Ashtead has confirmed plans to switch its primary listing to the United States, where it conducts most of its business, to gain access to ‘deeper’ capital markets.

The announcement was made alongside the release of an interim statement revealing a 4% drop in profit before tax in the first half due to slower rental growth. Ashtead reduced its profit guidance for the year as a result.

The combination of slower rental growth, lower profit guidance, and plans to shift their primary listing to the US resulted in a 10% drop in Ashtead shares on Tuesday.

“Ashtead has warned on profit this morning citing difficulty in its primary market of North America. The construction market has seen weakness driven by the higher interest rate environment lasting longer. This has in turn hurt used equipment sales and higher depreciation costs have hit Ashtead’s numbers,” said Adam Vettese, market analyst at investment platform eToro

“Most notably in the update is the long rumoured intention to switch to a US listing. The firm does almost all of their business in North America, they report in dollars and the vast majority of their staff are in the region. Despite this making sense on many levels, it is still a huge blow for the UK to see the 25th largest firm in the benchmark FTSE100 index leaving. Amid London’s campaign to be attractive to upcoming IPOs, it’s far from the best time to see one of their stalwarts leave for pastures new.”

The decision comes as the company acknowledges its transformation into a predominantly US-focused business. With its executive management team and operational headquarters already based in the United States, along with the majority of its workforce, the company believes this change will better align with its operational reality. As part of this transition, the company will rebrand as Sunbelt Rentals.

The overarching reason behind the switch is the attraction of US capital markets. Ashtead said they expect the move to give the company greater access to US investors and deeper capital markets, potentially increasing the liquidity of its shares. Additionally, the relocation of its primary listing could position the company for inclusion in major US stock indices.

Losing Ashtead will be a significant blow to London, given the company’s stellar performance over the years, driven by consistently growing profits.

The FTSE 100’s natural resource sector rallied on Monday after China promised to change its approach to supporting the economy amid sluggish growth and a struggling property sector.

Oil majors BP and Shell also joined the action as oil prices rose after Syrian rebels swept into Damascus and took control of the country, increasing tensions in the region.

“London’s blue-chip index has started the week on the front foot, shaking off signs of downbeat demand in China, as energy giants gain ground amid rising oil prices,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“The benchmark, Brent Crude, has crept higher towards $72 a barrel, as a fresh wave of uncertainty engulfs the Middle East, given the rapid fall of the Assad regime in Syria. Weak demand from China and the postponement of the plan by OPEC+ nations to postpone production increases is keeping a lid on prices to some extent. However, the speed at which rebel forces took over in Syria and the unpredictability of what will come next has raised fresh supply concerns in a region already wracked by conflict.”

China’s promise to take a “more proactive” approach to fiscal policy was music to equity investors’ ears. The world’s second-largest economy’s stuttering growth has been a major concern compounded by a lack of meaningful action by the authorities, who have seemed content to let things play out. This now looks set to change.

Rio Tinto, Antofagasta, Glencore and Anglo America surged to the top of the FTSE 100 leaderboard with gains between 2.6% and 3.5% on the promise of easier Chinese monetary policy and fiscal stimulus.

“The mining sector, as well as other China-exposed stocks like Prudential, Standard Chartered and Burberry, moved higher on tweaked wording from the country’s Politburo that suggested more economic stimulus could be on the way. Stocks in Hong Kong were also higher,” said AJ Bell investment analyst, Dan Coatsworth.

WPP gained 2.3% as news broke that two of its largest competitors would merge to create an advertising giant that promises to send waves through the industry.

“Investors in WPP seemed to shrug off the prospect of two arch-rivals coming together and creating a force to be reckoned with. Speculation that Omnicom and Interpublic are plotting a $30 billion merger is the talk of the town yet shares in WPP moved 3.5% higher on Monday,” Coatsworth explained.

“On one hand, a merger of two companies this size would inevitably involve widespread cost cutting as the first course of action. That could give WPP a window of opportunity to try and poach some clients while its enlarged rival’s management is distracted. On the other hand, a merger would bring together the cream of the crop from both companies which would aid their narrative during account pitches.”

Frasers Group was the top faller after Institutional Shareholder Services, an independent proxy adviser, advised against the proposals tabled by Frasers Group in their spat with Boohoo.

Digital advertising firm Brave Bison has announced plans to acquire sports marketing company Engage Digital Partners Limited for up to £10.6 million, payable in cash and shares over three years.

The deal, expected to be completed in early January 2025, will significantly expand Brave Bison’s sports and entertainment division.

Engage, established in 2012 following a management buyout from Endemol Sport, works with major sports brands, including Formula 1, ICC, Real Madrid, and New Zealand Rugby. The company employs 130 people across offices in London, Dubai, India, and Australia and provides round-the-clock service delivery.

The merger will combine Engage’s operations with Brave Bison’s existing sports network, which includes partnerships with PGA Tour, Ryder Cup, and US Open. The enlarged sports and entertainment division is expected to generate £16 million in pro-forma turnover.

The acquisition terms include an initial enterprise value of £2.1 million, equity consideration of £2.0 million, and potential contingent payments of up to £6.5 million over three years, subject to performance conditions. The equity portion is tied to Brave Bison achieving a minimum share price of 3p per share and meeting financial targets.

While Engage is projected to generate £6.9 million in turnover with an adjusted EBITDA loss of £0.3 million for the year ending December 2024, the acquisition is expected to become earnings accretive for Brave Bison in the medium term.

Alongside news of the acquisition, Brave Bison reported trading in line with market expectations, with anticipated FY24 Adjusted EBIT of £3.6 million and projected net cash of £7.0 million following the acquisition.