European markets have posted strong gains, fuelled by Wall Street’s best session since July, sparking hopes that confidence is returning to the market.
Sterling pound touched a two-week high against the dollar and the FTSE 100 index returned back above 7000.
There was a recovery for financial stocks after a reassuring trading update from Legal & General, which soothed fears about the underlying heatlh of the sector after the turmoil in UK assets after the government’s mini-Budget.
Last night’s improvement of 2.6% for the S&P 500 reflected hopes for a slowing in the pace of US interest rate rises after manufacturing activity data came in below expectations.
Meanwhile, stock market investors in London targeted heavily-sold stocks including Ocado and Next.
Elon Musk U-turns with fresh Twitter takeover offer at original price
18:17 , Simon Hunt
Billionaire Elon Musk is set to re-commit to his original offer of taking Twitter private, according to reports citing people familiar with the matter, in a dramatic U-turn for the world’s richest man.
Musk is tipped to be proceeding with the original terms of his deal in which he would acquire shares at $54.20 each, valuing the firm at $44 billion.
Twitter shares soared 12.67% on the news before trading the stock was halted. News of the deal was reported by Bloomberg earlier.
Twitter has been suing billionaire Elon Musk over his abandoned takeover of the company in a bid to force him to close the deal. The Tesla boss had said he was walking away from the deal over concerns about the the number of fake and spam accounts on the Twitter platform.
New York stocks rebound enters second consecutive session
14:52 , Michael Hunter
Wall Street’s S&P 500 made more strong gains in opening trade, led by some of the biggest names on the market as easing government bond yields on both sides of the Atlantic helped keep the mood bright across global markets.
The broad New York stock index added almost 80 points to 3755.06, a rise of over 2% in a broad rally that took in all but three of its constituents. General Motors and Ford were up almost 7% apiece. American Airlines gained over 6%. General Electric gained over 4%, as did Warner Brothers.
The three stocks to miss out on the rally were retailers Dollar General and Dollar Tree and transport provider CH Robinson.
The pound’s round trip at a glance: Sterling back where it was before the mini-Budget sell-off
14:32 , Michael Hunter and Simon Hunt
Sterling’s recovery from the record lows it touched in the dizzying sell-off of UK assets set off by the government’s radical tax reforms has held, keeping the pound near $1.14, its highest level in two weeks.
It came alongside a rally for fund managers that helped the FTSE 100 back above 7000 while rising prices for UK government debt kept the return investors were demanding to lend to the UK for 10 years under 4%.
The return of confidence into the market came after Legal & General issued a reassuring trading update. It helped ease fears over the financial position of the sector after the slump in the price of UK government debt prompted the Bank of England to intervene to support gilt prices and keep yields down.
Benchmark 10-year government gilt yields fell further under 4% today, reaching 3.82%, having crossed above 4.5% at the height of the selling.
Fund managers top FTSE 100 after L&G update reassures
12:39 , Michael Hunter
Shares in pension funds and other money managers topped the FTSE 100 leaderboard today as an unscheduled trading update from Legal & General soothed fears over the sector’s own finances
Its stocks were hit hard by the market turmoil which followed the government’s mini-Budget, amid fears that the plunge in the price of UK government debt could undermine the financial position of pension funds.
They are significant holders of gilts and often use the assets as collateral in arrangements set up to meet obligations to policy holders, so the rapid declines in price seen on concern about the UK’s public finances prompted the Bank of England to intervene as a buyer of the debt to support the market.
Legal and General said today its annuity portfolio “has not experienced any difficulty in meeting collateral calls and we have not been forced sellers of gilts or bonds” and that it “can withstand shocks like we have seen in the past few days.”
Shares in L&G, which runs pension schemes held by 4.4 million people with assets worth over £63 billion, rose 13p to 235p. Prudential was up 5% at 924p. Fellow fund manager Hargreaves Lansdown added 60p to 919p, the biggest rise on the FTSE 100 in percentage terms at 7%,
Overall, London’s main stock index was up 133 points at 7041.0, a rise of almost 2%.
Pound touches two-week peak around $1.14 as dollar strength cools
11:11 , Michael Hunter
Sterling continued to trade around $1.14 today, in a continued recovery from the historic lows touched during the sell off in UK assets which followed the government’s mini-Budget.
The pound was up 0.4% at $1.1364, taking it around 10 cents above its record weak point against the dollar, as the US currency’s long run higher continued to ease. There was also relief at government action to address concern over the UK’s public finances, after plans to abolish the top rate of tax were dropped.
But there were warnings from City experts that the momentum for the pound was already looking stretched. Stephen Gallo, head of European FX strategy at the Bank of Montreal, said: “We think most of the ‘good news’ related to the government’s reversal on unfunded fiscal policy loosening is in the price.
“Our one-to-three month outlook is for sterling is to trade at levels sub $1.10, but not to new lows.”
