The Bank of England remains in the spotlight after disappointing investors by not announcing a rate hike to support the pound – Copyright AFP Isabel INFANTES
The dollar weakened slightly against its major rivals on Tuesday, helping the pound rebound from a record low, while stock markets stabilized after recent volatility.
The world is heading towards a global recession as multiple crises collide, World Trade Organization chief Ngozi Okonjo-Iweala told the world trade body’s annual public forum in Geneva.
Recession prospects have risen in recent weeks as central banks continue to raise interest rates in an attempt to quell decades-high inflation, particularly by boosting the dollar.
The Federal Reserve has carried out three successive exceptional hikes in the United States and warns that more are to come.
It has seen investors pile into the dollar, sending it to record or multi-decade highs, in turn shaking governments from Tokyo to Beijing and London.
On Monday, the pound hit an all-time low of $1.0350 as traders spooked by a UK tax giveaway which they say could fuel further inflation and significantly increase UK government borrowing.
“The strength of the dollar remains the driving force – or the wrecking ball – in financial markets right now,” said Markets.com analyst Neil Wilson.
The pound staged a small rally on Tuesday after the Bank of England said it would “not hesitate to change interest rates as much as necessary”.
With the pound showing record weakness against the dollar this week, analysts expect a big rate hike when the BoE holds its next regular policy meeting on Nov. 3.
“A rate hike of more than 150 basis points is currently expected for the next meeting,” Commerzbank analyst Esther Reichelt noted on Tuesday, wondering if that would even be enough.
The Bank of England’s statement “should not calm anyone who had already questioned the BoE’s resolve to fight inflation even before these events”, she added.
Elsewhere, European natural gas prices jumped nearly ten percent to 190.50 euros after news broke that the two Nord Stream gas pipelines linking Russia and Europe were hit by unexplained leaks, raising suspicions of sabotage.
Pipelines have been at the center of geopolitical tensions in recent months as Russia cut off gas supplies to Europe in alleged retaliation for Western sanctions over its invasion of Ukraine.
A major new pipeline that will transport Norwegian gas via Denmark was inaugurated in Poland on Tuesday in a bid to help boost Europe’s energy security.
Oil prices jumped almost 2%, helped by a weaker dollar.
– Key figures around 11:00 GMT –
London – FTSE 100: 0.1% drop to 7,016.35 points
Frankfurt – DAX: UP 0.7% to 12,315.34
Paris – CAC 40: +0.7% to 5,811.35
EURO STOXX 50: UP 0.7% to 3,367.42
Tokyo – Nikkei 225: UP 0.5% to 26,571.87 (closing)
Hong Kong – Hang Seng Index: FLAT at 17,860.31 (closing)
Shanghai – Composite: UP 1.4% to 3,093.86 (closing)
New York – Dow: DOWN 1.1% to 29,260.81 (closing)
Pound/dollar: UP to $1.0821 from $1.0689 on Monday
Euro/dollar: UP at $0.9642 against $0.9611
Euro/pound: DOWN to 89.11 pence vs. 89.87 pence
Dollar/yen: DOWN to 144.28 yen against 144.72 yen
North Sea Brent Crude: UP 1.7% to $85.47 a barrel
West Texas Intermediate: UP 1.9% to $78.11 a barrel
The Bank of England remains in the spotlight after disappointing investors by not announcing a rate hike to support the pound – Copyright AFP Isabel INFANTES
The dollar weakened slightly against its major rivals on Tuesday, helping the pound rebound from a record low, while stock markets stabilized after recent volatility.
The world is heading towards a global recession as multiple crises collide, World Trade Organization chief Ngozi Okonjo-Iweala told the world trade body’s annual public forum in Geneva.
Recession prospects have risen in recent weeks as central banks continue to raise interest rates in an attempt to quell decades-high inflation, particularly by boosting the dollar.
The Federal Reserve has carried out three successive exceptional hikes in the United States and warns that more are to come.
It has seen investors pile into the dollar, sending it to record or multi-decade highs, in turn shaking governments from Tokyo to Beijing and London.
On Monday, the pound hit an all-time low of $1.0350 as traders spooked by a UK tax giveaway which they say could fuel further inflation and significantly increase UK government borrowing.
“The strength of the dollar remains the driving force – or the wrecking ball – in financial markets right now,” said Markets.com analyst Neil Wilson.
The pound staged a small rally on Tuesday after the Bank of England said it would “not hesitate to change interest rates as much as necessary”.
With the pound showing record weakness against the dollar this week, analysts expect a big rate hike when the BoE holds its next regular policy meeting on Nov. 3.
“A rate hike of more than 150 basis points is currently expected for the next meeting,” Commerzbank analyst Esther Reichelt noted on Tuesday, wondering if that would even be enough.
The Bank of England’s statement “should not calm anyone who had already questioned the BoE’s resolve to fight inflation even before these events”, she added.
Elsewhere, European natural gas prices jumped nearly ten percent to 190.50 euros after news broke that the two Nord Stream gas pipelines linking Russia and Europe were hit by unexplained leaks, raising suspicions of sabotage.
Pipelines have been at the center of geopolitical tensions in recent months as Russia cut off gas supplies to Europe in alleged retaliation for Western sanctions over its invasion of Ukraine.
A major new pipeline that will transport Norwegian gas via Denmark was inaugurated in Poland on Tuesday in a bid to help boost Europe’s energy security.
Oil prices jumped almost 2%, helped by a weaker dollar.
– Key figures around 11:00 GMT –
London – FTSE 100: 0.1% drop to 7,016.35 points
Frankfurt – DAX: UP 0.7% to 12,315.34
Paris – CAC 40: +0.7% to 5,811.35
EURO STOXX 50: UP 0.7% to 3,367.42
Tokyo – Nikkei 225: UP 0.5% to 26,571.87 (closing)
Hong Kong – Hang Seng Index: FLAT at 17,860.31 (closing)
Shanghai – Composite: UP 1.4% to 3,093.86 (closing)
New York – Dow: DOWN 1.1% to 29,260.81 (closing)
Pound/dollar: UP to $1.0821 from $1.0689 on Monday
Euro/dollar: UP at $0.9642 against $0.9611
Euro/pound: DOWN to 89.11 pence vs. 89.87 pence
Dollar/yen: DOWN to 144.28 yen against 144.72 yen
North Sea Brent Crude: UP 1.7% to $85.47 a barrel
West Texas Intermediate: UP 1.9% to $78.11 a barrel
