Weekly Market Update: 30th Oct
30/10/2026
Rachel Winter discusses the market reaction to the Autumn Budget, Anthropic’s IPO filing, and the big movements in the Brazilian equity index.
Transcript
Good morning and welcome to the Killik & Co market update.
Let’s start with the UK for a change as we’ve had the Autumn budget this week.
Overall the market reaction was very minimal. We tend to look at movements in UK government bond prices and the pound sterling as this shows the willingness to retain UK assets, and there was hardly any movement in either of these following the chancellor’s speech.
Overall the consensus was that the budget was not damaging to the economy, but that some big decisions had been kicked down the road, such as tackling the unsustainable welfare spending.
The OBR’s economic and fiscal outlook that was released alongside the budget was a bit gloomy but not unexpectedly so. The very first line of the executive summary was “The UK’s economic and fiscal position remains very challenging”, with a key reason being the higher inflation that has been caused by higher energy costs, over which we have little control as we are reliant on energy imports.
While the broader market reaction was limited, there were some movements in particular sectors. Primarily the banks. Banks currently pay the standard rate of corporation tax which is 25%, plus an additional surcharge of 3%.
It has been expected that this surcharge might be raised to 8%, because banks have been beneficiaries of the rise in interest rates that has taken place since 2022. Here is the net interest income for Lloyds since 2020 – a broadly upward trajectory.
The fear of higher taxes had been weighing on the bank share prices. Here are natwest, Lloyds and barcalys over the past 15 years. You can see they they have dropped in the last couple of months on fears of more tax. In the end, an additional surcharge of 3% was added for a temporary period of 15 months. This wasn’t as bad as feared and bank shares rose on the day.
Housebuilders were disappointed by the budget. They had been hoping for more support for first time buyers which would prop up the housing market, but the support was less extensive than hoped and furthermore some of it will start later than hoped – the new first time buyer ISA will not commence until April 2029. Here are the shares of taylor Wimpey, persimmon and Barrat over the last 15 years. They were huge beneficiaries of low interest rates and government support, but they have dropped as interest rates have risen and support has been withdrawn.
There was some excitement on Monday when Anthropic finally filed for an IPO. The company will list on the Nasdaq exchange in November, hoping to reach a market capitalisation of $2 trillion dollars.
It’s remarkable that so much value can be created in such a short period of time – Anthropic was only founded in 2021.
Here are some examples of other major companies and how long it took them to reach a $1 trillion valuation. Starting at the bottom, it took Microsoft 44 years after being founded in 1975. Meta is generally seen as a much newer company, and it is, but it still took 17 years to reach $1 trillion.
The much anticipated announcement of anthropic’s IPO generated some positive moves in the technology sector earlier this week, but the sector has turned negative towards the end of the week following some results. The biggest mover was Alphabet, which lost over 12% of its value after reporting advertising revenues that we below expectations. Ad revenue has dropped because more people are using the AI mode on Google to gain information, rather than clicking on links that are found using the search function. Do give us a call to discuss our thoughts on Alphabet and other technology results reported this week.
We are seeing a bit of a rotation out of some of the tech names into other areas of the market. This 3 month chart compares the polar capital technology trust in pink to the polar capital global healthcare trust in green. They often move in opposite directions, and this week tech has fallen while healthcare has risen. A good reminder of the benefits of a diversified portfolio.
And lastly, there have been some big moves in Brazilian equities this week following a surprise election result. The left-wing leader Lula has unexpectedly won a fourth term. He had been expected to lose to Flavio bolsonara, who was seen as more business friendly, and Brazilian equities had risen in expectation of this. the MSCI Brazil dropped over 13% when it was announced that lula had won.
Here’s the brazil index in the Brazilian currency over the last ten years – you can see the rise before the election and the drop afterwards. This chart does make it looks as though the Brazilian market has performed well over the last decade, but it doesn’t account for currency.
Here’s the same chart but for the sterling based investor – its in negative territory over this time period.
This is because the currency has weakened so much. This shows how many Brazilian reals can be bought for £1. The chart has risen, showing the real weakening. There were 4 to the pound in 2016 and now there are more than 7 to the £. Currencies can make a big difference to investment returns.
Next week – Apple and Berkshire Hathaway.
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