FTSE 100 drops to two-month low as bond yields rise after Budget
The FTSE 100 finished 59.98 points, or 0.73%, lower to end the day at 8,159.63.
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The FTSE 100 closed firmly in the red despite the autumn Budget boosting some UK-focused firms who are hoping for a boost from the Government’s spending plans.
It came as bond yields jumped as significant spending and borrowing by the Chancellor Rachel Reeves indicated that interest rates could take longer to drop than previously expected.
In the equity markets, there were significant gains for gambling firms, such as Entain and Evoke, amid relief that they were not being targeted with specific tax measures after previous speculation.
However, spirit Diageo was among notable fallers after the Government confirmed an inflation-linked rise in alcohol duty for all drinks other than draught beer.
The FTSE 100 finished 59.98 points, or 0.73%, lower to end the day at 8,159.63.
It marks the index’s lowest close price since August.
However, the FTSE 250 closed 0.35% higher for the session.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The big bazooka of investment had largely been priced into share prices, and given the FTSE 100 is more internationally focused the Budget hasn’t budged it out of the red.
“However, the domestically focused FTSE 250 has crept into the green, with consumer discretionary stocks climbing higher as the Budget was angled to put more money in payslips.
“Bank shares have risen on a wave of relief given that there were no plans announced for a bigger levy on profits made in the sector.”
Meanwhile, sterling slipped during a volatile session, as the US dollar was also boosted by stronger-than-expected jobs data.
The pound was down 0.13% at 1.299 US dollars and down 0.5% at 1.196 euro.
In continental Europe, the Cac 40 ended 1.1 % lower for the day and the Dax index was down 1.13%.
Stateside, the main markets were slightly lower, with pharmaceutical giant Eli Lilly among the major fallers.
In company news, drugs maker GlaxoSmithKline slumped in value, and dragged on other pharmaceutical stocks, after it saw a sharp drop in revenue from its blockbuster Arexvy vaccine in the third quarter, dampening overall sales growth.
Shares finished down 3.1% to 1,407p after it said sales of the jab for respiratory syncytial virus (RSV), previously a key driver of vaccine sales, plunged 72% year-on-year to £188 million.
Shares in Standard Chartered rose after the bank said its profits jumped over the third quarter and it pledged to double investment in its wealth management business.
The firm reported a 37% jump in underlying pre-tax profits year on year, coming in ahead of analysts expectations.
Shares in Standard Chartered were up 4.1% in close.
Fashion chain Next also delivered good news to shareholders with it raising its annual sales outlook for the third time in three months, and saying it was on track to make more than £1 billion in annual profit.
Next said it is increasing its full-year pre-tax profit guidance by £10 million to £1.01 billion, and that it expects year on year sales to lift by just under 5%.
Shares in Next lifted 1.1% at close.
The biggest risers on the FTSE 100 were Entain, up 61.6p to 774.8p, Standard Chartered, up 36.2p to 912.6p, Croda, up 113p to 3,734p, Imperial Brands, up 61p to 2,304p, and DS Smith, up 10.4p to 477.4p.
The biggest fallers on the FTSE 100 were Anglo American, down 97.5p to 2,385.5p, GSK, down 44.5p to 1,407p, AstraZeneca, down 328p to 11,206p, Diageo, down 66.5p to 2,450p, and Spirax, down 170p to 6,535p.