Barratt raises earnings forecast, stocks fall
Barratt Developments is forecasting adjusted pre-tax profit of at least £1.05 billion for the year to June 30 today, a performance slightly ahead of current market expectations. Futures sales are also in a healthy position, the homebuilder added.
Chief executive David Thomas said: “We had an excellent performance this year, reflecting strong customer demand for our homes and the productivity of our sites.”
He described the housing market as robust, adding that his company had the flexibility to respond to changes in the business environment.
Barratt shares opened 4% lower today, despite improved earnings expectations. They have fallen by a third in the past year and nearly 50% compared to the most recent peak reached just before the pandemic in February 2020.
Richard Hunter, Head of Markets at Interactive Investor, said: “Barratt has provided further evidence, where appropriate, of the widening gap between actual trading performance and the industry’s low price performance.”
Wall Street sees 1% interest rate hike
Wall Street closed lower last night after higher-than-expected inflation of 9.1% in June raised the prospect of a full percentage point hike in US interest rates.
The Federal Reserve funds rate, which currently stands at 1.75%, was previously expected to rise 0.75% for a second meeting later this month.
But the inflation rate was much stronger than the 8.8% forecast, with few underlying trends pointing to price pressures approaching their peak.
Federal Reserve President Raphael Bostic, of Atlanta, expressed concern over June’s strong numbers and said “everything is in play” for the July meeting.
Canada’s central bank later fueled interest rate hikes in America when its members voted to raise the country’s key interest rate by 1% instead of the expected 0.75%.
With policymakers poised to take an even more aggressive stance, the US dollar index remained at par against the euro and $1,185 against the pound today.
At a time when the US economy is showing signs of slowing down, the prospect of increasingly tight monetary policy meant the S&P 500 opened 1.5% lower yesterday. It stabilized to close the session at 0.5%, but US futures markets later point to a weak start.
The focus is now on the second quarter profit of JP Morgan Chase, America’s largest bank and seen as an economic driver. The numbers are expected before Wall Street’s opening bell.