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☆ London stocks hit over one-week highs on UK policy reversal optimism
▼ + stars: | 2022-10-18 | by ( ) www.reuters.com time to read: +2 min

SummarySummary Companies FTSE 100 up 0.8%, FTSE 250 adds 0.7%Oct 18 (Reuters) - UK's blue-chip and mid-cap indexes hit their highest levels in more than a week on Tuesday, lifted by a historic reversal of the government's unfunded tax cut plans and earnings optimism that boosted Wall Street indexes overnight. The blue-chip FTSE 100 (.FTSE) gained 0.8% by 0713 GMT and the mid-cap FTSE 250 (.FTMC) rose 0.7%. The FTSE 100 hit its highest since Oct. 10, while the FTSE 250 rose to a level not seen since Oct. 7. U.S. stock indexes closed sharply higher on Monday after Bank of America posted solid results, spurring earnings optimism. Its shares had hit an eight-year low recently as homebuilders came under pressure from concerns about surging mortgage rates denting affordability.

☆ After U-turn, Britain's economy still paying for Truss's growth plan
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +4 min

With the economy still paying a price for the now-shelved plan, we take a look at some of the main pain points in markets. While those have come down significantly, Britain's 10-year yield remain 45 basis points above levels before Sept. 23 and 30-year yields are some 55 bps higher . This highlights that even with the U-turn in Truss's economic policy, investors still demand a higher premium for holding British government debt. 4/ MORTGAGE FIXBritain's mortgage market was plunged into chaos by the growth plan, as the money markets that lenders rely on to price home loans bet on higher interest rates. Reuters Graphics5/ SUNKEN STOCKSUK blue-chip stocks are still 3% below where they were traded prior to Truss's plan.

The former foreign and health minister was appointed on Friday after Truss sacked Kwasi Kwarteng, her close ally. Under the new policy, most of Truss's 45 billion pounds of unfunded tax cuts will go and a two-year energy support scheme for households and businesses - expected to cost well over 100 billion pounds - will now be curtailed in April. Hunt said halting the planned tax cuts would raise 32 billion pounds ($36 billion) every year. REUTERS/Henry Nicholls/File PhotoBut the response from bond investors who would fund the tax cuts was violently negative and borrowing costs surged. After scrapping one of the tax cuts, Truss fired Kwarteng on Friday, saying she accepted her plans had gone "further and faster" than investors were expecting.

☆ Dollar dips as UK budget U-turn improves market sentiment
▼ + stars: | 2022-10-17 | by ( Karen Brettell | ) www.reuters.com time to read: +2 min

British Pound Sterling and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. Register now for FREE unlimited access to Reuters.com RegisterBritish gilts rallied sharply after the news, helping to also send U.S. Treasury yields lower. Hunt replaced Kwasi Kwarteng, whose package of unfunded tax cuts on Sept. 23 unleashed a bond market sell-off. "For now, the market seems happy to give the new chancellor time and space to put the government's house back in order," said Chris Beauchamp, chief market analyst at IG. Traders are also on watch for any intervention from the Bank of Japan after the yen fell to a 32-year low.

☆ U.K. Treasury chief scraps nearly all government tax cut plans
▼ + stars: | 2022-10-17 | by ( Associated Press | ) www.nbcnews.com time to read: +4 min

U.K. Treasury chief Jeremy Hunt on Monday reversed most of an economic package announced by the government just weeks ago, including a planned cut to income tax. In a bid to soothe turbulent financial markets, Hunt said he was scrapping “almost all” the tax cuts announced last month and signaled public spending cuts are on the way. The unfunded tax cuts fueled investor concern about unsustainable levels of government borrowing, which pushed up government borrowing costs, raised home mortgage costs and sent the pound plummeting to an all-time low against the dollar. Hunt was under pressure to act before financial markets opened on Monday because the central bank’s support for the bond market ended Friday. The U.K. currency is now trading for roughly the same price it was on Sept. 22, the day before Kwarteng announced the tax cuts.

☆ European shares edge higher as investors await new UK fiscal plan
▼ + stars: | 2022-10-17 | by ( Amruta Khandekar | ) www.reuters.com time to read: +3 min

The region-wide STOXX 600 index (.STOXX) was up 0.3%, extending gains for a third straight session. European equities have suffered losses in the recent weeks as investors fret about the prospects of a recession from aggressive central bank actions to tame inflation. Most STOXX 600 sectors were trading up, with energy stocks (.SXEP) up 0.6% as oil prices rose driven by hopes of better demand from China. The bank has agreed to pay $495 million to settle a case brought against it in the United States. read moreNel (NEL.OL) rose 7.3% after the Norwegian hydrogen company received a NOK 600 million ($56.4 million) order from Woodside Energy (WDS.AX) for a U.S. hydrogen project.

