FTSE 100 LIVE: Stocks rise while pound and UK bonds recover as Starmer backs Reeves

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2 days ago

The FTSE 100 (^FTSE) and European stocks were higher on Thursday while the value of the pound also recovered as prime minister Keir Starmer assured traders that chancellor Rachel Reeves will remain in her role 'into the next election'.
It came after government borrowing costs surged after the chancellor was seen shedding tears in the Commons on Wednesday while the prime minister failed to back her when questioned at the despatch box.
The 10-year gilt yield, a benchmark for the cost of servicing the national debt, surged by nearly 16 basis points to 4.61%, while 30-year yields climbed 19 basis points to 5.42%.
Meanwhile, sterling fell by a cent against the US dollar, sliding from $1.3745 to $1.3636, making it the worst-performing major currency in the world at the time, on the back of the news.
Christian Kopf, head of fixed income at asset manager Union Investment Group, told BBC Radio 4's Today programme: 'Often we see jitters in the bond market which is caused by external events but yesterday it was different.
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'It was clearly caused by Prime Minister's Questions and by domestic events in the UK and the movement was very swift and very stark.
'It's about the future of the fiscal rule in the UK. Chancellor Reeves stands for that fiscal rule. Investors were growing concerned about the prospect of very high fiscal deficits that are no longer compliant with the fiscal rule and that would then give rise to higher yields and a weaker pound sterling.
'So people are really concerned about the consistency of economic policymaking in the UK.'
Starmer has since reassured traders of Reeves' position. "She and I work together, we think together. In the past, there have been examples — I won't give any specific — of chancellors and prime ministers who weren't in lockstep. We're in lockstep," he said.
The yield on UK 30-year bonds has dipped by 0.8% in early trading, to 5.361%. UK 10-year bond yields have also dipped by around three basis points, to 4.55% from 4.58% last night.
These moves suggests the bond markets are relieved that the PM is standing by Reeves, easing concerns that a new chancellor might be less committed to the current fiscal rules.
London's benchmark index (^FTSE) was 0.5% higher in early trade.
Germany's DAX (^GDAXI) rose 0.4% and the CAC (^FCHI) in Paris headed 0.3% into the green.
The pan-European STOXX 600 (^STOXX) was up 0.4%.
Wall Street is set for a positive start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green.
The pound was 0.1% against the US dollar (GBPUSD=X) at 1.3665.
Follow along for live updates throughout the day:
Wednesday's slump in the pound, despite surging borrowing costs, was reminiscent of the Liz Truss-era meltdown in bond markets, analysts have said.
Will Walker-Arnott, a director at wealth manager Charles Stanley said on Thursday:
Meanwhile, Andrew Wishart, economist at Berenberg Bank said that 'investors probably saved the chancellor'.
He said:
The value of the pound recovered on Thursday as Keir Starmer assured traders that chancellor Rachel Reeves will remain in her role 'into the next election'.
It came after government borrowing costs surged after the chancellor was seen shedding tears in the Commons on Wednesday while the prime minister failed to back her when questioned at the despatch box.
The 10-year gilt yield, a benchmark for the cost of servicing the national debt, surged by nearly 16 basis points to 4.61%, while 30-year yields climbed 19 basis points to 5.42%.
Meanwhile, sterling fell by a cent against the US dollar, sliding from $1.3745 to $1.3636, making it the worst-performing major currency in the world at the time, on the back of the news.
Christian Kopf, head of fixed income at asset manager Union Investment Group, told BBC Radio 4's Today programme:
Starmer has since reassured traders of Reeves' position. "She and I work together, we think together. In the past, there have been examples – I won't give any specific – of chancellors and prime ministers who weren't in lockstep. We're in lockstep," he said.
The yield on UK 30-year bonds has dipped by 0.8% in early trading, to 5.361%. UK 10-year bond yields have also dipped by around three basis points, to 4.55% from 4.58% last night.
These moves suggests the bond markets are relieved that the PM is standing by Reeves, easing concerns that a new chancellor might be less committed to the current fiscal rules.
Asian shares were mixed overnight as investors braced for a key US jobs report and waited on the passage of US president Donald Trump's tax cutting bill in Congress.
The Nikkei (^N225) rose almost 0.1% on the day in Japan, while the Hang Seng (^HSI) fell 0.8% in Hong Kong. The Shanghai Composite (000001.SS) was 0.2% up by the end of the session as data showed China's services activity expanded at the slowest pace in nine months in June.
In South Korea, the Kospi (^KS11) added 1.3% on the day despite president Lee Jae Myung saying that tariff negotiations were looking difficult and that he cannot confirm if talks can conclude by next Tuesday.
