FTSE 100 Live: Budget and bubbles continue to set agenda
Good morning and welcome back to the CityAM liveblog.
We are now just over a week out from the Labour government’s second Budget and last week rogue Westminster briefings sent ripples through markets.
After continuous weeks and media outings teasing a manifesto-breaking income tax hike, the government rowed back with several reports pointing to the proposal been kicked to the curb.
A combination of political pushback and a better-than-expected forecast from the fiscal watchdog were cited as the top reasons, but some economists failed to be sold on the latter.
Whilst signs are now pointing to a £20bn black hole as opposed to the previous £30bn to £40bn, it’s still a hefty sum that many have warned the Chancellor still may require a large blanket tax rise to cover.
The unease sent shivers through 10-year gilt yields, which climbed by 13 basis points at the start of trading to 4.57 per cent – the biggest jump since July when traders were panicked at the sight of Rachel Reeves teary in the House of Commons.
Meanwhile, the FTSE 100 fell 1.11 per cent to 9,698.37p dismissing hopes that it may cross that magic 10,000 mark.
Now, the fall of the blue-chip index wasn’t all pinned on Budget jitters, even as Lloyds – which is often seen as an informal barometer for the UK economy due to its domestic focus – fell 2.7 per cent.
It came after fears of an AI bubble rumbled on with steep losses in tech giants on Wall Street.
Richard Hunter, head of markets at Interactive Investor, said the “bruising session” indicated “the investor narrative is changing”.
Here are a few of our top stories from the last few days:
- LLP U-turn: Law Society demands ‘absolute clarity’ plan is off the table
- Exclusive: Industry chiefs warn Reeves not to hit business after income tax U-turn
- High Court finds BHP liable for Brazil’s worst environmental disaster
- Lloyds and Natwest shares fall in ‘perfect combination’ of fears
- Redbird pulls out of deal for The Telegraph