People walk through the City of London financial district during rush hour in London, Britain, October 3, 2022. Asia's main markets had struggled overnight but Europe's STOXX 600 (.STOXX) made a 0.5% early gain as both the pound and UK government bonds rallied in London. Invesco's director of macro research Ben Jones said the UK's volatility would remain a key focus for global markets. In currency markets, the dollar remains king as investors price in U.S. rates peaking around 5%. The rise of the dollar and global bond yields have been a drag for gold, which was stuck at $1,648 an ounce .

☆ UK finance minister seeks to stem bond rout by rushing forward tax plan
▼ + stars: | 2022-10-17 | by ( William Schomberg | ) www.reuters.com time to read: +4 min

"The chancellor will make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability," the finance ministry said. Register now for FREE unlimited access to Reuters.com RegisterSterling was up about 1% against the dollar in trading in Asia. Hunt met Truss over the weekend to overhaul her original economic proposals. No chancellor should seek to do that," the former foreign and health minister told BBC television in an interview broadcast on Sunday. Goldman Sachs said on Sunday it expected Britain's economy to shrink by 1.0% in 2023, a more severe contraction than its previous forecast of a 0.4% shrinkage, as Truss's tax cuts were reversed.

☆ British pound and gilts soar after Hunt rolls back tax cuts
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +9 min

Jeremy Hunt on Friday replaced Kwasi Kwarteng, who Prime Minister Liz Truss sacked following the so-called "mini-budget" on Sept. 23 that sent UK assets sliding. Hunt on Monday announced a series of tax changes that he said would raise 32 billion pounds ($36.19 billion) a year in extra revenues. STERLING: The pound rose against the dollar and the euro, gaining 1.1% and 0.7%, respectively , . So the UK is not the outlier when it comes to its monetary policy and its fiscal policy. STUART COLE, HEAD MACRO ECONOMIST, EQUITI CAPITAL, LONDON:"I think it would be a brave person to be buying sterling quite yet.

The blue-chip FTSE 100 index (.FTSE) ended 0.9% higher, while the domestically focussed FTSE 250 index (.FTMC) closed 2.8% up. Both the indexes logged their third-straight day of gains, with the latter up more than 5%. Under the new policy, most of Truss's 45 billion pounds of unfunded tax cuts will go and a two-year energy support scheme for households and businesses - expected to cost well over 100 billion pounds - will now be curtailed in April. Register now for FREE unlimited access to Reuters.com RegisterHunt, who replaced Kwasi Kwarteng, said halting the planned tax cuts would raise 32 billion pounds ($36 billion) every year. Traders are now seeing a 68.2% chance of a 100 basis points hike at the central bank's Nov. 3 meeting.

CNN —British Prime Minister Liz Truss on Monday apologized for her controversial mini-budget that crashed the country’s currency, rattled financial markets and led to her firing her finance minister and closest political ally. The moves amount to a gutting of Truss’ flagship “growth plan” and leave her in a perilous political position. “We have to make sure though, that we have economic stability, and that has to be my priority as prime minister. Truss added it was “painful” to sack her “friend” Kwarteng as finance minister but said she stood by her decision. She also apologized to her party’s lawmakers for her “mistakes” but said she would “move forward” and focus on delivering for the UK.

☆ UK gilts rally ahead of expected new U-turn on fiscal plans
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Long-dated British government bonds rallied on Monday ahead of a statement from new finance minister Jeremy Hunt who is expected to reverse swathes of Prime Minister Liz Truss's economic growth plan which triggered a market rout. Yields on 20- and 30-year gilts slid by around 34 basis points in early trade, reversing most of their sharp rises seen on Friday when a statement by Truss failed to reassure investors about the government's fiscal plans. Gilt yields remain well above their levels seen before former finance minister Kwasi Kwarteng announced Truss's growth agenda on Sept. 23 - a measure of the deficit in investor confidence that Hunt must now address. "It would take an almighty fiscal tightening package to convince the market that a) the fiscal path is now sustainable and b) that Bank of England hiking risk is reduced," said Antoine Bouvet, rates strategist at ING. BoE Governor Andrew Bailey said on Saturday: "As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August."

☆ 'How's Brexit going?' British politics mocked at home and abroad
▼ + stars: | 2022-10-17 | by ( Gavin Jones | ) www.reuters.com time to read: +4 min

New British finance minister Jeremy Hunt will set out tax and spending measures on Monday, two weeks earlier than scheduled, as he races to stem a dramatic loss of investor confidence in Prime Minister Liz Truss's government. read more"How's Brexit going?" read moreEven Britain's staunchly conservative newspaper the Telegraph, which backed the Brexit referendum, acknowledged in a column on Sunday that its economic goals had failed. "The UK example of how quickly and aggressively markets can turn on you, is likely to keep Italian policy cautious. I am sure Rome is watching carefully what is happening in the UK," one senior euro zone official said.

