UPDATE: As the UK braces for the critical Budget announcement on November 26, three key FTSE 100 stocks are under intense scrutiny as their fortunes could shift dramatically based on Chancellor Rachel Reeves’ decisions. Investors are on high alert following a week of market volatility, particularly with concerns surrounding the artificial intelligence sector.
Lloyds Banking Group (LSE: LLOY), which has seen its shares surge 60% in the past year, could face a major setback if Reeves imposes a windfall tax on banks. The current profit surcharge could increase from 3% to 8%, impacting future profits that are already forecasted at £4.5 billion for 2024, down from £5.5 billion in 2023 due to one-off costs, including a £700 million provision for motor finance mis-selling. The company’s management has announced a £1.7 billion share buyback, bringing total capital returns to £3.6 billion, including dividends. Investors are advised to weigh their options carefully as Budget day approaches.
Meanwhile, budget airline EasyJet (LSE: EZJ) is struggling, with its share price down 9.5% over the last year and 25% over five years. Despite strong holiday bookings, the airline faces a looming 15% increase in air passenger duty starting April, which has industry leaders calling for its repeal. With a current P/E ratio of 7.5, EasyJet is regarded as a potential bargain, but investors should be cautious, as past performance has not yielded significant gains.
In the gambling and gaming sector, Entain (LSE: ENT) presents an intriguing gamble with a P/E of 23. Although shares have dropped 3% in the past year and a staggering 45% over three years, the company’s joint venture with MGM Resorts in the US is thriving. Tax hikes on ‘sin stocks’ could impact its profitability, but the booming US market might cushion the blow. Investors should remain vigilant as Budget announcements could heavily influence market reactions.
The focus on these stocks highlights the uncertainty gripping investors ahead of the Budget. With only a few days left, analysts suggest that the volatility in the market may present both risks and opportunities for long-term investors.
As we approach Budget day, keep a close eye on these developments. The potential implications for Lloyds, EasyJet, and Entain could significantly affect their stock prices and broader market sentiment. It’s a critical moment for investors looking to navigate the challenges and opportunities presented by the upcoming announcements.
Stay tuned for real-time updates as the Budget unfolds and its impact on FTSE 100 stocks becomes clear. This week promises to be a pivotal one for UK investors.
