Key Takeaways
- The FTSE 100 rose nearly 1% after Rachel Reeves’ Autumn Budget.
- Banks were the main beneficiaries as the chancellor decided against imposing levies on their profits.
- Housebuilders fell immediately on the announcements but regained ground.
The FTSE 100 was up nearly 1% on the back of Chancellor Rachel Reeves’ speech, with the more domestically focused FTSE 250 also up by a similar amount. UK stock markets had been volatile in the run-up to the speech over fears of taxes on banks, gambling companies, airlines and the wider housing market.
The stock market reaction to the much-anticipated Autumn Budget was relatively benign, but some policy changes had a direct impact on specific sectors and stocks.
The biggest gainer in the FTSE 100, wealth manager St. James’s Place STJ, was up 4.64%, lifted by stronger sentiment towards the financial sector, which also boosted listed banks.
In the FTSE 250, Rank Group RNK was the biggest gainer with a rise of 12.31%, helped by news of an abolition of bingo duty from April 2026.
Wider gambling stocks were not so lucky: “Remote” gaming duty was hiked sharply, a policy trailed ahead of the budget. Shares in Entain ENT, a major player in the online gambling industry, fell sharply initially, but then recovered.
The Biggest Stock Gainers After the Autumn Budget
On a sector level, UK banks rose, driving some of the wider index gains because of their heavy index weighting: Lloyds Banking Group LLOY, Barclays BARC, and NatWest NWG were the main beneficiaries.
Michael Field, chief equity strategist at Morningstar, says that an absence of bank tax helped share prices. He adds that after strong gains this year, banking stock valuations are looking stretched.
Financial services has been the best-performing sector in the FTSE 100 in the year to date, up over 30%.
Matt Britzman, senior equity analyst at Hargreaves Lansdown says:
“UK lenders emerged largely unscathed from today’s Autumn Budget. Shares had been edging higher into the announcement on whispers that the sector would be spared - and a collective sigh of relief once Rachel Reeves took her seat confirmed those rumours, propelling Lloyds, Barclays and peers into the day’s top risers.
“Valuations aren’t as compelling as they were earlier in the cycle, but upside remains. UK banks are well-capitalised, highly profitable, and positioned to deliver stronger shareholder returns through 2026. For investors, the story has moved on from scraping a living to one about steady, disciplined growth,” he adds.
The Biggest Stock Losers After the Autumn Budget
Housebuilders initially fell on the news of changes to council tax on houses worth more than £2 million and the OBR’s downgrade to household disposable income. Stocks like Barratt Redrow BTRW, Persimmon PSN, Taylor Wimpey TW. and Bellway BWY fell more than 4% during the announcement, but have since moved into neutral territory. Berkeley Group’s BKG 1.56% share price fall remains the biggest drop among housing stocks.
Jack Fletcher-Price, equity analyst at Morningstar, says housebuilders are sensitive to macroeconomic factors, which explains higher share price volatility. “The absence of any update on abolishing stamp duty on properties under £500,000 may also disappoint the market. On the proposed mansion tax, confirmed for April 2028, we expect the Conservatives and Reform to pledge its abolition at the next general election—making it unlikely to ever come into effect.”
In addition, a social and affordable home program worth almost £40 billion was announced in the budget, with plans to deliver 1.5 million homes over the next decade.
Morningstar’s Field says items like planning reform and tax relief on specific works should help UK housebuilding stocks. “Expectations were clearly for more however, with shares for the major homebuilders flat today. As things stand though we see great opportunity in the sector.”
Airlines were another targeted sector in the budget, with air passenger duties being updated in line with the Retail Prices Index from April 2027. The government also confirmed last year’s announcement of a higher rate of passenger duty for private jets. Wizz Air WIZZ was up 1.19%, IAG 1.10% and EasyJet EZJ 0.25%.
Will the ISA Changes Boost UK Stocks?
In the budget speech, the chancellor also made changes to the ISA regime with the aim of incentivizing stock market investments in the UK.
Morningstar’s Field says the changes to the ISA allowances might not automatically be directed towards investments in the UK, as the chancellor hoped.
“Last year around £100 billion was saved in ISAs, of which 70% was in cash and the rest in equities. This ratio should change to 60/40, which will mean at least another £10 billion in equities. This is equivalent to around 0.5% of the FTSE 100, but of course there is no guarantee that much of this will be directed to UK equities.”
Caroline Shaw, multi asset portfolio manager at Fidelity International, says: “The outlook for UK equities is less clear cut. Earnings remain fairly uninspiring, and the announcements in today’s budget aren’t enough to improve growth meaningfully.”
“That said, the UK market still trades at a discount, balance sheets are robust, and buyback prospects are decent, while any sterling weakness should provide support for multinational large caps,” Shaw adds. “Given the challenging landscape of policy adjustments and fiscal pressures, we prefer to gain UK equity exposure through active management to take advantage of stock selection opportunities and dispersion between sectors.”
