Market report

Persimmon flags slowing demand | Primark | Aston Martin


4.30pm: Billionaire tightens grip on Aston Martin

Canadian billionaire Lawrence Stroll has reportedly tightened his grip on luxury car maker Aston Martin, leading a £30m investment in the shares.

Mr Stroll’s investment vehicle, Yew Tree, now owns 23.3% of the company, after he bought a 4.25% stake, According to The Telegraph.

Other investors include Saudi Arabia’s Public Investment Fund with 16.7% and Chinese car maker Geely with 7.6%.

Mr Stroll and co-investors including JCB’s Lord Anthony Bamford and biotech billionaire Ernesto Bertarelli bought in because the shares are cheap, he said.

UK house builders fell after Persimmon reported a sharp rise in cancellation rates as demand slowed amid an increase in the cost of mortgages. Rival Bellway and Taylor Wimpey were lower on the news.

Persimmon said it remains on track to deliver full year 2022 volume target of between 14,500 to 15,000 homes, despite some increased risk from recent elevated cancellation rates. Build rates have remained strong running at c. 20% ahead year on year. Persimmon is now fully reserved for the current year.

However, in an update for the period 1 July to 7 November, Dean Finch, group chief executive, commented: “Rising interest rates and broader economic uncertainty are clearly impacting mortgage lending and customer behaviour and this is reflected in our recent weekly sales rates and forward sales position.

“Persimmon enters this more challenging period… with average selling prices below the market average, high quality land holdings, and a robust balance sheet. The recent strengthening of our land holdings with disciplined investment will maintain our industry-leading embedded margins.”

He said a “relentless focus on customers, cost-efficiency, cash management and disciplined investment will help us navigate this more challenging market while also strengthening our ability to capitalise on future opportunities.

“We recognise how important sustainable returns are for our shareholders and today we are setting out a new capital allocation policy that balances this with the need to invest in our future success.”

Associated British Foods gained after it reported a jump in full-year sales and profits following a bumper performance at its budget fashion brand Primark.

ABF posted a 42% increase in 2021-22 profit, mainly reflecting a jump in Primark’s sales after the end of COVID-related restrictions.

However, ABF reiterated its forecast for a drop in profit in its current year due to higher energy and currency costs and consumers’ declining disposable income.

The FTSE 100 turned positive towards the end of the session, up 6.15 points at 7,306.14 as traders await the outcome of the US mid-term elections.

Global markets

Opinion polls in the US point to the Republicans winning at least one of the US legislatures, potentially frustrating legislation over the next two years and having a negative impact on business.

Even so, US markets pushed ahead with the Dow Jones Industrial Average up 1.31%, the S&P 500 up 0.97% and the Nasdaq Composite 0.85% higher.

There was more of a risk-on mood in the currency market, however, with both the euro and pound rising against the dollar.

Brent oil was quoted at $97.79 a barrel, down from $98.97. 

Asian stocks were mixed. The Shanghai Composite was down 0.7% in afternoon dealings, while the Hang Seng in Hong Kong was 0.6% lower. The Nikkei 225 in Tokyo rose 1.3%, while the S&P/ASX 200 in Sydney added 0.4%.

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