UK Stocks Surge as New Budget Eases Market Concerns

UK stocks rose on Wednesday following a tax-raising budget by finance minister Rachel Reeves. The FTSE 100 and FTSE 250 posted significant gains, buoyed by the financial and mining sectors. The budget, which aims to increase tax revenue, earned market approval, calming bond concerns and boosting banks and miners.

UK stocks experienced a notable surge on Wednesday, as the financial and mining sectors led gains following the announcement of a tax-raising budget by finance minister Rachel Reeves. The blue-chip FTSE 100 closed the session 0.9% higher, marking its best day in two weeks.

The domestically centered FTSE 250 rose 1.2%, achieving its strongest performance in over a month. Investors responded positively to Reeves's budget, which is designed to increase tax intake from workers, pension savings, and investments to create more fiscal headroom. The Office for Budget Responsibility reported a headroom projection of nearly 22 billion pounds within five years.

Long-term market stability was reinforced as UK 30-year gilt yields saw their largest single-day drop since April, falling 10.5 basis points to 5.21%. Analysts noted the increased fiscal buffer as a key factor in market confidence, with banks and miners registering healthy gains. Heavyweight banks such as Standard Chartered and Barclays saw increases, while mining companies like Fresnillo and Endeavour Mining benefited from rising metal prices.

(With inputs from agencies.)