MIDDAY UPDATE The FTSE 100 was trading up 0.27% and the FTSE 250 was up 2.15%.
Meanwhile, Britain’s economy grew 0.2 per cent in the second quarter, instead of an expected decline, per revised official figures from the Office for National Statistics.
Grant Fitzner, the ONS chief economist, said: “These improved figures show the economy grew in the second quarter, revised up from a small fall.
“They also show that, while household savings fell back in the most recent quarter, households saved more than we previously estimated during and after the pandemic.”
MORNING UPDATE London’s FTSE 100 index was down 1.8% and the FTSE 250 was down 3.1% in another gruesome day on British markets amid the chaos sparked by Kwasi Kwarteng and Liz Truss’s tax-cutting ‘mini budget’.
Markets in the UK wobbled further downwards thanks to a slump on Wall Street, with the Dow Jones Industrial Average down 2% in early trading.
Despite the Bank of England’s highly unusual £65 billion intervention yesterday, gilt yields in Britain were also ticking upwards, with the 10-year yield hitting 4.15%.
German finance minister Christian Lindner took a swipe at Truss and Kwarteng’s measures as he unveiled a support package for German households, saying: “Germany is showing its economic strength in an energy war. Our relief package is effective… we don’t want to follow the UK’s path.”
The Pound staged a fightback, rising to $1.11 after hitting historic lows earlier in the week, amid expectations of interest rate rises from the Bank of England’s Monetary Policy Committee.
Neil Wilson, analyst at Markets.com, said: “I have rarely seen sentiment so bad. “We’re doomed” seems to be the prevailing mood.
“We’ve not seen bond markets in such a state of flux for many years. Stocks are hovering around two-year lows and the dollar moves serenely on, crushing everything in its path.”
Fashion and homewares giant Next (GB:NXT) was one of the day’s big fallers, dropping 11.59% on warnings of reduced profits, with its CEO warning that the UK faced a second cost-of-living crisis driven by the plunging pound.
British business news today
Truss faces growing Tory pressure as Labour opens 33-point poll lead (FT)
FTSE 250 suffers worst fall since Covid lockdowns (Times)
Eurozone facing ‘severe risks’ to financial stability (Telegraph)