European markets muted ahead of UK’s budget

ftse City of London skyline view looking over the River Thames and Waterloo Bridge at sunset on 10th February 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government district that contains the primary central business district CBD of London. The City of London is widely referred to simply as the City is also colloquially known as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images)

The FTSE rose ahead of Jeremy Hunt’s spring budget. (Mike Kemp via Getty Images)

The FTSE 100 (^FTSE) and European markets were making tentative moves on Wednesday morning in London, as the UK government prepares to unveil its spring budget.

The FTSE 100 ticked up 0.2% after the open. The more domestically-focused FTSE 250 (^FTMC) was 0.5% higher. The pound (GBPUSD=X) rose cautiously against the dollar to just above $1.27.

Elsewhere in Germany and France, the DAX (^GDAXI) and CAC (^FCHI) were flat.

The headline policy set to be rolled out by UK chancellor Jeremy Hunt, has been touted to be a cut to income tax.

Read more: What a 2p national insurance cut means for your finances

“A cut to income tax would be a bit of a rabbit — whether enough to swerve election wipeout remains to be seen,” said Neil Wilson, chief market analyst at Finalto. “The risk is that, somewhat against character, Hunt announces a bunch of tax cuts that upset the markets. We have seen before that bond vigilantes are hunting in their packs again.”

Overnight in the US and Asia

Trade in Asia was mixed on Wednesday, with an underwhelming performance by the Nikkei (^N225) in Japan and strong gains by the Hang Seng (^HSI) in Hong Kong.

The Hang Seng rose 1.7%, recovering some of the losses seen on Tuesday, when worries about the growth and security of the Chinese economy were on the docket.

Meanwhile, there was selling across the board in US equities on Tuesday, with all three major indices closing lower for a second day.

Uncertainty over interest rate cuts and a shakeup in “magnificent seven” stocks brought a note of wariness to the market.

Contracts on the tech-heavy Nasdaq Composite (^IXIC) led the day’s declines, sinking about 1.7% as a retreat in Apple (AAPL) and Tesla (TSLA) continued to drag on stocks more widely. Both the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) closed down more than 1%.

Bitcoin and crypto

Bitcoin (BTC-USD) and crypto markets were the story of the day on Tuesday, with the largest cryptocurrency briefly reaching all-time highs, before tumbling back down more than 10%.

The price recovered a little on Wednesday, to trade at more than $67,200.

The run-up was associated with both capital inflows due to the spot bitcoin ETF approval earlier this year, and the upcoming halving event.

Watch: UK budget: What to expect

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