The UK budget had a surprisingly limited impact on FTSE indices today. However, there were a number of announcements that moved individual stocks. The FTSE 100 index moved down just a bit, by 0.3%. The FTSE 250 index was up 0.1%, but there was something notable about it.
A day for FTSE 250 stocks
First, the FTSE 250 stayed above 23,000 for the second consecutive day today. It had remained below these levels for all of October. The UK budget certainly did nothing to depress investor mood. In fact, if anything, it probably ensured that it stays buoyant.
The FTSE 250 index is a better representative of the UK economy than the FTSE 100. This is because more of its constituent companies cater to the UK market. The FTSE 100 index has a number of big multinationals whose share prices get impacted by a host of factors outside the UK.
Pub stocks rally after budget
It is little surprise that after today’s budget some of the biggest FTSE 250 gainers were the pub stocks Mitchells & Butlers and JD Wetherspoon. They saw price increases of 5.7% and 5.3%, respectively. This was likely driven by the announced cut in alcohol duties. These will apply to some wines and ciders that have relatively low alcohol content. This is much-needed good news for these stocks. They have been reeling under a bunch of challenges, including closures during lockdowns, the return of value added taxes, and labour shortages.
Boost to transport
The FTSE 250 transport operator FirstGroup, one of whose subsidiaries is Great Western Railway, was another big gainer today. Its stock price was up 4.5% as the budget announced additional funding for transport. Some £46bn is now slated to be spent on railways and an integrated rail plan will also be announced soon that is expected to reduce journey times across the country. Much like pubs, the transport sector has been one of the most impacted during the pandemic and any encouragement for it is indeed good news.
FTSE 100 property developers rise
Among FTSE 100 stocks, the biggest rally was seen among property stocks. Taylor Wimpey rose most by 2.7%. Persimmon, Barratt Developments, and Berkeley Group Holdings were also among the gainers, with a rise of over 1% in each of their share prices at today’s close. This budget said brownfield lands would be used for investments in new homes and more would be spent on the Affordable Homes Programme as well. Also, interestingly, there was no talk of higher taxes on the sector, which might well have been the case considering that house prices have been on a tear in the UK.
Utilities make gains
Another set of FTSE 100 gainers included utilities like SSE, National Grid, and United Utilities. The biggest gains were seen for SSE, which is also a big renewable energy company in the UK. The budget did make references to bigger investments in the greening of the economy.