Europe midday: Stoxx extends gains ahead of UK Budget, Powell testimony

6th Mar 2024 11:06

(Sharecast News) - European shares extended gains on Wednesday as investors awaited the UK's spring budget statement and testimony from US Federal Reserve Chair Jerome Powell.

The pan-European Stoxx 600 was up 0.24% at 497.47, with all major bourses higher.

In economic news, eurozone construction output ticked up slightly in February, but the sector's contraction extended to 22 months on weak orders and demand, according to a PMI survey published on Wednesday. In a separate data release, retail sales in the single currency bloc fell less than expected in January on an annualised basis.

UK Finance Minister Jeremy Hunt will deliver what is expected to be the final budget before a general election this year - and possibly his last as an MP if the opinion polls are accurate - with markets fretting about plans for tax cuts as a sweetener to voters.

Hunt has little fiscal room for manoeuvre, but right-wing members of the ruling Conservative Party who fear an electoral wipeout at the polls after 14 years in power have been pressing hard for bigger tax cuts, despite the fact that voters are opposed to government plans for a second round of austerity cuts to already crumbling public services which would fund any giveaway.

Given the headline-grabbing elements of the budget have been effectively leaked - a long-standing British tradition - before Hunt stands up in parliament, a planned 2% cut in national insurance contributions won't surprise many.

"Either way taxes and debt will remain historically high, productivity and growth historically low; financing wars, financing an ageing population, financing immigration - it's all squeezing the middle until the pips squeak. This is not how to get Tory-leaning voters to come out for you," said Finalto analyst Neil Wilson.

Meanwhile, Fed chief Powell will appear before the House of Representatives Financial Services Committee with investors looking for any clues on future monetary policy and the path of interest rates this year.

In equity news, Legal & General fell as the UK life insurer delivered below-par operating profits.

Shares in French reinsurer Scor were at the top of the Stoxx, up 8% after reporting record annual results.

Reporting by Frank Prenesti for Sharecast.com