The UK government are way behind in the polls, and today was an opportunity to win voters over. We won’t know if they’ve been successful in swinging the polls until later this year. We do know, however, that the budget hasn’t upset equity markets.
The FTSE 100 was 0.45% higher at the time of writing and was extending gains.
The London’s leading index was likely more of a relief rally Hunt didn’t say anything to send markets into a tailspin rather than the start of a wave of optimism.
The standout for investors will be the introduction of the British ISA which is having a mixed reception from the investment industry. The balance is probably leaning towards a negative reaction, with some industry experts tearing the scheme apart.
AJ Bell’s CEO has verbally destroyed the concept highlighting major problems with the implementation of a British ISA and whether it can actually achieve its goals.
“Increasing investment into UK companies is a laudable aim, but this ill-conceived, politically motivated decision will simply not achieve that objective,” said Michael Summersgill, chief executive at AJ Bell.
“50% of the money our customers currently invest through their stocks and shares ISAs is invested into UK assets, so this new allowance will have no impact whatsoever on their investment behaviour.
“A tiny minority of people max out their £20,000 ISA allowance each year, but these are the only ones that will see any benefit from the additional British ISA allowance. In the context of the £2tn+ UK stock market, any additional investment generated by these investors through the British ISA will be a rounding error.
“For most people, the British ISA only adds an unwelcome complexity. People will now have another option to evaluate when deciding which ISA type is right for them.”
FTSE 100 mover
As Hunt’s moves were largely announced before the budget, there was little in the way of market reaction. Housebuilders were flat with the absence of any major support for the property market.
Banks were marginally higher and IAG was the top gainer after a broker upgrade.
However, as Hunt fades into the background, focus will turn back to the US a concerns about the ‘magnificent 7’s’ sell off overnight.
“Overall the magnificent 7 lost $233bn in market value on Tuesday with the only member continuing to defy gravity being advanced chip designer Nvidia, whose shares climbed 0.9%,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Nvidia has seen surging demand elsewhere outweigh export restrictions to China and moved to mitigate these with a toned-down AI supercomputer for the Chinese market. Rumours suggest a similar move by rival AMD has hit a regulatory roadblock in getting its lower-powered model approved.”