London afternoon: Market takes tax hikes on chin

22nd Jun 2010 14:17

Footsie is still in the red after chancellor George Osborne's first Budget, which contained a huge raft of tax and benefit changes, most of which will raise revenue for the government.VAT is going up from 17.5% to 20%, capital gains tax is rising to a flat rate of 28% while the banks and building societies are being hit with a bank levy based on their balance sheet.So far, the sectors most directly affected are taking the new measures in their stride. Five of the top ten Footsie risers now are retailers with Marks & Spencer, Home Retail and Next leading the way despite the VAT hike. On the FTSE 250, N Brown, Sports Direct and JD Sports are also all going well.Housebuilders are rising, seemingly on the government's decision not to cut capital spending, though it did say it would prioritise when the money is spent. Barratt Developments and Persimmon are the best performers.Lloyds Banking is also going well despite the bank levy, which will be introduced alongside similar taxes in France and Germany.Miners are still lower as the bounce they enjoyed yesterday following the announcement that China is to stop pegging its currency to the US dollar has worn off. Fresnillo and Kazahhmys have both given back some of yesterday's gains. Costa Coffee owner Whitbread earlier gave the Footsie a small caffeine rush after a trading update. Premier Inn and Costa Coffee were the star performers for the hotel and restaurant chain group as it posted a record 7.6% like for like sales rise.British Airways is another blue-chip on the rise. The company has taken a major step towards restructuring its huge pension liabilities after the trustees of its two pensions funds agreed a recovery plan that avoids their closure to members. It should move the merger with Iberia even closer.Electronic sensors firm Halma produced record results for the seventh year in a row and topped analyst forecasts with an increase in adjusted profit of 9%. Profit before tax from continuing operations jumped to £86.2m in the 12 months ended 3 April, up from £79.1m in 2009, trumping expectations of about £82m.Distribution and outsourcing group Bunzl said overall trading is in line with full year expectations with revenue growth of 2%. Operating margin has improved in the six months ending 30 June compared to the same period in 2009 as a result of increases in the UK & Ireland and the Rest of the World.Shares in cigarette vending machine maker Molins went up in smoke after it issued a profit warning. Molins' shares skidded 16% after it warned its full year performance was now lower than previously thought as orders were delayed or cancelled and as it counted rising costs at its Packaging Machinery division.Youth fashion outfit SuperGroup has terminated an agreement with sole trader 888 Clothing whereby 888 sells on eBay SuperGroup garments classified as seconds, and setting up its own in-house eBay offering. Business process outsourcing specialist Xchanging has signed a letter of intent with SIA-SSB, the European leader in financial and payment systems services, to form an Enterprise Partnership.Chemring, the UK military decoy flares and mine detection firm, increased underlying profit in the first half by 7% and has named the successor to chairman Ken Scobie who retires in October after 13 years.