31st March 2014
Following a strong performance in February, the FTSE 100 index of the UK’s top firms has taken a tumble in March as the Budget hit home writes Philip Scott.
The index closed on Monday at 6,598.37, 17.21 points down on the day and 3% off over the month of March.
After the Chancellor’s mid-month Budget speech during which he declared that from next year retirees would not have to buy an annuity, shares in insurers and pension providers plummeted.
In the biggest shake-up of the UK’s pensions industry in decades, Osborne said: “Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits.”
The worst hit over March among the blue chips is life insurer Resolution, off 21% at 298.8p. The situation for the firm was exacerbated after the City watchdog, the Financial Conduct Authority, revealed last week that it plans to undertake a review into so-called zombie funds, an asset class which Resolution specialises in.
Fellow insurer Legal & General saw its shares fall by 15% to 204.7p over the month while bookmaker William Hill was also hit by the Budget. Its shares dived by 14% to 341p after the Government said it plans to introduce a new 25% rate of tax on betting machines, which would have reportedly slashed some £22m of the turf accountant’s profits last year.
Miner Fresnillo has been left nursing a 11% loss over the month, closing at 843.5p, while Vodafone fell 12% to 220.3p.
The UK’s supermarkets did not fare so well either, with Tesco down by 10% to finish the month at 295.4p. Morrison, after some disappointing full year results, fell 9% to 213p while Sainsbury’s loosened 8% to 316.1p over the period.
Industrial equipment rental specialist Ashtead Group, enjoyed the strongest rise among the top flight, rising 9% to 951p after it reported a robust increase in third-quarter revenue, spurring the firm onto raising its full-year profit forecast.
Engineer Rolls-Royce, which has won a $50m US marines contract jumped by 8% to 1,074p while B&Q owner Kingfisher also saw its stock jump by 8% to 421.4p, helped by its report that profits for the year to 1 February rose by more than 4% to £744m.
Also enjoying a rise over March was Sports Direct International, 6% better at 852p while Petrofac rose 5% to 1,438p.