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London open: Stocks edge up ahead of Budget, Powell speech
London stocks edged up in early trade on Wednesday as investors eyed the Spring Budget and a speech by US Federal Reserve chair Jerome Powell.
At 0850 GMT, the FTSE 100 was up 0.2% at 7,660.36.
Chancellor Jeremy Hunt will deliver his budget at 1230 GMT.
Neil Wilson, chief market analyst at Finalto, said: “Budget Day – what to expect from Wonky Wednesday? For policy wonks at the Treasury, it’s their big day out. Pre-election personal tax giveaways have been well leaked – eg NI cut by 2p again. There could be a more eye-catching income tax cut. A cut to income tax would be a bit of a rabbit – whether enough to swerve election wipeout remains to be seen. The risk is that, somewhat against character, Hunt announces a bunch of tax cuts that upset the markets.
“We have seen before that bond vigilantes are hunting in their packs again. I don’t think this is really going to happen and Hunt will lean again on fiscal drag to do the lifting, a particular bugbear when inflation and wage growth ought to have seen the levels change a lot since 2020.
“The tax rate will beat the post-war high of 37.2% of GDP in 26/27 or 28/29 depending on what Hunt does today – it will be breached no matter what, largely because of fiscal drag. We note that the IFS has warned the debt ratio will remain in the 90s whatever happens. In other words it’s totally meaningless tinkering unless they get a grip on the bigger stuff. At least Truss and Kwarteng had a go, albeit more Ronald McDonald than Ronald Reagan; the rest are cowards.
“Either way taxes and debt will remain historically high, productivity and growth historically low; financing wars, financing an ageing population, financing immigration – it’s all squeezing the middle until the pips squeak. This is not how to get Tory-leaning voters to come out for you. Debt debasement trades are flying with gold and bitcoin surging to record highs – of course that is more about the US than the UK, but the underlying message is that debt is starting to matter as countries run higher structural deficits.”
Investors were also eyeing Powell’s testimony in Congress at 1500 GMT for any clues on the timing, frequency and size of interest rate cuts.
In equity markets, Convatec was the top gainer on the FTSE 100 as it lifted its forecasts for medium-term organic growth after a strong performance in 2023 which saw a rise in margins and double-digit profit growth.
BA and Iberia owner IAG flew higher after a double upgrade to ‘overweight’ at JPMorgan.
Premier Foods rallied as it said that it will benefit from £33m increased free cash flow in the financial year to 29 March 2025 after reaching an agreement with the trustee of its pension scheme to suspend pension deficit contribution payments from 1 April 2024.
Tui travelled higher after an upgrade to ‘overweight’ at Morgan Stanley.
Breedon also rose as the construction materials group announced the acquisition of US-based BMC Enterprises for an enterprise value of $300m (£238.1m).
On the downside, Legal & General fell after it posted lower-than-expected operating profits last year amid tough market conditions. Operating profit came in at a flat £1.67bn against company-compiled forecasts of £1.75bn.
Tullow Oil gushed lower as the oil and gas explorer reported a drop in full-year profit and revenue, citing lower oil prices.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +7.28% | +38.00 | 560.00 |
| 2 |  |
International Consolidated Airlines Group S.a. | +4.37% | +6.20 | 148.05 |
| 3 |  |
Croda International Plc | +2.59% | +121.00 | 4,792.00 |
| 4 |  |
Ocado Group Plc | +2.12% | +9.40 | 453.70 |
| 5 |  |
Anglo American Plc | +1.88% | +32.00 | 1,735.80 |
| 6 |  |
Easyjet Plc | +1.82% | +9.80 | 547.80 |
| 7 |  |
Prudential Plc | +1.69% | +12.80 | 770.00 |
| 8 |  |
Itv Plc | +1.63% | +0.98 | 61.06 |
| 9 |  |
Barclays Plc | +1.62% | +2.74 | 172.20 |
| 10 |  |
Segro Plc | +1.57% | +13.60 | 881.40 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Legal & General Group Plc | -3.22% | -7.90 | 237.50 |
| 2 |  |
Antofagasta Plc | -1.66% | -29.50 | 1,748.00 |
| 3 |  |
Gsk Plc | -1.47% | -24.80 | 1,658.60 |
| 4 |  |
St. James’s Place Plc | -1.42% | -6.90 | 477.40 |
| 5 |  |
Coca-cola Hbc Ag | -1.21% | -30.00 | 2,454.00 |
| 6 |  |
Bae Systems Plc | -1.05% | -13.50 | 1,266.50 |
| 7 |  |
Relx Plc | -0.96% | -33.00 | 3,387.00 |
| 8 |  |
Intertek Group Plc | -0.80% | -39.00 | 4,866.00 |
| 9 |  |
Hsbc Holdings Plc | -0.75% | -4.60 | 605.50 |
| 10 |  |
Diageo Plc | -0.72% | -21.00 | 2,902.00 |
US close: Stocks lower, Apple weighs on major indices
US stocks closed sharply lower on Tuesday as shares in tech giant Apple weighed on the Street.
