FTSE 100 up up 8 at 7,419
Sterling boosted by new Brexit pledge
House-builders dented; estate agents celebrate
Close: FTSE 100 finishes in positive territory despite house-builders sell-off
The FTSE 100 finished little changed on Budget Day, which is not to say that the chancellor's speech did not have an impact.
A previous Conservative finance minister once gave the house-builders a massive leg-up in the form of the “Help to Buy” initiative, quickly dubbed the “Help to Sell” system as the law of unintended consequences saw to it that house prices simply adjusted upwards to reflect easier access to borrowed money; the current occupant of the job, on the other hand, pledged to investigate so-called ‘land-bank’ practices, where house-building projects are delayed in an attempt to drive up house prices.
“Spreadsheet Phil” had his own crack at trying to give first-time buyers a fighting chance of getting on the housing ladder by abolishing stamp duty for first time buyers on properties on homes priced at up to £300,000.
Great news for first time purchasers in the provinces, but an analysis of Zoopla data by HouseSimple indicated only 5.3% of properties on the market in London are currently priced at less than £300,000.
Despite the likes of Barratt Developments (-3.7%), Berkeley Group (-2.6%) and Persimmon (-1.9%) taking a biffo, the FTSE 100 finished the day in positive territory, up 8 at 7,419.
Do-it-yourself retailer Kingfisher PLC (LON:KGF) was the best performing blue-chip performer, rising 3.6% on hopes the chancellor's incentives will ginger up the housing market.
Lloyds Banking Group PLC (LON:LLOY), which owns the nation's biggest mortgage provider, Halifax, saw heavy trading activity, with twice as many shares changing hands as the next most widely-traded stock.
Lloyds finished the day up 0.3%.
2:30pm: FTSE 100 holds onto gains, Pound rallies despite growth downgrade and new £3bn Brexit pledge
As city analysts and commentators prepare to deep-dive into the budget, in order to find the devilish details and figure out what any of it really means, the FTSE 100 held on to most of its earlier gains.
The blue-chip benchmark was up 36 points, 0.5%, changing hands at 7,448.
Housebuilder Barratt Development Plc (LON:BDEV) looked to be the biggest budget casualty within the top-100 companies, losing 2.68% to 616.86p.
After taking an initial hit, on the sharp downgrade to growth forecasts, the British Pound later rallied because, as City Index analyst Kathleen Brooks explains, Philip Hammond comes out of the speech intact.
“The pound has now made fresh highs on the day post the Hammond speech. The reason for this could be relief at his generally good performance and overall weakness in the opposition response from Jeremy Corbyn.
“… the chancellor’s job was on the line as Brexiteers were circling to get their hands on the Treasury.
“Overall, he did a good job and managed to pull a couple of rabbits out of his hat … This could keep the Brexiteers at bay in the short-term, and Theresa May’s cabinet may stay as it is for another week at least.”
The analyst added: “The Chancellor ticked most of the boxes: more money for the NHS, no booze duty part from some ciders, plans for wage rises for nurses, an increase to the minimum wage of an inflation-busting 4.4%, investment in technology and driverless cars and measures to tax older diesel vehicles.
“However, the set piece of this Budget was always going to be extending home ownership, the £44bn package over 5-years was much larger than expected and has boosted the FTSE 100, however the actual homebuilders, Barratt and Persimmon are lower after the Budget.”
1:55pm: Estate agents rise on surprise stamp-duty boost
Hammond has announced he is removing stamp duty for first time buyers on properties on homes priced at up to £300,000.
People buying a home worth up to £500,000 will not have to pay stamp duty on the first £300,000.
It was good news for estate agents with Countrywise Plc (LON:CWD) up 3.38% to 114.75p and Foxtons Group Plc (LON:FOXT) rising 2.95% to 69.75p.
Shares in Rightmove Plc (LON:RMV) were relatively flat, up 0.15% to 4,028p.
