Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Marketmind: Pounded

Published 09/26/2022, 01:04 AM
Updated 09/26/2022, 01:05 AM
© Reuters. FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration
ESH25
-

A look at the day ahead in European and global markets from Tom Westbrook

Sterling's freefall extended to new lows on Monday as investors emphatically reject British finance minister Kwasi Kwarteng's programme of subsidies and unfunded tax cuts.

The pound, the most liquid method for betting against the programme's success, took out its 1985 low in the Asia session to hit $1.0327. It is only the latest casualty in financial markets, which have been tumultuous recently. On Friday, gilts suffered their heaviest selling in decades, and before that, the yen and U.S. interest rate futures have been roiled. [MKTS/GLOB]

For sterling, parity on both the dollar and euro now beckons and speculation is rising of a response - verbal or otherwise - from the Bank of England.

Elsewhere, pressure is building.

Italy on Sunday elected its most right-wing leader, Giorgia Meloni, since World War Two. Relatively poor performances by her euro-sceptic allies the League and Forza Italia may temper how much the power balance in Europe shifts as a result.

Global tension is also mounting over the war in Ukraine, as Russia holds widely-criticised votes aimed at annexing territory it has taken by force.

By incorporating the areas of Luhansk, Donetsk, Kherson and Zaporizhzhia into Russia - which could happen as soon as this week - Moscow could portray efforts to retake them as attacks on Russia itself.

Besides sterling, Asian stock markets fell on Monday. European futures fell 0.3% and S&P 500 futures fell 0.6%.

Key developments that could influence markets on Monday:

© Reuters. FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

Economics: Euro zone Jul construction output, German Ifo Business Sentiment Survey

Speakers: ECB's Christine Lagarde, Bank of England policy maker Silvana Tenreyro

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.