Market report: Stock surge continues but UK Budget impact casts a shadow
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Positivity continues to pulse through the FTSE 100 at the start of the week, with the blue-chip index heading higher. After putting in the best performance in months at the end of last week, investors continue to show optimism. Trump’s pick for Treasury Secretary has swelled investor sentiment further with stocks on Wall Street looking set for another flurry of gains. Hedge fund manager Scott Bessent’s long career of navigating the twists and turns of markets, has boosted confidence about incoming pro-business policies and lifted hopes that any tariffs would be highly targeted and potentially less inflationary in nature.
The crypto industry is basking in its moment in the sun, with Bitcoin rising back above $98,000, flirting with the psychologically important $100,000 mark. Rivals, including Ether and Solana are also holding onto huge gains made since Trump came to power after having declared his determination to make the US the crypto capital of the world. The latest increases have sprung up after one of the industry’s fiercest critics, the chair of the Securities and Exchange Commission, Gary Gensler said he would step down from his position in January. Trump’s appointee for the position is expected to go lighter on rules being brought in to regulate the industry.
Warnings from the Confederation of British Industry that the UK government’s Budget will hamper economic growth haven’t held back the domestically focused FTSE 250. The speech by the Chief Executive of the CBI, Rain Newton-Smith reiterates concerns from businesses that hiring and pay growth may be curtailed given the rise in employer national insurance contributions. Her remonstration that the policy will hamper business investment and economic output is likely to hit home harder, given that kickstarting economic growth was one of Labour’s key election pledges.
This pessimism is playing out when it comes to B&Q owner Kingfisher. Shares fell sharply after the company detailed the effect of the Budget on its business. It’s a huge employer and the NIC rise will cost the group around £31 million, unless it finds ways to mitigate the increase. It’s latest sales snapshot has revealed deep caution prevalent among UK consumers in the run up to the Budget. The rumour mill churning out expectations of widespread tax rises, dented sales in October, after a stronger performance in August and September. It meant that total group sales of £3.2 billion for the three months between August and October were 1.1% lower than the same period last year, on a like-for-like basis. As a result, it’s lowered the top end of its annual profit outlook, disappointing investors. The Budget has been a set-back as sentiment among shoppers had been improving, crucially for bigger-ticket items.
There’s been a small let-up in the surge in oil prices with Brent Crude dipping below $75 a barrel. It comes after last week’s surge amid the sharp escalation in tensions between Russia, Ukraine and NATO-member countries. Traders appear to be waiting for further developments to unfold and are also keeping a keen eye trained on the situation in Iran, which has vowed to increase its nuclear fuel-making capacity. This has led to expectations that there will be further sanctions imposed on Iran’s oil exports, raising more supply issues for world markets. Demand in China is also expected to increase after it issued a higher crude oil import quota.”
