The stock market winners and losers from Budget 2020


Looking at the array of policies and initiatives introduced today from the very narrow perspective of the stock market, investors initially seemed mildly impressed – the FTSE 100 rose by around a third of a per cent during Mr Sunak one-hour speech, although the index had already shed all of the gains made thanks to the Bank of England’s emergency half-point interest rate cut at the start of the day.

Mr Sunak has promised an extra £5 billion for the NHS and £7 billion in targeted measures to assist companies and individuals with changes to rules on sick pay and business rates, assistance with the Time to Pay tax mechanism and government-guaranteed loans for companies. Add in promised spending in areas such as housing, research and development, national infrastructure and education and all told Mr Sunak asserted the Budget represented a fiscal boost of some £30 billion – or around 1.7% of national GDP.

The speech gave few details of how all of this was to be funded, especially as duty on fuel and wine, beer and cider were frozen once more, although a further clampdown on tax evasion is coming and – as expected – the previously planned cut in corporation tax to 17% from 19% was scrapped.

With many of the fiscal initiatives targeting small and medium-sized firms there may not be too much here for larger, quoted ones to get excited about, especially given the scrapping of the tax cut.

However, BT and Spirent have taken encouragement from plans to invest in £5 billion gigabit broadband and £510 million in 4G mobile networks, especially in rural areas, respectively.

A plan to build 40 hospitals is giving shares in construction and support services firm Kier a lift. Kainos, a specialist in providing electronic medical records and digitisation services, is also up, although Medica, a provider of outsourced x-ray and radiology specialists is down on the departure of its chief financial officer. The company has been struggling to get enough staff to do scans for some time, so more hospitals might not necessarily be good for earnings if it cannot increase the supply of trained radiologists fast enough.

Diageo is up a fraction on support for research and development in the Scotch whisky industry while there are more notable moves at Balfour Beatty and Hill & Smith.

The former had already got a lift from its full-year results but the construction expert could be in line for more business as the Government funds investment in rail networks and stations and over 4,000 miles of road. As a leading manufacturer of crash barriers for motorways, Hill & Smith could be expected to win its share of contracts too.

Shares in Marshalls, which makes bollards and paving slabs used in rail infrastructure, also gained.

An individual company which appeared to get a significant Budget boost was book publisher Bloomsbury which gained 6% on news that VAT on digital books (and magazines) would be abolished, potentially providing a boost to sales.

Wetherspoon’s shares briefly reacted positively to the Chancellor’s commitment to increase the business rates discount for pubs from £1,000 to £5,000, applicable for sites with a rateable value below £100,000 in England for one year from 1 April.

The pubs sector will also benefit from a freeze in duty on all types of alcohol, although the challenge is still getting customers through the door in the first place amid increasing pressure on people to stay at home during the coronavirus crisis. That might explain why shares in Marston’s and Mitchells & Butlers shrugged off the Budget announcement.

Shares in house builders largely shrugged off the Chancellor’s promise of £12.2 billion in grant funding for affordable homes across England and his revelation that the Housing Secretary is due to announce what he called “comprehensive reforms” of the planning system on Thursday.

Shares in affordable homes Galliford Try did jump on the news, however, and brownfield real estate developers St Modwen Properties is up, although Harworth is largely unchanged, after Mr Sunak announced regeneration projects, including in the West Midlands.

These articles are for information purposes only and are not a personal recommendation or advice.

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Written by:
Russ Mould

Russ Mould has 28 years' experience of the capital markets. He started at Scottish Equitable in 1991 as a fund manager and in 1993 he joined SG Warburg, now part of UBS investment bank, where he worked as equity analyst covering the technology sector for 12 years. Russ joined Shares in November 2005 as technology correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media by AJ Bell Group, he was appointed AJ Bell’s Investment Director in summer 2013.