From Morningstar: 2024-10-28 06:21:52

The Labour Party’s annual conference saw Sir Keir Starmer warn of “painful” measures in the upcoming Budget to address public finances. The caution was aimed at both the public and markets, mindful of past budget dramas. FTSE 100 stocks, with overseas revenue, may not be heavily impacted by potential tax hikes.

The Budget announcement may not be all bad news, offering clarity and reducing uncertainty for investors. Sectors like gambling may face challenges, with Flutter shares falling after tax levy reports. Wealth management companies could benefit from increased need for advice, like St James’s Place, which has seen a share price rebound.

St James’s Place, the UK’s largest financial advisor, has seen its share price rise after regulatory changes and improved financial results. The company’s focus on advice could offset any negative impact from tax increases. With record assets under management, the company remains undervalued despite recent share price gains. James’s Place (STJ) has a Quantitative Economic Moat of None, a Quantitative Fair Value Estimate of £10.33, a Quantitative Morningstar Rating of 3 stars, and a Quantitative Morningstar Uncertainty Rating of Very High. Capital Gains Tax changes may be on the horizon, with speculation of an increase up to 24% or even 39%. Investors are concerned about the potential impact on investing behavior and await the government’s spending plans on infrastructure and energy. The chancellor’s tweaking of the UK’s “fiscal rules” could unlock more borrowing for big project spending, impacting gilt yields. The Budget may also address planning reforms that could benefit housing stocks. The UK’s appeal as a place of innovation and entrepreneurialism may be at risk due to regulation. The balance between regulation and fostering investment is delicate, with recent controversies highlighting the challenges. Business relationships are fragile, with messaging and government positions under scrutiny. The Budget will reveal the government’s stance on these issues. 1. The stock market reached record highs today, with the S&P 500 closing at 4,500 for the first time ever. This marks a significant milestone in the recovery of the economy following the impact of the COVID-19 pandemic, with increased investor confidence driving the surge in stock prices.

2. In other news, the Labor Department reported that jobless claims fell to 310,000 last week, the lowest level since the start of the pandemic. This indicates a strengthening job market and a positive sign for the overall economy as businesses continue to reopen and hire new employees.

3. Climate activists are celebrating as the Biden administration announced plans to cut methane emissions by 30% by 2030. Methane is a potent greenhouse gas that contributes to climate change, and this new initiative is aimed at reducing its impact on the environment and mitigating the effects of global warming.



Read more at Morningstar: Will Labour’s First Budget Spook Stock Markets?