The FTSE 100 enjoyed a widespread rally this morning ahead of the Budget when chancellor Rishi Sunak has promised to do ‘whatever it takes’ to support the UK economy in the wake of Covid-19.
There were just a handful of fallers on the main market, which jumped 1.2%, or 82 points, to 6,696 as markets eagerly awaited the unveiling of Sunak’s Budget plan. He is expected to extend the furlough job-support scheme until September, move the deadline for the stamp duty holiday, and introduce a mortgage guarantee that will see the return of 95% mortgages, as well as £5bn of grants to be delivered to the retail and hospitality sectors.
Robert Alster, chief investment officer at Close Brothers Asset Management, said the Budget ‘isn’t expected to have a particularly notable effect on the markets’ but businesses will be listening for ‘business rates and VAT cuts in the coming months’.
‘The question is how Sunak will balance the need for short-term support while addressing the long-term problem of the deficit,’ he said. ‘Speculation about tax rises has been rife. Specifically a reform of capital gains tax, increasing corporation tax, and potential ‘stealth’ taxes in the form of income tax band freezes.’
With reports that Sunak will give a helping hand to the hospitality and retail sectors, Premier Inn owner Whitbread (WTB) jumped to the top of the blue chips, up 4.5%, or 155p, to £35.61, while the world’s largest catering company Compass (CPG) gained 3.4% to £15.77.
Housebuilder Persimmon (PSN) added 3.2% to £27.98 after restoring its dividend to 235p after a continued improvement in profits and sales moving 7% ahead of pre-pandemic levels.
The FTSE 250 followed suit, climbing 1.1%, or 212 points, to 21,390 led higher by Micro Focus (MCRO). The software company soared 14.8%, or 65p, to 502p after signing a deal to collaborate with Amazon Web Services (AWS), the cloud-computing subsidiary of the online retailing behemoth.
Waste management company Biffa (BIFF) bounced 7% higher to 273p after raising its full-year profit expectations thanks to a better-than-expected second half.
In investment trust news, Chrysalis Investments (CHRY), which invests in fast-growing companies before they hit the UK Stock market, jumped 1.8% to 216p after estimating a 32p per share uplift on its holding in buy-now-pay-later lender Klarna following an oversubscribed $1bn funding round that valued the company at $31bn. Klarna is now the highest-valued private fintech business in Europe and second highest globally.
Gore Street Energy Storage (GSF) leaped 2.3% to 107p after the investment company participated in the National Grid’s new ‘dynamic containment services’ that pays a higher price for energy storage, and the trust has said if the trend towards this new type of battery storage continues it could provide a significant uplift in revenue.