Thursday, 25 April: The US dipped once again yesterday, and with a lack of momentum, Asia indices followed the same path. Littered with a number of ex-dividend stocks, London indices didn’t fair much better, while much of Europe sealed sea of red across screens this Thursday. Major causalities in London were housebuilders and Sainsbury’s. Legal & General propped up the foot of the table inta-day, although much of the declines can be attributed to it’s 11.82p final dividend.
Sainsbury’s took the brunt of morning headlines after the Competition and Markets Authority (CMA) blocked the proposed merger with Asda, citing a “substantial lessening in competition” and subsequently a rise in prices for consumers. The announcement doesn’t come much of a surprise after the provisional findings highlighted competition concerns, but now the merger’s fate has been sealed. Sainsbury’s don’t look set to be looking to appeal the decision and with shares falling 4.68% at the close today, levels are back below the initial April 2018 announcement.
Housebuilders lost ground after Taylor Wimpey flagged up margin pressures amid rising costs. In the group’s trading statement, covering the period from 1 January to date, the total order book value stood at £2.39bn, with 10,291 homes being sold to date. Further commenting that sales pricing remained flat relative to the end of 2018, the FTSE 100 constitute raised its final dividend, resulting in the total ordinary dividend to rise 32% to 6.24p. Highlighting concerns that build-cost inflation could be around 5% for 2019, fears over the group’s margins going forward sent Taylor Wimpey, and peers in the sector lower over the course of the day. Taylor Wimpey took the wooden spoon on the FTSE 100 at the close, ending -5.36%, while Crest Nicholson, Redrow and Bovis all fell >3%.
The S&P 500 and Nasdaq on Wall Street looked to be rebounding from yesterday’s dips, as both Facebook and Microsoft topped expectations in earnings season. Microsoft momentarily became the third company to hit the $1trn valuation market as shares have continued to perform strongly on the back of the group’s cloud business.