A CURIOUS feature of the slide in share prices when the stock market reopened earlier after the New Year holiday was how resilient many of the major construction shares proved to be.
Given the market's nerves about rising interest rates, shares in the major UK contracting and house-building groups might have been expected to be earlycasualties of the slump.
But volume house builders, such as Barratt, Wimpey and Beazer, all saw modest rises in their shares on the day. Even McCarthy & Stone, which warned of a slowdown in visitor inquiries, saw its shares rise by 4p to a52-week high of 251p.
The market reasoned that looming rises in rates were probably already reflected in house-builder's share prices and, with interest rates expected to peak at 7 per cent, the disruption to the new housing markets may not be significant.
The City also appeared fairly relaxed about the impact that rising rates will have on the contracting sector. Shares in Amec, Laing, Morrison Construction and Alfred McAlpine were all unaffected by the rate fears, suggesting the stock market has taken on board some of the industry's claims that partnering and new service-related businesses means it can now offer a more resilient source of earnings.
Share prices among the major building materials groups proved less resilient, however.
The groups with major international operations, such as Wolseley and CRH, saw their shares come under pressure, partly on fears that interest rates are set to rise in the US.
The 3 per cent fall in the value of shares in RMC, Germany's largest building materials producer, reflected concerns that rates are also set to rise acrossEurope.
Meanwhile, it was noticeable that the shares of lightside UK building materials producers, such as Anglian, fared less well than the heavyside groups. Lightside groups are more relianton the housing repair and maintenance markets and remain highly sensitive to the changes in disposable income which higher interest rates can bring.