At the close, the Dow Jones Industrial Average was down 1.04% at 38,585.19, while the S&P 500 lost 1.02% to 5,078.65 and the Nasdaq Composite saw out the session 1.65% weaker at 15,939.59.
The Dow closed 404.64 points lower on Tuesday, extending losses recorded in the previous session.
In focus on Tuesday, shares in Apple headed south after the tech giant was slapped with a €1.84bn fine by European Union antitrust regulators over its App Store rules, with the watchdog telling the company that it cannot stop music streaming services from advertising cheaper subscription deals outside of its store. In response, Apple said the Commission had failed to “uncover any credible evidence” of either consumer harm or anti-competitive behaviour, stating that competitor’s such as Spotify wanted to “rewrite the rules of the App Store” to gain competitive advantage, while paying nothing to Apple. Apple vowed to appeal the Commission’s decision.
Also in the corporate space, AMD traded lower on the back of a Bloomberg report that claimed the company had hit a regulatory snag that would prevent it from selling an artificial intelligence chip to China while GitLab shares crashed after the software firm issued weak full-year guidance.
Big-box retailer Target reported fourth-quarter earnings that came in ahead of analyst expectations, with annual revenues growing roughly 40% year-on-year and quarterly profits coming in nearly 58% higher at $1.38bn, and fashion retailer Nordstrom narrowly beat revenues estimates.
On the macro front, the S&P Global composite purchasing managers index was revised higher to 52.5 in February, up from preliminary estimates for a reading of 51.4 and ahead of the 52 recorded in January. February saw a general decrease in cost pressures, with input prices easing at the slowest rate since October 2020. However, firms still chose to pass on higher costs to customers, leading to a month-on-month uptick in selling price inflation.
Elsewhere, the services PMI was revised higher to 52.3 in February, up from a preliminary of 51.3 and just below the 52.5 reading seen in January. The print pointed to a solid performance by the services sector last month, with output rising for a thirteenth successive month.
On another note, the Institute for Supply Management‘s US services PMI fell to 52.6 in February, down from a four-month high of 53.4 in January and missing expectations for a reading of 53. February’s print pointed to marginally slower growth in the services sector amid faster supplier deliveries and employment contraction.
Wednesday newspaper round-up: Fuel duty, Post Office, ECB
Retaining the fuel duty cut in the budget is a regressive policy that benefits the wealthiest in society, who will save £60 a year, while those who earn the least will save just £22, according to analysis. Jeremy Hunt is expected to announce an extension of the 5p cut in fuel duty brought in during 2022, a proposal that has won him plaudits across the rightwing press. – Guardian
The Post Office’s finance chief has been on sick leave for almost a year after clashing with its chief executive, The Telegraph can disclose. Alisdair Cameron, the chief financial officer, has been signed off work since last April and has not attended a single board meeting since then. He is still listed as sitting on the Post Office board and the company, which is taxpayer owned, refuses to reveal his interim replacement. It is alleged that chief executive Nick Read asked the Government to authorise a pay-off for Mr Cameron but that request was declined. – Telegraph
Christine Lagarde is facing growing backlash from staff at the European Central Bank (ECB) over its “one-sided” views on climate change policies. In a letter seen by The Telegraph, the ECB’s staff committee complained that remarks by a board member on the need to “reprogramme” employees failing to embrace the bank’s climate policies had an “undeniable authoritarian note”. – Telegraph
High interest rates and falling corporate real estate prices pose a serious risk to the US banking system, the International Monetary Fund has said, as it warned of the prospect of looming bank failures. On the anniversary of the collapse of Silicon Valley Bank, the IMF has rung the alarm bell over the risks of another round of bank failures triggered by the worst fall in commercial property values in half a century in the world’s largest economy. – The Times
The shipyard that built the Titanic has been named as the preferred bidder for a £120 million contract to build a new port for the Falkland Islands. Belfast-based Harland & Wolff was selected by the Islands’ government for the project. Subject to agreeing the final contract pricing and concluding commercial negotiations, work on the two-year project is expected to begin later this year. The manufacturing group will construct, transport and install four floating pontoons, measuring 90 metres each to the South Atlantic. – The Times
