Budget 2024: stocks on the move

Plenty of company shares were given a lift by this Labour government’s first major fiscal event. Here are some of the companies lighting up trading screens.

30th October 2024 15:15

by Lee Wild from interactive investor

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Well, Budget Day 2024 was worth waiting for. While it wasn’t all good news, and as investors digested the expected increase in rates of capital gains tax (CGT), Chancellor Rachel Reeves offered enough to give individual stocks and sectors a boost.

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On the FTSE 100, the energy sector was bid up as the outcome of this budget could have been worse. Reeves said Energy Profits Levy (EPL) would go up by three percentage points to 38% and the 29% investment allowance is removed. The levy will also be extended until 31 March 2030.

However, 100% first-year allowances in the EPL will remain. And there is also recognition that the oil industry needs long-term certainty on taxation. A consultation on how the taxation of offshore oil and gas will respond to price shocks once the EPL ends will be published early next year.

There’ll be a separate consultation on new environmental guidance for assessing end use emissions which “seeks to provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations.”

An initial response from FTSE 100 plays Hunting (LSE:HTG) and Harbour Energy (LSE:HBR) was positive. Small-cap oil explorers were in demand, too, with many posting double digit percentage gains. Jersey Oil and Gas (LSE:JOG) soared as much as 60%, Seascape Energy Asia Ordinary Shares (LSE:SEA) added 16% and Serica Energy (LSE:SQZ) 15%.

A commitment to generous defence spending had a positive impact on BAE Systems (LSE:BA.), Chemring Group (LSE:CHG) and Babcock International Group (LSE:BAB). Reeves said the government would continue to earmark £3 billion a year for Ukraine for “as long as it takes” and that the defence budget will “comfortably exceed” the NATO spending target of 2% of GDP. A path to spending 2.5% of GDP on defence will be outlined “at a future fiscal event”.

Boozers were in merry mood too. The Budget reduces duty on qualifying draught products – about 60% of alcoholic drinks sold in pubs – from February next year. That cuts duty bills by over £85 million a year and the price of an average strength pint by a penny. Meanwhile, alcohol duty on non-draught products increases in line with RPI inflation.

What’s more, eligible retail, hospitality and leisure properties will get 40% relief on their business rates liability for 2025-26. No surprise, then, that investors raised a glass to Mitchells & Butlers (LSE:MAB), Marston's (LSE:MARS) and Wetherspoon (J D) (LSE:JDW).

And banks appear to have avoided any extra tax levies on profits. Barclays (LSE:BARC) and NatWest Group (LSE:NWG) shares are higher, although poor old Lloyds Banking Group (LSE:LLOY) is still reeling from Friday’s court verdict on motor finance which could results is substantial compensation claims.

Elsewhere, an initial bullish reaction at easyJet (LSE:EZJ) and International Consolidated Airlines Group SA (LSE:IAG) has been partially unwound as investors pick over the details of this budget. Air Passenger Duty rates for 2026-27 will go up by a modest £2 for short‑haul flights in economy class.

AIM shares were moving in the right direction, despite tax benefits being halved. That’s because investors had been expecting worse than the 20% tax now applied to inheritance tax (IHT) on AIM assets.

The FTSE AIM All-Share index rallied 3.9% to 744, but you have to put this in context. Less than six months ago, the index was trading at 810, and way above 1,300 a little more than three years ago. This decision does the junior market no favours.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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