Barratt shares drop as it warns it will build fewer homes this year; Britons spend on days out over DIY – business live

European shares are pushing higher following gains in Asia and on Wall Street, with Japan’s Nikkei hitting a new record level of 41,831, up 0.6%.

The FTSE 100 has regained some of the ground lost yesterday, as airlines and precious metals miners gave the market a lift. The FTSE has climbed 31 points, or 0.4%, to 8,171. The German Dax and the French CAC have both gained 0.3% while Italy’s FTSE MiB is 0.4% ahead.

In London, IAG, which owns airlines such as British Airways, Iberia and Vueling, is leading gains on the FTSE 100, trading more than 4% higher. EasyJet is another big riser, up 2.2%.

They appear to have been boosted by research from TSB showing that Britons are cutting back on DIY and households goods purchases, but are splashing out on one-off treats such as holidays and days out.

Stock markets have rallied over the past fortnight on growing expectations of US interest rate cuts.

AJ Bell investment director Russ Mould said:

Testimony from Federal Reserve chair Jerome Powell before the US Senate saw him flag a return to normality in the labour market. While he made no commitment on rate cuts, jobs data is one of the most important influences on the Fed’s decision making because tight labour market conditions and rapidly rising wages can lead to inflation becoming entrenched.

In other housing news, the building materials merchant Travis Perkins has appointed the former Taylor Wimpey boss Pete Redfern as its new chief executive.

Redfern ran Taylor Wimpey, one of Britain’s biggest housebuilders, for 14 years until 2021 and was involved in the company’s creation –- he was the boss of George Wimpey before it merged with Taylor Woodrow in 2007.

He is taking over from Nick Roberts at Travis Perkins, which also appointed a new chair, Geoff Drabble.

Drabble also chairs Ferguson, the building materials distribution business listed on the New York and London Stock Exchanges, which mainly operates in North America, and is also chair of the packaging firm DS Smith, and has sat on the board of kitchen supplier Howdens in the past. DS Smith has agreed to a £5.8bn takeover by its bigger US rival International Paper, and Drabble is likely to relinquish his chairmanship when the deal goes through.

Housing analyst Stephen Rawlinson said:

The appointments will be a bit of a shock as both might have been seen as entering a quieter phase of their careers but awakening the sleeping giant that is Travis Perkins is clearly too great an attraction.

We are surprised at the moves at Travis Perkins but can see how Pete and Geoff could be motivated to get stuck into their new roles, as both will remember what Travis was in the past and how it has declined in the last decade, and the platform for renewal it now represents.

Redfern will receive an annual salary of £760,000, and will be in line for an annual cash bonus and restricted share plan award at the same level as his predecessor. There are no forfeited awards from previous employment to be bought out.

Another UK housebuilder, Crest Nicholson, just said that its board is “minded to recommend unanimously” to its shareholders a sweetened of £701m all-share takeover deal from its bigger rival Bellway, if it tables a firm offer.

Crest shares, listed on the FTSE 250, rose 2.8% to 245.2p on the news.

The company explained:

The boards of Bellway and Crest Nicholson believe that there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson. The revised proposal would bring together the strength of each business with complementary brands to reinforce Bellway’s position as a leading UK housebuilder, while enabling Crest Nicholson shareholders to benefit from the scale of the combined business.

A month ago, Crest rejected a £650m approach from Bellway. The business has been struggling, racking up losses in the first half of year. It slashed its dividend in its latest profit warning last month as it continued to be hit by volatile mortgage rates and slowing demand in the housing market.

Barratt, Britain’s biggest housebuilder, said it expects to build up to 7% fewer homes this year than last, sending its shares down almost 3%.

The shares are the biggest faller on the FTSE 100 index this morning, trading 2.9% lower.

Barratt expects completions to drop by up to 7% to 13,000-13,500 this year, from 14,004 homes in the year to June. That total was down by 18.6% from the previous year when it built 17,206 homes.

Even so, it estimates that adjusted profit before tax will be slightly ahead of its previous expectations. Markets had forecast £355m.

First-time buyer activity has stabilised and shown some recovery, accounting for 27% of private sales, up from 25% the previous year. Demand among existing homeowners remained resilient, albeit with continuing elevated levels of sales incentives and increased use of part exchange, at 16% of private reservations in the year.

Barratt has agreed to buy another housebuilder, Redrow, in a £2.5bn deal, and both sets of shareholders approved it in mid-May.

David Thomas, the chief executive, said the business looks forward to working with the new Labour government on tackling the UK’s housing crisis.

