Comment: US and UK Market Reactions to Fed Policy Meeting and UK Budget
March 20, 2014 10:42 am
US markets closed out yesterday in the red and European markets opened in the red this morning, mostly due to yesterday’s surprising announcement by Janet Yellen. In her first monetary policy meeting, the new Fed Chair opened the way to an increase in the interest rate sooner than expected (possibly as soon as mid-2015), as well as stating her intention to reduce monthly asset purchases by $10 billion, down to a rate of $55 billion per month.
Meanwhile, the UK Stock Market reaction to yesterday’s budget speech by Chancellor George Osborne was decidedly mixed. Whilst helping individual savers, the scrapping of compulsory annuities led to a sharp drop in the value of Britain’s biggest life insurance companies, with Legal & General and Resolution both dropping by 13%. Also hit hard were Aviva and Standard Life, falling 6%. Of the Big Five, Prudential saw the smallest decrease in share price, but its drop of 2% still wipes off £850 million of its company valuation. Retail Investment Companies were the big winners from the Budget, with Hargreaves Lansdowne shares rising by 6% and both Savills and AXA S.A opening strongly this morning.
Betting companies were also losers, as the Chancellor announced a sharp increase in duties (25%) on Fixed Odds Betting Terminal profits. Ladbrokes, as the company with the greatest percentage of gross profits from the machines, was the heaviest hit, its shares dropping by 11%, with both William Hill and Paddy Power also affected by the decision.
US markets closed out yesterday in the red and European markets opened in the red this morning, mostly due to yesterday’s surprising announcement by Janet Yellen. In her first monetary policy meeting, the new Fed Chair opened the way to an increase in the interest rate sooner than expected (possibly as soon as mid-2015), as well as stating her intention to reduce monthly asset purchases by $10 billion, down to a rate of $55 billion per month.
Meanwhile, the UK Stock Market reaction to yesterday’s budget speech by Chancellor George Osborne was decidedly mixed. Whilst helping individual savers, the scrapping of compulsory annuities led to a sharp drop in the value of Britain’s biggest life insurance companies, with Legal & General and Resolution both dropping by 13%. Also hit hard were Aviva and Standard Life, falling 6%. Of the Big Five, Prudential saw the smallest decrease in share price, but its drop of 2% still wipes off £850 million of its company valuation. Retail Investment Companies were the big winners from the Budget, with Hargreaves Lansdowne shares rising by 6% and both Savills and AXA S.A opening strongly this morning.
Betting companies were also losers, as the Chancellor announced a sharp increase in duties (25%) on Fixed Odds Betting Terminal profits. Ladbrokes, as the company with the greatest percentage of gross profits from the machines, was the heaviest hit, its shares dropping by 11%, with both William Hill and Paddy Power also affected by the decision.
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