U.K. stocks dropped, ending a two-day rally, led by a slump in insurers after Chancellor of the Exchequer George Osborne removed rules requiring retirees to buy pension annuities.
Legal & General Group Plc lost 8.4 percent and Resolution Ltd. fell 4.6 percent. William Hill Plc dropped 6.8 percent. Smiths Group Plc retreated 3.7 percent after reporting first-half revenue that missed analysts’ estimates. Antofagasta Plc declined 5.3 percent after Deutsche Bank AG and Credit Suisse Group AG downgraded the stock. Barclays Plc rose 2.3 percent after people familiar with the matter said it will sell its index business.
The FTSE 100 Index lost 32.15 points, or 0.5 percent, to 6,573.13 at the close of trading in London. The gauge climbed 1.2 percent in the past two days after President Vladimir Putin said Russia isn’t seeking to partition Ukraine. The FTSE All-Share Index dropped 0.4 percent today, and Ireland’s ISEQ Index fell 1.3 percent.
“The insurance companies are still a very significant proportion of the FTSE 100 and they have just been rumbled, as the annuity business has been a secret little earner for these companies for many years,” said Justin Urquhart Stewart, who helps oversee about $7 billion at Seven Investment Management LLP in London. “Anybody who provides annuities will see their shares heavily hit.”
Osborne set out his penultimate budget before the 2015 election. Among other changes to pension rules, he said he would guarantee that people retiring on defined-contribution pensions will be offered “free, impartial advice” on their retirement choices.
Legal & General, the largest manager of U.K. pension assets, lost 8.4 percent to 211.2 pence. Resolution, the insurance buyout firm founded by Clive Cowdery, fell 4.6 percent to 335 pence. Aviva Plc, the UK’s second-biggest insurer by market value, fell 5.2 percent to 490.4 pence. Standard Life Plc dropped 3.1 percent to 354 pence.
William Hill fell 6.8 percent to 351.5 pence and Ladbrokes Plc slumped 12 percent to 140.4 pence after Osborne announced higher duty on in-store gaming machines.
Hargreaves Lansdown Plc, the U.K.’s biggest retail broker, jumped 14 percent to 1,504 pence. The Chancellor of the Exchequer said all U.K. workers who retire on defined contribution pensions will be offered free financial advice.
In the U.S., Fed officials will end a two-day policy meeting today and will probably announce a $10 billion cut in monthly bond buying to $55 billion after the close of European markets, according to economist forecasts. Chair Janet Yellen will then speak. Economists forecast the Federal Open Market Committee will continue reductions at that pace at every meeting before announcing an end to the program at its Oct. 28-29 gathering.
The Fed will also scrap its 6.5 percent jobless rate threshold to adopt qualitative guidance for signaling when it will consider raising the benchmark interest rate, economists said in a survey. Payrolls rose more than projected last month and unemployment fell to 6.7 percent from 7 percent in November.
Smiths Group lost 3.7 percent to 1,301 pence. The producer of security scanners said revenue fell 2.2 percent to 1.44 billion pounds in the six months through Jan. 31, missing analysts’ estimates of 1.48 billion pounds.
Antofagasta tumbled 5.3 percent to 785 pence. Deutsche Bank lowered its rating to sell from hold, and Credit Suisse lowered it to underperform, the equivalent of sell, from neutral.
Barclays gained 2.3 percent to 241.5 pence. The second-largest U.K. lender by assets is planning to solicit offers in the next month for its index business, which could fetch $400 million in a sale, people with knowledge of the matter said.