We welcome the new government’s urgency and focus on housebuilding and reform of the planning system as key to both unlocking economic growth and tackling the chronic undersupply of new homes. We look forward to working with government and wider stakeholders to address supply side constraints and deliver the new homes, of all tenures, the country needs.

The vast majority of eye doctors believe increased outsourcing of cataract operations to private clinics in England in recent years has negatively affected their NHS departments, research has found.

Almost three-quarters of ophthalmologists surveyed said that outsourcing of cataracts to the private sector had a negative impact on their NHS eye care departments, with 54% flagging a large negative impact and 16% a small one.

The survey of 200 eye doctors by the Centre for Health and the Public Interest (CHPI), shared with the Guardian, came after Wes Streeting, the new health secretary, pledged to divert billions of pounds from hospitals to GPs to “fix the front door to the NHS” and met junior doctors on Tuesday to try to end a long-running pay dispute.

Nearly 60% of the ophthalmologists polled said outsourcing had a negative impact on NHS staffing, 62% said the same for staff training, and 46% said it harmed the ability of public eye care departments to treat patients with more complex conditions. Issues raised about staffing included the loss of consultants, nurses and optometrists to the private sector.

Oil prices have fallen as the impact from Hurricane Beryl faded and inflation data highlighted weak consumer demand in China, the world’s biggest importer of crude.

Brent crude, the global benchmark, dropped by 50 cents, or 0.6%, to $84.15 a barrel while US West Texas Intermediate crude slipped by 0.5% to $80.99 a barrel.

There are signs that the Texas energy industry was little affected by Hurricane Beryl after it swept through the region on Monday, easing concerns over oil supply.

Suvro Sarkar, DBS Bank’s energy sector team lead, told Reuters:

Hurricane Beryl blowing over seems to be the biggest driver for the time being and an opportunity for traders to lock in some profits after a bullish run over the last two weeks.

The latest inflation figures from China showed annual consumer price inflation dipped to 0.2% in June from 0.3% in May despite Beijing’s measures to revive consumer demand.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Britons are cutting back on DIY and households goods purchases, but are splashing out on one-off treats such as holidays and days out, according to a report from TSB entitled How Britain spends.

There was a 9.2% increase in spending with airline and travel companies between January and June compared with a year earlier.

People spent more on entertainment such as concerts, theme parks, going to the cinema and theatre (up 5.1%), with spending on amusement parks jumping by 20.2%.

Spending in pubs is also up, by 7.2% — driven by spending over Easter and the May Bank holidays rather than during the euro tournament, as spending in pubs fell by 2.5% in June compared to May.

As people try to manage their household costs, many are shelving renovations or home improvement projects, with overall spending on DIY, electrical and furniture falling by 15.5%. They also spent less on new clothes, down 4%.

As food price growth has slowed, supermarket spending has risen by 3.4%.

The report, a six-monthly analysis of TSB debit card transactions, shows consumers spent £9.5bn in the first half of the year. While this is up 1.7% compared to the same period in 2023, it is lower than the rate of inflation of 2%.

Delphine Emenyonu, head of loans and credit cards at TSB said:

While many household budgets are under pressure, consumers are remaining optimistic – with many prioritising spend on treats such as holidays and entertainment.

Consumers are feeling more confident about their finances, and with a potential interest rate cut later in August, we may see increased spending levels in the second half of the year.

In China, consumer prices grew for a fifth month in June, but less than expected, while producer price deflation persisted, with domestic demand in slow recovery mode despite Beijing’s support measures.

The Chinese government has sought to revive consumer demand following a lacklustre post-Covid recovery but people remain worried about the housing downturn and job insecurity.

The consumer price index rose 0.2% in June from a year earlier, compared with a 0.3% rise in May, according to the National Bureau of Statistics. Economists had expected an annual rate of 0.4%. Food prices fell by 2.1% year on year despite supply disruptions caused by poor summer weather.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said

The risk of deflation has not faded in China. Domestic demand remains weak.

The producer price index fell by 0.8% in June from a year earlier following May’s 1.4% decline.

Asian shares remained close to two-year highs hit at the start of the week. Japan’s Nikkei rose 0.6% to a new record high, while Hong Kong’s Hang Seng slipped by 0.1% and the Shanghai market fell by 0.57%.

Stocks have rallied on the back of growing expectations that the US Federal Reserve could start cutting interest rates soon, with Fed chair Jerome Powell saying yesterday that the US is “no longer an overheated economy”.

The Agenda

• 2.30pm BST: Bank of England chief economist Huw Pill speaks

• 3pm BST: US Federal Reserve chair Jerome Powell speaks

• 4.30pm BST: BOE policymaker Catherine Mann speaks on a panel at Manchester Business School