London close: Markets subdued in Budget aftermath

20th Mar 2013 16:16

Markets on the whole gave a muted reaction to George Osborne's Budget Statement today, in which he warned that Britain would grow less and borrow more than originally estimated, while traders continued to digest developments elsewhere, including the Cypriot bailout and a meeting at the US Federal Reserve.The Cypriot parliament last night voted to reject a €10bn bailout deal that included a tax on bank accounts. Though this outcome was widely expected, it raises the pressure on the government to come up with a 'plan B', or else face a default and subsequent exit from the Eurozone. Stocks across Europe started the day strongly on reports that Cypriot leaders are seeking financial assistance from the Kremlin possibly in exchange for gas exploration rights. However, these gains were quickly pared ahead of the Budget announcement just after midday.No change in policy is expected from the Federal Open Market Committee later today, despite concerns over the last few months that improving data in the US labour market could prompt the central bank to scale back its quantitative easing (QE) programme. Stocks on Wall Street started strongly on Wednesday as traders wait to hear clues from Chairman Ben Bernanke as to whether he intends to change the Fed's stance on current stimulus measures. Traders also had to digest the minutes of the latest Monetary Policy Commitee meeting which showed that the vote over QE was again split, with members voting six-to-three in favour of keeping the asset purchase programme at £375bn. All eyes on OsborneThere were few surprises from the Chancellor's Budget in the House of Commons on Wednesday, partly because details were leaked out in a London newspaper even before his speech had started. Osborne said that there remains "much more to do" and a recovery was taking "longer than anyone hoped". A number of proposals were put forward to boost the economy, including: a cut in corporation tax; an increase in the tax-free allowance; cancelling the fuel-duty rise due in September; abolishing stamp duty on growth markets such as AIM; as well as measures to boost housing and infrastructure. He also modified the Bank of England's remit so that it can use QE to influence interest-rate expectations. However, he did admit that the forecast for UK growth in 2013 had been trimmed for the Office for Budget Responsibility (OBR) from the 1.2% estimate in December to just 0.6%. The OBR also raised its estimate for borrowing this year by £6.0bn to £86.5bn.Stocks react to Budget plansHouse builders and construction stocks charged ahead today on the back of Osborne's promise to build more affordable housing, as well as his proposal to help people on to (and move up) the property ladder. Builders on the FTSE 250 were prevalent among the risers today, with Barratt Developments, Taylor Wimpey, Persimmon, Bellway, Bovis Homes and Redrow all finishing with decent gains.CRH, the FTSE 100-listed building materials group, was also in demand after the Budget included plans to kick-start activity in the infrastructure industry, using extra savings from government departments to boost plans by £3.0bn a year from 2015-2016.Meanwhile, pub owners Wetherspoon and Fuller, Smith & Turner were on the rise after beer was exempt from a rise in alcohol duty, with Osborne cutting the tax on the drink by one pence a pint. ENRC slips after falling into the red in 2012ENRC labelled 2012 as a "challenging year" as a swing into the red led to the miner scrapping its final dividend. The resources giant recorded a loss before tax of $550m, down from a profit of $2.76bn the year before, as it took impairment charges and an onerous contract provision totalling $1.54bn. Royal Bank of Scotland was higher after Liberum Capital upgraded the stock to 'buy' with its target price at 340p. Smiths Group, the diversified industrial firm, edged higher after rewarding shareholders with a 6.0% increase in the dividend after posting a rise in half-year revenue and profit. Bakery and hot snacks retailer Greggs slumped after serving up a mixed bag of results for 2012: full-year sales rose 4.8% while but profits slipped 2.2%. A number of stocks were registering losses after going ex-dividend today, including Aviva, InterContinental Hotels and Lancashire.FTSE 100 - RisersRoyal Bank of Scotland Group (RBS) 300.20p +2.25%Rolls-Royce Holdings (RR.) 1,131.00p +1.98%Schroders (SDR) 2,136.00p +1.81%RSA Insurance Group (RSA) 117.30p +1.73%Babcock International Group (BAB) 1,100.00p +1.66%Polymetal International (POLY) 870.00p +1.46%Capita (CPI) 912.00p +1.39%CRH (CRH) 1,528.00p +1.39%British Land Co (BLND) 552.50p +1.38%Aberdeen Asset Management (ADN) 422.50p +1.29%FTSE 100 - FallersAnglo American (AAL) 1,773.00p -2.58%Aviva (AV.) 315.00p -2.54%Eurasian Natural Resources Corp. (ENRC) 306.90p -1.85%International Consolidated Airlines Group SA (CDI) (IAG) 262.40p -1.83%Pearson (PSON) 1,170.00p -1.76%Weir Group (WEIR) 2,288.00p -1.59%Hargreaves Lansdown (HL.) 889.00p -1.55%BG Group (BG.) 1,169.50p -1.47%Marks & Spencer Group (MKS) 392.40p -1.43%InterContinental Hotels Group (IHG) 1,970.00p -1.40%FTSE 250 - RisersBarratt Developments (BDEV) 255.60p +6.59%Taylor Wimpey (TW.) 90.85p +6.13%Ocado Group (OCDO) 161.10p +5.09%Redrow (RDW) 191.40p +4.02%Bellway (BWY) 1,230.00p +3.97%Persimmon (PSN) 1,010.00p +3.96%Betfair Group (BET) 723.00p +3.95%Elementis (ELM) 275.00p +3.81%Bovis Homes Group (BVS) 693.50p +3.12%Kazakhmys (KAZ) 486.60p +2.68%FTSE 250 - FallersGreggs (GRG) 480.00p -8.31%Lancashire Holdings (LRE) 839.50p -7.65%SEGRO (SGRO) 251.70p -4.84%Petropavlovsk (POG) 235.50p -4.54%Ferrexpo (FXPO) 174.30p -4.02%Lonmin (LMI) 300.00p -3.78%Centamin (DI) (CEY) 56.45p -3.75%Essar Energy (ESSR) 140.70p -3.43%Computacenter (CCC) 525.00p -3.40%Go-Ahead Group (GOG) 1,459.00p -3.38%BC