The Wall Street effect

Shares suffered across the board last week after adverse financial reporting from corporates on the other side of the Atlantic caused widespread jitters among investors.

Wall Street plummeted to its lowest level since the US presidential election, sparked by fears of a slowing economy and poor first quarter earnings reports. The London stock market duly had its worst week since July last year.

The knock-on effect on this side of the pond was not surprising, as investors tend to look to the world’s largest economy for signs of future ripple effects in the wider global economy.

The construction sector did not escape the gloom, falling for a fifth consecutive week by 2% to 3405. Some of the industry’s biggest players felt the tough blow, including most of the major housebuilders. Westbury (-7.8%), Taylor Woodrow (-6%), Bellway (-6.2%), Bovis Homes (-5.7%), Crest Nicholson (-3%), Persimmon (-3.5%), Redrow (-3.4%), Wimpey (-3.8%) and Berkeley (-2.3%) were all affected.

The housebuilders were not helped by fears of a property crash in the States, raised by US analysts.

One of the few companies to escape was small residential developer Fairbriar, which rose 11.5% to 48.5p. However, this seemingly big uplift can be explained by the small size of the business, as well as the news that chairman Kevin McCabe, who is also the chairman of Sheffield United FC, announced that he and two shareholders were preparing to launch a management buyout.

Among the contractors, the biggest, Balfour Beatty, dropped 5.3% to 297p, suffering the same fate as many UK quoted companies. Morgan Sindall escaped the general malaise, rallying 4% to 712.5p after an upbeat trading statement at its annual general meeting on Tuesday.

Hanson, the FTSE-100 materials company, limited the damage to the sector overall by rising 3% to 498p. Among the support services companies, Atkins and WSP defied the downward trend rising 3% to 645.5p and 8.6% to 286p respectively.

The All-Share Index reflected the performance of the construction sector, falling 2% to 2454.

Angela Monaghan is business editor