Market Report: Savills suffers from tax crackdown on top homes
Punters in Savills were cursing George Osborne yesterday. The estate agent, which focuses on the high end section of the market, was one of the stocks worst-hit by the Budget after the Chancellor announced he was upping the amount of tax on homes being sold for more than £2m.
As well as the increase in stamp duty, he also closed a loophole by introducing a 15 per cent tax on upmarket properties being bought through a company. Amid fears that the measures would hit its trading in the UK, Savills was knocked back to a session low of 363.46p, although by the bell it had managed a slight recovery, eventually closing 9.2p worse off at 373p.
Although the stamp duty changes means a housebuyer will have to fork out an extra £40,000 for a home worth £2m, not everyone was convinced it was a major blow. "For those people who are playing in that sphere of the property market, the difference probably won't change their thought process," said one City voice.
The housebuilders, meanwhile, were finding reasons to cheer the budget. Barratt Developments and Bovis Homes powered up 6.3p to 148.8p and 15.6p to 508.5p respectively following confirmation that the Get Britain Building fund is getting another £150m pumped into it.
A new duty on gaming machines was not taken well by the bookies. William Hill was pegged back 5.3p to 243.1p while Ladbrokes closed 3.5p lower at 152.5p, with Peel Hunt's Nick Batram saying the 20 per cent tax rate was "very much towards the top end" of expectations.
However, although smokers will not have been happy about the decision to raise the price of a pack of cigarettes by 37p, that did not stop Davidoff-owner Imperial Tobacco puffing up 64p to 2,558p and rival British American Tobacco shifting 32p higher to 3,229p.
The FTSE 100 itself had little reaction to the Budget, as it edged up 0.54 points to 5,891.95 despite having plummeted 70 points on Tuesday, with disappointing housing data from the States also not helping matters.
Weir Group was the main faller, sliding 6.21 per cent to 1,859p after investors were spooked by a profit warning from the pump maker's rival Baker Hughes. Particularly worrying for the engineer was the US group's admission that its pressure pumping operations were suffering from both raw material shortages and pressures on pricing, although the severity of Weir's move was also being put down to a high level of short interest in the stock.
Forecast-beating fourth-quarter figures from Sainsbury's left it at the top of the benchmark index as it advanced 13.8p to 319.3p, although rival supermarket Tesco failed to follow, easing back 0.45p to 332.3p.
ITV was lifted 0.3p to 87.15p after once again finding itself the subject of bid talk. Panmure Gordon's Alex DeGroote announced that, having screened the media companies for potential takeover candidates, the broadcaster was one of the stocks most closely fitting the criteria for being a possible target.
Saying he "fully [expects] M&A to be a market driver this year" in the sector, the analyst also highlighted the publisher Informa and ad agency Aegis. They ticked up 4p to 440p and 1.8p to 182.8p respectively, with the latter getting an additional boost from Exane BNP Paribas raising its rating to "outperform".
Ocado slid back 4.5p to 118.8p on the FTSE 250 following the re-emergence of the online grocer's arch-nemesis Philip Dorgan, the Panmure Gordon analyst who once said "Ocado starts with an 'o', ends with an 'o' and is worth zero".
He reiterated his "sell" advice and 50p price target, warning that – with the online grocer searching for a replacement for Andrew Bracey, who quit as chief financial officer in January – "a new finance director will be keen to rebase forecasts".
He also highlighted the fact that Ocado has recently been offering free six-month trials of its Delivery Pass scheme – not, he said pointedly, "helpful to profitability".
Dixons topped the mid-tier index by shifting up 1.33p to 18.8p – meaning its share price has added nearly a third in just eight sessions – after Espirito Santo's scribblers changed their rating to "buy". The electronics chain was also continuing to be helped by the troubles at Game, whose shares were suspended on the fledgling index as it headed for administration.
Investors responded to APR Energy's admission late on Tuesday that it is delaying its results, which were due today, until next month by pushing the temporary power firm down 19.64 per cent to 884p.
Down on the small-cap index, vague speculation suggesting Premier Foods could be a bid target for Kraft did the rounds in early trading. However, the far-fetched idea was rubbished by traders following news of a number of share dealings by directors of the troubled Hovis-owner, which finished 0.5p higher at 12.5p.
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