Jeremy Hunt has reversed most of the measures in Kwasi Kwarteng’s mini-budget two weeks ago, and the markets are relieved. Income tax will no longer fall to 19% and the Energy Price caps are now only guaranteed for six months rather than two years.

As a result, Gilt yields have fallen significantly, and if those falls are sustained, mortgage rates should start to fall back too.

The prospect of more stability in markets and the economy boosted share prices. The FTSE 100 closed up 0.9% at 6920.24. The FTSE 250, which has a bigger slant to UK-focused companies than the FTSE 100, delivered a bigger rise, up 2.76% to 17,502.84.

In today’s update, we look at why housebuilders have done especially well today, why ITV is on the rise, and why shares in one of the biggest online clothing retailers have dropped.

Relief that markets may a bit more stable has delivered a big boost for internet security firm Darktrace (DARK). The share price is up 12.5% to 341.7p

Darktrace is a classic growth stock, where a high valuation is driven by expectations of fast growth in the future. (Before today’s news it was trading on 84 times earnings.) If a country goes into recession, and/or markets are falling, these kinds of growth stocks are often the most vulnerable. So if the economic outlook is genuinely less stormy, Darktrace may find it easier to survive and prosper.

The other issue here is takeover interest. US technology investor Thoma Bravo expressed an interest in buying Darktrace in August but then walked away. So there’s always a chance another bidder may come along. But we should stress the words ‘chance’ and ‘may’ here.

ITV (ITV) has had a good day after the Financial Times reported that the company was thinking about selling a stake in its production business, ITV Studios. Fans of ITV argue that if the production and broadcast arms of the company were split, ITV Studios would end up with a higher valuation than ITV’s current overall value of around £2.5 billion. If ITV can sell a stake in the Studios business at a good price, that would demonstrate to the market that there is hidden value in ITV shares. That’s the theory anyway.

Today’s news has boosted ITV’s share price by 9% to 67.34p.

Jeremy Hunt did leave one tax cut from Kwasi Kwarteng’s mini-budget. The stamp duty threshold for first-time buyers on property purchases will still rise to £425,00, and the threshold for other purchasers will still rise to £250,000. That’s good news for housebuilders and Vistry (VTY), formerly known as Bovis, led the way with a 6% rise to 563p.

Other housebuilders on the up included Barratt Developments (BDEV), up 3.6% to 359p, and Persimmon (PSN), up 4.7% to 126.8p. The stamp duty cut probably wasn’t the only factor pushing up share prices for the sector. If mortgage rates in the next two or three years prove to be lower than previously feared, that’s obvious good news for these firms.

Shares in Reach (RCH) have soared 14% to 79.6p. The company owns the Daily Mirror, Daily Express and a large number of regional newspapers. Reach is trying to transform itself into a modern digital news provider but the company has struggled to grow digital revenues at a rate that fully makes up for declines in print revenues. However, the company’s trading update last week showed digital revenues rising well in July and August. With that backdrop, it looks like bargain hunters have decided today that the shares have fallen too far.

ASOS (ASC) has confirmed news reports that it is renegotiating the terms of its debt covenants with lenders. The online retailer’s shares have fallen 3% to 517p as a result. This follows a previous 80% fall in the share price over the last year. ASOS has been hit by the double whammy of rising costs and customers who are feeling the pinch. On top of that, ASOS benefitted in the pandemic when rival Primark, owned by Associated British Foods (ABF), couldn’t open its stores, as Primark doesn’t sell clothes online.

Renegotiating debt covenants is never a good sign for a business, so there may be further bad news down the line.

Shares in Hargreaves Lansdown (HL) have declined 2.5% to 794p after the investment platform reported it was being sued by an initial 3,200 customers who lost money in the Woodford Equity Income Fund debacle. The claimants allege that Hargreaves was recommending the fund to investors right up until the fund collapsed, even though it had become obvious the fund had significant problems around liquidity and the portfolio much earlier. On top of that, CEO Cbris Hill is leaving.

That said, it wasn’t all bad news for Hargreaves today. The company released a first quarter update which was reasonably good against the backdrop of a falling market. Assets under management slipped only a little, from £123.8 billion to £122.7 billion over the period, and revenues jumped 15% to £162.9 million. The revenue rise was driven by higher income on cash balances.

Overall though, the reputational damage inflicted by the lawsuit, with possibly more to come, should exert further downwards pressure on the share price. Especially if markets remain choppy. It’s also worth keeping an eye on margins. Hargreaves has traditionally benefitted from super-high operating margins of over 60%+. but those margins have come down recently to around 45%, probably due to strong competition from the likes of AJBell (AJB), and Interactive Investor. Hargreaves probably needs to cut its customer fees further, so a return to the days of 60% margins seems unlikely.

Superdry (SDRY) was a big riser on Friday after the CEO made a sizeable purchase of shares. However, the shares have sliipped back today 1.3%% to 120p. The fall might be explained by a price target cut by RBC, lowering its target for Superdrug from 280p to 155p. Admittedly, the new target is still above today’s price, so profit taking was probably also a factor after Friday’s 10% price jump.

Shares in Halma (HLMA) have slipped just over 1% to £20.17. The safety technology company has a good track record of growth, but the shares are trading on quite a high valuation – about 28 times earnings – and Halma has a long history of buying other businesses. Acquiring other firms always carries risk so, even after today’s fall, Halma’s shares don’t look like a bargain yet.

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