European markets close slightly higher; Bank of England intervenes in bond market – CNBC

European stocks close slightly higher

The pan-European Stoxx 600 provisionally ended 0.3% higher, recovering from losses of 2% in morning trade and a choppy afternoon.

The U.K.’s FTSE 100 was up 0.3% after the Bank of England announced the temporary purchase of long-dated bonds and the suspension of gilt selling next week.

The U.K. bond market has seen a historic sell-off and the pound has plunged to a historic low against the U.S. dollar as traders expressed aversion to a “mini-budget” announced Friday.

Germany’s DAX closed 0.9% higher, while France’s CAC 40 was up 0.2%.

— Jenni Reid

Stocks on the move: Thyssenkrupp down 11%, Hikma up 8%

Shares of German multinational conglomerate Thyssenkrupp fell 11% by mid-afternoon after JPMorgan reinstated its coverage of the stock with an “underweight” rating.

At the top of the European blue chip index, Britain’s Hikma Pharmaceuticals jumped more than 8% by mid-afternoon.

– Elliot Smith

Sterling slides after Bank of England bond market intervention

Sterling fell 1.4% against the dollar on Wednesday, sliding below $1.06 after the Bank of England intervened in the U.K. bond market to calm the recent market turmoil unleashed by the new government’s so-called “mini-budget.”

The Bank announced Wednesday that it would suspend the planned start of its gilt selling next week until Oct. 31 and begin temporarily buying long-dated bonds until Oct. 14., in an emergency program backed by the U.K. Treasury.

– Elliot Smith

All indicators going in the wrong direction: WTO head

Ngozi Okonjo-Iweala, director general of the World Trade Organization (WTO), speaks during the Clinton Global Initiative (CGI) annual meeting in New York, on Monday, Sept. 19, 2022.

Michael Nagle | Bloomberg | Getty Images

The global economy is slowing considerably and may be inching toward a recession, Ngozi Okonjo-Iweala, director general of the World Trade Organisation, told CNBC’s Julianna Tatelbaum.

“My worry is that all the indicators are going in the wrong direction,” Okonjo-Iweala said at a WTO event in Geneva.

She noted recent downgraded global growth forecasts from the IMF, World Bank and OECD. She added that purchasing managers’ indexes have cooled and ocean freight rates have dropped, which “could be a drop in demand which is signaling something untoward.”

— Jenni Reid

EU pledges robust response to suspected sabotage of Nord Stream gas pipelines

BORNHOLM, DENMARK – SEPTEMBER 27: Danish Defense shows the gas leaking at Nord Stream 2 seen from the Danish F-16 interceptor on Bornholm, Denmark on September 27, 2022.

Danish Defence/ | Anadolu Agency | Getty Images

The European Union pledged to deliver a “robust and united response” to a suspected act of sabotage after mystery gas leaks hit two underwater Russian gas pipelines.

“All available information indicates those leaks are the result of a deliberate act,” EU foreign policy chief Josep Borrell said in a statement.

“We will support any investigation aimed at getting full clarity on what happened and why, and will take further steps to increase our resilience in energy security. Any deliberate disruption of European energy infrastructure is utterly unacceptable and will be met with a robust and united response,” he added.

Here’s the full story.

— Sam Meredith

Bank of England delays bond sales, launches temporary purchase program after market turmoil

LONDON, February 03: Governor of the Bank of England Andrew Bailey leaves after a press conference at Bank of England on February 3, 2022 in London, England. The Bank is expected to hike interest rates for a fifth consecutive meeting on Thursday, but faces a tough balancing act between supporting growth and curbing inflation.

Dan Kitwood | Getty Images News | Getty Images

The Bank of England will suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government’s so-called “mini-budget.”

U.K. gilt yields are on course for their sharpest monthly rise since at least 1957 as investors flee British fixed income markets following the new fiscal policy announcements. The measures included large swathes of unfunded tax cuts that have drawn global criticism, including from the IMF.

In a statement Wednesday, the central bank said it was monitoring the “significant repricing” of U.K. and global assets in recent days, which has hit long-dated U.K. government debt particularly hard.

Read the full story here.

