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5pm: Pound hammered

Sterling plunged to an intraday low of $1.0349, before rebounding slightly to $1.0655.

Housebuilders and retailers were also on the receiving end of a steep sell-off as another Bank of England interest rate hike grew more likely. Taylor Wimpey fell 7.6%, Barratt Developments 4.7% and Persimmon 6.9%.

The FTSE 100 just managed to stay in positive territory, closing 2.35 points up at 7,020.95.

“The market’s continuing verdict on the mini-Budget which turned out to be anything but mini couldn’t really have been any more savage as sterling hit an all-time low against the dollar,” says AJ Bell investment director Russ Mould.

“When the pound is weak it lifts the relative value of the overseas earnings which dominate the index,” he says. “More instructive is the performance of the more domestic-facing FTSE 250 which remained under pressure and slipped to its lowest levels since 2020.

“The problem for the new Government is the growth it hopes to engineer through tax cuts is unlikely to come through that quickly while the reduction in the buying power of the pound will effectively import more inflation at a time of already acute inflationary pressures.

“Government borrowing costs are also going through the roof – a key question facing investors in the face of all this is can and will Truss, Kwarteng and co. hold their nerve.

“In a sign of the nervousness pervading the UK market and UK assets, property investor LXI REIT pulled out of a £500 million deal, struck just last week, to buy supermarket property from Sainsbury’s (see below).

“The tenor of the brief announcement hints that shareholders weren’t prepared to stump up the cash to fund the transaction given the current market storm.”

7am: Frasers bids for MySale

Retail group Frasers, headed by Mike Ashley, has posted a mandatory offer for Australian online fashion discounter MySale after procuring 48.5% of the company’s stock, including the shareholding of former chairman Carl Jackson.

MySale last week said the 2p-a-share offer “did not reflect an adequate value or premium for control of MySale and therefore undervalues MySale and its prospects”.

Frasers’ offer is valued at £13.6m and said this reflects a “fair valuation”.

7am: Sainsbury’s property sale off

Sainsbury’s said its plan to offload 18 supermarket stores to LXi REIT in a sale and leaseback basis has been called because of stock market volatility.

LXi REIT said it is not proceeding with the share issue that would have part-funded the transaction.

Sainsbury’s said: “Hence we are no longer in discussions to sell these stores to LXi REIT. This will have no impact on our financial guidance.

“We stated on September 21 that if the LXi transaction were to proceed, the cash received from this transaction would have been used to part-fund the purchase of 21 freehold Sainsbury’s supermarkets from the Highbury and Dragon portfolios.

“The purchase of these 21 stores will complete in the first half of the financial year to March 2024. Given the strength of the Sainsbury’s balance sheet and property portfolio, we have a wide variety of alternative options to finance this transaction.

7am: LV= CEO

Insurance, investment and retirement specialist Liverpool Victoria Financial Services (LV=) has appointed David Hynam as its incoming chief executive, subject to regulatory approval.

He was formerly chief executive of Bupa’s UK and Global markets, UK CEO of Friends Life and chief operating officer of AXA. He has 30 years’ experience in retail financial services.

Mr Hynam joins LV= today, succeeding Mark Hartigan who announced his decision to step down as chief executive after two years in an interim role and will be leaving the business at the end of the month.

7am: Unilever chief steps down

Unilever said chief executive Alan Jope will step down at the end of next year, after five years in the post. The consumer goods company will kick off a formal search for Mr Jope’s replacement.

7am: Moneysupermarket hires CFO

Moneysupermarket.com Group named Niall McBride as its chief financial officer, subject to regulatory approval. Mr McBride is currently the CFO of Ocado Group and Marks & Spencer joint-venture Ocado Retail. 

7am: RPS backs offer

Professional services firm RPS Group has backed a £636 million takeover offer from Tetra Tech and withdrew its recommendation for a bid by Toronto-listed consultancy firm WSP Global. Nasdaq-listed consultancy and engineering services firm Tetra will pay 222 pence in cash for each RPS share, a 7.8% premium to the 206p offered by WSP.

Global markets

The FTSE 100 was tipped to benefit from heavy falls in sterling overnight as it is heavily weighted with companies whose overseas earnings are boosted by a low pound.

Sterling was trading just above parity with the US dollar as the markets grew increasingly nervous over the level of borrowing required by the UK government to support its tax-cutting plans.

The pound fell by more than 4% to just $1.0327 in early Asia trade and is now at its lowest level against the dollar since decimalisation in 1971. Ahead of London’s Stock Exchange opening it regained some ground, trading at $1.055.

In Tokyo, the Nikkei 225 was 2.6% lower in late trade. In Sydney, the S&P/ASX 200 was down 1.3%. In China, the Shanghai Composite was down 0.1%, while in Hong Kong, the Hang Seng Index was down 0.2%.

Brent oil was trading at $85.19 a barrel.