- US equities started October with strong gains, with all major equity indices jumping more than 2%.
- The surge came amid a falling US dollar and falling bond yields.
- The rally was initially sparked by the British government’s reversal of its tax cut proposal.
U.S. stocks soared on Monday, kicking off the new quarter with a nearly 3% gain for all three major stock indexes. The Dow Jones jumped over 800 points.
The gains came amid a slide in the US dollar, which fell about a quarter of a percent, as well as a major drop in bond yields. The initial rally was sparked by the U.K. government’s about-face on its controversial tax cut and fiscal stimulus plans.
UK Finance Minister Kwasi Kwarteng has confirmed reports that the newly installed government, under Prime Minister Liz Truss, will drop its planned tax cuts for top earners. Investors were increasingly worried about unfunded tax cuts and the potential implications for already high inflation.
“The first major reversal in the first month of rule is not exactly an encouraging start for Liz Truss’ government,” said City Index analyst Fiona Cincotta. “The move could potentially limit sterling’s gains as the market worries about the government’s ability to weather this storm consistently.”
Here’s where the U.S. indices stood at the 4 p.m. ET Monday close:
Here’s what else happened today:
In commodities, bonds and crypto:
- West Texas Intermediate crude oil jumped 4.79% to $83.30 a barrel. Brent, the international oil benchmark, rose 4.24% to $88.75.
- Gold rebounded 2.08% to $1,706.80 an ounce.
- The 10-year Treasury yield fell 17 basis points to 3.66%.
- Bitcoin rose 1.85% to $19,519, while Ether jumped 1.86% to $1,315.