Markets report

Pound soars on ECB decision | US ‘out of technical recession’

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5pm: Pound soars as ECB raises rates

euros

Sterling soared to its highest value against the euro in more than a month after the European Central Bank vowed to maintain a quantitative easing programme until 2024. 

The pound stood at 1.1594 against the euro at 4.30pm – having rallied more than 0.5% since trading opened this morning as investors continue to shy away from the bloc’s currency. 

The European Central Bank (ECB) increased interest rates by 0.75 points, its third successive hike.

Traders saw a smaller-than-expected hike by the Bank of Canada yesterday as a sign that rate-setters are ready to ease back on monetary policy tightening.

Bank of Canada Governor Tiff Macklem said was placing a lot more emphasis on the effects of the slowdown when deciding rate strategy.

“This could have implications if the Federal Reserve were to start thinking the same way next week, hence the selloff in the US dollar,” CMC Markets analyst Michael Hewson said.

The Federal Reserve and the Bank of England are expected to follow with rates rises next.

The FTSE 100 closed 17.62 points higher at 7,073.69.


3.30pm: US pulls out of technical recession

The US economy grew for the first quarter this year, with GDP rising at a 2.6% annualised rate in the July to September period after falling in the first two quarters of 2022.

This was above economists’ expectations of 2.4% growth for the quarter.

Despite not officially entering recession earlier this year, as US recessions are decided by the country’s National Bureau of Economic Research, two quarters of negative GDP growth is seen as a ‘technical recession’ amongst many economists, being the standard for recession in countries such as the UK.

The data helped Wall Street divert attention from weak tech results. The Dow Jones Industrial Average was up 1.47%, while the S&P 500 advanced 0.47%, although the tech-focused Nasdaq Composite was 0.18% weaker.


3.15pm: Bulb deal close

Octopus Energy is close to sealing a deal to buy Bulb, its collapsed rival that has been kept alive with billions of pounds of Government support for nearly a year.

Bloomberg reports that the Government could agree a deal this week to transfer 1.5 million customers.

The deal is expected to see the Government pay Octopus to take on the customers. Octopus has reportedly asked for around £1 billion to deal with the customers.


10.30am: Parsley Box falls further

Shares in meals delivery firm Parsley Box, chaired by Chris van der Kuyl, were down a further 11% to 1.95p, valuing the company at £1.42m. They fell 45% yesterday after the board said it may quit the stock market. Full story here


7am: Lloyds

Lloyds Banking Group saw quarterly profits fall ahead of a potential rise in loan defaults.

Pre-tax profit came in at £1.5 billion for July-September, below the £1.8 billion average forecast and down on £2 billion in the same period last year. Full story here


7am: Shell

Shell posted third quarter profits of $9.45 billion, slightly above forecast, and more than double the $4.2bn reported in the same period last year. Full story here


7am: Made.com

Online furniture retailer Made.com has confirmed that the company is no longer for sale after yesterday announcing that there are currently no offers.

“Having considered the nature of ongoing discussions with interested parties as part of the company’s strategic review process, the board has concluded that there is no reasonable prospect that an offer for the issued and to be issued share capital of the company will be forthcoming and has accordingly decided to terminate the formal sales process under the Takeover Code. Accordingly, the company is no longer in an offer period.

“The board of MADE will continue to look to preserve value for its creditors and shareholders as part of the ongoing strategic review and a further update will be made as and when appropriate.”


7am: Facebook

Facebook parent Meta posted a decline in revenue for a second consecutive quarter, following a fall in advertising revenue and as competition from video app TikTok heats up.

The quarter’s weak results has raised more questions on the wisdom of plans to spend $10 billion a year on the metaverse.

Revenue for the three months to the end of September fell 4% to $27.71 billion from $29.01 billion in the same period last year.

The results followed weak earnings reports from Google parent Alphabet and Microsoft this week. Meta’s stock tumbled 14% in after-hours trading.


Global markets

The pound has jumped to six-week highs as Rishi Sunak is seen as bringing some stability to fiscal policy.

Sterling was trading at $1.150 in US trading on Tuesday and a break above this level on Wednesday triggered a further jump to $1.158.

US markets ended a volatile session in subdued fashion with the Dow Jones posting its fourth consecutive day of gains, while tech stocks were under pressure following disappointing results from Alphabet and Microsoft.

At the close the DJIA was almost unchanged, the S&P 500 was 0.74% lower and the Nasdaq Composite slipped 2.04%.

The Bank of Canada surprised the market by hiking interest rates by a less than expected 50 basis points, encouraging markets to believe central banks may ease off on aggressive policies to tackle inflation.



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