Miners and housebuilders get FTSE off to strong start for June, Wickes rides the home renovation boom

“The warmer temperatures seem to be agreeing with the FTSE 100 which gets off to a strong start at the beginning of June,” says AJ Bell Financial Analyst Danni Hewson.

“Robust figures from the housing market lifted the housebuilding sector while miners were in demand as commodity prices resumed an upwards trajectory.

“The FTSE’s rise was all the more impressive when you consider it came against the backdrop of a recovery-inspired rally in sterling. A strong pound dulls the relative worth of the overseas earnings which dominate the index.

“Sports fashion retailer JD Sports dismissed speculation its executive chairman Peter Cowgill might resign amid shareholder discomfort over his dual role.”

Wickes

“For the first time recently demerged DIY chain Wickes’ can apply the ‘It’s got our name on it’ slogan to one of its own trading updates.

“And the company is off to a pretty impressive start, with sales growth tracking well ahead of not just last year’s pandemic-disrupted trading but also the same period in 2019, helping the company to make a good impression on the market by guiding for profit at the top end of expectations.

“The company operates in a fragmented market which is benefiting from a post-Covid home improvement boom so now is a pretty good time to strike out on its own following its split from Travis Perkins.

“Basically if the company can’t make it work now then it would never be able to. Wickes has exposure to both DIYers and, for those who have accepted their limitations, the ‘Do It For Me’ brigade given its significant business selling to trade customers.

“There is only a brief mention in today’s update of supply issues despite widespread evidence that the cost and availability of some materials is an increasing problem.

“The danger is that enthusiasm for domestic renovations hits the obstacle of prohibitive costs and delays, thus stopping the current boom in its tracks.

“This could leave Wickes exposed in a competitive market and remind investors why Travis Perkins was keen to spin off the business in the first place.”

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