Alex Gosling, chief executive of online estate agent HouseSimple, said: "Most people were expecting the threshold to be raised to £250,000 so an extra £50,000 will come as a surprise to many. And no-one expected the additional freeze for areas with higher priced houses.
“That will defintely be welcomed by first-time buyers in the south.”
Gosling, however, added: “Many will feel the Chancellor should have gone further and abolished stamp duty altogether. It's an archaic tax that hurts the people who need help the most, and is nothing more than an easy way for the Treasury to fill its boots."
1:50pm: Housebuilders drop as landbank review creates new uncertainty
To tackle the housing crisis, Hammond has announced £44bn for capital, loans and grant to support housebuilding.
He said by the mid-2020s there should be 300,000 homes being built every year - the highest level since the 1970s.
The government plans to build homes in high-demand areas and around transport hubs.
Hammond also revealed the launch of a review into so-called ‘landbank’ practices to investigate why sites with granted planning aren’t developed quickly enough, threatening possible intervention where projects are held for commercial reasons.
London listed housebuilders were falling with Barratt Developments Plc (LON:BDEV), down 3% to 614.5p, showing the sharpest decline.
Persimmon Plc (LON:PSN) was down 2.3% at 2,614, Bellway Plc (LON:BWY) and Taylor Wimpey Plc (LON:TW. were both just shy of 1.5% lower. Redrow plc (LON:RDW) shed 0.67% to 591p, and Bovis Homes Group Plc (LON:BVS) edged down 0.44% to change hands at 1,126p.
1:35pm Air passenger duties frozen, EasyJet and IAG trading positively
The government will also again freeze short-haul air passenger duty, and long-haul APD for economy passengers. An increase on taxes for private jets will fund this measure.
British Airways owner International Consolidated Airlns Grp SA (LON:IAG) shares were up 0.5% at 608.5p.
easyJet Plc (LON:EZJ) shares rose 2.38% to 1,375p, whereas Flybe Group Plc (LON:FLYB) and Ryanair Holdings Plc (LON:RYA) were both lower, down 2% and 1.3% respectively.
1:30pm: Pub stocks mixed as booze duties frozen
In a welcome break for the hospitality industry and its consumers- duty on beer, wine, cider and spirits to be frozen.
Among the pub operators EI Group Plc (LON:EIG) led the way, rising over 2% to trade at 141p each, followed by Marston’s plc (LON:MARS), J D Wetherspoon Plc (LON:JDW), and Greene King Plc (LON:GNK) which were also in positive territory.
Young & Co.'s Brewery Plc (LON:YNGA), however, dropped nearly 3% to 1,310p and Mitchells & Butlers Plc (LON:MAB) was 0.5% lower at 260.7p.
1:25pm: London listed oil companies to benefit as tax history will become transferable
A proposal to make tax history transferrable could be a catalyst to industry consolidation and takeover activity in the North Sea – many years of accrued tax losses are now arguably at least as attractive as the remaining oil asset values for some offshore operations.
Hammond said it is "an innovative tax policy that will encourage new entrants to bring fresh investment to a basin that still holds up to 20 billion barrels of oil".
The move, lobbied for by the Oil & Gas UK industry group, may soften the decommissioning costs for older fields, and could be particularly significant for London’s listed mid-cap and junior offshore oil companies that aim to squeeze as much oil as possible from the mature North Sea basin.
“Decommissioning is a significant factor when deciding whether to invest in the North Sea and the ability to transfer tax history for oil and gas fields is a welcome first step to help to address this concern,” said Andrew Benitz, chief executive of Jersey Oil & Gas – an AIM quoted group with plans to acquire producing mature North Sea assets.
“There is plenty of life left in the North Sea yet."
1:00pm: FTSE 100 continues to strengthen, pound falling on downgrade to OBR growth estimates
Statistics provided by the Office for Budget Responsibility (OBR) confirmed that the government is on track to meet its fiscal targets, borrowing falling to £49.9bn this year, down £8.4bn from its forecast at the Spring Budget, before shrinking to £39.5bn next year.
