Housebuilders, UK shale gas explorers and construction firms with large civil engineering exposure were the biggest early stockmarket winners following today's 2013 Budget from chancellor of the exchequer George Osborne.
Meanwhile, on the tax front investors welcomed news of an abolition of stamp duty from April 2014 on Aim and ISDX-quoted securities. They further cheered that savings locked in defunct Child Trust Funds, abolished by the Coalition in 2010, may soon be eligible for transfer into junior ISAs; a consultation is underway.
Osborne's new Help To Buy scheme sent Barratt Developments (BDEV) on tear, 5.2% stronger to 253p. This initiative added to the existing NewBuy and First Buy programmes designed to stimulate the housing market. Bellway (BWY) and Bovis Homes (BVS) also reacted positively, up 3% to £12.19 and 1.7% better at 683p.
That the chancellor is also consulting with the Bank of England (BoE) on extending the Funding for Lending Scheme added to the positive sentiment even if the UK economy will grow in 2013 at half the pace forecast by the Government three months ago.
GDP growth is expected to be 0.6%, revealed Osborne, although the Office for Budget Responsibility still predicts that the UK will avoid a new recession. It sees GDP growth of 1.8% in 2014 (down from 2%) and maintains its 2.3% growth forecast for 2015.
While he announced that the BoE inflation target will be kept steady at 2%, Osborne said its rate-setting body, the Monetary Policy Committee, should also take growth into account. Both sterling and gilts sold off with the former down 0.23% against the euro at €1.1695, with market expectations for future inflation clearly higher.
Shares in the quoted pub companies gave a muted response to news of changes to alcohol duty. The planned 3p rise in beer duty has been scrapped and replaced by a 1p cut in duty on a pint of beer. The beer duty escalator has also been scrapped.
But there was a better response from companies linked to the UK infrastructure market where the Government plans to spend an extra £3 billion a year from 2015/16. Costain (COST) rose 0.9% to 297.8p and Balfour Beatty (BBY) nudged up 1.2% to 262.5p. Morgan Sindall (MGNS), with a big exposure to civil engineering, got a boost, 1% higher at 547p.
Support for UK shale gas exploration gave IGas Energy (IGAS:AIM) a bump. The company owns mature fields in the East Midlands and the Weald basin and was 5.3% to the better on Osborne's backing.
By Simon Keane and Dan Coatsworth