Wall Street Surges; UK Tax U-turn Welcomed
Newslooks- NEW YORK (AP)
Stocks are opening sharply higher on Wall Street, the latest about-face for a market that has seen a lot of sudden ups and downs recently. The S&P 500 jumped 2.5% in the early going Monday, while the Dow was up 2% and the Nasdaq climbed 3%. Benchmark Treasury yields eased back somewhat from their multiyear highs, while in the U.K. government bonds rallied following news that the country’s new Treasury chief was abandoning nearly all of a series of unfunded tax cuts announced last month that had upset markets. Bank of America rallied nearly 5% after reporting earnings that beat forecasts.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
U.S. markets pointed toward higher early Monday ahead of another batch of corporate earnings that are being released amid erratic market swings.
Futures for the S&P rose 1.2% and the Dow Jones Industrials ticked 1% higher before the opening bell.
Bank of America’s profits fell by 8% in the third quarter as it set aside cash to cover potential loan losses. It’s the latest bank to start socking away money for a potential recession, as Wall Street’s biggest banks have become increasingly gloomy on the U.S. economy going into the winter.
Charles Schwab and Bank of New York Mellon also report earnings Monday. On Friday, solid earnings from banks briefly buoyed markets even as executives said they were setting aside more funds in the event of a recession.
In Europe, U.K. Treasury chief Jeremy Hunt on Monday reversed most of an economic package announced by the government just weeks ago, including a planned cut to income tax.
In a bid to soothe turbulent financial markets, Hunt said he was scrapping “almost all” the tax cuts announced last month and signaled public spending cuts are on the way. He also scaled back a cap on energy prices designed to help households pay their bills. It will now be reviewed in April rather than lasting two years.
Hunt was appointed Friday after Prime Minister Liz Truss fired Kwasi Kwarteng, who spent less than six weeks in the Treasury job.
Markets have been unsettled and swung wildly last week after a U.S. report showed that inflation remains very hot.
On Monday, Britain’s FTSE 100 rose 0.9%, as did France’s CAC 40. Germany’s DAX was up 1.2% at midday.
In Asia, the meeting of China’s ruling Communist Party opened Sunday and is expected to reappoint Xi Jinping as leader for the next five years. Analysts expect the meeting will reaffirm Xi’s his grip on power and stronger state control over the economy. They expect no change to Beijing’s “zero-COVID policy.”
“Fresh updates from China’s Party Congress are being scrutinized, with the emphasis on technological advancement and national security seemingly brought up as high priorities for China’s longer-term direction. Further de-coupling f rom U.S. technology seems to be the story,” Yeap Jun Rong, a market strategist at IG in Singapore, said in a commentary.
Japan’s benchmark Nikkei 225 slipped 1.2% to finish at 26,775.79. Australia’s S&P/ASX 200 dipped 1.4% to 6,664.40. South Korea’s Kospi rebounded to gain 0.3% to 2,219.71. Hong Kong’s Hang Seng rose 0.5% to 16,662.19, while the Shanghai Composite rose 0.4% to 3,084.94. In Mumbai, the Sensex gained 0.8%.
In currency trading, the U.S. dollar rose to 148.87 Japanese yen from 148.63 yen. That’s a nearly 32-year low for the yen against the dollar.
Clifford Bennett, Chief Economist at ACY Securities, noted the U.S. dollar will likely continue to rise as interest rates are pushed higher to counter inflation. That’s a hardship for countries facing steep increases in costs for imports and for debt repayments.
“The outlook is grim. The economic horizon is dark,” he said of the American economy. “”The U.S. dollar will continue to strengthen for the moment, particularly against other Western currencies.”
The euro cost 97.32 cents, up from 97.21 cents.
Worries about inflation remain, though there is some evidence of economies cooling in some parts of the world. A report last week showing U.S. consumers’ expectations for inflation was another signal the Federal Reserve may keep aggressively raising interest rates, although that strategy raises the risks of a recession.
The Fed has already raised its benchmark interest rate five times this year, with the last three increases by three-quarters of a percentage point. Wall Street expects another raise of three-quarters of a percentage point at its next meeting in November.
In energy trading, benchmark U.S. crude dipped 7 cents to $85.54 a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude oil prices fell 3.9% on Friday. Brent crude, the international standard, added 15 cents to $91.78 a barrel.
