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Stock markets fall as tech shares plunge

Google's new Bay View Campus in Mountain View, California, US. Photo: Peter DaSilva/Reuters

European stock markets mostly slipped into the red on Wednesday as traders discovered that the UK fiscal statement has been moved again from 31 October to 17 November, and will be a full budget.

In London, the FTSE 100 (^FTSE) rose 0.3% by afternoon trade, climbing above the 7,000 points mark after spending most of the session in the red. The CAC (^FCHI) was 0.1% higher in Paris, and the Frankfurt DAX (^GDAXI) was 0.7% up on the day.

It came as the full "autumn statement" will be delivered by chancellor Jeremy Hunt and accompanied by separate forecasts from the Office for Budget Responsibility (OBR) later than expected.

Hunt told broadcasters: "I want to confirm that it will demonstrate debt falling over the medium term which is really important for people to understand.

"But it’s also extremely important that that statement is based on the most accurate possible economic forecasts and forecasts of public finances. And for that reason the prime minister and I have decided it is prudent to make that statement on 17 November when it will be upgraded to a full autumn statement."

Read more: Rishi Sunak pushes back crucial autumn budget to 17 November

The pound (GBPUSD=X) continued to rise during the session, to a fresh six-week high, after hitting its highest level against the US dollar on Tuesday. This was above where it was trading before Liz Truss's and Kwasi Kwarteng’s mini-budget.

Sterling was trading at $1.1564 against the US greenback, up 0.8%. It was also boosted by a weaker dollar, amid expectations that the Federal Reserve may be less aggressive in hiking interest rates in the coming months.

The UK government's borrowing costs have also fallen back to levels last reached before the budget.

“The two-week delay of plans to reveal detail of the UK government’s spending plans on Halloween hasn’t caused investors to take fright, with the markets cutting prime minister Rishi Sunak some slack, given that he’s just a day into the new job," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

"The pound has remained above $1.15, retreating only a little from the mornings highs, but sterling is still up overall."

She added: "Investors are mindful that it was the unnecessary rush to announce big tax cuts which caused such tumultuous times for the Truss administration and what they crave now is caution and stability. The premium slammed on UK assets by reckless policies of his predecessor appears to be slowly lifting, but hefty challenges for team Sunak remain, as the economy heads into recession and the productivity puzzle remains as cryptic as ever to solve.

Read more: Stocks trending after hours: Microsoft, Alphabet, Chipotle and more

Across the pond on Wall Street, the S&P 500 (^GSPC) were treading water, and the tech-heavy Nasdaq (^IXIC) fell 0.8% by the time of the European close. The Dow Jones (^DJI) managed to edge 0.6% higher.

It came as the US average mortgage interest rate jumped to 7.16%, the highest since 2001. The average rate on a 30-year fixed-rate mortgage rose by 22 basis points to 7.16% for the week ended 21 October, data from the Mortgage Bankers Association revealed.

Mortgage applications growth is the slowest since 1997, while mortgage rates have more than doubled since the start of the year.

On Tuesday, US markets finished the day higher after bond yields reiterated sharply and the US dollar slumped after housing data came in weaker than expected.

Read more: UK's energy price guarantee must be fixed to solve fiscal 'black hole'

Michael Hewson of CMC Markets said: “There appears to be an increasing belief that a Fed pause is close, and while we can still expect to see another 75bps, it’s what comes next that appears to be generating some caution, after Mary Daly of the San Francisco Fed commented at the end of last week that after November the time could be ripe for talk about stepping down.”

Asian shares climbed higher overnight as investors held onto hopes that the pace of US and global rate hikes would start to slow.

In Tokyo, the Nikkei (^N225) climbed 0.7% while the Hang Seng (^HSI) rose 1% in Hong Kong, and the Shanghai Composite (000001.SS) rose 0.7%.

Watch: How does inflation affect interest rates?