CONSTRUCTION shares took their fair share of the pain in the stock market slide early this week. The falls were fairly indiscriminate. Shares in contractors and house builders were marked down on concerns about future interest rises and the health of the economy.
At one point on Monday Persimmon's share price was down by 6 per cent and other house builders came under selling pressure, despite an upbeat report from website Rightmove, pointing to a recent 5.9 per cent rise in asking prices for houses. In the current climate, this was seen as merely reinforcing the case for a future interest rate rise and inevitably tougher trading conditions to come.
Judging by property agent Savills' share price, which fell 19 per cent in four days, the City is particularly nervous about the London housing market.
It is also anxious about the US housing market, where the price of new units has been sliding for five months and mortgage application are reported to be down by a fifth. This will inevitably take its toll on house builders with heavy US exposure, notably Taylor Woodrow and George Wimpey.
The major contractors also seem to have fallen from favour. An upbeat AGM statement from Carillion last week pointing to positive trading conditions and strong new orders could not prevent a further slide in its share price, which has slumped by 12 per cent over the past three weeks.
Likewise, positive noises from Balfour Beatty last week, when it pointed to an £8 billion order book, did not stop its shares initially falling by more than 4 per cent on Monday.
Over coming weeks, the investor relations industry will be going into overdrive to remind the City how PFI, framework contracts and the like will give the majors resilience in a tougher climate.
But for now the mood is sceptical. May Gurney, for one, may find it hard going to drum up interest for its AIM f lotation over the coming weeks.