London midday: Stocks extend losses ahead of Budget

London stocks had fallen further into the red by midday on Monday, with caution in the air ahead of this week’s Budget.

The FTSE 100 was down 0.5% at 7,647.28 .

On Wednesday, Chancellor Jeremy Hunt will present the Spring Budget to Parliament at 1230 GMT in what is likely to be the last major economic update before the upcoming general election.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Speculation over what’s in and what’s out of Jeremy Hunt’s budget is reaching fever pitch, ahead of the big reveal on Wednesday. What appears clear is that the Chancellor has a lot less fiscal room to play with than he hoped, which is why he’s played down speculation about significant tax cuts.

"Warnings are coming thick and fast, from the Office of Budget Responsibility and the International Monetary Fund, about the financial irresponsibility of offering big sweeteners. Given the huge borrowing commitments the government already has to honour, it seems unlikely there will be a big fanfare of an income tax giveaway. However, a further cut to National Insurance is still on the cards. There is though likely to be a good deal of other tinkering by Houdini Hunt, who is set to show a sleight of hand with an array of smaller moves to try and please the voters ahead of the election.

"With blue-chip stocks finding it hard to regain their mojo and the swoop on British companies continuing, rumours are swirling that Jeremy Hunt will try and revitalise the London markets, by offering tax incentives to retail investors.

"While and increase to the annual ISA allowance would be hugely welcome, he should steer clear of introducing a ‘British ISA. This would add unnecessary complexity and could have a negative impact on UK investors. Even if such a move did persuade people to invest more in the UK, it could end up increasing risk for investors. It could unnecessarily concentrate portfolios, which could be a detriment, especially if there was more volatility in the London markets compared to others. A separate British ISA might end up providing no additional boost to UK investment. Those who already max out their £20,000 ISA allowance could simply hive off all their existing UK holdings to the British ISA, and use the extra wiggle room to invest more overseas in their usual ISA."

In equity markets, Ocado was under the cosh again after results last week and amid the prosect of a potential legal battle with Marks & Spencer.

Hipgnosis tumbled as the value of its music portfolio was cut by more than a quarter and the company said it would need to use free cash to pay down debt. As a result, it does not plan to begin paying dividends again "for the foreseeable future".

On the upside, Aviva reversed earlier losses to trade a little higher, after saying it had made its first foray into the Lloyd’s insurance market with the £242m purchase of underwriting syndicate Probitas.

Shipping broker Clarksons rallied as it posted record full-year profits, with revenue driven by strong growth in its broking, support and research divisions.

BP was firmer after Jefferies upgraded shares of the oil giant to ‘buy’ from ‘hold’ and lifted the price target to 570p from 520p, saying it expects the stock to continue to close its valuation gap versus peers.

Market Movers

FTSE 100 (UKX) 7,647.28 -0.46%
FTSE 250 (MCX) 19,269.22 -0.44%
techMARK (TASX) 4,370.16 -0.16%

FTSE 100 - Risers

BT Group (BT.A) 106.60p 1.86%
Endeavour Mining (EDV) 1,338.00p 1.06%
Rolls-Royce Holdings (RR.) 378.40p 0.96%
BP (BP.) 475.35p 0.78%
BAE Systems (BA.) 1,259.00p 0.72%
Melrose Industries (MRO) 629.80p 0.64%
Fresnillo (FRES) 466.50p 0.63%
Ashtead Group (AHT) 5,754.00p 0.56%
GSK (GSK) 1,671.00p 0.55%
SEGRO (SGRO) 866.60p 0.44%

FTSE 100 - Fallers

Ocado Group (OCDO) 450.60p -5.34%
Entain (ENT) 888.00p -3.14%
Kingfisher (KGF) 227.00p -2.32%
Anglo American (AAL) 1,720.40p -2.29%
Burberry Group (BRBY) 1,257.50p -2.29%
Mondi (MNDI) 1,381.50p -2.16%
St James's Place (STJ) 500.80p -2.15%
Rentokil Initial (RTO) 430.10p -2.03%
Rightmove (RMV) 555.20p -1.94%
Croda International (CRDA) 4,804.00p -1.92%

FTSE 250 - Risers

ICG Enterprise Trust (ICGT) 1,274.00p 3.58%
TBC Bank Group (TBCG) 3,270.00p 3.32%
Clarkson (CKN) 3,775.00p 2.72%
Direct Line Insurance Group (DLG) 213.20p 2.65%
Drax Group (DRX) 481.00p 2.34%
OSB Group (OSB) 441.60p 1.80%
Apax Global Alpha Limited (APAX) 156.00p 1.69%
HICL Infrastructure (HICL) 125.60p 1.45%
Spirent Communications (SPT) 110.50p 1.38%
Oxford Instruments (OXIG) 2,245.00p 1.35%

FTSE 250 - Fallers

Hipgnosis Songs Fund Limited NPV (SONG) 53.80p -14.74%
Aston Martin Lagonda Global Holdings (AML) 165.80p -6.17%
ITV (ITV) 60.54p -5.35%
Quilter (QLT) 101.30p -4.97%
PZ Cussons (PZC) 97.60p -4.13%
W.A.G Payment Solutions (WPS) 75.20p -3.59%
Dr. Martens (DOCS) 93.30p -3.57%
Close Brothers Group (CBG) 371.40p -2.98%
Darktrace (DARK) 350.40p -2.88%
AO World (AO.) 92.10p -2.75%