FTSE 100 : The £40 billion gamble

In a daring debut, the government has rolled out its inaugural budget since seizing power in the UK last July. The centerpiece? A substantial £40 billion tax increase aimed at rejuvenating public services.

"I have made my choices. Responsible choices," Chancellor of the Exchequer Rachel Reeves said. The most contentious tax hike targets national insurance contributions, a move that businesses dread, expected to rake in over half of the new revenue—£25 billion annually. Other revenue sources include increased capital gains tax, VAT on private schools, and the end of energy subsidies for millions of pensioners. The Office for Budget Responsibility (OBR) forecasts that the UK's tax burden will climb from 36.4% of GDP in 2024/2025 to a record 38.3% in 2027/2028. Former Conservative Prime Minister Rishi Sunak said the budget is a "classic Labour agenda: more taxes, more borrowing, no growth plan, and workers bearing the brunt."

The FTSE 100 was down 0.6% this morning, following a 0.7% slide on Wednesday. US economic data remains a focal point, with a recent report showing stronger-than-expected private job growth. The core personal consumption expenditures inflation gauge was higher than expected, but the headline PCE reading fell below 2%, which doesn't strengthen the case for further Fed rate cuts.

In corporate news, Shell reported a decline in third-quarter earnings due to lower crude prices and weaker refining margins. Revenue fell 7.1% and pretax profit dropped 36%. Despite this, Shell announced a USD3.5 billion share buyback and maintained its dividend.

Vodafone is in early-stage talks to acquire parts of Telekom Romania Mobile Communications from Hellenic Telecommunications Organization. The deal is still subject to due diligence, and financial terms have not been disclosed.

Coca-Cola HBC raised its revenue growth outlook for 2024, while Smith & Nephew lowered its yearly outlook due to challenges in China, reducing its revenue growth prediction to around 4.5%.

J Sainsbury's announced the sale of its Argos Financial Services card portfolio to NewDay Group for £720 million. The deal includes a partnership to create a new Argos-branded digital credit proposition.

Key economic events include eurozone unemployment and CPI data, UK Bank of England Deputy Governor Sarah Breeden's speech, and US personal consumption expenditures and initial jobless claims data.

Things to read today:

• Rachel Reeves bets on public spending increases in budget winning over voters (Guardian)
• Lost Mayan city found thanks to laser mapping (Wired).
• How many continents are there? The answers may not please you (New York Times).
• Swiss watchmakers forced to convert to social media (Bloomberg).