The budget and the markets: The pain is already in the price
The reaction of the markets to the budget depends entirely on whether it measures up to expectations. To be sure, there are a whole lot of items whose excise or customs duties will be tinkered with, and that will affect individual stocks. But, for the market as a whole, the big concerns are overall changes in taxation and the fiscal deficit.
At first glance, there seems to be little correlation between the fiscal deficit and the stock market. Equities have sometimes done well when the deficit has been high and sometimes when it has been low. Markets are moved by lots of things, and the fiscal deficit is only one of them.
The reaction of the markets to the budget depends entirely on whether it measures up to expectations. To be sure, there are a whole lot of items whose excise or customs duties will be tinkered with, and that will affect individual stocks. But, for the market as a whole, the big concerns are overall changes in taxation and the fiscal deficit.
At first glance, there seems to be little correlation between the fiscal deficit and the stock market. Equities have sometimes done well when the deficit has been high and sometimes when it has been low. Markets are moved by lots of things, and the fiscal deficit is only one of them.
