What can markets and traders expect from the Autumn Statement?

In his first set-piece event since becoming chancellor, Philip Hammond is expected to loosen the purse strings – but not a lot.

The government has little room for manoeuvre and it’s expected to show a £100bn Brexit black hole in the public finances. Mr Hammond is expected to create a more flexible fiscal framework, ditching targets to achieve a surplus by the end of the parliament, allowing for some headroom.

He’s expected to announce some fresh spending on infrastructure – something in the region of £15bn has been talked about. This is likely to be targeted at shovel-ready projects that can deliver an immediate boost to growth and ‘future-proof’ the UK economy against Brexit. Infrastructure bonds have been talked about as a means to pay for this.

Slower growth is forecast but so far the UK economy is holding up remarkably well since the Brexit vote. Unemployment has fallen to multi-year lows and retail sales in October rose at the fastest annual rate in 14 years. The task for the chancellor is to outline how the Treasury plans to cope with the “slow motion” slowdown in growth that is still expected to follow.

Which stocks to trade?

 

In equities, individual stocks may be set for gains or losses depending on what Mr Hammond unveils. There is clearly expectations for some more spending on infrastructure – leaving the potential to disappoint quite high. And let’s not forget this is the first set-piece event for the new chancellor so he may want to make his mark with a couple big gestures.

Housebuilders

New measures to help housebuilders, including a £3bn housebuilding fund, could deliver a shot in the arm for small and medium-sized builders, who the fund would be aimed at. FTSE 250 firms like Bellway, Grainger, Redrow and Crest Nicholson are ones to watch. FTSE 100 constituents Barratt, Persimmon and Taylor Wimpey also worth keeping an eye on.

Estate agents

Calls to bin the second home stamp duty charge could benefit estate agents like Countrywide and Foxtons.

Construction

Plans to get projects off the ground could deliver a boost for construction contractors. Stocks like Balfour Beatty, Costain and John Laing could be among those to follow. Ashtead and CRH – among the big risers since Donald Trump’s victory – are also worth watching.

Outsourcers

Government spending plans usually affect outsourcers – watch Bunzl, Mitie (which reports Monday), and Capita.

Airlines

Help for so-called ‘Jams’ (Just about managing) could involve a cut to air passenger duty to offset to increasing cost of foreign holidays post Brexit. Airlines like IAG and EasyJet may be pleased if Mr Hammond opts for this relatively easy win for the chancellor.

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