LONDON: The London stock market firmed Wednesday in cautious trade before Britain’s annual budget, but Frankfurt fell on continued political uncertainty in Germany.
The British capital’s benchmark FTSE 100 gained 0.2 percent as investors awaited finance minister Philip Hammond’s budget presentation to parliament, due at 1200 GMT.
The chancellor of the exchequer will unveil his Conservative government’s tax and spend plans against a backdrop of Brexit tensions and sluggish UK economic growth.
Hammond has already trailed plans to build 300,000 homes every year, unveiling billions of pounds of investment alongside new powers and planning rules.
He will meanwhile likely lift his annual borrowing targets and cut economic growth forecasts.
– Pre-budget phase –
“We are still stuck in the pre-budget phase, meaning the markets are not doing too much just yet,” noted Spreadex analyst Connor Campbell.
“In terms of potential market-movers, the housing sector is arguably the one to watch given the amount of chatter there has been about Britain’s need to build new homes.”
It was the travel sector which grabbed investors’ attention however in Wednesday trading, with shares in Thomas Cook slumping more than 11 percent on London’s second-tier FTSE 250 index after the group’s poorly-received earnings update.
Elsewhere in Europe, Frankfurt’s DAX 30 index slinked lower after talks on forming a government coalition in Germany collapsed over the weekend.
Pressure mounted Wednesday on Germany’s Social Democrat leader Martin Schulz to reconsider an alliance with Chancellor Angela Merkel’s conservatives to stop Europe’s biggest economy from sinking into months of paralysis.
Schulz has repeatedly said the SPD would not return as the junior coalition partner in a government led by Merkel, after suffering a stinging defeat in September’s general election.
Frankfurt stocks sank “presumably due to the lack of political progress in Germany”, noted Campbell.
– Asia steams ahead –
Europe’s markets diverged following Asia’s rally, which saw Hong Kong finish above the 30,000 points mark for the first time in 10 years after another record close on Wall Street.
Asian and US investors were back in buying mood this week on optimism about the world economy and earnings, while they remain upbeat that US lawmakers will eventually push through much-vaunted tax cuts.
All three main stock indices in New York closed at all-time highs once again Tuesday as dealers there begin to wind down for Thursday’s Thanksgiving holiday.
The positive energy flowed through to Asia, where Hong Kong pushed 0-6 percent higher Wednesday, sitting above the 30,000 barrier for the first time since late 2007.
In commodities trading, global oil prices rallied to near two-year highs.
The latest peaks came after data pointed to a drop in US stockpiles, while investors are awaiting a meeting of OPEC next week hoping it will extend an output cut.
Source: Brecorder.com
