European markets closed higher as UK takes a major turn in tax cuts; British pound rises

    The think tank says a failed tax cut attempt will do long-term damage to the UK’s credibility

    The UK government’s attempt to introduce a raft of tax cuts, which it rolled back almost entirely today after wreaking havoc on markets, has caused long-term damage to the economy, according to a leading think tank.

    “Markets were very unhappy with what the former chancellor announced, and I think the government was largely forced into that amount of change,” Paul Johnson, director of the Institute for Fiscal Studies, told CNBC Arabelle Gumede.

    “There is undoubtedly long-term damage [to the economy] Because there is more uncertainty, there is a lack of stability in politics. What I’ve seen the current chancellor do is try to reassert that trust and credibility, but once that credibility is lost, it’s very difficult to regain it. “The government is doing everything it can to get it back at the moment,” Johnson said.

    – Jenny Reed

    Stocks on the go: Darktrace and JustEat top the list of risers in the booming market

    UK cyber security company shares Dark Trace It rose 13.5% in afternoon trading, as a food delivery company just eat 9.5% profit.

    Across European stock markets, all sectors were in positive territory at 3:00 PM London time. Both the main German and French indexes rose by about 2.1%, while the British FTSE 100 rose by 1.3%.

    – Jenny Reed

    Truss tax cuts ‘could not come at a worse time’: KPMG’s head of tax policy

    Truss' scrapped tax cut plan could not have come at a worse time, says KPMG's head of tax policy

    The package of tax cuts announced by the Liz Truss government on September 23, which was reversed almost completely this morning, was an experiment in choppy economies that could not have come at a worse time, according to the UK’s head of tax policy at KPMG.

    “It was just the way it was done, the lack of clear costing, the fact that it was done at a time when government finances are under pressure due to the need to subsidize energy consumers [prices]”Squawk Box Europe comes at a time when global interest rates and gold bond yields are rising,” Tim Sarson told CNBC’s Squawk Box Europe.

    – Jenny Reed

    UK government bond yields fall during the financial statement

    Yields on long-term British government bonds, otherwise known as government bonds, fell during a statement by British Finance Minister Jeremy Hunt.

    The yield on 20-year government bonds fell 42 basis points during the statement, falling to 4.439%. The 30-year Treasury yield also fell 42 basis points to 4.368%.

    The 10-year Treasury yield was down 32 basis points to trade around 3.997% ahead of Hunt’s speech. Yields on 5-year and 2-year Treasuries also fell on Monday.

    – Hannah Ward Glinton

    British Chancellor of the Exchequer Jeremy Hunt cancels majority of Prime Minister Liz Truss’s budget

    Stocks on the go: ITV up 9.6%, Hargreaves Lansdowne up 4.4%

    Shares in ITV rose 9.6% after a report by the Financial Times that it may sell a stake in production arm ITV Studios.

    ITV Studios is one of the largest producers of programs in Europe and some analysts estimate it could be worth more than the 2.5 billion pounds ($2.82 billion) market value of its parent company.

    British investment platform Hargreaves Lansdown fell 4.4% after slowing earnings reports and news of CEO Chris Hill’s resignation. The company reported a decline in assets under management during the first quarter of fiscal year 2023.

    The organization has also been hit with a multi-million pound lawsuit over the failure of one of its former fund managers, Neil Woodford.

    – Hannah Ward Glinton

    UK government bond yields fall before the financial statement

    Yields on long-term British government bonds, otherwise known as government bonds, fell ahead of new Finance Minister Jeremy Hunt’s financial statement expected later today.

    The 10-year Treasury yield was down 19 basis points to trade around 4.129%.

    The yield on 20-year Treasuries fell by about 15 basis points when the market opened, while the yields on index-linked gold bonds for 30 years were down about 17 basis points.

    Yields on 5-year and 2-year Treasuries also fell on Monday.

    – Hannah Ward Glinton

    The British pound rose after political setbacks

    The British pound rose on Monday morning in Asia after further policy reversals by the British government late last week. The pound was last up 0.56% to $1.1233.

    CNBC Pro: About to retire? How to customize your portfolio now, according to the professionals

    Despite the volatility in the markets, asset managers say it’s important to keep investing if you’re about to retire.

    But how should one allocate the funds, given the unstable markets, the shorter investment horizon, and the need to have some cash for retirees?

    CNBC Pro asks experts for their opinions.

    Professional subscribers can read more here.

    – Weezin Tan

    China’s central bank leaves medium-term interest rates unchanged

    The People’s Bank of China has rolled over its Medium Term Lending Facility (MLF) loans and kept the interest rate unchanged at 2.75%, according to a statement on its website.

    The central bank announced that it would keep the interest rate unchanged for a year for the second month and inject 500 billion yuan ($70 billion) through the multilateral fund.

    A Reuters poll predicted no change in the fund’s rate and a partial extension of loans from the central bank.

    – Jie Lee

    CNBC Pro: As market volatility continues, Wall Street analysts say sell these stocks

    Stocks around the world have taken a hit this year, and major indices remain deep in negative territory.

    As investors weigh whether to sell or continue to invest, CNBC Pro examined nearly 1,500 large and mid-size global stocks and found a number of top companies with sell- or under-weight ratings.

    CNBC Pro subscribers can read more here.

    – Ganesh Rao

    European markets: here are the opening calls

    European markets are heading to a lower open on Monday as investors survey the deteriorating economic outlook.

    The UK’s FTSE is expected to open 31 points lower at 6,819, the German DAX down 60 points at 12,377, and the French CAC down 29 points at 5,902, according to data from IG.

    The lower opening in Europe comes amid a growing global sense of pessimism. Stocks in the Asia-Pacific region fell on Monday as recession fears weighed on sentiment.

    Meanwhile, US stock futures rose early Monday, as investors were waiting for big earnings reports from Bank of America on Monday, while Goldman Sachs will release the numbers on Tuesday morning.

    Last week, a hotter than expected inflation reading sent prices swinging in the markets as investors readjusted their expectations regarding the upcoming US Federal Reserve interest rate hike.

    On the data front in Europe, the final inflation reading data for Italy is due in September.

    – Holly Eliat

    CNBC Pro: Morgan Stanley’s Mike Wilson notes major earnings risks — and mentions stocks to avoid

    The US equity team at Morgan Stanley, led by Michelle Weaver and Mike Wilson, says there is a major risk to earnings on the horizon.

    The investment bank has named several stocks that it believes will be the most affected in the next three to six months, and which could see their share prices plummet in the same period.

    Professional subscribers can read more here.

    – Xavier Ong

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