Hammond said it will fall to its lowest level in 20 years by 2022/23.
But, the OBR also cut its forecasts for GDP. It expects GDP growth of 1.5% in 2017,1.4% in 2018 and 1.3% in 2019. However, it sees 600,000 more people in work by 2020.
Seemingly the market continues to have a tentatively positive response to the ongoing speech, with the FTSE 100 up 45 points or 0.6% at 7,456.
#FTSE near highs of day as Chancellor #Hammond announces #Budget2017, weighing on £. No major industry-specific measures yet though ^KO
— City Index (@CityIndex) November 22, 2017
At the same time, the pound dropped to its lowest level of the day following the OBR numbers.
12:45pm: FTSE 100 rising as Hammond kick off budget with £3bn pledge for Brexit preparations
The FTSE 100 stood in positive territory as Philip Hammond kicked off his budget speech with a £3bn pledge to invest in Brexit preparations – the government has already set aside £700mln he said.
Hammond’s opening remarks then turned to commentate on the ‘technological revolution’ that he claims Britain is at the forefront of.
At 12:45pm, the FTSE 100 was up 37 points or 0.5% at 7,448.
11:30am: Sterling could take a pounding if budget goes badly - analyst
“If, as we expect, ‘Fiscal Phil’ sticks to the deficit reduction plans and doesn’t boost overall debt levels to try and lift growth then it is hard to see how this Budget can be good news for the pound,” City analyst Kathleen Brooks said in a budget preview note.
“Sterling may struggle to break above the 1.3350 level – the top of GBP/USD’s recent range – if the Chancellor does not deliver a pro-growth budget.
She added: “Watch out for buy the rumour, sell the fact for sterling later today.”
“The pound has rallied into this Budget and is up 0.5% so far this week, but things could turn sour later today.”
Brooks also highlighted the potential for broader Brexit-related uncertainties should the budget speech go badly.
“Make no mistake, the biggest market-moving event from this Budget could be Hammond’s own performance,” the analyst explained.
“Brexiteers are circling for his job, and this Budget is the battlefield for mounting Brexit tensions within the cabinet. If the Chancellor bombs then the knives will be out.
“If May is forced to sack her Chancellor in the aftermath of this Budget then this could be a big negative for the pound.
“Just last week the pound dropped 1.5% on rumours (unsubstantiated) in the Sunday Times that the Tory party were getting ready to oust May.
“If Hammond is forced out then May could find herself one step closer to the exit, which is likely to reinforce the political premium weighting on the pound.”
11:15am: FTSE 100 trading positively as City awaits Philip Hammond’s budget speech
The City of London is in reasonable spirit with just over half an hour to go until Philip Hammond starts his budget address.
Changing hands at 7,434 the FTSE 100 was up 23 points or 0.32%.
11:00am: Stocks to watch when Hammond delivers budget speech
Britain’s ‘broken’ housing market will no doubt be on the agenda, and will be closely watched by investors in London’s listed housebuilders.
Hammond previously targeted a building rate of 300,000 new homes per year, and it is expected that a new housing packing will speak to initiatives making access to public lands as well as support regional funding.
But, ‘greenbelt’ planning reform is expected to remain off limits.
Some £10bn was pledged to the ‘Help to buy’ scheme, which helps first time buyers secure deposits, during the recent Conservative Party conference so more commentary could come in that regard, similarly there may be talks of stamp duty concessions for first time buyers too.
Fuel and oil
Analysts see potential for an increase in fuel duty, as the cost of another freeze (it has been static for seven years now) would cost the Treasury about £750mln annually.
The expectation, however, is that the change may be for diesel only, presenting a compromise that would frame the choice more in environmental rather than economic terms.
BP Plc (LON:BO) and Royal Dutch Shell Plc (LON:RDSB) both moved higher on Wednesday morning, though that’s to do with oil market fluctuations not the duties on UK forecourts.
