Budget Day: All eyes are on Rishi Sunak’s tax and spending plans
With all the briefings that have been taking place since the weekend there would appear to be little in the way of surprises when the Chancellor of the Exchequer gets up to speak later today.
Most of the content appears to have already been pre-briefed much to the displeasure of the Speaker of the House of Commons.
These include increases to public sector pay, a huge cash injection for the NHS, investment in regional transport, skills, housing, and education, along with a freeze to fuel duty.
“However the devil will be in the detail, in terms of how much it is all likely to cost,” commented Michael Hewson, Chief Market Analyst at CMC Markets UK, this morning.
Meanwhile, zooming in on the global markets today.
European markets posted their third successive day of gains yesterday with the FTSE100 setting a new 20-month high, while US markets continued to break records.
This saw the Nasdaq100 join the S&P500 and Dow in setting new record highs, as optimism over company earnings continued to offer a tailwind for stocks.
“Yesterday consumer goods giant Reckitt Benckiser joined its sector peers Unilever, Procter & Gamble, as well as Nestle in reporting higher sales, as well as higher revenues, sweeping away the concern of a few weeks, that raising prices isn’t the demand killer that many thought it might be. It also means companies are likely to much more able to better maintain their margins,” Hewson said.
Across the pond
In the US, the performance of UPS in their Q3 numbers also offered an insight into how well the US economy is doing by seeing a 13 per cent increase in revenues as it absorbed higher costs, by raising prices, although volumes dipped slightly by 2 per cent.
Hewson commented; “With Alphabet, Microsoft and Twitter all reporting after the bell, there was a mixed response with Microsoft and Alphabet posting impressive numbers, while Twitter disappointed as a consequence of the change in Apple’s privacy rules.”
“As we look ahead to today’s European open, we look set for a slightly softer start with the main focus for today will be the UK Autumn Budget,” he added.
On the data front we have some more US data with durable goods for September, which given the various problems with supply chains could see a decline of 1.1 per cent, after a 1.8 per cent rise in August. Excluding transports expectations are for a rise of 0.4 per cent.
Hewson pointed out that the Bank of Canada is also set to meet and is widely expected to keep rates unchanged at 0.25%, although the committee is expected to taper bond purchases from C$2bn to C$1bn a week.
“The only question would appear to be around when rates are set to rise with a consensus of around April 2022.”
“The central bank will need to update its inflation forecast given CPI is currently at 4.4% and well outside their target range, with governor Macklem likely to stick to the narrative that most of what is being seen is transitory in nature,” Hewson concluded.