FTSE 100 drifts lower as Chancellor’s ‘mini-budget’ fails to excite

The FTSE 100 drifted lower as the Chancellor’s summer statement failed to excite traders.

Positive sentiment in the US also failed to drag the European indices higher as it weighed down by early caution in the Asian markets.

London’s top flight closed 33.74 points lower at 6,156.16p at the end of trading on Wednesday.

Connor Campbell, financial analyst at Spreadex, said: “Rishi Sunak’s summer statement didn’t end up doing much for the FTSE, nor did a positive open for the Dow Jones.

“The mini-budget wasn’t robust enough to distract European investors from the continued acceleration of global Covid-19 cases, the return to lockdown in Melbourne, and what this will all mean for the pace of any economic recovery.”

The major European markets slipped as they remained consistently cautious, after a similarly negative session on Tuesday.

The German Dax decreased by 0.97%, while the French Cac moved 1.24% lower.

Across the Atlantic, the Dow Jones climbed after the bell despite coronavirus concerns remaining high across the country.

Meanwhile, sterling flitted around during the Chancellor’s statement but ended broadly flat as there was little to show a major shift in fiscal policy.

The value of the pound rose 0.37% versus the US dollar at 1.259 and was down 0.15% against the euro at 1.111.

Housebuilders and estate agents were buoyed by plans to temporarily remove stamp duty for houses below £500,000, with the likes of Savills and Persimmon all moving higher.

Restaurants and hospitality firms also saw shares float higher, with Wagamama-owner The Restaurant Group rising after the Government cut VAT on meals and announced a 50% discount for people dining between Mondays and Wednesdays in August.

David Madden, market analyst at CMC Markets UK, said: “The assistance to the hospitality sector doesn’t include alcohol, which could explain why pub groups like JD Wetherspoon are in the red.”

In company news, transport firm FirstGroup tumbled after it flagged doubts over its future amid the pandemic as passenger numbers plunged and it slumped to a £300 million loss.

The bus and rail firm – which runs train franchises including South Western Railway and Avanti West Coast – revealed a “material uncertainty” over its ability to continue as a going concern. Shares closed 11.34p lower at 37.84p as a result.

Shares in Boohoo also slid lower for the third successive day, despite it appointing a top lawyer to look into allegations that factories involved in the making of its clothes were paying below minimum wage and breaching safety rules.

It closed 36.9p down at 224.5p as its board said it was “shocked and appalled” by the allegations, which were aired in the Sunday Times last weekend.

Elsewhere, Metro Bank moved higher after it named industry veteran industry veteran Robert Sharpe to replace controversial co-founder Vernon Hill. Shares rose by 1.75p to 113p.

The price of oil nudged higher as the energy market remained broadly muted. The price of a barrel of Brent crude oil increased by 0.37% to 43.02 US dollars.

The biggest risers on the FTSE 100 were Rolls-Royce, up 10.3p at 287.8p, Fresnillo, up 23.4p at 908.6p, ABF, up 45.5p at 1,996.5p, and BHP, up 32.8p at 1,682.2p.

The biggest fallers of the day were WPP, down 33.4p at 591.4p, Melrose, down 4.85p at 114.1p, IAG, down 8.5p at 212.1p, and Ashtead, down 97p at 2,664p.

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