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5pm: Markets dip after PM’s speech

There were few signs that the Prime Minister’s latest budget u-turn had instilled confidence in the markets.

After soaring 126 points earlier in the session, the FTSE 100 suffered a sharp sell-off in later trading to close just 8.52 points higher at 6,858.79.

The pound weakened against the dollar after Liz Truss’s statement, falling 1.2% in the minutes after she confirmed a planned increase to corporation tax would go ahead.

Ms Truss said she would revert back to plans first announced by Rishi Sunak to increase the rate of corporation tax from 19% to 25%.

Sterling was trading at $1.12 and fell by a similar proportion against the euro to trade at €1.15.

Yields on government bonds – also known as gilts – rose, making borrowing more expensive for the Treasury and continuing to pile pressure on pension funds.

There were expectations that interest rate rises may not be so severe. However, Danni Hewson, financial analyst at AJ Bell, described the PM’s measures as “a sticking plaster already curling at the edges”.

4.20pm: Britishvolt ‘seeks funding’

Battery manufacturing start-up Britishvolt is said to be holding emergency fundraising talks with carmakers and other potential investors that may lead to a sale of the business, as it runs the risk of running out of money before Christmas.

The Financial Times quoted sources saying Britishvolt – which is backed by Edinburgh investment company Abrdn and miner Glencore – is holding talks with seven possible “strategic investors”.

The talks include options from assuming a minority stake to a full takeover, after recent market turmoil prompted traditional shareholders to pull out of its latest funding round.

The FT said India’s Tata Motors, the owner of Jaguar Land Rover, is one of the suitors, while other talks include at least one other carmaker and several energy companies.

7am: Royal Mail wields axe

Royal Mail shares fell 12% after it announced that it needs to axe thousands of jobs and will report a full year adjusted operating loss of £350m. Full story here

Global markets

The pound continued to rise through Asian trading today after hints of a budget tax reversal.

Sterling traded at $1.1324 early Friday, up markedly from its Wednesday low of $1.0925.

London equities were expected to open strongly after the Nikkei 225 was 3.3% higher in late trade, while the S&P/ASX 200 closed up 1.8%. The Shanghai Composite added 2.1%, while the Hang Seng in Hong Kong is up 3.7%.

Futures were pointing toward further gains on Wall Street. The Dow Jones Industrial Average rose 2.83%, S&P 500 advanced 2.60%,and the Nasdaq Composite jumped 2.23%.

However, hopes that pressure would ease on the Bank of England to raise rates were dashed after US headline CPI inflation rose 8.2% year-on-year in September (versus consensus expectations of 8.1%), compared to 8.3% in August. 

Markets reacted significantly to the upside surprise, with the dollar strengthening to its highest level since September on a trade-weighted basis as speculators increased their bets that the Fed would increase rates by another 75bps hike at its meeting on 2 November.