Market behaviour on the days around Budget Day

The United Kingdom Budget Day used to be in April, after the start of the fiscal year, but these days it is in March, before the end of the fiscal year. The Chancellor of the Exchequer will give his Budget to Parliament this Wednesday, 19 March 2014.

The following charts show the daily returns since 2000 for three asset classes for the three days around Budget Day:

  1. B(-1): the day before the Budget
  2. B(0): Budget Day
  3. B(+1): the day after the Budget

Equities

For example, in year 2000 the Budget was on 21 March, the day before the Budget the FTSE 100 rose 1.04%, on Budget Day the index fell 0.13%, and on the day after the index fell 0.12%.

Daily returns for FTSE 100 for the three days around the Chancellor's Budget (2000-2013)Currency

Daily returns for GBPUSD for the three days around the Chancellor's Budget (2000-2013)Gilts

Daily returns for 8pc Treasury 2021 for the three days around the Chancellor's Budget (2000-2013)Summary

The following two charts give a summary for the three asset classes.

Average returns for three asset classes for the three days around Chancellor's Budget (2000-2013)

Positive returns for three asset classes for the three days around Chancellor's Budget (2000-2013)On average since 2000 the equity market has seen mildly positive daily returns on the day before the Budget and on Budget Day itself. But the most significant observation is that equities have been weak on the day after the budget – since 2000 the market has only risen on three days after the Budget.

Sterling seems to like the Budget, on average GBPUSD has risen for all three days.

Gilts have been weak for all three days, with the weakest day being the day after the Budget.

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