LONDON (Reuters) – Shares in UK housebuilders bounced off two-year lows on Wednesday as investors and traders covered bearish bets ahead of next week’s vote on Prime Minister May’s Brexit deal.
A man works at a Bellway housing development in London, Britain October 12, 2015. British housebuilder Bellway Plc said it would increase its output by as much as 10 percent this year after it sold a record 7,752 homes in the 12 months to end-July, helping pretax profit rise 44 percent. Photograph taken October 12, 2015. REUTERS/Suzanne Plunkett
The bounce didn’t signal a sudden change of mind from the market over the challenges facing housebuilders in an economy hurt by the decision to exit the European Union, but rather an acknowledgement that they may not have much further to fall, traders said.
Earlier in the session, the housebuilding sector .FTNMX3720 was at its lowest level since December 2016, down 16.2 percent this year against a 10 percent fall in the FTSE 350. In afternoon trade, it was up 0.2 percent.
With next Tuesday’s vote on Prime Minister May’s Brexit deal looming, short sellers in the shares may be unwinding their positions ahead of the vote, banking their gains as they bet the prices may not have much further to fall.