MARKET REPORT: UK gloom overshadows boom in US for Ashtead

Ashtead shares fell as rapid progress at its US business was overshadowed by concerns over softening market conditions in the UK.

The FTSE 100 firm, which hires out machinery like excavators and forklift trucks, said the rollout of ‘mega projects’ on the back of investment in infrastructure under President Biden has helped trading boom in the US.

Group revenue rose 19 per cent to £2.14billion in the three months to the end of July while profit was up 11 per cent to £466million.

The gains were driven by its Sunbelt Rentals business in the US, which loans out construction and industrial equipment for everything from cleaning up floods to powering sporting events.

But with high inflation remaining in Britain, it said it now expects rental revenue growth of between 6 per cent and 9 per cent in the UK in the year to the end of April 2024, down from a previous range of 10 per cent to 13 per cent. 

Shares slid 2.9 per cent, or 158p, to 5310p.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Ashtead is seen as a bellwether of economic health and its latest update is a warning for deteriorating conditions in the UK. 

It is little surprise that its UK and US businesses are diverging in prospects, given the huge stimulus programmes provided by the Biden administration across sectors like green energy and infrastructure.’

The FTSE 100 inched down 0.2 per cent, or 14.83 points, to 7437.93 and the FTSE 250 lost 0.2 per cent or 32.72 points to 18491.42.

European food retailers sank into the red amid warnings from JP Morgan that deflation – or falling prices – is a ‘real possibility’ from next year. 

The US investment bank named B&M among most-exposed stocks on the belief that shares are likely to fall given they have gained 40 per cent so far this year. The retailer’s rating was downgraded to ‘underweight’ from ‘overweight’ and the target price reduced to 513p from 577p.

JP Morgan also named Tesco and argued Britain’s biggest supermarket will come under pressure to invest in its business to defend its market share.

The stock’s rating was cut to ‘neutral’ from ‘overweight’ and the target price was trimmed from 270p to 250p.

Shares in B&M – which has agreed to buy up to 51 Wilko stores – shed 3.4 per cent, or 19.2p, to 547.8p and Tesco dropped 2.8 per cent, or 7.5p, to 256.3p.

Mining giant Rio Tinto appointed a chief executive for its aluminium business. Jerome Pecresse, the former president and chief executive of General Electric Renewable Energy, will succeed Ivan Vella on October 23. Shares edged down 0.5 per cent, or 25p, to 4975p.

Begbies Traynor fell 1.2 per cent, or 1.5p, to 123p after the restructuring expert bought the Cardiff-based insolvency practitioner Jones Giles & Clay to increase its presence in South Wales.

Jet 2 appointed Robin Terrell, who has sat on the board since April 2020, as its chairman.

A chartered accountant, he has led online and retail businesses including Amazon UK, John Lewis Direct and Tesco UK.

The hire came after Philip Meeson, who bought the airline and package holiday firm in 1983, stepped down from the job in July. Shares fell 0.3 per cent, or 3p, to 1053p.

Packaging firm DS Smith slid despite improved sales of cardboard boxes. Shares lost 0.6 per cent, or 1.7p, to 307.9p.

Ongoing difficulties in its Nigerian business have spurred PZ Cussons into action. 

The owner of Imperial leather soap and Carex handwash has offered to pay £22.8million to buy the 26.73 per cent of shares it does not own so the company can be delisted from the Nigerian stock exchange. 

Shares slid 0.1 per cent, or 0.2p, to 156.8p.