Markets liked Rishi Sunak’s election as our next Prime Minister. Gilt yields fell, which should mean lower interest rates for borrowers, and shares were up. The FTSE 100 closed 44 points higher at 7,013.99 while the FTSE 250 rose 131 points to 17,337.55.

That said, we shouldn’t get carried away about our economy. A survey looking at confidence levels among purchasing managers in the UK was poor with a 47.2 rating for October. Any number below 50 suggests that the economy is contracting, so it looks like the recession may have already started.

In our movers today, we look at why shares in Pearson have jumped 10% and also why it’s been a bad day for "the man from the Pru".

Shares in Pearson (PSON) have jumped almost 10% to £9.64 after the educational publisher said that underlying sales were up 7% in the first nine months of the year. Pearson also said that trading was in line with analyst expectations for the full year.

Much of the strong performance was driven by English Language Learning where sales were up 28%. The lifting of travel restrictions in most of the world has boosted travel and immigration, and hence demand for English language courses. The only downside for Pearson was higher education sales, which were down 4%. But even that fall was in line with expectations.

Looking ahead, education is arguably a fairly resilient business area in a recession. As some people lose jobs, they may wish to invest in educating themselves to get a better job. On the other hand, some of those people may prefer to use second-hand textbooks rather than the latest virtual courses from Pearson.

After today’s rise, Pearson’s share price has soared 60% this year. But even now, the shares don’t look expensive. They’re on a dividend yield of over 2% and the company has a strong balance sheet. The big question is how resilient education will be in the recession that has probably already started.

Auto Trader (AUTO) was a big riser today after the online car marketplace said it would sell an Irish subsidiary, Webzone, for 30 million euros. Webzone operates a car trading site in Ireland. Peel Hunt reckons the sale will reduce earnings per share by less than 1%, and thinks it’s a good move for Auto Trader to concentrate on the UK.

Peel Hunt is also upbeat on Auto Trader as an investment and raised its rating on the stock from "hold" to "buy" today given recent weakness in the share price. The broker also expects "robust" interim results next month. Auto Trader’s share price closed 3.3% higher at £5.02.

Billing software company Cerllion (CER) saw its share price climb 9.6% today to £11.40. This was on the back of a strong update ahead of full year results. Cerillion said it expected adjusted pre-tax profit to be "materially ahead" of the current market forecast of £10.1 million. What’s more, net cash is now expected to come in at around £20 million, up from £13.2 million a year earlier.

There’s much to like about Cerillion. It’s always nice to see a company with a net cash position rather than net debt. It means the company has a nice safety cushion if performance deteriorates in the future. The Return on Capital Employed figure is also impressive at 35%. This means that when Cerillion has invested money its business in the past, those investments have generated plenty of profits. The only problem is that much of the good news is already in the price – Cerillion is trading on a multiple of 29 times earnings. And even a well-managed, fast-growing, but profitable business may not be immune to the effects of the economic downturn.

Gilt yields are down and that should mean that homebuyers looking for a new mortgage will start to be offered better rates. So unsurprisingly, shares in housebuilders are on the up today. Leading the way is Persimmon (PSN) with a 4.5% rise in the price to £12.73. Even after today’s share price rise, the company still trades on just five times earnings, which looks attractive at first glance. Just remember that housebuilders tend to trade on low price/earnings ratios most of the time. That’s because they’re volatile businesses – when the house market suffers, their profits can fall dramatically.

Other housebuilders on the up today included Berkeley Homes (BKG), up 3.8% at £4.29, and Vistry (VTY), up 3.2% at £5.67.

Shares in insurance giant Prudential (PRU) tumbled 9% to £8.04 after Asian markets fell last night. Prudential’s business is now strongly focused on Asia, so bad news in the East is bad news for Prudential. Asian investors were spooked by the latest Communist Party Congress in China where President Xi Jinping strengthened his power further, with an emphasis on security rather than economic growth. What’s more, the Chinese economy grew by only 3.9% over the last year, well below the target of 5.5%.

Prudential wasn’t the only Asia-focused faller today. Several Asia investment trusts are down including the Fidelity China Special Situations Trust (FCCS), down 10% to £1.85, and JP Morgan China Growth & Income (JCGI), down 9.7% at £2.56.

Mining shares have also been hit by the Aslan sell-off. If the Chinese economy is slowing down, then there will be less demand for copper and other industrial minerals. Several large miners are down, and Antofagasta (ANTO) is the biggest faller of the largest players, down 2.2% at £11.22.

There’s an attractive long-term story for Antofagasta. It’s primarily a copper miner, and electric vehicles contain more copper wires than conventional cars. That long-term story drove a strong rise in the share price between 2016 and 2020, but the pandemic and the global slowdown pushed the share price in a different direction more recently. In the short term, investors are likely to carry on focusing on China where demand for copper is set to fall further.

Aston Martin Lagonda (AML) is another victim of Asian falls. Aston Martin is clearly a luxury business, and most luxury businesses see China as a significant market. So today’s 5.7% fall in the share price to 95.76p is no great surprise.

Aston Martin’s share price has performed poorly since the company listed in 2019. Running low on funds, Aston Martin was forced to raise cash from shareholders earlier this year and that pushed the shares even lower. Still, Aston Martin has a strong brand, so the firm may be bought by a brand trophy hunter at some point.

Package holiday firm On the Beach (OTB) is due to release a trading update tomorrow. Some investors think the news is going to be bad as the shares are down 4.3% today at 93.9p. In spite of today’s fall, it seems likely that On the Beach has had a good summer. After all, millions of Brits were desperate to get away for the first time since the pandemic.

Looking ahead, the picture is less positive, however. Consumers are being squeezed hard, and there’s also a long-term trend away from package holidays. Many of us want to plan our own trip. That’s not good news for shareholders. 

Now take a look at our weekly share tips