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25th Nov 2020. 3.11pm

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Sunak’s Spending Review: Stocks to Watch

Chancellor Rishi Sunak released his much-anticipated Spending Review today – designed to help kick-start the UK’s battered economy.

Here’s a few of the key take-aways and how they will impact the stocks we trade…

INFRASTRUCTURE:

Sunak unveils “once in a generation” investment in infrastructure

The chancellor said the government will pour billions into the transport and infrastructure network to keep services running following a collapse in passenger numbers during the pandemic.

The rail network will receive more than £2bn ins subsidies next year and a further £4.8bn will be used to support buses, regional light rail, cycling and Transport for London.

Mr Sunak added the transport network will benefit from a “once in a generation” investment in infrastructure, including upgraded railways and new cycleways.

Stock to watch: CRH (CRH)

Irish cement making giant CRH is well positioned to benefit from increased infrastructure spending in the UK, EU and US.

The shares have finally through a key level of resistance on today’s Spending Review, and should they close and hols above the resistance level, they look an attractive buy.

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CRH Daily Candle Chart

CRH Daily Candle Chart

HOUSING:

Government to spend nearly £20bn on housing

The chancellor announced a £7.1bn national home building fund and confirmed a £12.2bn affordable homes programme.

The chancellor said £4.8bn from the fund will be allocated as capital grant funding to boost development, while £2.2bn will be loaned to smaller builders.

However, estate agents hoping for an extension to the government’s stamp duty holiday were disappointed, with no mention in the chancellor’s speech of prolonging the property tax holiday, which is due to come to an end on March 31.

Stock to watch Barratt Developments (BDEV)

Whilst the homebuilding plans were a positive, failure to extend the stamp duty holiday has left housebuilders looking mixed on the day.

Barratt Developments have carved out a strong uptrend in recent weeks, and today’s price action has seen the shares start to form a bullish hammer candle. Should the shares close near intra-day highs, it would potentially setup a trend continuation trade.

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BDEV Daily Candle Chart

BDEV Daily Candle Chart

RETAIL & HOSPITALITY

Highstreet left without any further reprieve

Retailers and hospitality businesses hoping for further reprieve from business rates were left disappointed.

The business rates holiday, which has saved businesses around £11.8bn is set to end at the end of March.

However, the government said it is also “considering options for further Covid-19 related support through business rates reliefs” with plans to be set out in the New Year.

Stock to watch JD Sport (JD.)

After failing to break above 827p resistance on multiple occasions, JD Sports share price is now looking vulnerable to further selling pressure.

The shares have broken decisively lower during the last two sessions, and with the lack of positive news from today’s Spending Review, we could well see further downside.

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JD. Daily Candle Chart

JD. Daily Candle Chart

Disclaimer:

This research is prepared for general information only and should not be construed as any form of investment advice.