The FTSE 100 saw a 0.1% fall as sterling slightly weakened against the dollar following Chancellor Rishi Sunak’s Spring Statement in early afternoon trading on Wednesday.
The market was anchored by a 4.2% rise to $120 per barrel in the price of Brent Crude.
The FTSE 100 had gained in morning trade and clawed back most of its year-to-date losses after the shock of Russia’s invasion of Ukraine in late February.
Retail stocks have been on shaky ground over the past few weeks, and major retailers held their breath to see if Sunak’s Spring Statement would give consumer spending budgets a modicum of relief in the coming months.
“Shares in retail companies have been weak in recent months as investors speculate there could be a sharp drop in consumer spending once the energy price cap goes up in April,” said Russ Mould of AJ Bell.
“Any measures by Sunak to help with the cost-of-living crisis could trigger a relief rally in the retail sector on the stock market.”
Mini-Budget
The Chancellor announced several minor concessions for households to assist consumers with the back-breaking rate of inflation, which is predicted to peak at 8.7% in the final quarter of 2022.
Sunak said the threshold for national insurance payments is set to rise to £12,570 a year, giving the average taxpayer a slight amount of room to breathe in the coming year.
“The average worker who earns more than the £12,570 threshold will save £330 a year, once the change kicks in,” said AJ Bell head of personal finance Laura Suter.
“The Government says that 70% of people currently paying National Insurance will see a reduction in their bill, even with pushing ahead with the increased 1.25% levy.”
Oil Strength
The top risers on the FTSE 100 included BP with a 3.4% rise to 384.1p on the back of the rising Brent Crude price following disruption to Russian and Kazakh oil supplies through the CPC pipeline.
Shell also benefited from the surge in oil prices with a 3.2% increase to 2,072.5p.
Electrocomponents rose 2.8% to 1,060p following an increase in market share and a widening customer base over the last few months.
The FTSE 100 top fallers were led by Persimmon’s decline of 3.1% to 2,211.5p on the back of increased housing prices and the cost of construction continued to climb.
The Reckitt Benckiser Group saw a dip of 2.7% to 5,717p as the company led other consumer staples lower over consumer spending fears.
Kingfisher continued its downward spiral with a 2.5% fall to 266p as consumer spending on DIY and home improvement looked set to decline following record high inflation and a gradual increase in hybrid and office work systems.