Yahoo Finance LIVE: FTSE and US markets lower as Treasury yields cause jitters
How global markets are performing on Friday
The FTSE and major indexes across Europe dipped on Friday as a fall in inflation meant UK public borrowing figures came in at a lower clip than expected. US markets were also lower as jumping Treasury yields caused jitters.
The FTSE (^FTSE) continued losses, dipping 1.2% by the afternoon having also closed 1.2% lower on Thursday. Frankfurt's DAX (^GDAXI) also declined 1.3% and the CAC (^FCHI) in Paris was down 1.2%.
Meanwhile, US stocks slipped. The S&P 500 (^GSPC) fell 0.8% by the end of the day in London, the Dow (^DJI) was 0.4% lower and the Nasdaq (^IXIC) dropped 1.3%.
Stocks lost ground after Federal Reserve chairman Jerome Powell signalled the Fed is committed to its "higher for longer" rates stance, which spurred gains in Treasury yields. The benchmark 10-year yield (^TNX) rose briefly to 5% late on Thursday, a closely watched level not seen since July 2007.
Concerns remain in equities markets about the ongoing conflict between Israel and Hamas, as tension escalates at the border with Lebanon.
Public sector net borrowing in the UK was £14.3bn in September, 10% less than at this time last year. The year-on-year decrease in borrowing was driven by a large drop in debt interest payments from £7.9bn in September 2022 to £0.7bn in September.
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Public spending in the UK is particularly susceptible to inflation because a significant proportion of UK government debt is index-linked, meaning interest payments go up with inflation.
"We continue to be optimistic that the government will meet its target to halve inflation by the end of this year," said Divya Sridhar, economist at PwC UK. "There are considerable gains to be made from a public finances perspective if this target is met.”
Net government debt marginally fell to 97.8% of GDP in September relative to its share of GDP in the previous month. This was more than 2 percentage points higher than in September 2022.
“We had to borrow during the pandemic to protect lives and livelihoods, but since then [Russian president Vladimir] Putin’s invasion has pushed up inflation and interest rates," said chancellor Jeremy Hunt. "This means we spent twice as much on debt interest last year as we did the previous year."
“This is clearly not sustainable; we need to get debt falling and reduce public sector waste so that those delivering public services can get back to what they do best; teaching our children, keeping us safe, and treating us when we’re sick.”
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