FTSE 100, in opposite to British pound, declined on the back of budget announcement
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UK stocks deepend decline after budget announcement
While the pound didn't show many signs of reaction to today's budget announcement by Chancellor Hunt, UK stocks took a further dive with the FTSE100 reaching the lowest level since December 2022. Some of this negative sentiment is certainly tied to the prospect of a crisis in the banking sector sparked by the collapse of several high profile US banks but many are now asking themselves how this new budget by the UK government will impact economic prospects moving forward. Furthermore, expectations of inflation have been lowered further from previous estimates to 2.9% which may prompt a modified reaction by the Bank of England as we head to the end of the year. The pound continues to hover around the 1.205 region against the US dollar after the greenback seemed unimpressed with US retail sales and PPI data, but any major news may lead to a significant reaction across asset classes. In conclusion, many of the measures announced today were somewhat expected and certainly were perceived better than the "mini-budget" announcement by the Truss cabinet, which now famously caused a crash in the pound. It remains to be seen how much of it will be able to be implemented as businesses and consumers continue to struggle with cost of living and economic uncertainty.