☆ The pound rises after UK's new finance minister speeds up announcement of tax and spending plans to Monday
▼ + stars: | 2022-10-17 | by ( Huileng Tan | Karen Friar | ) www.businessinsider.com time to read: +4 min

The UK's finance minister Jeremy Hunt will lay out details of some of the government's tax plans Monday. The policy details come two weeks early, after abrupt tax U-turns and the sacking of Hunt's predecessor. The pound rose Monday, after weeks where the tax plans roiled markets as investors fretted about stability. The turmoil prompted Nobel laureate Paul Krugman to say the UK markets were "behaving like those of a developing country." That and political pressure on Prime Minister Liz Truss has led to a series of U-turns on the tax plans in recent days.

☆ Britain's political and market turmoil
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

People walk through the City of London financial district during rush hour in London, Britain, October 3, 2022. Following is a snapshot of related events, comments and explanations:Register now for FREE unlimited access to Reuters.com RegisterWHAT'S BEHIND THE CRISIS? * The Bank of England was forced into emergency bond-buying to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond market that threatened to wreak havoc in the pension industry and increase recession risks. * The BoE interventions have highlighted a growing segment of Britain's pensions sector - liability-driven investment. MARKET REACTION* Long-dated British government bonds rallied on Monday.

☆ UK Prime Minister Truss says 'sorry' for mistakes, but 'I'm sticking around'
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Britain's Prime Minister Liz Truss apologised for "mistakes" in her programme that caused investor confidence to evaporate and her poll ratings to plunge before nearly all of it was finally shredded on Monday, but said she would not step down. "I do want to accept responsibility and say sorry for the mistakes that have been made," Truss told the BBC. read moreAsked if she was now prime minister in name only, Truss said she had appointed Hunt because she knew she had to change direction. Truss and Kwarteng attempted to upend British fiscal policy by unveiling 45 billion pounds of unfunded tax cuts last month to snap the economy out of stagnation. "I'm sticking around because I was elected to deliver for this country," she said.

☆ FTSE 100 climbs ahead of Hunt's fiscal plans
▼ + stars: | 2022-10-17 | by ( Sruthi Shankar | ) www.reuters.com time to read: +2 min

The blue-chip FTSE 100 index (.FTSE) gained 0.5%, while the domestically focussed FTSE 250 index (.FTMC) climbed 0.6%. The pound jumped 0.8% and government bonds rallied ahead of Hunt's announcement at 1000 GMT, which is expected to detail plans to raise taxes and spend lesser than previously planned. read more read moreRegister now for FREE unlimited access to Reuters.com Register"The markets have reacted positively to Hunt's expedited timeline, which alleviates some of the fiscal uncertainty," said Victoria Scholar, head of investment at Interactive Investor. Truss on Friday reversed some of the tax cut measures, and replaced Kwasi Kwarteng with Hunt. Meanwhile, the Bank of England (BoE) on Friday concluded its emergency bond purchases aimed at supporting the gilts market.

Just three months after he all but admitted his ambitions to get the top job in politics had ended, Hunt was appointed finance minister, propelled into the job to clean up the market mess created by his boss, Prime Minister Liz Truss. "No one camp of the other candidates who went further can feel too sore and bad about not having their man or woman as prime minister," he told BBC radio. In a room on the so-called Committee corridor in parliament, Hunt told colleagues that tough decisions would have to be made to balance the books. Another joked: "It was good to hear from the new prime minister." Some are still not convinced his latest appointment will bring him the prize he has pursued for so long - to become prime minister.

☆ Factbox: UK axes economic 'growth plan' to restore market confidence
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +1 min

Here are some of the policy reversals announced by Hunt, which he said would raise 32 billion pounds ($36.19 billion) for the government finances. Hunt announced this will now stay at 20% indefinitely. Register now for FREE unlimited access to Reuters.com RegisterThe finance ministry said this will raise around 6 billion pounds a year. CORPORATION TAXBritain will now press ahead with its original plan to raise its 19% corporation tax rate - the lowest among the G7 club of rich nations - to 25% in 2023. The finance ministry had estimated that keeping the rate at 19% would have cost the taxpayer 67.5 billion pounds over the next five years.

