Muted U.K. Budget Reaction in Stocks, Construction Firms Higher
(Bloomberg) -- There was little reaction to the U.K. budget in the stock market, with sectors such as construction holding onto gains seen earlier in the day on leaks about what would be in the announcement.
Online retail names were very briefly volatile after Chancellor of the Exchequer Philip Hammond announced a new digital tax. The sector fell briefly but recovered almost immediately once Hammond clarified it would not target online shopping, but rather the largest internet businesses.
Some measures ultimately came after the market closed in London, so could have an impact tomorrow. This includes a higher tax on online gambling sites, up to 21 percent from 15 percent.
- FTSE 100 index closed up 1.3 percent, FTSE 250 closed up 1.2 percent
- Online fashion firms Asos Plc and Boohoo.com Plc both slipped very briefly on the announcement of a new digital services tax, but quickly retraced the losses when the government clarified the tax is not targeting online shopping but rather Internet giants such as Alphabet Inc.
- Construction firms Costain Group Plc and Balfour Beatty Plc held on to earlier gains, up 5 percent and 2.9 percent respectively, after announcements about extra funding for fixing potholes and pumping more money into infrastructure spending
- Engineering and defense contractor Babcock International Group Plc held onto earlier gains as Hammond announced a series of defense spending pledges, including another 1 billion pounds for the Ministry of Defence; shares closed up 3.7 percent
- Packaging firm RPC Group Plc slipped late in the session after Hammond said a planned tax on plastic cups is canceled but said the government will be monitoring how the effect of what the private sector is already doing
- Little reaction in the housebuilding sector to proposals to consult on relaxing planning rules restricting the conversion of commercial properties into homes or to cut tax relief for landlords
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