Global Markets: Pound jumps on UK tax cut reversal, oil swings higher
03/10/2022 07:54
By Sam Byford
TOKYO, Oct 3 (Reuters) - Oil jumped on Monday as OPEC+
considered reducing output at its meeting later this week while
the pound swung higher after the UK government said it would
reverse a controversial tax cut that had roiled British markets.
Asian stocks mostly fell in holiday-thinned trade although
Japanese markets found support on strong energy and
semiconductor shares.
Sterling jumped in early London trade after the British
government announced plans to reverse the proposed scrapping of
the higher rate of income tax that has sparked a backlash in the
governing Conservative Party.
The pound GBP=D3 rose as far as $1.128, its highest in 10
days, while FTSE futures FFIc1 hinted at a strong recovery in
a stock market that has been battered by concerns over Prime
Minister Liz Truss and her finance minister Kwasi Kwarteng's
spending plans.
U.S. crude futures CLc1 rose 2.70% to $81.64 a barrel
after OPEC+ sources told Reuters oil production could be cut by
between 500,000 and one million barrels a day. Brent crude
LCOc1 rose 2.55% to $87.31 per barrel.
Japan's Nikkei 225 .N225 rose 0.50%, with energy stocks
leading gains on the index and upbeat quarterly earnings from
Mimasu Semiconductor 8155.T boosting chip shares.
A closely watched factory survey out of Japan showed the
slowest growth in manufacturing activity since the beginning of
last year, with sluggish global conditions hurting exports and
the weakening yen contributing to domestic inflation.
Minutes from the Bank of Japan's September meeting were also
released on Monday, showing members debated the possibility of
inflation outpacing expectations under the bank's ultra-easy
monetary policy, which ultimately went unchanged.
"Some participants suggested that the BoJ should closely
monitor whether the recent cost pressures will lead to a
virtuous cycle of higher wages," wrote Ayako Fujita, a
researcher at JPMorgan, in a note. "We think this confirmed that
wage trends are the key condition for the BoJ to change its
policy."
The yen JPY=EBS briefly fell as low as 145.4 to the U.S.
dollar despite remarks this morning from Japan's finance
minister, Shunichi Suzuki, that the government would take
"decisive steps" to prevent sharp currency moves.
It was the first time the yen has fallen through the 145
barrier since Sept. 22, when the Ministry of Finance intervened
to prop up the currency, which has hit 24-year lows against the
dollar this year. It later pared losses and was last at 144.86.
Outside Japan, stocks fell around Asia. MSCI's broadest
index of Asia-Pacific shares ex-Japan .MIAPJ0000PUS was down
1.04%, on course for its fourth straight session of losses. It
fell nearly 14% over the past quarter.
In Australia, where some states are observing a public
holiday, the S&P/ASX 200 index .AXJO fell 0.27%.
Hong Kong's Hang Seng index .HSI dropped 1.75%.
South Korea had a national holiday and China entered the
Golden Week break on Monday. Hong Kong is closed for a public
holiday on Tuesday.
Euro Stoxx 50 futures STXEc1 lost 1.63%.
Investor focus will later swing to the September U.S. ISM
manufacturing index.
"ISM manufacturing is unlikely to dent the optimism around
the U.S. economy that has been building up further with positive
economic indicators released over the last few weeks," Saxo Bank
market strategist Redmond Wong wrote in a research note.
The Reserve Bank of Australia meets on Tuesday, with markets
widely expecting another 50 basis point rate hike while Japan's
consumer price index is likely to show another pick up in
inflation.
Spot gold XAU= was up 0.27% to $1,664.0900 an ounce.
Leading cryptocurrency Bitcoin fell 1.48% to $19,137.
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(Reporting by Sam Byford; Editing by Sam Holmes)
((Sam.Byford@thomsonreuters.com;))
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