CEOs expect recession and consider job cuts according to senior-level survey
10:46 , Michael Hunter
A significant majority of senior executives at home and abroad expect a recession in the next 12 months and half of them are considering cutting jobs, according to the latest CEO Outlook Survey compiled by KPMG.
The global accountancy firm found 80% of CEOs think economic contraction will arrive within that time, an outlook that is already affecting staffing. Around 40% of the leaders contacted in the UK and abroad have already frozen hiring and around 50% were considering job cuts in the next six months.
Jon Holt, Chief Executive of KPMG in the UK, said: “Business leaders are predicting and preparing for an imminent recession. Many are having to make hard choices now to help their businesses weather the volatile conditions they face.”
The view of economic prospects over a longer period became more optimistic, and improved from the last survey, in a sign that the corporate world is getting a clearer picture of a way through the downturn. Over 70% of global CEOs felt more confident over a three-year outlook, up from 60% in research carried out in February. In the UK, 80% felt more confident for the same timeframe.
KPMG spoke to over 1300 CEOs running some of the world’s biggest businesses, including 150 in the UK, in July and August this year.
Pivot talk boosts markets, FTSE 250 up over 2%
10:22 , Graeme Evans
London’s FTSE 100 index is back above the 7000 threshold amid a rally for global markets.
The improved risk appetite followed Monday’s progress for Wall Street shares on hopes that central banks could soon pivot towards a more dovish stance on interest rates.
The S&P 500 index jumped 2.6% in its best performance since the end of July, reflecting a sharp fall in Federal Reserve interest rate expectations after weaker-than-expected figures on manufacturing activity.
The pivot talk gained strength during Asia trading when Australia’s central bank delivered a smaller-than-expected 0.25% hike in rates.
Japan’s Nikkei index surged by almost 3% and the FTSE 100 index put back some of the heavy losses of the past fortnight by climbing 1.5% or 103.80 points to 7012.56.
The next big test for sentiment is likely to come with Friday’s report on the US jobs market, as well as the start of Wall Street’s quarterly earnings season.
For now, investors in London were happy to sweep up stocks trading at multi-year lows. These included the grocery technology business Ocado, which has plunged by more than two thirds this year but rallied 6% or 27.1p to 492.74p today.
Fashion retailer Next, which started 2022 above 8000p, also improved 217.3p to 5053p and Premier Inn owner Whitbread cheered 112p to 2430p.
Hargreaves Lansdown led the top flight, aided by analysts at Jefferies removing their “underperform” recommendation and raising their target price on the financial services business to 930p. Shares rallied 60.8p to 920.4p.
The FTSE 250 index, which has fallen by more than 25% this year, improved by more than 2% or 402.88 points to 17,687.76. Consumer-focused stocks were lifted by today’s reassuring update from Greggs, with Currys and JD Wetherspoon among those more than 7% higher.
FTSE 100 rallies, L&G and Greggs higher after updates
08:34 , Graeme Evans
The FTSE 100 index is up 1.2% or 81.47 points at 6990.23, fuelled by hopes for a pivot on the Federal Reserve’s approach to interest rates.
The risers board included Legal & General, which gained 4% or 8.4p to 230.3p after the financial services group delivered a reassuring trading update. L&G said: “Volatility has increased significantly in H2, but this has limited economic impact on our businesses.”
Leisure stocks were also higher, with British Airways owner IAG and Premier Inn chain Whitbread up by 4%. Shares in Hargreaves Lansdown boasted the biggest gain in the FTSE 100, lifting 5% or 44.2p to 903.8p after Jefferies raised its price target to 930p.
The FTSE 250 index gained 1.3% or 233.89 points to 17,518.77, led by Greggs after the bakery chain stuck by profits guidance. Its shares were 5% or 89p higher at 1812p.
Wall Street recovers on rate rise hopes
07:57 , Graeme Evans
Wall Street’s best session since late July means European markets are set for a positive start, with IG Index predicting that the FTSE 100 index will open 0.7% higher at 6958.
The US performance came after weaker-than-expected figures on manufacturing activity boosted hopes that the Federal Reserve will slow the pace of interest rate rises.
The S&P 500 jumped by 2.6% and the tech-heavy Nasdaq Composite by 2.3%, while US futures are also pointing to further progress later today. The next big test for sentiment is likely to come with Friday’s monthly non-farm payrolls report.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “After falling more than 9% in September and extending its year-to-date decline to nearly 25% as of Friday’s close, we think the S&P 500 was looking oversold.
“In addition, some of last week’s selling pressure may have been driven by quarter-end rebalancing, which has now ended.”
Asian markets followed Wall Street’s lead as the Nikkei in Japan lifted by more than 2.5%.
Brent crude, meanwhile, remains just below $90 a barrel after rising 4% yesterday on expectations that Opec will reduce planned output at its meeting tomorrow.