Despite the terrifying inflation report, the Asia-Pacific market grew overnight, with investors shifting focus on the possible reconsideration of the fiscal policies.
Spreading speculations about the possibility of the UK government reconsidering its controversial fiscal policies triggered some gains across the European markets. While the Stoxx 600 pumped 1.3% earlier today, utilities grief 2.7%. Similarly, all sectors and major bourses increased. Many ministers were in attendance at the International Monetary Fund’s (IMF) annual meeting in Washington. A major topic during the conference was economic chaos.
Meanwhile, there were reports on Thursday that the UK government could eliminate some costs in the mini-budget. British finance minister Kwasi Kwarteng presented the mini budget on the 23rd of September. The budget aims to reduce energy bills and taxes, which would benefit both households and businesses. Hence, there may be some positive changes in the European markets and an uptick in economic growth. While presenting the mini-budget to the parliament, the finance minister called for a “new approach or a new era, focused on growth.” He added that there is a need to reform the supply side of the economy. Kwarteng noted that what high taxes do is damage Britain’s competitiveness. The minister explained further the impact of high taxes in British:
“They reduce the incentive to work, invest and start a business, and the higher the tax, the more ways people seek to avoid them, or the world elsewhere or simply work less… rather than putting their time and money to more creative and productive ends.
European Markets Surge on Hopes of UK Fiscal U-Turn
Now that reports suggest a possible scrap of the $48.6 billion of unfunded tax cuts, stocks and the pound have soared significantly. The European markets are somewhat rebounding and the Dow also closed at 800 points higher.
Despite the terrifying inflation report, the Asia-Pacific market grew overnight, with investors shifting focus on the possible reconsideration of the fiscal policies. Additionally, hopes are high for more stimulus from the Chinese government.
With the announcement of Prime Minister Liz Truss giving a press conference this afternoon by 2:00 pm, UK bond yields dropped. Gilts, UK government bonds, popped to reach a session high on the conference reports. Similarly, the 30-year yield jumped 4.261%. In response to questions about a possible U-turn from the min-budget, the finance minister said he is “totally confused on delivering the growth plan.”
Prime minister Truss is under intense pressure to revisit specific policies. Moreso, public opinion polls show that her government is lacking support. After the mini-budget came to the limelight, the pound dropped to an all-time low. The British currency shed 5% against the dollar, reaching $1.03.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
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