Market snapshot: Nvidia becomes first $4tn firm and Vistry update

Increasing cynicism about the veracity of tariff threats and a rekindling of the AI trade drove markets higher, with the Nasdaq setting a record closing high.

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Investors are apparently running with the TACO (Trump Always Chickens Out) theme, assuming that the more recent deals and negotiations which have taken place will continue to override the hefty threats emanating from the White House. Meanwhile, minutes from the Federal Reserve revealed that the central bank remains on alert for inflationary tariff impacts, although to date these have been limited with  the economy clearly holding up. As such, the consensus is that, all things being equal, an interest rate cut may not come until the end of the year.

The resurgence of AI euphoria boosted the mega-cap technology stocks, with NVIDIA Corp (NASDAQ:NVDA) briefly hitting a market cap of $4 trillion (£2.9 trillion), becoming the first company to do so. The continuing risk-on attitude leaves each of the main indices comfortably ahead for the year despite the “Liberation Day” wobbles, with the Dow Jones having added 4.5%, and the more technology influenced S&P 500 and Nasdaq rising by 6.5% and 6.7% respectively.

The UK’s premier index joined the bullish party, breezing past its previous record high in a highly assured open. Gains were widespread, with the mining sector being a particular feature of a risk-on approach, which lifted the main players across the piece. There was also notable buying interest among the pharmaceuticals and the housebuilding sectors, where more previous reticence faded.

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The moves leave the FTSE 100 ahead by 9.3% in the year to date, which excludes the additional benefit of an average 3.4% dividend yield, but which includes the increasing attraction of the index as an investment destination, as investors seek alternatives to some of the turmoil which has been in evidence elsewhere in the past few months.

Vistry trading statement

This year could well prove to be one of two contrasting halves for Vistry Group (LSE:VTY), with a weak opening six months likely to be reversed by the recent government announcement on affordable housing, which plays into the group’s Partnerships strategy.

Vistry is now focused on a Partnership programme with organisations such as local authorities and housing associations driving around 75% of first-half completions. The recent government announcement of a £39 billion Affordable Homes Programme is one which the group unsurprisingly welcomes, since it will benefit from this unprecedented funding which is aimed, in part, to deal with the national housing supply shortage. Any benefits from the scheme will add to the group’s extremely healthy forward order book of £4.3 billion, where the group is already 79% forward sold for the year as a whole.

Net debt has also been in focus at Vistry, where a level of £295 million compares with £322 million in the corresponding period. While the removal of the dividend remains disappointing, the group is nonetheless pressing on with its share buyback programme, where £57 million of the announced £130 million has been completed.

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More relief for the sector came yesterday with the announcement from the Competition and Markets Authority (CMA) that its concerns into housebuilding pricing would now be satisfied by a contribution of £100 million from seven UK housebuilders, of which Vistry will pay the containable sum of £12.8 million. More importantly, the judgment removes the sector overhang which the investigation had brought.

The numbers themselves are not ones on which Vistry will want to linger, with estimated revenue for the half-year of £1.8 billion comparing to £2 billion the year previous, and with pre-tax profit falling from £120.7 million to £80 million. Completions also fell to 6,800 from 7,792 homes, with Partner demand suffering prior to the June spending review and with open market business still hampered by consumer affordability challenges and less interest rate cuts than had previously been anticipated.

The improving backdrop has led to a spike in the group’s shares, which have risen by 22% over the last three months. However, this is far from sufficient to offset the previous damage wrought by a series of profit warnings, which leaves the shares down by 51% over the last year, as compared to a gain of 3% for the wider FTSE 250. As the company was relegated from the FTSE 100 in December, some investor trust evaporated and it could be some time until confidence in the group’s prospects can be rebuilt. As such, the market consensus of the shares as a hold is likely to remain in place until a sustained recovery becomes evident.