Yesterday's trading: FTSE flies in the face of Budget
Flabbergasted was the only word to describe how dealers felt after the Footsie flew back above 4,000 to close 43.2 points up at 4,030.66 despite a shocking Budget which confirmed that the UK is in deep financial crisis.
Geoff Foster: Traders were shocked.
Confirmation that government borrowings will soar to a record £175bn this year with debt rising to 79% of gross domestic product in 2013-14, as the economy shrinks at its fastest pace since the Second World War, did cause an initial relapse. But shares soon recovered their composure. The FTSE 250 soared 172.71 points to 7,159.96.
London was helped to some extent by a resilient Wall Street which replaced a 74 point fall with a 75 point gain despite hearing that Morgan Stanley had incurred a larger than expected loss in the first-quarter.
Meanwhile, the gilts market was in complete disarray, sustaining falls of around a point in places after the government announced a record £220bn of issuance this year, some £40bn higher than expected.
Insurers and fund managers retreated after confirmation of plans to curb pensions relief. Friends Provident slipped 2.8p to 60.8p, Prudential eased 5½p to 357¾p and Schroders shed 18p to 817p.
Pub companies heaved a sigh of relief that the added duty on alcohol was no more than 2%, or the equivalent of 1p on a pint, 13p on a short and 4p on a bottle of wine. Mitchells & Butlers frothed up 12p to 2681/4p, Enterprise Inns 13½p to 120¾p, Whitbread 6p to 844½p and Punch Taverns 2p to 95½p.
The 2% rise in tobacco duty from 6pm last night left British American Tobacco 11p better at 1584p but Imperial Tobacco 17p off at 1490p.
Nautical Petroleum gushed 7¼p to 46½p on the proposals to introduce allowances for North Sea oil operators.
Hopes that the government's car scrapping plan will provide a welcome boost to new car sales helped motor dealer Inchcape accelerate 3p to 18¼p. Blackrock now holds 5.4% of Inchcape.
Pleased that the stamp duty 'holiday' on properties up to £175,000 had been extended until the end of the year and delighted with the £500m of fresh government support for new housing projects, housebuilders erected good gains. Barratt Developments rose 13.2p to 162¾p and Redrow 3½p to 195p.
Away from the budget, Barclays jumped 19p to 218p after Qatar Holdings, its biggest shareholder, sold 35m shares reducing its stake in the bank to 5.8% from just over 6%. The sale comes ahead of today's AGM at which chairman Marcus Agius is expected to take some flak about its capital raising from Middle Eastern investors.
Lloyds Banking Group advanced 5½p to 100½p after UBS said it is one of the few European banks that can say with certainty they are fully recapitalised. Its target price is 120p.
Fund managers went shopping for retailers following upbeat comments from Citigroup. The broker told clients that for the first time in two years, the sector's earnings could actually rise. Next jumped 98p to 1435p as it upgraded the stock to buy from hold, while Marks & Spencer rose 17¾p to 329¼p.Comet owner Kingfisher added 12.1p at 174.8p.
Department store Debenhams gained 5½p to 63½p ahead of today's interim results. Analysts reckon a fund raising to pay down debt could be on the cards. Sports Direct jumped 7¾p to 69p in anticipation of a reassuring pre-close trading update today.
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Struggling broadcaster ITV sprang to life, rising 3¼p to 32p amid vague rumours of a possible bid from Italy's biggest private broadcaster, Mediaset. Owned by the family of Italian prime minister Silvio Berlusconi, Mediaset is on the acquisition trail but yesterday said it did not see any opportunities arise in the short-term.
Well above average turnover of 858,000 shares in restaurant group Carluccio's was prompted by growing speculation that Richard Caring, owner of media restaurants the Ivy, J Sheekey and Le Caprice, is lining up a cash offer. The shares put on 5p more to 77½p which compares with the year's high of 151½p.
Gresham Computing, the specialist provider of financial and storage solutions, put on 6½p to 48½p. KBC Peel Hunt advised clients to buy on the annual results which showed a return to profitability for the full year. It has also recently won a landmark contract with a global banking group which is expected to have a material impact on future performance.
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