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London open: Stocks fall ahead of Spring Budget
London stocks fell in early trade on Wednesday as investors eyed Chancellor Jeremy Hunt’s Spring Budget.
At 0835 GMT, the FTSE 100 was down 0.3% at 7,617.80.
Hunt confirmed ahead of the Budget that energy bills support will be extended for a further three months, meaning the Energy Price Guarantee will not rise by £500 to £3,000 from April, as previously planned.
However, a separate voucher scheme – which gives £66 per month to every household – will still come to an end this month.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The Chancellor is focusing on how to prod the stalling economy into life, without making tax cut and spend promises which could set off a fresh debt furore. With a keen eye on trying to maintain financial stability particularly the close shave this week given SVB’s collapse, he looks set to focus on highly targeted policies, rather than tax cuts to propel growth.
“He has more wiggle room as public sector borrowing, still high by historical standards is set to undershoot forecasts made by the Office of Budget Responsibility. Labour shortages mean high inflation is stubborn and he’ll be trying to coax people back to work with a combination of sweets and a naughty step approach, with a widening of sanctions expected for those who don’t look for work.
“Hunt is also expected to conjure up tax incentives for businesses who invest in Britain, to offset some of the effects of the corporation tax increase which is going up from 19% to 25%.
“The defence sector could also get a boost as the Treasury has been under pressure for months to increase military budgets. He’s expected to announce an extra £5bn over two years and there will be a keen eye trained on the trajectory after that. The latest skirmishes in the skies between a US drone and a Russian aircraft has unsettled markets, and there is an expectation that NAO member countries will need to keep upping spending to deal with future threats.”
The Spring Budget is due at 1230 GMT.
In equity markets, insurer Prudential slid even as it reported a better-than-expected rise in annual profit on the back of new insurance sales and said China’s relaxation of Covid restrictions had also provided a boost.
The Asia-focused company saw adjusted operating profit rise 8% in 2022 to $3.38bn, beating a forecast of around $3.34bn from a company-compiled forecast.
Online trading platform IG Group was in the red as it said third-quarter trading revenue fell amid lower market volatility.
On the upside, 4imprint rallied as it reported a rise in full-year profit and revenue and proposed a special dividend.
Balfour Beatty gained as the construction company posted a jump in full-year profit, announced a £150m share buyback and hailed a “strong” operational and financial performance across the group.
Spirent Communications was boosted by an upgrade to ‘buy’ from ‘hold’ at Berenberg, while Ibstock was lifted by an upgrade to ‘buy’ at Numis.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | +0.73% | +0.70 | 96.88 |
| 2 |  |
Gsk Plc | +0.71% | +9.80 | 1,390.20 |
| 3 |  |
Bt Group Plc | +0.66% | +0.95 | 144.50 |
| 4 |  |
Astrazeneca Plc | +0.62% | +66.00 | 10,752.00 |
| 5 |  |
Hiscox Ltd | +0.54% | +6.00 | 1,118.50 |
| 6 |  |
Relx Plc | +0.51% | +13.00 | 2,550.00 |
| 7 |  |
Pearson Plc | +0.43% | +3.60 | 845.80 |
| 8 |  |
Smith & Nephew Plc | +0.38% | +4.50 | 1,202.00 |
| 9 |  |
Bae Systems Plc | +0.28% | +2.60 | 940.60 |
| 10 |  |
Rentokil Initial Plc | +0.24% | +1.20 | 511.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Prudential Plc | -6.26% | -74.00 | 1,109.00 |
| 2 |  |
Carnival Plc | -4.98% | -34.80 | 664.20 |
| 3 |  |
Ocado Group Plc | -3.99% | -17.60 | 423.60 |
| 4 |  |
Bp Plc | -2.92% | -15.50 | 515.30 |
| 5 |  |
Antofagasta Plc | -2.76% | -42.50 | 1,496.50 |
| 6 |  |
Marks And Spencer Group Plc | -2.54% | -3.95 | 151.60 |
| 7 |  |
Glencore Plc | -2.54% | -11.70 | 449.75 |
| 8 |  |
Shell Plc | -2.39% | -59.00 | 2,410.50 |
| 9 |  |
Melrose Industries Plc | -2.39% | -3.75 | 153.25 |
| 10 |  |
Legal & General Group Plc | -2.34% | -5.70 | 238.30 |
US close: Stocks rally following CPI reading
Wall Street stocks were firmly in the green at the close of trading on Tuesday as market participants digested key inflation data.
