FTSE enjoys budgetary boost

Oil producers drag the FTSE higher having for once enjoyed the chancellor’s budget speech.

Chancellor George Osborne

FTSE traders spent much of the morning pondering what the chancellor George Osborne would announce during his eighth budget today. As is always the case, there were several surprises the markets had not been anticipating.

The much anticipated increase to the fuel charge has been postponed for a sixth year, while at the same time Mr Osborne has slashed the taxation to companies exposed to the North Sea oil industry. Both the largest oil companies, BP and Shell, benefited as well as the likes of John Wood Group – bouncing by more than 4% at one point in time.

The new tax on sugary drinks was also not on the radar, and due to this surprise the likes of AG Barr and Britvic saw their shares thumped on its announcement. Somewhat harshly, Tate & Lyle initially saw its shares suffer, only for the collective investment market to belatedly remember they sold off its sugar business back in 2009.

Sterling struggled following the downgrade to the UK’s growth forecasts for the next five years, and as such this has seen EUR/GBP head higher to retest those late February highs. In contrast, GBP/USD has not moved too far as it waits to see what developments happen in the US later tonight.

Once the flurry of excitement over the budget had died down, the markets shifted their focus over to the US in anticipation of what Federal Reserve chair Janet Yellen might say. The implied probability of a rate rise in March is only 4% but that increases to 54% for a rate rise in June. The comments that are attached to this latest FOMC statement will go a long way to shaping the FX markets perceived value of the dollar in the coming weeks.

Oil prices have again found a little bit of traction as US light and Brent crude straddle the $40 level, the catalyst for this move being the expectations the OPEC nations will meet again next month. This could be a bit of a false dawn as Iran is not due to join this meeting and has stated it aims to continue increasing its oil output.

FTSE risers and fallers

Company % change Index points
Royal Dutch Shell A +3.05 +8.29
Royal Dutch Shell B +3.16 +7.69
BP +2.98 +7.25
HSBC Holdings +0.99 +3.42
Glencore +2.91 +1.86

 

Company % change Index points
Shire -3.05 -2.64
TUI AG -5.98 -1.14
AstraZeneca -0.55 -1.09
BT Group -0.55 -0.82
Unilever -0.54 -0.81

The day ahead

Economic data:

12.30am – Australia employment data (February): unemployment rate forecast to fall to 5.9%, while the number of jobs rises by 33,000.

10am – eurozone trade balance (January), CPI (February): trade surplus to drop to €22.5 billion, while the inflation rate drops to -0.2% YoY from 0.3%. Core inflation is expected to be 0.7%, also down from January, when it was 1%.

12pm – Bank of England monetary policy decision: as with the Fed, no policy changes are likely, but with the BoE looking increasingly dovish there is the possibility we may get more talk of interest rate cuts rather than increases.

11.50pm – BoJ meeting minutes: these will be interesting to see if there was fresh discussion of more easing measures.

Corporate reporting:

Full year earnings: Ted Baker, Premier Farnell, EnQuest, Deutsche Lufthansa AG

Half/Quarterly earnings: Kier Group, Adobe Systems Inc

FTSE ex-dividend dates (17 March):

FTSE 100: Randgold Resources LtdHammersonBritish American Tobacco

FTSE 250: Millennium & Copthorne HotelsEssentraLondonmetric PropertyAlliance TrustClose Brothers GroupGrafton GroupAssura Group Ltd

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