By Carla Mozee, MarketWatch
Standard Chartered upgraded; Pound sees 2010 low
LONDON (MarketWatch) -- Stocks climbed in London Wednesday,
extending gains after the government laid out its budget, but the
pound was hit as comments from the Bank of England underscored
expectations that interest rates will be left on hold.
Stocks: The FTSE 100 rose 1.6% at 6,945.20 and the midcap FTSE
250 rose 0.9% to 17,363.74, after Chancellor of the Exchequer
George Osborne presented the coalition government's 2015 budget to
lawmakers. It is the final budget before the U.K. general election
in May.
The budget generally met projections, "with all the giveaways
that one might expect to various constituents," said Nick Beecroft,
senior market analyst at Saxo Bank.
The chancellor discussed overhauling taxes for the North Sea oil
industry, which has been hurt by the slide in oil prices. The
measures could add up to GBP1.3 billion in tax reductions. Shares
of major oil companies Royal Dutch Shell PLC and BP PLC each
bounced up 2.4%, and BG Group PLC turned higher by 1%.
Housing stocks stayed higher, with the "imaginative idea of
matching a 25% contribution to whatever people save toward home
deposits," Beecroft said. Home builder Taylor Wimpey PLC climbed
2.6%, Barratt Developments PLC rose 1.3% and Persimmon PLC gained
0.9%.
Bank shares largely held to gains after Osborne announced plans
to increase an annual bank levy by 0.21%, a move he said will raise
GBP900 million to support economic recovery following the financial
crisis. HSBC PLC ended up 1.6% and Barclays PLC picked up 0.9%.
Lloyds Banking Group PLC managed to turn 0.1% higher, after
slightly extending losses after Osborne said the government will
sell more than GBP9 billion shares in the lender this year. The
bank is roughly 24% owned by the government, stemming from its
bailout in 2007.
Stock in Royal Bank of Scotland also turned higher by 0.3%.
Standard Chartered PLC rallied 8.1%, extending gains as the
Asia-focused bank started the session with a ratings upgrade to
overweight from equal weight at Barclays.
Among the few decliners on the FTSE 100, enterprise-software
maker Sage Group PLC and brewer SABMiller PLC each slipped 0.1%.
Automobile and aerospace components maker GKN PLC ended
fractionally lower.
Osborne outlined plans to tackle tax evasion that would raise
GBP5 billion a year, including a 25% tax on profit of some
multinational firms detailed in December
(http://www.marketwatch.com/story/uk-lays-out-how-google-tax-will-work-2014-12-11).and
a "Google Tax" starting April 1.
Osborne also outlined forecasts from the Office for Budget
Responsibility
(http://www.marketwatch.com/story/uk-budget-forecasts-strike-upbeat-tone-for-economy-2015-03-18),
including a 2015 growth forecast of 2.5%, up from 2.4% estimated in
December.
Sterling: The pound (GBPUSD) fell to $1.4664 from $1.4749,
knocked back to levels last seen in mid-2010. Minutes from the Bank
of England's March policy meeting
(http://www.marketwatch.com/story/bank-of-england-sounds-alarm-over-stronger-pound-2015-03-18)
showed officials are concerned the pound's rise against currencies
of the U.K.'s key trading partners will weigh on prices for
imported goods, keeping inflation levels lower for longer.
Annual inflation was running at 0.3%, below the bank's 2%
target, giving little reason for policy makers to raise the
benchmark rate from 0.5%. All nine policy members in March voted to
hold the rate steady.
At the same time, January data from the Office for National
Statistics released Wednesday
(http://www.marketwatch.com/story/uk-employment-improves-but-wages-disappoint-2015-03-18)
showed annual wages grew by 1.6% excluding bonuses. Analysts polled
by FactSet had expected growth of 1.8%.
"The recent positive run of earnings data has countered the low
headline inflation readings, but this lower wage growth is now
concerning," wrote Alex Edwards, head of the corporate desk at
UKForex, in a note.
Investors will turn to the Federal Reserve's policy statement
due after trading closes in the U.K.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
