Pound rises and gilt yields fall as Sunak looks set for Number 10, Ashley takes a stake in ASOS, Auto Trader sells Irish business and Pearson performs well

“At least PM-in-waiting Rishi Sunak knows he’s got the markets on his side,” says AJ Bell Financial Analyst, Danni Hewson.

“After rival Boris Johnson pulled out last night, paving Sunak’s way to Number 10 – barring an unexpected upset from Penny Mordaunt – gilt yields have fallen appreciably, and the pound has made solid progress. Domestic-facing sectors like housebuilders and banks are also in demand and the FTSE 250, which has a more domestic focus than the FTSE 100, is also materially higher.

“Investors clearly hope Sunak will stabilise the economy and the political situation – though it’s hard to work out at this point which is the harder task.

“Assuming Sunak gets his coronation later today, attention will likely turn to the new fiscal plan set to be announced a week today on Halloween. Clearly the aim will be to avoid doing anything which might spook the market.

“As well as the recovery in sterling and the reduced cost of government borrowing, Sunak will be pleased to see European gas prices going in the right direction thanks to mild temperatures across the continent. And while the outlook is still filled with dark clouds, for the first time in a while it is possible to spy a chink of light.”

ASOS/Mike Ashley

“Fresh from standing down from his day job at Frasers Mike Ashley is reportedly on manoeuvres, extending his stake in fashion brand Hugo Boss and taking a position in troubled online retailer ASOS. Clearly the retail kingpin is not done with the sector just yet.

“ASOS’ financial results revealed some significant problems for the business as spending by its core demographic dries up and the company faces rising costs and a more perilous balance sheet position, but Ashley clearly believes there is still value in the brand.”

Auto Trader

“Like a forgotten £20 note in the glove box, web-based car seller Auto Trader has pleased the market with the €30 million sale of its Webzone business – which trades in the Republic of Ireland as Carzone.

“The division wasn’t high profile and there probably wasn’t a huge amount in the share price for it so to secure a helpful cash injection and shine a headlamp on its valuation won’t have done Auto Trader any harm with investors.”

Pearson

“Education publisher Pearson’s digital transition continues to pay off. Despite inflationary pressures, the company was able to keep full-year guidance in place as third quarter underlying sales saw solid growth.

“The company’s English language learning products are notably enjoying strong demand and the robust update suggests that after a difficult decade and transition from big academic textbooks to a more internet-based offering, Pearson is in a good position.”

These articles are for information purposes only and are not a personal recommendation or advice.