Budget 2025: What rumours are doing to the FTSE 100
Banking shares led the FTSE 100 higher on Tuesday amid rumors that the sector will survive the tax hit in Chancellor Rachel Reeves’ budget.
The FTSE 100 index closed at 9,609.53 points, up 0.8 percent and 74.62 points.
FTSE 250 closed at 21,617.41 points with 205.83 points (1.0 percent), while AIM All-Share closed at 742.09 points with 4.93 points (0.7 percent).
High street lenders Lloyds Banking Group rose 3.8 per cent, NatWest Group rose 3.7 per cent and Barclays rose 2.4 per cent.
It came like this Finance Times Ms Reeves said she was unlikely to introduce further tax increases on UK banks, allaying fears that they could be hit.
The Chancellor will present his budget statement to Parliament at around 12.30pm on Wednesday, following Prime Minister’s Questions.
This is likely to involve even heftier tax increases as Ms. Reeves seeks to narrow the expected fiscal deficit and seek a higher buffer against future economic shocks.
Extending the freeze on personal tax credits, mansion tax, increases in betting taxes and changes to wage sacrifice schemes are all likely to form part of a buffet approach to tax policy.
But economists are less sure that this scattershot approach is the right path to take.
Citi’s Callum McLaren-Stewart described the buffet approach as “politically acceptable, but economically problematic”.
Peel Hunt’s Kallum Pickering said a “haphazard patchwork of anti-growth tax increases” would be a “bad outcome”.
Ahead of the budget, sterling rose to $1.3183 at the close of trading in London on Tuesday, compared with $1.3104 on Monday.
The UK 10-year bond yield decreased by 5 basis points to 4.49 percent.
Reports also suggest the Chancellor may announce a stamp duty holiday for new listings on the London Stock Exchange.
Hargreaves Lansdown’s Emma Wall said it would be a “welcome development” for the UK stock market, which has “lost out” to New York on initial public offerings in recent years.
Currently, investors must pay 0.5 percent stamp duty when purchasing shares, but this tax is expected to be waived for up to three years on new IPOs.
In European stocks on Tuesday, the CAC 40 in Paris closed up 0.8 percent, while the DAX 40 in Frankfurt closed up 1.0 percent.
Stocks in New York were mixed after Monday’s big gains.
The Dow Jones Industrial Average rose 0.7 percent, the S&P 500 index rose 0.2 percent, but the Nasdaq Composite fell 0.2 percent.
The yield on the US 10-year Treasury bond decreased from 4.05 percent to 4.01 percent. The yield on the US 30-year Treasury bond was reduced from 4.69 percent to 4.65 percent.
Following the data gap caused by the US government shutdown, investors evaluated many new figures on the health of the US economy.
Reports on steady year-over-year growth in US producer prices in September were mixed; The increase in retail sales was more moderate than monthly forecasts.
Producer prices rose 2.7 percent year-over-year in September, according to the Bureau of Labor Statistics, matching the consensus forecast cited by FXStreet, in line with the rise in August.
Separately, the Census Bureau reported that U.S. retail sales rose 0.2 percent in September from August; This was below the 0.4 percent increase estimate quoted by FXStreet. Sales in August increased by 0.6 percent compared to July.
Additionally, a report by the Conference Board showed that U.S. consumer confidence weakened in November, reaching its second lowest level since April.
The CME FedWatch tool currently puts the odds of a quarter-point rate cut at the December Fed meeting at 83 percent.
The data pressured the dollar. The euro rose to $1.1569 on Tuesday against $1.1525 on Monday. Against the yen, the dollar traded at 156.13 yen compared to 156.91 yen.
In London, Beazley fell 9.2 percent as analysts said a planned $500 million investment to build a new Bermuda platform would mean a “significant” drop in share buyback expectations.
Insurer Lloyds of London announced the news alongside mixed trading results for the first nine months of 2025.
However, RBC Capital Markets said the “new big news” was the $500 million capital to be established in Bermuda.
Beazley said the investment supports growth from 2026 and “supports our expansion into the alternative risk transfer market”.
But UBS thinks this puts the year-end share buyback “at risk” and if there is still a share buyback, it could be below the broker’s US$700 million forecast.
Better-off Kingfisher rose 6.0 percent after raising its profit forecast for the second time in three months.
The DIY retailer, which owns the B&Q, Screwfix, Castorama and Brico Depot brands, now expects adjusted pre-tax profits of £540 million to £570 million for the full year.
In September, Kingfisher raised its profit outlook to the “upper end” of its previously set range of £480 million to £540 million.
On the FTSE 250, AO World jumped 1.5 per cent as it raised its profit forecast after reporting “continued positive trading”.
The consumer electronics retailer from Bolton, England, raised its profit forecast in September to a range of £45 million to £50 million.
Since then, AO World has said it sees “continued positive trading” and now expects pre-tax profit to be “at the top” of its outlook range.
But Baltic Classifieds fell 2.2 percent after JPMorgan twice downgraded its rating from “overweight” to “underweight.”
The broker thinks online classifieds players will need to “materially” step up their efforts to maintain their gatekeeper position by offering “undisputed, world-class, now AI-driven search experiences and relevant information to compete with GenAI agencies and new aggregators.”
The price of Brent oil fell from $62.90 to $61.71 per barrel at the close of the London stock exchanges on Monday.
The oil price fell following news that Ukraine had agreed to the terms of a peace deal with US representatives, but additional reports suggested Russia could block any modified plans.
Gold is trading at $4,132.40 an ounce versus $4,097.64.
The biggest risers in the FTSE 100 were Airtel Africa with an increase of 19.2 points to 314.80 points, Kingfisher with an increase of 17.5 points to 309.9 points, Burberry with an increase of 52.5 points to 1,168.5 points, Barratt Redrow with an increase of 15.5 points to 393.9 points and Lloyds Banking Group with an increase of 3.3 points. 90.6p.
The biggest fallers on the FTSE 100 were Beazley, down 79 points at 781 points, Intertek, down 278 points, at 4,592 points, Pearson, down 21.8 points, at 985.2 points, BAE Systems, down 31 points, at 1,621 points, and Compass, down 41 points, at 2,408 points.
Wednesday’s economic calendar includes the UK budget, the Beige Book in the US and an overnight interest rate forecast in New Zealand.
Wednesday’s UK corporate calendar includes half-yearly results from property developer Helical, equipment rental firm Speedy Hire and celebration cake retailer Cake Box.