North Sea and onshore shale
As the budget coincides with a new offshore licensing round, there may well be some commentary around the taxation of the remaining North Sea oil assets – albeit, a number of reform initiatives and consultations have been bandied about for quite some time now.
From a stock market perspective the ones to watch will be the likes of EnQuest Energy (LON:ENQ), Premier Oil PLC (LON:PMO) and Cairn Energy PLC (LON:CNE) and, of course, the smaller companies on AIM such as Faroe Petroleum plc (LON:FPM), Independent Oil & Gas PLC (LON:IOG), Jersey Oil & Gas Plc (LON:JOG).
Sin stocks
Tobacco and alcohol duties predicted to increase in line with inflation – or at least at the nominal rate of 2%.
Cigarette firms Imperial Brands Plc (LON:IMB) and British American Tobacco plc (LON:BATS) were moving in opposite directions with the former up nearly 1% and the latter down by a similar margin, though it must be said that the UK now contributes only a small proportion of business for the big multinational earners.
A quick scan of the pub sector similarly provide little in the way of clues. Whilst Ei Group Plc (LON:EIG) (formerly Enterprise Inns) was a notable riser, gaining 2.3% to 141.25p, the rest of the sector was a mixed bag.
Marston's PLC (LON:MARS) and Greene King Plc (LON:GNK) both moved positively , up 0.3% and 0.5% respectively, while, Mitchells & Butlers Plc (LON:MAB) and Young & Co.'s Brewery Plc (LON:YNGA) were 0.8% and 0.2% lower.
J D Wetherspoon Plc (LON:JDW) shares were dead flat, though there the thinking may be distracted thing about what Hammond might say about Brexit rather than any changes to the taxes on beer.
10:30am: FTSE 100 up 20 points at mid-morning
The FTSE 100 held around 20 points higher by mid-morning on Wednesday, changing hands at 7,430.
London’s big-cap commodity stocks edged higher on the improved oil and metal prices.
Royal Dutch Shell Plc (LON:RDSB) moved up 0.6% to trade at 2,390p, while BP Plc (LON:BP) similarly rose 0.6% to 497.25p.
BHP Billiton plc (LON:BLT) added 0.47% to 1,391p, Rio Tinto Plc (LON:RIO) gained 0.2% to 3,580p while Glencore Plc (LON:GLEN) nudged up 0.3% to 363.4p. Antofagasta Plc (LON:ANTO) rose 0.26% to 967.5p, but, Anglo American Plc (LON:AAL) was the outlier, losing nearly 1% to 1,443.5p.
Banking stocks marked time ahead of the budget, though Lloyds Banking Group Plc (LON:LLOY) notably moved up 0.5% to just over 66p per share. Barclays Plc (LON:BARC) was up 0.3% to 189.75pm while Royal Bank of Scotland Plc (LON:RBS) was flat.
Worries over margins have dampened Thomas Cook Group Plc’s (LON:TCG) parade, with the travel agent’s shares losing 10% in Wednesday’s early deals – despite higher revenue and profit, and reports that demand was picking up again for key destinations like Turkey and Egypt.
“Cut-throat competition, especially for Spanish holidays, has depressed profit margins and conditions are challenging in the group’s UK division,” said Russ Mould, investment director at stockbroker AJ Bell.
Speaking of stockbrokers, Charles Stanley Group Plc (LON:CAY) shares lost around 5% this morning after its interim results were released. Superficially, it looked like a good period – pre-tax profit up 53% to £6.9mln and core business revenue up 9.8% to £74mln, nonetheless it also cautioned over regulatory changes which are driving up IT costs and resulting in lower commissions from clients.
8.15am: Positive start
Philip Hammond’s looming budget speech is proving to be a distraction for investors in London, where the FTSE 100 has effectively started flat.
In opening deals the London benchmark was up about 15 points, 0.2%, changing hands at 7,426.
