the housing market. 

Alastair McCaig, market analyst at IG, said: "We felt that the Conservatives coming to power was going to be a positive for housebuilders. With the summer budget in a few weeks, there's every likelihood of the confirmation of ongoing benefits. So there's optimism in that regard, and with Berkeley’s good figures as well, it all bodes well for the sector."

Groceries

Unfortunately for the supermarket sector, shares in grocery industries are falling. Leading retailers Sainsbury's, Morrisons, Marks and Spencer and Tesco all saw the value of their shares fall by around one per cent on Wednesday. Some believe this is due to negative comments made by Credit Suisse.

Analysts from the financial firm said: "We see few opportunities within a group that has historically misallocated capital, is faced with extreme competitive pressures and operates in a very low-growth environment."

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.