Britain issues costliest five-year debt since 2008
Britain has successfully sold more government debt this morning, but at the highest price since the financial crisis almost two decades ago.
The Debt Management Office sold £4.5bn of 5-year debt at an average yield of 5.036%, the highest since 2008, Reuters reports.
There was plenty of interest in the gilts – perhaps not surprising, given the lucrative yields the DMO was prepared to pay. Investors bid for 3.51 times as much debt as was available, allowing the DMO to pick the best offers (ie, the investors offering to accept lower yields).
Closing post
Time to wrap up…
Britain has paid the highest interest rate to borrow for five years since the financial crisis of 2008.
The day before the Budget, the government sold £4.5bn of five-year bonds at an interest rate of 5.036%.
City analysts said the jump in borrowing costs was a reminder of the pressures on the public finances, with investors hoping for a quiet budget from John Healey tomorrow.
Ion Jauregui, analyst at ActivTrades, says:
In other news…
Banking giant HSBC has reported a 32% rise in third-quarter profits to $9.6bn (£7.2bn), alongside plans to give $2.7bn to shareholders through dividends and buybacks.
The results, which knocked HSBC’s shares down by over 5%, sparked new calls for a bank tax in the budget.
It also pushed HSBC’s value below Shell, which is now the most valuable company in London.
The number of UK businesses in financial distress has hit its highest level in more than two decades, as pressure grows on the chancellor to provide more support to the private sector.
The chancellor was also lobbied to tax the super-rich, to fund more cost of living support.
UK shop price inflation has risen to the highest level in two and a half years, according to the British Retail Consortium, which warned that “the dam is starting to break” when it comes to retailers trying to limit price rises for customers.
French consumer confidence has hit its lowest level in 13 years…
…while there’s been a small pick-up in morale in the US.
HSBC loses crown of London's most valuable company
Trading has closed on the London stock market, and HSBC has ended the day as the FTSE 100’s top faller.
Traders remained unimpressed with the bank’s financial results this morning, with its 32% jump in profits a little below expectations.
By my calculations, that means HSBC has slipped to second place on the list of the most valuable companies on the Footsie, with a value of £221.8bn.
Shell, which dipped by 1.8% today, has a market capitalisation of £224bn.
Photos: Tax the super-rich!
A group of campaigners gathered in Parliament Square today to urge the government to tax the super-rich in tomorrow’s budget.
Campaigners from civil society organisations including Tax Justice UK, Patriotic Millionaires UK, and Positive Money came together to call on prime minister Andy Burnham and chancellor John Healey to tax the richest to fund support for those suffering from the cost of living squeeze.
Faiza Shaheen, executive director at Tax Justice UK, said:
The UK stock market is hoping for a budget that “does no harm”, reports Sue Noffke, manager of the Schroder Income Growth Fund.
That may sound rather unambitious, but after two tax-raising budgets from Rachel Reeves the City would prefer a fiscal event that was light on fireworks, but with some growth-friendly measures.
Noffke explains:
We have some better economic news from the US.
US consumer confidence has risen in October for the first time in four months, as Americans grow more optimistic about the job market and business conditions.
The Conference Board’s gauge increased 7.5 points to 91.7, the highest since June and beating forecasts.
“Consumer confidence advanced in October, driven primarily by improved perceptions of current and expected business conditions,” said Fergus McCormick, senior economist, global indicators at The Conference Board, adding:
Britain’s logistics industry has been cheered by reports that chancellor John Healey will retain the current freeze on fuel duty in tomorrow’s Budget.
This wouldn’t be a terribly surprising development – it’s become a modern tradition that a chancellor lays out plans to raise fuel duty in future years, only to bottle it when the moment arrives.
Ben Fletcher, chief executive of business group Logistics UK, says:
Back in the markets, Wall Street has opened higher as tech stocks rebound from their recent losses.
The Nasdaq share index has gained 1%, up 250 points at 26,420 points. AI cloud computing operator Nebius is leading the risers, up almost 9%.
The S&P 500 share index is up a more modest 0.5%.
Oil falling amid hopes of Middle East de-escalation
The rise in government bond yields has been driven by inflation fears, due to the jump in the oil price this year.
And there are encouraging signs today that energy prices are falling.
Brent crude is down 1.6% at $113.91 a barrel, driven by a diplomatic push to de-escalate tensions between Saudi Arabia and Iran.
Yesterday, representatives from Saudi Arabia, Turkey, Pakistan and Iran met in Tehran; Iran’s Foreign Minister Esmaeil Baqaei said the talks were a step toward regional security cooperation.
According to Reuters, Iranian Security Council chief Mohsen Rezaei on Tuesday met Supreme Leader Ayatollah Mojtaba Khamenei, with state media reporting that Khamenei had emphasised the importance of pursuing Iran’s interests and maintaining its conditions for ending the war.
Over in the US, new home sales have stumbled as Americans have wrestled with higher interest rates.
New single-family home sales decreased by 0.6% in September to an annualized rate of 676,000, according to figures released today by the federal government.
If Chancellor Healey can deliver the dull budget the market expects on Wednesday then the UK will be rewarded with lower gilt yields, says Matthew Amis, investment director, rates management at Aberdeen Investments:
The UK bond market is pretty quiet ahead of tomorrow’s budget.
The yields on long-dated gilts are down slightly, having already dropped back from the multi-year highs struck earlier this autumn.
LSE marks 40th anniversary of the Big Bang
London’s stock market has been marking the 40th anniversary of the Big Bang – the sweeping, Thatcherite deregulation of the London Stock Exchange.
The Big Bang brought several fundamental changes to the City, including the end of fixed fees for share trading, allowing firms to operates as both brokers and market-makers, and bringing in electronic trading.
It also allowed foreign firms to buy UK stockbrokers, paving the way for the takeover of UK banks by (largely) American rivals.
To mark the occasion, this morning’s opening ceremony at the London Stock Exchange rang its new bell for the first time. This bell, the LSE says, is “a symbol of its heritage, ambition and the market community.”
It’s unfortunate that the market promptly fell by 1%, but we can blame HSBC for that!
