British stock market today, October 5 – what you need to know

CLOSING UPDATE –

The FTSE 100 index was down 0.5% and the FTSE 250 ended down 1.5%. Prime Minister Liz Truss aimed to reassure markets with a speech where she claimed she had three priorities for Britain: “growth, growth and growth,” on the final day of the Conservative party conference.
She claimed her Conservative party faced an “anti-growth coalition” of rival political parties, anti-Brexit activists and environmental campaigners.
She said, “I know what it’s like to live somewhere which is not feeling the benefits of economic growth. I’ve seen the boarded-up shops and people with no hope turning to drugs.”

The pound reversed earlier gains to drop nearly 1% against the dollar, trading at $1.1375.

MORNING UPDATE The FTSE 100 closed up by 2.6% and the FTSE 250 was up by 3.1% on Tuesday in a day where rays of sunshine seemed to shine amid ongoing global financial gloom – as investors hoped that central banks may slow the pace of interest rate hikes around the world. 

In Britain, the Bank of England has stopped buying government bonds for the first time since its emergency intervention last week, hinting that the panic around the gilts market has died down. 

Kwasi Kwarteng’s U-turn on the upper rate of tax helped the Pound tick higher to $1.154. Meanwhile, outgoing Shell CEO Ben van Beurden said that windfall taxes on energy are ‘inevitable’. 

Susannah Streeter, senior investment and market analyst, Hargreaves Lansdown: “Shell’s boss has flung open a door on a windfall tax which the UK government had been trying to close. This will reignite the debate over how profits of energy giants should be taxed, just as a row rages about whether welfare spending will be hit to pay for the Truss administration’s slash and spend policies.”

Among the factors spurring investor optimism was the possibility of America’s Federal Reserve slowing its interest rate hikes. Head of portfolio management research at MSCI Andy Sparks said: ‘The chances for a pivot are much greater during 2023.The easy pivot path for the Fed will be if inflation has fallen significantly. The real challenge will be if inflation has not declined as much as hoped, but the economy has weakened. In such a case, the Fed’s resolve to continue rate hikes will be tested.’

Energy giant Drax (GB;DRX) fell 6.2% after a BBC Panorama documentary which claimed that the company was cutting down forests in Canada which which were important to the environment. 

British business news today

UK lenders face pressure to cut mortgage rates if markets stabilise (FT) 

Woodford-style run on $41 trillion funds threatens global stability (Telegraph) 

‘Kick in the teeth’ for small businesses (Times)