The City’s low-key start comes despite improving commodity prices - oil and metal prices are higher – and rallying global equity markets which saw the major US and Asian benchmarks notably higher.
Crude oil was up more than a 1% rise, with WTI up to US$57.75 per barrel and Brent exchanging above US$63.
In stock specific news, GlaxoSmithKline PLC’s (LON:GSK) Juluca HIV drug has been approved by the US Food and Drugs Administration.
Thomas Cook PLC (LON:TCG) reported better revenue and profits, although it flagging challenging conditions for its UK and Spain businesses, which dragged back its shares.
United Utilities PLC (LON:UU. gave the sort of reassuringly unremarkable results that defensive utility stock investors look for.
Property developer Hammerson PLC (LON:HMSO) is to bank €291mln from the sale of 64.5% of the Place des Halles shopping centre in Strasbourg.
Proactive news headlines:
MySQUAR Limited (LON:MYSQ) has announced that, as of 31 October 2017, the total number of registered users across all its apps and games exceeded 20mln, up from the figure of 7.5mln as at 12 January 2017.
Bulk-email specialist Dotdigital Group plc (LON:DOTD) has taken a big step towards becoming the go-to “omni-channel marketing automation platform” after snapping up customer engagement group Comapi for £11mln.
PowerHouse Energy Group PLC (LON:PHE) has finished the first stage of the design of a scalable commercial UK waste-to-hydrogen system. The pre-Front end Engineering and Design (FEED) incorporates Powerhouse’s DMG technology to convert syngas produced from industrial waste into road-fuel-quality hydrogen for use in gas-powered vehicles.
Secure payments specialist Eckoh PLC (LON:ECK) swung to a first half profit as growth in its US operations boosted revenue. The company posted profit before tax of £1.5mln for six months to 30 September, compared to a loss of £0.2mln the same period a year ago.
BATM Advanced Communications Limited (LON:BVC) has announced that its Telco Systems unit, has established partnerships with a number of leading telecoms organisations offering joint solutions for network virtualisation which the firm estimates has a sales value to it of US$200m over the next few years.
Gfinity Plc (LON:GFIN) saw revenues soar last year – a “pivotal” period which saw the esports group launch its first online gaming series and partner with several big-name video game franchises. In the 12 months ended 30 June revenues rose 64% to £2.37mln (2016: £1.45mln), which Gfinity said was primarily driven by tie-ups with the likes of Microsoft and Activision Blizzard.
Shares in Midatech Pharma Plc (LON:MTPH) edged higher on Wednesday after the specialty pharma received another manufacturing certification from Spanish regulatory authorities for its facility in Bilbao. Big Pic in September.
Newly-listed app distribution group appScatter Group PLC (LON:APPS) gone live with its platform for developers and publishers as scheduled. Some 10,000 businesses and individuals that registered their interest in the platform on the company's website, www.appscatter.com, prior to launch.
The chairman of Base Resources Limited (LON:BSE) (LON:ASX) believes the miner is “in a robust position and is well-placed to take advantage of an improving commodity market with sound long-term fundamentals.”
Orosur Mining Inc (LON:OMI) has flagged that some 2,000 ounces of gold production is expected to be deferred from the San Gregorio mine’s second quarter. It comes as a result of extended downtime, specifically two offline drill rigs used in stope production.
Ferrum Crescent Ltd (LON:FCR) told investors it has landed a three month extension to the exploration term at the Toral lead-zinc project, in Spain. The company will now have until November 2020 to complete its obligations under the current exploration licence.
Savannah Resources Plc (LON:SAV) has revealed what it describes as encouraging drilling results from the Mina do Barroso lithium project, in Portugal. The drill campaign is intended to provide the basis to a JORC compliant mineral resource estimate and work so far has unearthed significant intersections of lithium mineralisation.
Harvest Minerals Limited (LON:HMI) has received more data indicating its natural fertiliser KPfertil can perform better than traditional soil treatments. Leach tests indicated much more potassium reached the plants using KPfertil with only 0.07% of the potassium washed away compared to 20.8% from potassium chloride (KCl), 19.2% from potassium sulphate (K2SO4) and 21% from potassium nitrate (KNO3).
