The FTSE 100 looks set to extend its gains on budget day as the index pushed up again by 1.28% on early morning trading. This is despite the possibility of tax rises as Rishi Sunak vows “to be responsible” with British people’s money.
Naeem Alam, chief market trader at AvaTrade, speculated on how the UK Government will continue to provide support, while aiming to secure the nation’s finances in the long-term.
“It is widely expected that the Chancellor will be using the budget to extend a vast package of covid-19 support, which is likely to last until the end of September. Of course, the Chancellor is betting on a hope that the economy will return from its coronavirus crisis by that time,” said Aslam
“The furlough scheme was due to end in April, but now, it will run in its current form until the end of June. After that, it is expected to phase out slowly. The key idea over here is to avoid any cliff-edge by withdrawing the furlough support rapidly.”
“Obviously, all of this means a higher bill for the Treasury. The Chancellor will maintain the need to balance the budget once the economy is back on the recovery track. Traders expect to see a future tax rise path that could help repair the damage that has occurred to public financing.”
FTSE 100 Top Movers
Whitbread (4.68%), Informalities (4.01%) and Persimmon (3.84%) lead the pack at the top of the index.
Out of a handful of companies to have lost ground on the FTSE 100 on Wednesday morning, Avast (-1.96%), Kingfisher (-0.39%) and Admiral Group (-0.33%) are the biggest fallers.
Persimmon, the FTSE 100 homebuilder, confirmed its profit fell during 2020, while the company saw an increase in the value of its forward order book to £2.3bn. Profit before tax fell to £783m from £1bn, as revenues also dropped by £0.1bn to £3.3bn.
The company confirmed its dividend for the year at 110p a share, down from 235p per share at the end of 2019.
Avast (LON:AVST), the internet security application, confirmed an increase in its full-year profit and revenue as more people worked from home during the pandemic. During 2020, the FTSE 100 company’s tax before profit rose to $436.7m, up from $400.1m the year before. Avast’s adjusted revenue increased by 2% to $892.9m.
At early morning trading, the FTSE 100 company’s share price fell by 1.77% to 456p per share. It is a continuation of the performance of the Avast’s share price year-to-date, which is down from 532.5p per share.