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☆ Premarket stocks: The strong dollar has an unexpected victim
▼ + stars: | 2022-10-18 | by ( Paul R. La Monica | ) edition.cnn.com time to read: +6 min

New York CNN Business —The strong dollar has been a headwind for blue chip US companies in the Dow and S&P 500 this year. And the Russell 2000, another index of mostly smaller companies, is down 25%, too. Also, the dollar is so strong — the US Dollar Index, which tracks the greenback against the euro, pound, yen and several other currencies has soared 18% this year — it’s making foreign imports cheaper. But real estate stocks have been slammed by worries about a housing and office real estate slowdown. And multinational companies and foreign stocks will fare more poorly than smaller companies with little to no international exposure.

☆ British U-Turn Shows Central Banks Still Rule (and That’s Not Always Good)
▼ + stars: | 2022-10-17 | by ( Jon Sindreu | ) www.wsj.com time to read: 1 min

In its game of chicken with the U.K. government, the Bank of England has emerged victorious. Investors are relieved, but in truth nobody has much to celebrate. On Monday, U.K. Treasury chief Jeremy Hunt rolled back £32 billion, equivalent to about $36 billion, out of the £45 billion in tax cuts promised by his predecessor Kwasi Kwarteng . British sovereign bonds rallied, particularly those with shorter maturities.

☆ Analysis: Despite tax U-turn, UK's Hunt still faces tough budget choices
▼ + stars: | 2022-10-17 | by ( William Schomberg | ) www.reuters.com time to read: +5 min

LONDON, Oct 17 (Reuters) - The screeching about-turn on tax cuts by finance minister Jeremy Hunt on Monday will not spare Britain from painful spending cuts and new tax hikes to fix the country's public finances. Paul Johnson, director of the Institute for Fiscal Studies, a think-tank, said Monday's tax cuts U-turn was relatively simple compared with the balance Hunt must strike between more tax increases and spending cuts over the next two weeks. Hunt said the tax U-turns announced so far would raise about 32 billion pounds a year in extra revenues. That was 40 billion pounds above the level needed to cut debt as a share of the economy which currently is about 97%. "With tens of billions of spending cuts still to come, and a new energy support package needing to be devised, many of Jeremy Hunt's tough choices still lie ahead," Torsten Bell, chief executive of the Resolution Foundation, said.

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.

☆ U.K. Treasury Chief Jeremy Hunt Reverses Nearly All Tax Plans to Reassure Markets
▼ + stars: | 2022-10-17 | by ( Max Colchester | Paul Hannon | ) www.wsj.com time to read: 1 min

LONDON—New U.K. Treasury Chief Jeremy Hunt said Monday he was reversing nearly all the government’s proposed tax cuts and would pare back an energy price cap as he moves to reassure markets about the stability of the nation’s finances. Mr. Hunt, who took over on Friday after Prime Minister Liz Truss fired his predecessor Kwasi Kwarteng, has acted quickly in his first days on the job to try to repair the damage to Britain’s standing among investors by taking steps to shore up public finances after weeks of turmoil on U.K. financial markets.

☆ 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.

☆ 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.

☆ Massive fiscal U-turn leaves UK in political funk
▼ + stars: | 2022-10-17 | by ( Pierre Briancon | ) www.reuters.com time to read: +4 min

By the tax year ending in April 2027 this should help the government claw back 32 billion pounds of the 45 billion pounds a year Kwarteng and Truss had planned. Beyond that, the scheme, which the government had estimated might cost some 60 billion pounds over six months, will become less generous. The pound strengthened against the U.S. dollar while yields on 10-year UK government bonds declined by nearly 45 basis points. But they remain at 12-year highs, suggesting that the UK has much to do to regain credibility with global investors. Government spending cuts will also be required to narrow a hole in public finances that the Sunday Times reported was as big as 72 billion pounds ($81 billion).

☆ 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.

"It is really not the right time to experiment with fiscal policy," AXA chief economist Gilles Moec said about the UK's moves, assessing that Monday's U-turn may have appeased "the bond vigilantes for now". The term, bond vigilantes, refers to debt investors imposing fiscal discipline on profligate governments by forcing their borrowing costs higher. Ed Yardeni, who coined the bond vigilantes term in the early 1980s, penned a blog post saying "They're Baaaack!" Even U.S. President Joe Biden was speaking the bond vigilante's language at the weekend, noting he wasn't the only one that thought the UK plan was a "mistake". "This is probably the biggest example in practice of the bond vigilantes activity," said Antonio Cavarero, head of investments at Generali Insurance Asset Management.

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.

