LONDON: The pound jumped more than two per cent against the dollar Monday as Britain’s fourth finance minister in as many months sensationally ripped up a tax-cutting budget that had spooked markets.

Chancellor of the Exchequer Jeremy Hunt tore up the fiscal policy unveiled by the new government of Prime Minister Liz Truss last month.

Monday’s reversals also lifted London’s benchmark FTSE 100 shares index, which closed up 0.9pc.

Frankfurt gained 1.7pc and Paris 1.8pc.

All three main indices on Wall Street rebounded on Monday, having finished sharply lower Friday.

The Dow was up 1.7pc in late morning trading, with the S&P 500 climbing 2.6pc and the tech-heavy Nasdaq soaring 3.2pc.

“The three pillars of support for the rebound effort — lower interest rates, a weaker dollar, and strength in the mega-cap stocks — need to remain intact,” said market analyst Patrick O’Hare at Briefing.com.

“They are currently, so the stock market has something to build on.” The markets have been grappling with the latest strong US inflation reading, which ramped up bets that the Federal Reserve will hike borrowing costs by 75 basis points twice more before the end of the year.

That, in turn, has stoked concerns the world’s top economy will flip into a recession. Traders are keeping tabs on looming earnings reports, with expectations that higher rates and prices will have eaten into companies’ bottom lines.

Elsewhere, Asian equities started the week in mixed fashion. There was a little disappointment among investors after Chinese President Xi Jinping at the weekend reasserted his commitment to the zero-Covid strategy of lockdowns that has hammered the economy this year.

Published in Dawn, October 18th, 2022