Pound surges as bank opens door to rate hike

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The FTSE 100 is expected to rise after yesterday’s 1.5pc rise pushed it back above the 7,000 mark as traders wait for the latest Bank of England rate meeting.

While the Bank is expected to keep rates at their current record low of 0.1 pc, economists expect it could signal waning support for bond buying as early as this afternoon, following a similar move by 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 rising 0.83 percent. Shares of the debt-ridden real estate company actually surged after it struck a deal with Chinese bondholders to pay interest on its domestic bonds.

5 things to start your day

1) Two more energy suppliers go bankrupt as Kwarteng considers windfall tax: Kwasi Kwarteng refused to rule out a one-off tax on businesses profiting from soaring gas prices as two other energy suppliers went bankrupt over fears of a wave of business collapses.

2) The Federal Reserve signals the start of a reduction: The Federal Reserve has indicated that it will soon begin to scale back its bond buying efforts, marking the beginning of the end of a period of massive monetary support designed to shield the U.S. economy from the pandemic.

3) Mini Moke returns to Great Britain: Sixties icon the Moke, a fun and inexpensive car favorite of stars of the time including Brigitte Bardot and the Beatles, returns home with production relocated entirely to the UK.

4) Why Britain faces an uphill battle to secure a trade deal with the United States: The UK is hoping that joining the US-Mexico-Canada deal will speed up talks with Washington, but that could leave London even less clout.

5) German recovery falters in yet another blow for Merkel: Germany’s recovery is faltering after shortages crippled its post-Covid response, the country’s leading economic think tank has warned.

What happened during the night

Asian stocks rose on Thursday, supported by positive news from struggling developer China Evergrande Group, as the dollar held close to a one-month high after the US Federal Reserve took a hawkish tilt during the night.

However, investors remained nervous about Evergrande’s future, with a major test coming later Thursday when $ 83.5 million in dollar bond interest payments is due.

Evergrande shares jumped 23% on Thursday after a unit said on Wednesday, as the Hong Kong market was closed for a public holiday, that it had “resolved” the payment of a coupon on a bond onshore.

The Hong Kong benchmark rose 1.6 percent, raising the MSCI’s largest Asia-Pacific stock index outside of Japan, which gained 0.64 percent.

Elsewhere, Chinese blue chips gained 0.74 percent, the Australian benchmark rose 1.04 percent, and Korea’s Kospi fell 0.6 percent after returning from a three-day hiatus to catch up with the global falls earlier in the week.

US equity futures, the S&P 500 e-minis, rose 0.31 pc.

Coming today

  • Business : Playtech, Harbor Energy (temporary); Royal Mail, CVS, Investec (commercial update)
  • Economy: Economy: Manufacturing PMI (UK, US, EU), PMI services (UK, US, EU), Composite PMI (UK, US, EU); BoE interest rate decision (UK), the consumer confidence of GfK (UK)


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