European markets tread water as traders await UK budget
European markets had a softer start on Wednesday as traders look ahead to the UK’s autumn budget.
After 12:30pm UK time, chancellor Rishi Sunak will outline the next steps in Britain’s recovery plan from the coronavirus pandemic.
This will include the government’s plans for raising or lowering taxes, as well as big decisions on what the government will spend money on.
“With all the briefings that have been taking place since the weekend there would appear to be little in the way of surprises when the chancellor of the exchequer gets up to speak later today,” Michael Hewson of CMC Markets said.
“Most of the content appears to have already been pre-briefed much to the displeasure of the Speaker of the House of Commons. These include increases to public sector pay, a huge cash injection for the NHS, investment in regional transport, skills, housing, and education, along with a freeze to fuel duty, however the devil will be in the detail, in terms of how much it is all likely to cost.”
Traditionally any impact from the measures announced tends to move sterling, although there could be some market impact in terms of specific sectors and perhaps general sentiment.
Read more: Budget 2021 preview: What to expect from chancellor Rishi Sunak
Across the pond, S&P 500 futures (ES=F) were up 0.1%, Dow futures (YM=F) also climbed 0.1%, and Nasdaq futures (NQ=F) were 0.2% higher as trade began in Europe.
Wall Street continued to surge on Tuesday, with the Nasdaq joining the S&P and the Dow in setting new record highs, as optimism over company earnings continued to offer a tailwind for stocks.
Richard Hunter, head of markets at Interactive Investor, said: “Investors are riding the wave of surging company earnings, as the reporting season continues to outpace expectations.”
Watch: Wall Street hits record but Facebook weighs
Hong Kong led most Asian markets lower on Wednesday with tech firms in the firing line after China Telecom was banned from the US over national security concerns.
The Hang Seng (^HSI) fell 1.7% while the Shanghai Composite (000001.SS) dipped 1% and the Nikkei (^N225) was flat in Tokyo.
The US Federal Communications Commission (FCC) voted to revoke the company’s licence in America, meaning it now must discontinue US services within 60 days.
China Telecom is the largest Chinese telecommunications company, and has had authorisation to provide its services for nearly 20 years in the United States.