Rambler Metals and Mining PLC (LON:RMM) (TSXV: RAB) has announced the appointment of Scott Britton as the company's new general manager at the Ming Copper-Gold Mine in Baie Verte, Newfoundland and Labrador, Canada.
Feedback plc (LON:FDBK), the specialist medical imaging technology company, has announced that Dr Balaji Ganeshan will be presenting at the 103rd Scientific Assembly and Annual Meeting of the Radiological Society of North America taking place from 26 November to 1 December 2017 in Chicago, USA.
6:50am: FTSE 100 seen higher but quiet ahead of Philip Hammond’s Autumn budget
London’s FTSE 100 is expected to start Wednesday, although only slightly, but, trading is likely to be light – at least until chancellor Philip Hammond turns up with his red briefcase.
When Hammond unveils the Autumn Budget he will be under pressure to ease up on austerity at a time of heightened economic uncertainty following the Brexit vote.
Hammond has vowed to achieve a budget deficit of less than 2% of gross domestic product (GDP) by 2020, from 2.6% for 2016/17. But he may need to abandon this target if he wants to increase spending on public services after some politicians blamed austerity for the Conservatives losing their majority in a snap general election in June.
The Office for National Statistics (ONS) on Wednesday revealed the deficit grew by 7% year-on-year to £8bn in October, more than the market forecast of £7.5bn, as higher inflation pushed up interest payments on index-linked gilts.
However, the deficit for the current financial year from April to October reached its lowest level in a decade, falling £4.1bn to £38.5bn.
The Office for Budget Responsibility had forecast public borrowing would come in at £58.3bn in the March Budget but is expected to revise up the shortfall after downgrading UK productivity growth estimates.
Elsewhere, equity markets have been positive if not spectacular.
Wall Street benchmarks closed Wednesday higher – the Dow Jones rose 160 points or 0.69% to finish at 23,590.
The S&P 500 added 0.65% to close at 2,599 while the Nasdaq performed best, gaining just over 1% to end the session at 6,862.
In Asia, Japan’s Nikkei climbed 106 points or 0.48% to 22,523, while Hong Kong’s Hang Seng notched up 175 points or 0.58% to 29,989. The Shanghai Composite, meanwhile, rose 0.3% to 3,421.
Australia’s ASX 200 advanced 0.38% to trade at 5,986.
Here in the UK, CFD and spreadbetting group IG Markets sees the FTSE 100 in positive territory, up about 8 points just over an hour before Wednesday’s open, calling the benchmark at 7,416 to 7,420.
Significant events expected on Wednesday November 22:
Finals: Cambria Automobiles (LON:CMAB), Countryside Properties (LON:CSP), Euromoney Instiutional investor (LON:ERM), Sage Group (LON:SGE), SSP Group (LON:SSPG)
Interims: Accsys Technologies (LON:AXS), Biffa (LON:BIFF), Charles Stanley Group (LON: CAY), Creightons (LON:CRL), Eckoh (LON:ECK), New River REIT (LON:NRR), Quiz (LON:QUIZ), United Utilities Group (LON:UU.)
Economic events: UK Autumn Budget
Around the markets (at 9.50am):
- Sterling: US$1.3252, up 0.1%
- Gold: US$1,284.70 an ounce, up 0.3%
- Brent crude: US$57.77 a barrel, up 1.6%
City Headlines:
- Uber says it covered up cyberattack on 57m users - The Times
- Uber paid hackers to cover up massive data breach - Reuters
- UK budget deficit widened unexpectedly, but factory orders rise - The Guardian
- Wage growth is coming back, say Bank of England chiefs – Telegraph
- The London Stock Exchange cannot bear too much transparency - Financial Times
- Hinkley Point C subsidy has dealt consumers 'a bad hand', say MPs - The Guardian