European shares made a strong start to trade on Tuesday after a rebound on Wall Street overnight and a positive Asia session.
The pan-European Stoxx 600 was up climbed 1.53% in early deals. Britain’s FTSE 100 was up 0.7% while the pound was 0.4% firmer versus the dollar at 1.1369 – its highest level in two weeks as investors welcomed news that Finance Minister chancellor Kwasi Kwarteng plans to bring forward the publication of his debt-reduction proposals.
Kwarteng on Monday caved in to pressure and announced he would abandon plans to cut the top rate of tax, but gave no indication he would bring forward the publication of his medium-term fiscal plans.
However, on Tuesday it was widely reported that the government had now once again buckled and would publish the plan later this month, having previously said they would be published at the end of November.
“US markets finally got something to cheer about in the first session of the fourth quarter. Both the S&P 500 and NASDAQ posted their biggest daily increases since August as US Treasury yields pulled back 0.18 percentage points,” said Hargreaves Lansdown analyst Matt Britzman.
“Whilst rallies in most global indices is certainly a welcome reprieve, underlying issues very much remain.”
“Sterling strengthened on Monday as the UK government agreed to abandon the plan to axe the top rate of tax, pushing back to $1.13 vs the US dollar. However, this mini reversal is likely to be short-lived in its nature as sterling remains under significant pressure in the face of a looming recession and a US Fed that looks likely to continue aggressive rate rises.”
In equity news, shares in UK bakery chain Greggs gained 5.5% after reporting a rise in quarterly sales despite the deepening cost of living crisis and plummeting consumer confidence.
British insurer and pensions group Legal & General gained after saying it had not been exposed to recent bond market turmoil sparked by UK Finance Minister Kwasi Kwarteng’s badly received mini budget last week.
Accelleron shares were higher as investors bought the stock at a discount after the former ABB turbocharging unit’s weak market debut on Monday.
Reporting by Frank Prenesti at Sharecast.com
