All eyes on the Chancellor’s spring budget announcement / Image Source: Adobe

Stocks in London were on the rise at the start of the afternoon, ahead of the eagerly-anticipated UK budget announcement, though eyes are also on events in the US with Federal Reserve Chair Jerome Powell speaking later and as the race for the White House hots up.

The FTSE 100 index was up 26.81 points, 0.4%, at 7,672.97. The FTSE 250 was up 148.97 points, 0.8%, at 19,420.00, and the AIM All-Share was up 1.30 points, 0.2%, at 736.19.

The Cboe UK 100 was up 0.3% at 768.07, the Cboe UK 250 was up 0.9% at 16,778.49, and the Cboe Small Companies was up 0.1% at 14,501.06.

In European equities on Wednesday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up marginally.

In the UK, focus is on Wednesday’s budget. The budget is expected to be announced around 1230 GMT.

On the back of announcing a cut to the main 12% rate of employee national insurance to 10% during the autumn statement, eyes will be on whether UK Chancellor Jeremy Hunt will unveil some more tax cuts.

The chancellor is hoping to woo voters ahead of this year’s general election, especially since the budget could be the last fiscal event before the election.

Hunt is expected to make a 2p cut to national insurance central to his budget, which he said would deliver ‘more opportunity and more prosperity’. The change could save the average worker £450 a year, adding up to £900 when combined with last year’s move.

‘To fund such measures, the chancellor will reportedly raise taxes elsewhere and assume stringent public spending increases over the forecast horizon. As the chancellor is sticking to the fiscal rules, there is unlikely to be an adverse market reaction akin to the 2022 mini-budget. Nevertheless, markets will be assessing whether any of the measures announced might boost demand and impact on BoE interest rate decisions,’ said analysts at Lloyds.

A possible British ISA is among the moves by Hunt that are being speculated, AJ Bell analyst Russ Mould noted.

‘Has the prospect of a British ISA fired up the UK stock market? Speculation is rife that Chancellor Jeremy Hunt will unveil plans at the budget to encourage more people to invest in UK stocks. In theory, that could provide a tailwind for UK equities if a significant number of investors invest extra money in UK stocks, pushing up prices. This is all theoretical and there is no guarantee it will play out in this way if the British ISA goes ahead,’ Mould added.

Across the Atlantic, focus will be on monetary policy and political developments.

On Wednesday and Thursday, Federal Reserve Chair Powell will head to Capitol Hill for his semi-annual testimony before Congress.

Powell’s testimony comes in a week which sees a number of data releases on the US labour market, culminating in the US jobs report on Friday.

On the political front, Nikki Haley will suspend her US presidential campaign after being soundly defeated across the country in a series of primary elections on Super Tuesday, sources said, AP reported.

The move leaves former president Donald Trump as the last remaining major candidate for the 2024 Republican nomination.

Trump had earlier celebrated an ‘amazing night’ as he closed in on the Republican presidential nomination with big wins in the Super Tuesday primaries, setting up an all-but-certain rematch with President Joe Biden in November.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.8%.

The Bank of Canada announces its latest interest rate decision at 1445 GMT. The bank is expected to keep rates on hold.

After that, the European Central Bank will release its own interest rate decision on Thursday at 1315 GMT. The Frankfurt-based is also expected to keep rates on hold, with eyes on whether it offers any clues on when it will be ready to cut rates.

Barclays analysts said: ‘In the press conference, we expect President Lagarde will communicate that the debate about the timing of rate cuts and policy normalisation has started. Beyond recognizing progress in the disinflationary process, the conference message will echo the January meeting accounts one, signalling ’that continuity, caution and patience are still needed’ in order to become sufficiently confident that inflation will reach the target in a sustainable manner.’

The pound was quoted at $1.2723 at midday on Wednesday in London, up ever-so-slightly to $1.2721 at the equities close on Tuesday. The euro stood at $1.0877, higher against $1.0866. Against the yen, the dollar was trading at JP¥149.73, down compared to JP¥150.12.

Back in London, ConvaTec rose 7.0% to the top of the FTSE 100 index on Wednesday.

The Reading, England-based medical products and technology company said its pretax profit more than doubled to $167.4 million in 2023, from $81.9 million the prior year.

ConvaTec also said revenue increased 3.4% to $2.14 billion from $2.07 billion, while organic revenue growth accelerated to 7.2%, ‘broad-based across all four chronic care categories’.

ConvaTec has recommended a final dividend of 4.460 cents per share, up from 4.330 cents the previous year. This would bring the full-year total dividend up to 6.229 cents from 6.047 cents.

In the FTSE 250, Premier Foods jumped 12%, after it struck a deal to suspend pension deficit payments sooner than expected.

The St Albans, Hertfordshire-based food manufacturer, which creates products for various brands including Ambrosia, Bisto, Mr Kipling and Oxo, said it had reached agreement with the RHM Pension Scheme Trustee to suspend pension deficit contribution payments from April 1.

The suspension of future contributions is taking place earlier than originally expected, reflecting the strong performance of the pension scheme, the company said.

As a result, Premier Foods said it would benefit from £33 million increased free cash flow for the financial year ending March 29, 2025.

Holiday operator Tui rose by 6.6%.

Investment bank Morgan Stanley upgraded Tui to ’overweight’ from ’equal weight.’

Morgan Stanly said that Tui shares could treble, assuming a return to pre-Covid margins and pre-Covid valuation multiple.

Amongst London’s small-caps, Digital 9 surged 24%.

The investor focused on ‘critical digital infrastructure assets’ said it has received merger control approval in Iceland for the completion of the Verne transaction. On Tuesday, Digital 9 had received approval in Finland.

Back in November, Digital 9 announced the sale of its stake in the Verne Group for up to $575 million to funds managed by Ardian France SA, a Paris-based investment and asset management firm.

Brent oil was quoted at $82.50 a barrel at midday in London on Wednesday, down from $82.69 late Tuesday. Gold was quoted at $2,126.77 an ounce, up slightly against $2,125.97.

Still to come on Wednesday is the latest ADP US jobs report at 1315 GMT, a precursor to Friday’s nonfarms.

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Issue Date: 06 Mar 2024