London close: Stocks mixed, pubcos rally on Sunak's Autumn Budget

The FTSE 100 ended the session down 0.33% at 7,253.27, while the FTSE 250 eked out gains of 0.05% to 23,172.04.

Sterling was in the red against its major trading pairs, last falling 0.29% on the dollar to $1.3727, and losing 0.25% against the euro to trade at €1.1842.

“Today’s UK budget brought plenty of cheer for pubs, with the Chancellor cutting alcohol duties and halving business rates next year,” said IG senior market analyst Joshua Mahony.

“The decision to halve business rates for those in the retail, hospitality and leisure sectors does provide a welcome boost for businesses getting back to normal after a hugely disruptive pandemic period.

“Meanwhile, the decision to simplify alcohol duties will see taxes cut for drinks such as wine and beer, while plans to raise taxes on spirits have also been scrapped.”

On the Budget front, UK economic growth forecasts were lifted to 6.5% this year and 6% in 2022, according to Chancellor Rishi Sunak.

That revision compared with previous forecasts by the Office for Budget Responsibility of 4% for 2021 after a plunge of 9.9% in 2020 - the worst recession in three centuries.

Inflation, meanwhile, was likely to average 4% for most of next year, up from its current level of 3.1%, and unemployment was forecast to peak at 5.2%, down from a forecast for about 12% last year.

Sunak unveiled a new set of fiscal rules for the public finances, not dissimilar to those introduced by Labour's Gordon Brown in 1997, stating that debt must fall as a percentage of GDP, with the state only borrowing to invest in future growth and everyday spending balanced by the third year of each forecast period in normal non-pandemic circumstances.

Borrowing in the current financial year, 2021-22, would be 7.9% of GDP, and would fall to 3.3% next year.

In March, the OBR estimated a budget deficit of £233.9bn for 2021-22, or about 10.3% of GDP.

“While the economic outlook is looking up, the Chancellor’s push towards fiscal discipline could raise questions for a Bank of England that is predicted to raise rates next week,” IG’s Mahony added.

“The idea of raising rates at the same time and fiscal tightening does signal a potential squeeze on an economy that is still getting back on its feet after a hugely damaging 19-months.”

In economic news, meanwhile, figures out earlier from the British Retail Consortium showed UK shoppers were facing rising prices in the run-up to Christmas after the cost of goods increased for the third month running.

Total food prices rose 0.4% in October from a month earlier compared with a 0.1% month-on-month increase in September, the BRC/NielsenIQ shop price index showed.

Overall prices remained below the level of a year earlier but the annual rate of decline reduced.

“This is the third consecutive month of both food and non-food month-on-month rises,” said Helen Dickinson, the BRC's chief executive.

“The increased costs from labour shortages, supply chain issues and rising commodity prices have started filtering through to the consumer.

“Tight margins mean retailers may not be able to absorb all of these new costs, so prices will continue to rise.”

In equity markets, Entain added 2.25%, having tanked on Tuesday after US-based DraftKings said it would not be making an offer for the owner of Ladbrokes and Coral.

Shares in pub chains JD Wetherspoon and Mitchells & Butlers were ahead 5.27% and 5.68%, respectively, after the Chancellor announced a new tax relief for pubs in the autumn Budget.

In a bid to simplify the alcohol tax system, which Sunak described as "outdated and full of historic anomalies", the chancellor said the new system would follow the rule that the stronger the drink, the higher the rate.

He unveiled a 5% cut to duty on draught beer and cider served from draught containers of more than 40 litres, equating to a permanent cut in the cost of a pint of 3p.

Transport operator FirstGroup rallied 4.94% after confirming it would return £500m to shareholders through a tender offer at 105p a share.

The shares also benefited from an upgrade to ‘buy’ at HSBC.

HomeServe rose 3.43% after it announced the acquisition of CET Structures, a UK home emergency assistance business, for £53m, and said current trading was in line with guidance.

Housebuilders Taylor Wimpey, Berkeley and Barratt Developments gained 2.66%, 1.14% and 1.23% respectively, even after Rishi Sunak said residential property developers faced a new cladding tax.

On the downside, miners retreated as copper and other base metals prices fell, with Glencore down 3.08%, Anglo American off 2.11%, Rio Tinto losing 1.59%, and BHP 1.59% weaker.

Admiral slumped 5.51% after Munich Re sold 12.1m shares in the insurer in a placing at 2,940p each.

Wickes lost 4.51% after it confirmed its full-year profit guidance despite inflationary headwinds, but reported a dip in third-quarter sales.

Fresnillo lost 3.5% after the mining company reported lower silver and flat gold production in the third-quarter as it warned of the impact of labour shortages and inflationary pressures.

Market Movers

FTSE 100 (UKX) 7,253.27 -0.33%
FTSE 250 (MCX) 23,172.04 0.05%
techMARK (TASX) 4,571.46 -0.63%

FTSE 100 - Risers

Taylor Wimpey (TW.) 156.20p 2.66%
Entain (ENT) 2,047.00p 2.25%
Compass Group (CPG) 1,524.00p 1.97%
SSE (SSE) 1,659.00p 1.97%
Sainsbury (J) (SBRY) 306.50p 1.69%
Persimmon (PSN) 2,737.00p 1.63%
National Grid (NG.) 936.70p 1.51%
United Utilities Group (UU.) 1,028.00p 1.43%
WPP (WPP) 966.20p 1.36%
SEGRO (SGRO) 1,315.00p 1.27%

FTSE 100 - Fallers

Admiral Group (ADM) 2,879.00p -5.51%
Fresnillo (FRES) 851.60p -3.50%
Glencore (GLEN) 358.50p -3.08%
Pearson (PSON) 607.20p -2.97%
Aveva Group (AVV) 3,534.00p -2.91%
Flutter Entertainment (CDI) (FLTR) 14,265.00p -2.13%
Anglo American (AAL) 2,759.00p -2.11%
Hikma Pharmaceuticals (HIK) 2,414.00p -1.83%
Kingfisher (KGF) 338.00p -1.77%
Pershing Square Holdings Ltd NPV (PSH) 2,910.00p -1.69%

FTSE 250 - Risers

Mitchells & Butlers (MAB) 260.00p 5.68%
Wetherspoon (J.D.) (JDW) 1,040.00p 5.37%
FirstGroup (FGP) 100.90p 4.94%
Restaurant Group (RTN) 91.80p 3.15%
Homeserve (HSV) 855.00p 2.83%
Pantheon International (PIN) 3,115.00p 2.81%
Workspace Group (WKP) 853.00p 2.77%
PureTech Health (PRTC) 357.50p 2.74%
Spire Healthcare Group (SPI) 240.00p 2.56%
HICL Infrastructure (HICL) 167.00p 2.45%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 1,405.00p -4.39%
Network International Holdings (NETW) 354.80p -4.38%
Ashmore Group (ASHM) 342.80p -3.49%
4Imprint Group (FOUR) 2,890.00p -3.18%
Watches of Switzerland Group (WOSG) 1,114.00p -3.16%
Moneysupermarket.com Group (MONY) 218.00p -3.11%
Trainline (TRN) 312.20p -3.04%
Oxford Instruments (OXIG) 2,325.00p -2.92%
Reach (RCH) 326.00p -2.83%
AO World (AO.) 146.60p -2.79%