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What to watch: Pound rises ahead of budget, Stellantis dividend, Persimmon soars, European PMIs

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Tom Belger
·Finance and policy reporter
·5 min read
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The pound was trading higher ahead of the UK budget. Photo: Artur Widak/NurPhoto via Getty Images
The pound was trading higher ahead of the UK budget. Photo: Artur Widak/NurPhoto via Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Pound edges higher ahead of UK budget

The pound was trading higher against the dollar (GBPUSD=X) and euro (GBPEUR=X) on Wednesday, as traders awaited the UK government's budget announcement later in the day.

Sterling was up 0.2% against both currencies in early trading, hovering around $1.398 and $1.156 shortly after 10am in London.

It has declined from last week's highs after a wider market sell-off amid rising bond yields on Friday. But it remains close to its highest level against the dollar since April 2018 and the euro since February 2020. Britain's more rapid vaccine rollout than much of the world has fuelled demand for the currency and UK equities.

UK and European stocks higher as investors mull budget and PMI data

European stock markets also opened higher on Wednesday, with attention on PMI data and the UK government's looming budget announcement.

Chancellor Rishi Sunak will unveil the government's tax and spending plans, including a September extension to the furlough scheme which has safeguarded millions of jobs during the pandemic. Some newly self-employed workers previously excluded from help will also now be eligible for grants.

Watch: Chancellor to extend furlough scheme until September as he unveils Budget

Investors will be looking at the scale of stimulus measures and government borrowing with Britain's economy still hobbled by lockdown restrictions, as well as the latest economic forecasts and the impact of new announcements on particular sectors. Reports a stamp duty holiday in England and Northern Ireland will be extended sent housebuilding stocks flying earlier this week.

Services PMI data also provided clues about the impact of lockdowns on European economies. IHS Markit's bellwether survey showed most UK, German, French services firms contracting, with a composite eurozone figure also indicating decline in trade. But the eurozone figure came in better than expected by analysts.

READ MORE: 125,000 UK employers have handed back £708m in furlough grants

The FTSE 100 (^FTSE) rose 1.1% in early trading on Wednesday, while the FTSE 250 (^FTMC) was 0.7% higher. Investors appeared to shrug off or take the positives from Britain's services PMI figures, which showed business optimism at a 14-year high and conditions stabilising, with a pick-up in trade even though most firms still reported decline.

Elsewhere in Europe, the CAC (^FCHI) in France was up 0.8% and the DAX (^GDAXI) in Germany trading 1% higher.

Meanwhile US futures were pointing to a higher open on Wall Street later in the day, after declines on Tuesday. S&P 500 futures (ES=F) were 0.7% higher, Dow futures (YM=F) also up 0.7%, and Nasdaq futures (NQ=F) 1% higher as trading got underway in Europe.

Asian stocks had rallied overnight. China's SSE composite index (000001.SS) surged 2%, the Hang Seng in Hong Kong (^HSI) rose 2.7%, and Japan's Nikkei (^N225) closed 0.5% higher.

"Supporting this has been stronger February services and composite PMIs for many Asian countries," said Reid.

Persimmon optimistic about 2021 as profit takes a hit

Housebuilder Persimmon (PSN.L) announced its total revenues and underlying profit before tax both took a hit in 2020 amid the economic fallout of COVID-19, but the company is eyeing a full recovery to pre-pandemic levels.

The company was among the FTSE 100's (^FTSE) top risers on Wednesday morning, with shares up 4.7%.

The group's total revenues for 2020 were £3.3bn ($4.6bn), down from £3.6bn in 2019, with new housing revenues of £3.1bn, down from £3.4bn a year ago.

Profit for 2020 was £784m, down from roughly £1bn in 2019. Persimmon made 13,575 completions over 2020 14% below 2019 but in line but with expectations, as record sales in the second half mitigated production down 50% in the second quarter.

Stellantis: Newly merged Fiat and Peugeot approve €1bn investor payout

Stellantis (STLA.MI), the newly merged Fiat and Peugeot, has approved a €1bn (£860m, $1.2bn) payout to shareholders alongside its annual results.

Stellantis said on Wednesday its board had approved a €1bn cash distribution for investors as detailed under in the merger agreement between Fiat Chrysler Automobile (FCA) and Peugeot-owner PSA. The payout is still subject to shareholder approval at Stellantis' AGM in mid-April.

Details of the shareholder return came as Stellantis reported annual results for its two operating companies. The $52bn merger between FCA and PSA completed in mid-January 2021 and Stallantis reported results for the two businesses separately.

FCA, which owns brands like Fiat, Chrysler and Maserati, saw sales fall 20% to €86.6bn as the COVID-19 pandemic hit demand. The business made a net profit of just €24m, down 99% on the prior year. The company said performance improved towards the end of the year, with record adjusted profits in the fourth quarter.

PSA, which owns the likes of Citroën and Vauxhall, said revenue fell 18.7% to €60bn due to the pandemic. Operating profit was more resilient than at FCA, dropping from €6.3bn in 2019 to €3.6bn.

Watch: What is a budget deficit and why does it matter?