Market Numbers 21st March 2014, Budget Comment plus Headlines

S e w e l l B r y d e n G u n n

Market Numbers 21st March 2014, Budget Comment plus Headlines
The key take aways from this year’s Chancellor’s Budget on Wednesday were effectively increased ISA allowances (the normal increase at 6th April followed by a further increase to £15,000 for a combined cash and/or equities ISA allowance with effect from July this year) and a change to the way people can access their pension funds (this latter announcement is yet to be fleshed out but effectively halts the requirement for most people to buy a “Compulsory Purchase Annuity” with their pension fund(s) at point of retirement).
Business investment received a helping hand with further incentives announced and the personal allowance of income earned before being subject to tax was raised to £10,500.
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Comments that the personal allowance should be raised to match the minimum wage – £13,000 – are not without basis and credibility. Nevertheless, setting aside political posturing and the usual “hunt for the loopholes”, the general consensus appears to be that this Budget, with it’s far reaching pension reform, is well received. Of course more can be done – for example the 20% VAT rate, whereby another fifth of the cost of a thing is added to the bill, for the lower paid who just about cover their expenditure with any income earned is effectively a full 20% “income tax” with no personal allowance – it could be argued that some mechanism should be found to return this but perhaps this would be too costly to the Treasury at this stage in our economic recovery.
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Pensions “will have never had it so good” – by allowing people to access their hard earned pension funds with relatively little restriction, Chancellor Osborne has created a new breed of pensioner who will now have the freedom to choose how to finance retirement that best suits their own situation. There will be many in the Annuity Business who will have thrown their hands up in horror as they saw their pretty much guaranteed way of life swept away as a result of this one single announcement.
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BUT sensible people who are serious about managing their money will also have realised that with this new found freedom comes a degree of risk and they would do well to get independent financial advice from a suitably qualified professional – Of course I would advocate a CHARTERED FINANCIAL PLANNER such as SEWELLBRYDENGUNN (www.3sbg.net), but then I would, wouldn’t I ?!
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There are many financial planning assumptions and opportunities which will now need further exploration once the detail of the Budget has been fleshed out.
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MARKET NUMBERS
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The FTSE 100 closed at 6557.17 +29.28 points +0.45% on previous weeks close 6527.89
+164.41 points +2.57% against a year ago at 6392.76
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“In House”, we regard the FTSE 100 index as being somewhat volatile so that direct comparison with more balanced or cautiously constructed portfolios will not always give an appropriate result although reviewing the index is useful as a general guide to market activity in the larger capitalised market.
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Sectors which performed well over the last week include:
Basic Materials (Chemicals, Forestry & Paper, Mining and Industrial Metals & Mining), which closed at 5276.44 +1.4% on the week
Industrials (including Engineering, Aerospace, Electrical and Support services), which closed at 4540.01 +1.4% on the week
Utilities (Electricity, Gas Water & Multi utilities), which closed at 8585.23 +1.8% on the week.
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Life Insurance/Assurance (within Financials) took a hit, closing at 7024.30  -2.9% on the week following the Budget Announcement about pensions and annuities.
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Brent Crude closed at 106.92 (last week 108.57)
Bank of England Base (Repo) Rate at 0.50% (since 05/03/2009)
One Pound GBP buys 1.6628 USD and 1.1941 EUROS
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A PERSONAL VIEW : by Neil A Sewell:      Copper price declines recently have been noticeable despite no obvious signs of disruption to supply or demand. China has tended to dominate the copper market so it is reasonable to leap to the conclusion that copper stocks languishing in Chinese warehouses point to an easing of demand which is possibly caused by a change in China’s internal credit market. Copper has been used as collateral for credit deals in the past which may well have impacted (up) recent historic copper pricing. Now the signs may be there that perhaps the frequency of such deals is on the wain and the resulting demand for copper is too….(Neil Sewell writes “these are my own views and not those of SewellBrydenGunn nor of SCM Finance)

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