Across the pond on Wall Street, US stocks climbed overnight to close at new record highs after president Donald Trump announced that the US has struck a trade deal with Vietnam, including a 20% tariff on exports to America. That is lower than the 46% tariff that had been threatened, but still much higher than previous rates.
Vietnamese shares rose to their highest since April 2022. The local dong currency, however, dipped to a record low of 26,229 per dollar.
The Dow Jones (^DJI) closed flat at 44,484.42, the S&P 500 (^GSPC) rose 0.5%, finishing at 6,227.42, and the tech-heavy Nasdaq (^IXIC) rose 0.9% to end at 20,393.13.
In the bond market, the yield on benchmark 10-year US Treasury notes rose to 4.284% from 4.251% on Tuesday night.
Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what's moving markets and happening across the global economy.
To the day ahead we have US data releases including the jobs report for June, the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May. Otherwise we'll get the final services and composite PMIs for June in the US and Europe.
From central banks, we'll hear from the Fed's Bostic, and the ECB will publish the account of their June meeting.
Here's a quick snapshot at what's on the agenda:
7am: Trading updates: Currys, Watches of Switzerland
9.30am: UK service sector PMI for June
10am: OECD Economic Survey of the European Union and Euro Area
1.30pm: US non farm payrolls, employment report for JuneWednesday's slump in the pound, despite surging borrowing costs, was reminiscent of the Liz Truss-era meltdown in bond markets, analysts have said.
Will Walker-Arnott, a director at wealth manager Charles Stanley said on Thursday:
Meanwhile, Andrew Wishart, economist at Berenberg Bank said that 'investors probably saved the chancellor'.
He said:
The value of the pound recovered on Thursday as Keir Starmer assured traders that chancellor Rachel Reeves will remain in her role 'into the next election'.
It came after government borrowing costs surged after the chancellor was seen shedding tears in the Commons on Wednesday while the prime minister failed to back her when questioned at the despatch box.
The 10-year gilt yield, a benchmark for the cost of servicing the national debt, surged by nearly 16 basis points to 4.61%, while 30-year yields climbed 19 basis points to 5.42%.
Meanwhile, sterling fell by a cent against the US dollar, sliding from $1.3745 to $1.3636, making it the worst-performing major currency in the world at the time, on the back of the news.
Christian Kopf, head of fixed income at asset manager Union Investment Group, told BBC Radio 4's Today programme:
Starmer has since reassured traders of Reeves' position. "She and I work together, we think together. In the past, there have been examples – I won't give any specific – of chancellors and prime ministers who weren't in lockstep. We're in lockstep," he said.
The yield on UK 30-year bonds has dipped by 0.8% in early trading, to 5.361%. UK 10-year bond yields have also dipped by around three basis points, to 4.55% from 4.58% last night.
These moves suggests the bond markets are relieved that the PM is standing by Reeves, easing concerns that a new chancellor might be less committed to the current fiscal rules.
Asian shares were mixed overnight as investors braced for a key US jobs report and waited on the passage of US president Donald Trump's tax cutting bill in Congress.
The Nikkei (^N225) rose almost 0.1% on the day in Japan, while the Hang Seng (^HSI) fell 0.8% in Hong Kong. The Shanghai Composite (000001.SS) was 0.2% up by the end of the session as data showed China's services activity expanded at the slowest pace in nine months in June.
In South Korea, the Kospi (^KS11) added 1.3% on the day despite president Lee Jae Myung saying that tariff negotiations were looking difficult and that he cannot confirm if talks can conclude by next Tuesday.
Across the pond on Wall Street, US stocks climbed overnight to close at new record highs after president Donald Trump announced that the US has struck a trade deal with Vietnam, including a 20% tariff on exports to America. That is lower than the 46% tariff that had been threatened, but still much higher than previous rates.
Vietnamese shares rose to their highest since April 2022. The local dong currency, however, dipped to a record low of 26,229 per dollar.
The Dow Jones (^DJI) closed flat at 44,484.42, the S&P 500 (^GSPC) rose 0.5%, finishing at 6,227.42, and the tech-heavy Nasdaq (^IXIC) rose 0.9% to end at 20,393.13.
In the bond market, the yield on benchmark 10-year US Treasury notes rose to 4.284% from 4.251% on Tuesday night.
Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what's moving markets and happening across the global economy.
To the day ahead we have US data releases including the jobs report for June, the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May. Otherwise we'll get the final services and composite PMIs for June in the US and Europe.
From central banks, we'll hear from the Fed's Bostic, and the ECB will publish the account of their June meeting.
Here's a quick snapshot at what's on the agenda:
7am: Trading updates: Currys, Watches of Switzerland
9.30am: UK service sector PMI for June
10am: OECD Economic Survey of the European Union and Euro Area
1.30pm: US non farm payrolls, employment report for June