Wall Street lower as FTSE finishes in the red after Jeremy Hunt’s Autumn statement

FTSE 100 FILE - Chancellor of the Exchequer Jeremy Hunt leaves 10 Downing Street following a Cabinet meeting, the first held by the new British Prime Minister Rishi Sunak, in London, Wednesday, Oct. 26, 2022. Hunt, Britain’s Treasury chief, warned Sunday Nov. 13, 2022, of a coming spending crunch and tax increases for cash-strapped Britons as he bids to fill the “black hole” in the country’s finances. (AP Photo/Frank Augstein, File)
The FTSE 100 took a hit from Jeremy Hunt's windfall tax announcement. Photo: Frank Augstein/AP

The FTSE 100 and European stocks finished this Thursday in the red, with the UK’s benchmark tumbling in the wake of chancellor Jeremy Hunt’s Autumn statement.

On Wall Street, cautious comments from Federal Reserve officials and strong economic data tame enthusiasm sparked by inflation slowdown.

The Dow Jones (^DJI) slipped 0.77% to 33,299 while the S&P 500 (^GSPC) lost 1.20%% to 3,911 points. The tech-heavy Nasdaq (^IXIC) fell 1.11% to 11,059.

James Bullard, who leads the Federal Reserve Bank of St. Louis, said the Federal Reserve may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control.

The FTSE 100 (^FTSE) lost 0.14% to finish at 7,340 , while the CAC (^FCHI) in Paris retreated 0.74% to 6,558 points. In Germany, the DAX (^GDAXI) was flat at 14,240.

Royal Mail owner International Distributions Service (IDS.L) lost 0.96% after reporting a £219m loss as strike action takes its toll.

Ocado (OCDO.L) shares continue to be the worst performer on the FTSE 100 as the Kintbury Capital hedge fund said it expects a 50% downside in the stock at best.

Energy shares were lower after the chancellor announced that the windfall tax on the profits of oil and gas firms will increase from 25% to 35% and extended until March 2028.

BP (BP.L) and Shell (SHEL.L) also took a hit, down 0.31% and 0.43% respectively.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’Share prices of energy generating companies have retreated rapidly as it became clear that the Treasury will scoop up more money which has been falling into their profit baskets as gas prices soared.

Read more: From income tax to pensions: What Jeremy Hunt's Autumn statement means for you

"A much bigger slice of profits of energy giants such as BP and Shell will now also be raked in, with the energy profits levy increased from 25% to 35%. The door was inched open even further on the case for a windfall tax following comments made by Shell’s outgoing boss, Ben Van Beurden, that the tax burden had to fall on the energy sector to help the poorest in society. That’s partly why the reaction has been relatively muted in terms of their share prices.

"Wind farm operator Orsted had already said such a tax is fair if companies are making windfall profits from current high energy prices. However, it along with other generators had already hedged the price of their output well in advance of the current crisis, so won’t have benefited fully from the surge on international exchanges so the nuances of how the tax will work will be important. Now rumours of the levy on electricity generators have become reality shares have fallen back further.

"For the government there is a risk that energy prices will continue to fall back, which will limit what can be creamed off. "

Read more: Autumn statement: Jeremy Hunt's budget will see millions paying more in tax and energy bills to rise to £3k

Meanwhile, Brent crude (BZ=F) has retreated to $90/barrel.

Read more: Bank of England: Bailey warns further interest rate rises likely

In Asia, Tokyo’s Nikkei 225 (^N225) dropped 0.35% to finish at 27,930 while the Hang Seng (^HSI) in Hong Kong tumbled 1.04% to 18,066. The Shanghai Composite (000001.SS) was also in the red, losing 0.15% to 3,115 points.

Watch: What is a recession and how do we spot one?