☆ UK CFOs say credit is expensive, hit by "mini-budget," Deloitte survey says
▼ + stars: | 2022-10-16 | by ( William Schomberg | ) www.reuters.com time to read: +2 min

The quarterly Deloitte UK CFO Survey found 56% of chief financial officers at top companies thought credit was costly, the most since 2010. "A 12-year period of easy credit conditions is drawing to an end," Ian Stewart, chief economist at Deloitte, said. Register now for FREE unlimited access to Reuters.com RegisterCFOs who responded after Sept. 23's mini-budget were more likely to report high credit costs than those who responded before, Deloitte said. The Deloitte survey found CFOs on average saw a 78% chance that Britain would fall into recession in the next 12 months, and had tilted towards defensive strategies which prioritised cost reduction and cash control. The survey of 87 CFOs, including 23 from FTSE 100 companies and 30 from FTSE 250 firms, took place between Sept. 20 and Oct. 3.

☆ New UK finance minister vows to show markets he can fix budget
▼ + stars: | 2022-10-16 | by ( ) www.reuters.com time to read: +1 min

LONDON, Oct 16 (Reuters) - Britain's new finance minister Jeremy Hunt said he would show investors that he will repair the country's public finances after the original economic plans of Prime Minister Liz Truss triggered a bond market rout. No Chancellor should seek to do that," Hunt told BBC television in an interview broadcast on Sunday. But Hunt has said he will go further including increases in taxes as well as a tighter control on public spending. Asked whether he thought financial markets would have confidence in his plans, Hunt told the BBC: "Well, I think, you know, for people trading the markets, actions speak louder than words." Register now for FREE unlimited access to Reuters.com RegisterReporting by William James Writing by William Schomberg Editing by Louise HeavensOur Standards: The Thomson Reuters Trust Principles.

☆ UK housing market shows strains from "mini-budget": Rightmove
▼ + stars: | 2022-10-16 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 17 (Reuters) - Britain's housing market lost momentum this month after Prime Minister Liz Truss's economic plans upset financial markets and triggered a repricing of the mortgage market, data from property website Rightmove showed on Monday. Asking prices for homes coming to the market rose by 7.8% year-on-year in October, the smallest increase since January. The turmoil meant some institutions temporarily stopped selling mortgages to new customers, while others ramped up repayment rates for new loans. Rightmove reported a rush of buyers trying to complete sales before mortgage offers fixed at prior lower repayment rates expired. Register now for FREE unlimited access to Reuters.com RegisterReporting by Andy Bruce Editing by William SchombergOur Standards: The Thomson Reuters Trust Principles.

☆ Joe Biden says Liz Truss's plan to cut taxes for Britain's 'super-wealthy' was a 'mistake' as the UK prime minister battles to stay in power
▼ + stars: | 2022-10-16 | by ( Ryan Hogg | ) www.businessinsider.com time to read: +2 min

US President Joe Biden said plans by the UK to cut taxes for the highest earners were a "mistake." Liz Truss's government was forced into a U-turn on $50 billion of unfunded tax cuts this week. The US president told reporters the prime minister's climbdown on a multi-billion dollar tax cut plan was "predictable," in a rare comment on British politics. Truss, who leads the UK's centre-right Conservative Party, proposed sweeping tax cuts to the tune of £45 billion (around $50 billion) that would have been largely funded by borrowing. On Friday, Press Secretary Karine Jean-Pierre said the White House wouldn't comment on the situation in the UK.

☆ U.K.'s new finance chief warns of 'difficult decisions ahead' amid political and market turmoil
▼ + stars: | 2022-10-15 | by ( Leila Sackur | ) www.nbcnews.com time to read: +5 min

LONDON — The U.K.'s new finance minister warned of “difficult decisions ahead” on Saturday, the morning after he had replaced his predecessor who was only 38 days into the job. Warning of “difficult decisions ahead” Hunt told British broadcaster Sky News: “Some taxes will not be cut as quickly as people would want, some taxes will go up.” (Sky News is owned by Comcast, the parent company of NBC News.) Kwarteng became the second shortest-serving chancellor of the exchequer, as the British finance minister is known. Britain's Prime Minister Liz Truss at a news conference on Friday. Truss is Britain’s third prime minister in six years.

☆ New UK finance minister warns some taxes will rise in sign of new U-turn
▼ + stars: | 2022-10-15 | by ( ) www.cnbc.com time to read: +3 min

Jeremy Hunt arrives at his home in London after he was appointed Chancellor of the Exchequer following the resignation of Kwasi Kwarteng. Britain's new finance minister Jeremy Hunt said on Saturday that some taxes will have to go up, signaling another abrupt policy U-turn by Prime Minister Liz Truss who is battling to save her leadership just over a month into her term. Big, unfunded tax cuts were a central plank of Truss's original plans, but Hunt said tax increases were on the cards. "The thing that people want, the markets want, the country needs now, is stability," Hunt said. "Some taxes will not be cut as quickly as people want, and some taxes will go up.

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