Yesterday’s economic adjustments were largely overshadowed by news of Rishi Sunak’s appointment as the UK’s new prime minister.
Following a night of ups and downs on Sunday, the pound rose against the US dollar yesterday, but quickly fell. Today, it’s been quite choppy so far. The GBP/EUR rate dropped 1% yesterday and has continued to fall this morning.
Data released yesterday revealed the number of low-deposit 95% mortgages on sale has fallen by 52% since Kwasi Kwarteng’s mini-budget was scrapped last month. This fuels fears that could lead some banks and building societies to withdraw low-budget deals that are often the only choice for first-time buyers.
By close of trading yesterday, the FTSE 100 was higher by nearly 0.9% at 7028 points.
The yield on Britain’s 10-year gilt fell more than 30 bps yesterday to below 3.8%, the lowest in over a month.
In the US, Global Manufacturing PMI fell to 49.9 in October, well below market expectations of 51, the lowest reading since May 2020.
In the euro area, PMI also fell sharply to 46.6 from 48.4 in September. This morning data is expected for Germany’s business climate, which is forecast to fall for the fifth month in a row.
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