EVENING UPDATE – The FTSE 100 closed up 0.24% and the FTSE 250 closed up 0.15% after a calm day of trading following an extremely volatile fortnight in the wake of the disastrous ‘mini-budget’ unveiled by Liz Truss.
CMC Markets analyst Michael Hewson said, “Today’s gains have been broad-based as sentiment settles down after the ructions of the last two weeks.”
Meanwhile, demand for houses has fallen sharply in the wake of the mini-budget, a top developer has warned.
Jason Honeyman, chief executive of house builder Bellway said that new home reservations have fallen 40% in the past three weeks – as Britain’s three biggest mortgage lenders increased interest rates a day after Jeremy hunt reversed many of the measures in the ‘mini-budget.
MORNING UPDATE – The FTSE 100 closed up 0.90% and the FTSE 250 up 2.76% after a buoyant day of trading sparked by the near-complete reversal of LIz Truss and Kwasi Kwarteng’s disastrous ‘mini-budget’.
Chris Beauchamp, chief market analyst at trading platform IG said, “Stock markets, the euro and sterling are on the up, as the mood in markets turns more optimistic for the time being. The dollar’s weakening today provides another sign that risk assets are finding some short-term support, and even embattled UK assets have been lifted.”
“Jeremy Hunt, arguably de facto PM of the UK, has steadied the fiscal ship of state.”
In the wake of Hunt’s announcement, the pound surged against the dollar and was trading at $1.13. The interest rate on government bonds also fell.
Hunt said that a planned 1pm cut in income tax will be shelved “indefinitely” while reforms to off-payroll working rules will not be reversed, and the Government’s energy price guarantee will be re-assessed in April next year.
Hunt said, “A central responsibility for any government is to do what’s necessary for economic stability. This is vital for businesses making long term investment decisions and for families concerned about their jobs, their mortgages and the cost of living.
Hunt is to discuss measures for supporting energy bills from next year, with a Treasury review looking for “a new approach that will cost the taxpayer significantly less than planned”.
Housebuilders soared on the news that interest rates would not rise as high as had been feared – with Barratt Developments (GB:BDEV) up 4.84%.
British business news today
Hunt scraps tax cuts and slashes energy package in bid to calm markets (FT)
City fund faced risk of asset fire sale as markets tanked (Telegraph)
Windfall tax back on table as Hunt sweeps away Truss policies (Times)