Persimmon stock price gains over 6% on reports of stamp duty cut

Persimmon stock price gains over 6% on reports of stamp duty cut
Written by:
Michael Harris
6th July, 11:31
  • The UK government is considering fresh tax cuts to support the troubled economy
  • The Chancellor to announce the lifting of the property tax threshold for homebuyers
  • Reacting to news, Persimmon share price surged hit a new 4-week high above GBX2400
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Shares of Persimmon PLC (LON: PSN) have gained more than 6% on media reports that the UK government is considering tax cuts to support the troubled economy. Persimmon share price hit a new 4-week high on this news.

Fundamental analysis: 

Rishi Sunak, British Finance Minister, is considering the next steps to help the troubled economy. According to reports, the Chancellor will most likely announce the lifting of the property tax threshold to £500,000 from £125,000, at which the stamp duty is applied. 

“A stamp duty holiday would provide welcome financial relief for millions of people, including first-time buyers,” said Tom Bill, head of UK residential research at estate agent Knight Frank.

“The government understands that moving house has far-reaching benefits for the UK economy and this may form part of a wider re-think of property taxation that recognises this strategically important role.”

As of now, homebuyers are paying a 2% stamp duty on homes costing over £125,000. Those with deeper pockets looking to purchase a home between £250,000 and £925,000 are required to pay a 5% stamp duty. 

Moreover, the latest surveys show that the construction sector has rebounded immensely in June following a plunge in demand in the previous quarter. 

Invezz reported that Persimmon’s competitor, Barratt Developments, announced this morning that the near-term outlook looks positive. The firm reported that its order book is currently at £3.25 billion ($4.06 billion), as of June 30. This is more than 20% higher compared to £2.60 billion a year ago. 

“Since the removal of government restrictions on housing market activity on 13 May 2020 there has been a welcome recovery in internet activity, site visitors and net reservations across both the industry and our business,” Barratt said in a trading update. 

Technical analysis: Shares surge to a 4-week high

Persimmon share price has gained over 6% today to trade above GBX2400 for the first time since early June. Shares plunged around 60% in March to hit a 4-year low at GBX1368.

Persimmon stock daily chart (TradingView)

Boosted by the new plans, set to be unveiled on Wednesday, Persimmon stock price is now approaching the 200-DMA at GBX2429. If broken, the buyers will look to take the price action to test the critical resistance around GBX2600. 

Summary

Shares of Persimmon are trading over 6% in the green today on reports that Chancellor Sunak is ready to announce a new set of measures to support the troubled economy. Persimmon share price has hit a 4-week high above GBX2400.

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