– Elliot Smith

The Bank of England’s position is ‘almost impossible,’ chief investment strategist says

The UK government has made the Bank of England's position almost impossible, strategist says

Harnett said that domestic companies – those in the FTSE 250 – “will be the ones that struggle,” which is a point of concern for the U.K.

“When the markets see a crack they go for it in a big way and we see that crack being widened out in the U.K.,” he told CNBC’s “Squawk Box Europe.”

— Hannah Ward-Glenton

Stocks on the move: Thyssenkrupp down 8%, Roche up 5%

Shares of German multinational conglomerate Thyssenkrupp fell 8% in early trade after JPMorgan reinstated its coverage of the stock with an “underweight” rating.

At the top of the Stoxx 600, Swiss pharmaceutical company Roche jumped 5.7% after a positive read-across from an Alzheimer’s drug study by rivals Eisai and Biogen.

– Elliot Smith

Yields on 20-year and 30-year UK gilts top 5%

Yields on 20-year and 30-year U.K. gilts pushed past the 5% mark on Wednesday as the extraordinary sell-off in U.K. fixed income market continued.

Bond yields move inversely to prices. The new government’s so-called “mini-budget” on Friday sparked a wave of selling in British fixed income markets, with gilt yields now set for their biggest monthly climb since at least 1957, according to a Reuters analysis of both Refinitiv and Bank of England data.

– Elliot Smith

IMF gives damning verdict on Britain’s tax cuts

Signage outside the International Monetary Fund (IMF) headquarters in Washington, D.C., U.S., on Tuesday, April 19, 2022. The IMF slashed its world growth forecast by the most since the early months of the Covid-19 pandemic, and projected even faster inflation, after Russia invaded Ukraine and China renewed virus lockdowns. Photographer: Al Drago/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

U.S. 10-year Treasury yield breaches 4% for the first time since 2010

Loading chart…

Jihye Lee

CNBC Pro: Credit Suisse says now’s the time to buy two green hydrogen stocks — and gives one over 200% upside

Credit Suisse says it’s time to enter the green hydrogen sector, with a number of catalysts set to drive the clean energy powerhouse.

“Green hydrogen is a growth market — we increase our 2030 market estimates by [over] 4x,” the bank said, forecasting that green hydrogen production will expand by around 40 times by 2030.

It names two stocks to play the boom — giving one upside of more than 200%.

CNBC Pro subscribers can read more here.

— Weizhen Tan

CNBC Pro: Asset manager reveals what’s next for stocks — and shares how he’s trading the market

CNBC Pro Talks: Asset manager Neil Veitch on top picks — and stocks to avoid — as volatility persists

Neil Veitch, investment director at Edinburgh-based SVM Asset Management, says he expects the macro landscape to remain “quite difficult” for the remainder of the year.  

Speaking to CNBC Pro Talks last week, Veitch named the key drivers that could help the stock market to turn “more constructive” and shared his take on growth versus value.

CNBC Subscribers can read more here.

— Zavier Ong

U.S. 10-year yield closes in on key 4% level

The 10-year Treasury yield is edging close to 4%, a level it has not touched since 2010.

The U.S. 10-year is the benchmark yield that sets the course for home mortgage rates and other consumer and business loans. It has bounded higher this week, as U.K. gilt yields race higher and on expectations of an aggressive Federal Reserve.

The yield was at 3.96% in afternoon trading. The 10-year yield reversed an earlier decline and gained about basis points. (A basis point equals 0.01 of a percentage point)

“It’s definitely been impressive, and I just think no one is yet willing to step in and catch the falling knife,” said Ben Jeffery of BMO. He added a lack of liquidity has also been pushing up yields, which move opposite price.

Loading chart…

Jeffery said the yield was also moving higher ahead of the 1 p.m. auction of 5-year notes.

He said the 10-year tested the 4% level in 2010. “The last time we were sustainably above 4% was 2008. There’s another technical level at 4.10% and then there’s not much of note until 4.25%,” he said.

Patti Domm

European markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.

The U.K.’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.

Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.

Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.

U.K. inflation figures for August are due and euro zone industrial production for July will be published.

— Holly Ellyatt

Leave a Reply

Your email address will not be published. Required fields are marked *