Pound jumps as Bank opens door to rate rises
The FTSE 100 is set to push higher after yesterday’s 1.5pc surge that pushed it back above the 7,000 milestone, as traders await the Bank of England’s latest rates meeting.
While the Bank is expected to keep rates at their current record low of 0.1pc, economists anticipate that it could signal a tapering of bond-buying support as soon as this afternoon, following a similar move at the US Federal Reserve last night.
Meanwhile Asian stocks rose overnight as investors expressed hope that the worst of the Evergrande crisis could be over, with the Hang Seng climbing 0.83pc. Shares in the debt-ridden property company actually jumped after it struck an agreement with Chinese bondholders to pay interest on its domestic bonds.
5 things to start your day
1) Two more energy suppliers go bust as Kwarteng considers windfall tax: Kwasi Kwarteng has refused to rule out a windfall tax on companies profiteering from spiralling gas prices as two more energy providers went bust amid fears of a wave of corporate collapses.
2) Federal Reserve signals start of tapering: The Federal Reserve has indicated it will soon begin tapering back its bond-buying efforts, signalling the beginning of the end for a period of massive monetary support designed to shield the US economy from the pandemic.
3) Mini Moke comes back to Britain: Sixties icon the Moke, a cheap, fun car favoured by stars of the day including Brigitte Bardot and the Beatles, is coming home with production moving entirely to the UK..
4) Why Britain faces an uphill battle in striking a US trade deal: UK hopes that joining the US-Mexico-Canada agreement will speed up talks with Washington, but it may leave London with even less leverage.
5) German recovery falters in new blow for Merkel: Germany’s recovery is faltering after shortages crippled its post-Covid fightback, the country’s leading economic thinktank has warned.
What happened overnight
Asian shares moved higher on Thursday, supported by some positive news from struggling developer China Evergrande Group, while the dollar held near a one-month top after the US Federal Reserve took a hawkish tilt overnight.
However, investors remained on edge about Evergrande’s future, with a major test to come later on Thursday when $83.5 million in dollar-bond interest payments are due.
Evergrande’s shares surged 23pc on Thursday after a unit said on Wednesday, when the Hong Kong market was closed for a holiday, that it had “resolved” a coupon payment on an onshore bond.
The Hong Kong benchmark rose 1.6pc, boosting MSCI’s broadest index of Asia-Pacific shares outside Japan, which gained 0.64pc.
Elsewhere, Chinese blue chips gained 0.74pc, Australia’s benchmark rose 1.04pc, and Korea’s Kospi fell 0.6pc after returning from a three-day break to catch up with global falls earlier in the week.
US stock futures, the S&P 500 e-minis, were up 0.31pc.
Coming up today
- Corporate: Playtech, Harbour Energy (interims); Royal Mail, CVS, Investec (trading update)
- Economics: Economics: Manufacturing PMI (UK, US, EU), services PMI (UK, US, EU), composite PMI (UK, US, EU); BoE interest rate decision (UK), GfK consumer confidence (UK)