☆ Morning Bid: In Hunt we Truss
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

While insisting Truss, who is fighting to keep her job, is indeed in charge, Hunt catalogued the mistakes made in the past few weeks and signalled that tighter spending controls and some tax rises are on the way. Register now for FREE unlimited access to Reuters.com Register"I think what the country wants now is stability." Monday will test all sides in the UK gilt markets now that the central bank's emergency bond-buying programme has concluded. Hunt has already spoken to the Bank of England Governor Andrew Bailey, agreeing on the need to repair the public finances. Sterling has nudged higher after Truss reversed some of her government's economic plan, not long after she sacked Kwasi Kwarteng as finance minister.

☆ Wall St futures higher with focus on earnings
▼ + stars: | 2022-10-17 | by ( ) www.reuters.com time to read: +2 min

SummarySummary Companies Futures: Dow 0.78%, S&P 0.93%, Nasdaq 1.12%Oct 17 (Reuters) - U.S. stock index futures were higher on Monday, after a roller-coaster week, as investors focused on the third-quarter earnings season to assess the impact of decades-high inflation and rising interest rates on corporate profit. Tesla Inc (TSLA.O), Netflix (NFLX.O) and Johnson & Johnson (JNJ.N) are also expected to report their results later in the week. Analysts now expect profit for S&P 500 companies to have risen just 3.6% from a year ago, much lower than an 11.1% increase expected at the start of July, according to Refinitiv IBES data. ET, Dow e-minis were up 231 points, or 0.78%, S&P 500 e-minis were up 33.5 points, or 0.93%, and Nasdaq 100 e-minis were up 120.75 points, or 1.12%. Investors now await another test for gilts from a new tax proposal due later in the day from Kwarteng's successor Jeremy Hunt.

☆ 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.

☆ 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.

☆ 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.

☆ New UK finance minister rips up Truss’ economic plan in stunning policy reversal
▼ + stars: | 2022-10-17 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

The stunning reversal would raise £32 billion ($36 billion), he said. “No government can control markets, but every government can give certainty about the sustainability of public finances,” Hunt said. “The United Kingdom will always pay its way.”The moves represent a gutting of Prime Minister Liz Truss’ flagship policies and leave her in a perilous political position. On Friday, Truss fired Kwasi Kwarteng, her previous finance minister, and reinstated a big tax hike on corporations. “A central responsibility for any government is to do what’s necessary for economic stability,” Hunt said.

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.

☆ British pound rises as new UK finance minister brings forward policy announcements to today
▼ + stars: | 2022-10-17 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +2 min

LONDON — Sterling rose against the dollar on Monday morning after new U.K. Finance Minister Jeremy Hunt announced he would deliver parts of his medium-term fiscal plan later in the session. The pound was up nearly 1% to $1.1288 by early Monday morning, extending gains after the statement from the U.K. Treasury. The decision follows a dramatic day in British politics on Friday, which included big fiscal U-turns from Prime Minister Liz Truss and the sacking of Finance Minister Kwasi Kwarteng. Hunt said over the weekend that his priority as finance minister is growth, much like his predecessor, but he highlighted it would be "underpinned by stability." U.K. bonds saw a sharp sell-off and the pound hit a record low in the days afterward.

☆ 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.

☆ UK Prime Minister Liz Truss faces serious pressure to resign after failed budget
▼ + stars: | 2022-10-17 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +1 min

LONDON — U.K. Prime Minister Liz Truss is facing calls to resign from within her own Conservative Party just six weeks after entering Downing Street. Truss and her former Finance Minister Kwasi Kwarteng announced a fiscal package – a so-called "mini-budget" – on Sept. 23. The latest plans were announced Monday by Jeremy Hunt, just three days into his tenure as finance minister. Angela Richardson, Conservative MP for Guildford, said it was "no longer tenable" for Truss to remain as prime minister, speaking on Times Radio on Monday, while Jamie Wallis, Conservative MP for Bridgend, wrote to the prime minister telling her to resign. "I ask you to stand down as Prime Minister as I believe you no longer hold the confidence of the country or the parliamentary party," Wallis' letter said.

☆ Sterling rebounds on UK fiscal policy U-turn; yen struggles
▼ + stars: | 2022-10-17 | by ( ) www.cnbc.com time to read: +3 min

In this photo illustration, British GDP £1 coins and bank notes are pictured in Bath, England. The news came hours after she sacked former finance minister Kwasi Kwarteng, with Jeremy Hunt replacing him. All eyes are now on how the UK government bond market will trade, after the Bank of England on Friday concluded its emergency gilt market support. The U.S. dollar index , which measures the greenback against a basket of currencies including the yen, firmed at 113.02. Elsewhere, the euro gained 0.26% to $0.9748, while the Australian and New Zealand dollars bounced mildly from recent losses.

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