At the close, the Dow Jones Industrial Average was up 1.06% at 32,155.40, while the S&P 500 advanced 1.65% to 3,919.29 and the Nasdaq Composite saw out the session 2.14% firmer at 11,428.15.
The Dow closed 336.26 points higher on Tuesday, off session highs but still easily reversing losses recorded in the previous session.
Tuesday’s primary focus was February’s consumer price index report, which revealed the cost of living in the US continued to ease last month. According to the Department of Labor, in seasonally adjusted terms the country’s Consumer Price Index advanced at a month-on-month pace of 0.4%. However, negative base effects meant that the annual rate of increase in CPI slipped from 6.4% for January to 6.0% in February.
Core CPI, on the other hand, advanced by 0.5% in comparison to the month before, meaning that the year-on-year rate of change ticked lower by a tenth of a percentage point to 6.5%. Significantly, at the core level, price gains for shelter, which was expected to start moderating substantially in the first half of 2023, picked up again and was ahead by 0.8% on the month.
Zaye Capital‘s Naeem Aslam said: “The US CPI data has printed a mixed number today, but traders are paying less attention to the core CPI number which surged. Most traders are satisfied with the headline month-on-month data which matches the expectations.”
Elsewhere on the macro front, the National Federation of Independent Business‘ small business optimism index increased to 90.9 in February, up from 90.3 in January and the highest reading in three months.
In the corporate space, United Airlines shares slumped after the carrier slashed its first quarter guidance and said it expects to report a loss of $0.60-$1.0 per share of the period, while First Republic shares surged 20% as regional banks do their best to bounce back from the previous session’s SVB-fuelled sell-off.
Wednesday newspaper round-up: Energy bills support, prepayment meters, financial ombudsman
The Treasury has performed a U-turn on a planned cut to energy support for households after warnings that it would plunge many thousands more families into poverty. In an announcement on the morning of the chancellor Jeremy Hunt’s budget speech, the government confirmed that the energy price guarantee would continue at its current rate, which limits a typical annual household bill to £2,500. It is being extended from April, when it was due to expire, for a further three months until the end of June. – Guardian
A ban on the forced installation of prepayment meters by energy companies has been extended beyond the end of March, Ofgem has said. The energy regulator’s chief executive, Jonathan Brearley, told MPs that suppliers would not resume the installations until a code of practice was published and Ofgem was satisfied it was being adhered to. – Guardian
Saudi Arabia is to spend £30bn on a fleet of 72 Boeing jets as it seeks to dominate the Gulf with a new airline. Riyadh Air, launched on Sunday, has agreed to buy the Dreamliners in the plane maker’s fifth biggest order of all time amid a scramble to eclipse neighbouring flag carriers Emirates, Qatar Airways and Etihad. – Telegraph
About 13,000 complaints made to the financial ombudsman have not been resolved after more than a year, the head of the service told MPs, as she admitted there is “more we could do to bring that number down”. Abby Thomas, who joined the Financial Ombudsman service six months ago as its chief executive and chief ombudsman, told an influential cross-party committee of MPs that 7,500 of the cases are subject to legal proceedings or have had to be put on hold because the companies involved have gone into administration. – The Times
Tesco’s imposition of fees for online suppliers has led to widespread calls for a referral to the grocery regulator. The UK’s largest supermarket wrote to suppliers last week informing them it would be introducing Amazon-style fulfilment fees on all products sold on its UK and Ireland websites and app. – The Times
