Market report: Tradesmen down tools and bring Grafton gloom as Morrisons is shelved

A bleak picture painted by builders merchant Grafton Group of the UK’s home improvement market since the Brexit vote caused investors to offload shares in the sector today.

The FTSE 250 firm, which owns the Selco Builders Warehouse chain as well as Buildbase, saw revenues rise 13% to £1.23 billion in the first half of 2016 and pre-tax profits up 12% to £65 million, less than analysts had pencilled in.

But its outlook for the merchant division, which makes up more than 90% of sales, was what spooked investors and sent the shares tumbling 43p, or 7%, to 565p.

It said demand has been dampened by the EU referendum outcome and confirmed it was looking at closing less-profitable branches as a result.

Investors decided to trim their holdings in other companies exposed to the DIY and home improvement markets. Travis Perkins slipped 18p to 1684p, Topps Tiles was off 1.25p at 114p and B&Q owner Kingfisher was 0.6p cheaper at 370.8p.

It may be transfer deadline day for footballers and their agents, but the City’s own wheelers and dealers were struggling to get any big deals away.

Trading volumes remain low, with another lacklustre performance from the FTSE 100, up just 0.02 points at 6820.81, with banks offsetting a fall from mining stocks. Supermarkets group Morrisons was shelved by investors when Goldman Sachs slashed its rating to sell after the shares had surged by a third this year. The shares dipped 1.7p to 195.6p.

Plastics business Carclo slumped 20.25p to 136.75p as it revealed the referendum had dented corporate bond yields, which in turn had increased its pension deficit to the point where it could no longer afford to pay a dividend.

A smaller first-half loss from Brave Bison, the digital media group run by Ashley Mackenzie and backed by his father, Kelvin, the former Sun newspaper editor, wasn’t enough to spark a buying spree and the shares edged down 0.01p at 4.87p.

Punters’ favourite Tlou Energy rose 0.2p to 7.08p as it confirmed a share placing to raise £1.7 million at a discounted 5.5p for its gas-to-power projects in southern Africa.

Gulf Keystone, a former AIM darling, launched its $25 million open offer at 0.83p a share as part of the embattled oil firm’s balance sheet restructuring, and plunged 1.2p to 3.6p.