Think tank says failed tax cut attempt will hurt UK’s credibility long-term
The UK government’s attempt to introduce a series of tax breaks, almost completely backtracked today According to a leading think tank, it did long-term damage to the economy after causing chaos in the markets.
“Markets were extremely unhappy with what the previous prime minister announced, I think the government has been heavily pushed to this scale of change,” Paul Johnson, director of the Institute for Financial Studies, told CNBC’s Arabile Gumede.
“There is undoubtedly long-term damage. [to the economy] because more uncertainty has been created, there is a lack of stability in politics. What you see the current prime minister doing is trying to reassert that certainty and credibility, but once that credibility is lost, it’s very hard to regain. And the government is doing everything right now to win him back,” Johnson said.
Stocks in motion: Darktrace, JustEat top ups in bustling market
Shares of UK cybersecurity firms dark trail as a food delivery company increased 13.5% in afternoon trade just eat 9.5% won.
All sectors in European stock markets were in positive territory at 15:00 London time. Leading indices of Germany and France rose around 2.1%, while the UK’s FTSE 100 index rose 1.3%.
Truss tax cuts ‘couldn’t have come at a worse time’: KPMG head of tax policy
The tax cut package announced by the Liz Truss government in September. According to KPMG’s head of UK tax policy, 23, which was almost completely reversed this morning, was an experiment in a trickle economy that could not come at a worse time.
“That was the way it was done, the fact that it was done at a time when government funding was strained by the lack of net cost, the need to support consumers from energy. [prices]It’s a time of rising global interest rates and gilded yields, Tim Sarson told CNBC’s “Squawk Box Europe”.
UK government bond yields fell during the financial statement
Yields on long-term UK government bonds known as Gilts have fallen in recent days. Statement by the British Finance Minister Jeremy Hunt.
The yield on 20-year gilding fell 42 basis points to 4.439% at the time of the announcement. Gold yields linked to the 30-year index also fell 42 basis points to 4.368%.
10-year gilding yields were down 32 basis points to trade around 3.997% just before Hunt spoke. The returns on the 5-year and 2-year gilding also declined on Monday.
UK Finance Minister Jeremy Hunt reverses most of Prime Minister Liz Truss’ budget
Stocks in motion: ITV up 9.6%, Hargreaves Lansdown down 4.4%
Shares in ITV rose 9.6% after a report by the Financial Times that it may sell its stake in production arm ITV Studios.
ITV Studios is one of Europe’s largest producers of programming, and some analysts estimate its parent company could be worth more than £2.5 billion ($2.82 billion) market cap.
British investment platform Hargreaves Lansdown slid 4.4% after reports of slowing earnings and news of CEO Chris Hill’s resignation. The company reported that assets under management fell in the first quarter of fiscal 2023.
The organization has also hit a multimillion-pound lawsuit over the failure of one of its former fund managers, Neil Woodford.
UK government bond yields drop ahead of financial statement
Yields on long-term UK government bonds known as gilding fell before financial statement by Jeremy Hunt, the new Finance Minister expected later today.
10-year gilding yields were down 19 basis points to trade around 4.129 percent.
Returns on 20-year gilts fell by about 15 basis points at market open, while gilt returns on the 30-year index fell by about 17 basis points.
The returns on the 5-year and 2-year gilding also declined on Monday.
British pound strengthens after policy reversals
The pound rallied in Asia on Monday morning after the UK government made further policy changes late last week. The pound was last traded at $1.1233, up 0.56%.
CNBC Pro: Nearing retirement? How can you allocate your portfolio right now, according to professionals?
Despite the volatility in the markets, asset managers say it’s important to stay invested if you’re approaching retirement.
But how should funds be allocated keeping in mind volatile markets, a shorter investment horizon and the need for retirees to have some liquidity?
CNBC Pro asks experts for their opinions.
For subscribers, you can read more here.
— Weizhen Tan
China’s central bank did not change medium-term interest rates
The People’s Bank of China renewed its medium-term lending facility (MLF) loans and kept the interest rate unchanged at 2.75%. Declaration on its website.
The central bank announced that it would keep the one-year rate unchanged for a second month and injected 500 billion yuan ($70 billion) through the MLF.
A Reuters poll had expected no change in the MLF rate and a partial rollover of loans from the central bank.
CNBC Pro: Wall Street analysts say to sell these shares as market volatility continues
Stocks worldwide have taken a hit this year and major indexes remain in deep negative territory.
While investors were deciding whether to sell, CNBC Pro scanned nearly 1,500 large and mid-cap global stocks and found a number of large companies that were selling or under-rated.
CNBC Pro subscribers can read more here.
— Ganesh Rao
European markets: Here are the opening calls
European markets are heading for a lower open Monday as investors investigate the worsening economic outlook.
The UK’s FTSE index is expected to open 31 points down at 6,819, the German DAX down 60 points at 12,377 and the French CAC at 5,902, down 29 points, according to data from IG.
The low deficit in Europe comes amid increasingly pessimistic global sentiment; Stocks in Asia-Pacific The region tumbled on Monday as recession fears stifled sentiment.
Meanwhile, U.S. stock futures rose early Monday as investors awaited big earnings reports. Bank of America Monday, Goldman Sachs He’ll release the numbers on Tuesday morning.
Last week and hotter than expected inflation reading It has revived wild price fluctuations in the markets as investors readjusted their expectations for future rate hikes by the US Federal Reserve.
On the data front in Europe, final inflation readings for Italy are expected in September.
CNBC Pro: Morgan Stanley’s Mike Wilson points to significant risk to earnings and highlights stocks to avoid
Morgan Stanley’s U.S. equity team, led by Michelle Weaver and Mike Wilson, says there is a significant risk to earnings on the horizon.
The investment bank has named the stocks that it believes will be most affected in the next 3-6 months and that can be seen to decline in share prices in the same period.
For subscribers read more here.
— Zavier Ong
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