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Redrow expected to continue housebuilders' optimism, but all eyes directed towards the Fed

The US Federal Reserve will announce its latest policy decision following its two-date September meeting at 7.15pm London time

Houses
Housebuilders have reported increasing demand in recent weeks as the sector makes hay from the pent-up demand after the coronavirus lockdown

Full-year results from Redrow PLC (LON:RDW) on Wednesday will come after some optimistic news from housebuilding rivals in recent weeks as the sector makes hay from the pent-up demand after the coronavirus lockdown.

Larger peer Berkeley maintained its full-year profit guidance and its shareholder returns commitments as underlying sales reservations for the past four months stood at “around 20% below the annualised run rate for last year”.

Barratt, meanwhile, reported a 46% decline in annual profits as house sales fell 29% but said it has enjoyed a boom in sales in recent weeks.

Question marks remain over just how much of this demand will translate into higher sales for Redrow, said analysts at Hargreaves Lansdown, especially with recent PMI data indicating the recovery may be petering out.

“Although we expect sales to have bounced back from pandemic levels, when showrooms were closed, the housebuilder has warned customers that it may take a while to re-establish build programmes and timeframes as construction teams operate amidst new and enhanced safety measures.”

Outlook in focus as Games Workshop holds AGM

Warhammer maker Games Workshop Group PLC (LON:GAW) is due to hold its annual general meeting on Wednesday, which will likely be accompanied by an update on trading.

Investors are likely to be in a good mood already following a brief update on September 10 that said trading over the summer months was ahead of expectations and also declared a 50p dividend.

With this in mind, shareholders are likely to focus on outlook in the coming update, as the group has said it still does not know what the impact of the pandemic will be on its business, although its retail channel is slowly recovering from store closures during the lockdown period earlier this year.

Fed comments

The US Federal Reserve will announce its latest policy decision following its two-date September meeting at 7.15pm London time.

Fed chair Jerome Powell and his fellow policymakers are on a state of high alert, according to investment analysts at AJ Bell, in case the recovery from the first-half’s recession proves weaker than expected.

Powell recently said the Fed will adjust its inflation target and look for a 2% average over time – meaning that it will be happy to see an overshoot after periods when it has missed that target.

“That means the Fed is prepared to run negative real interest rates for some time – whereby its headline interest rate runs below inflation. For investors, that means their money loses purchasing power in real term and this may be one reason why some investors are piling into stock,” the AJ Bell analysts concluded.

Significant events expected on Wednesday, September 16:

Fed rate decision

Finals: Redrow PLC (LON:RDW), Galliford Try Holdings PLC (LON:GFRD), Pan African Resources plc (LON:PAF)

Interims: Accesso Technology Group PLC (LON:ACSO), Advanced Medical Solutions Group PLC (LON:AMS), Boku Inc (LON:BOKU), Central Asia Metals PLC (LON:CAML), Checkit PLC (LON:CKT), Ocean Outdoor Limited (LON:OOUT), Ormonde Mining plc (LON:ORM), Science In Sport PLC (LON:SIS)\

Trading announcement: Games Workshop Group PLC (LON:GAW)

Economic data: UK inflation, UK PPI, US retail sales

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