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Stocks in London opened lower on Monday, but the pound kicked off the week on the front foot, after a UK government U-turn on a tax cutting measure.
Fears over the future of Credit Suisse were rife on social media over the weekend. The stock slid in Zurich in early trade.
The FTSE 100 index opened down 61.27 points, 0.9%, at 6,832.53 on Monday. The FTSE 250 opened down 143.09 points, 0.8%, at 17,025.25, and the AIM All-Share opened down 0.99 points, 0.1% at 805.39.
The Cboe UK 100 opened down 0.7% at 684.64, the Cboe UK 250 opened down 0.1% at 14,642.49, and the Cboe Small Companies opened down 0.2% at 12,696.54.
In European equities on Monday, the CAC 40 in Paris opened down 1.2%, while the DAX 40 in Frankfurt opened down 1.3%.
Liz Truss and Kwasi Kwarteng have abandoned a plan to abolish the UK top rate of income tax for the highest earners in an astonishing U-turn.
The chancellor acknowledged that their desire to axe the 45% rate on earnings over £150,000 in a move to be paid for by borrowing had become a ‘distraction’ amid widespread criticism.
He issued a statement, hours before he had been due to defend the plans at the Conservative Party conference, saying: ‘We are not proceeding with the abolition of the 45p tax rate.’
‘We get it, and we have listened,’ he added.
The U-turn will be seen as a massive blow to their authority, coming a little over a week after they were announced and just a month into Truss's premiership.
Sterling made a strong comeback from its recent lows. The pound was quoted at $1.1208 at the London equities open Monday, compared to $1.1149 at the close on Friday.
Investors, spooked by the mini-budget announced in September, sold off the pound. Sterling had hit a record low against the dollar in the process. Part of the concern came as to how stimulus measures announced would be funded.
The euro stood at $0.9796 Monday, unchanged from $0.9796.
Against the yen, the dollar was trading at JP¥145.05, higher compared to JP¥144.68 late Friday.
In London, Telecom Plus soared 21%.
The multi-utility provider said it expects annual profit ‘materially ahead’ of current market expectations.
It cited stronger customer growth, as well as a reduction in previously-expected cost of multi-service discounts during the second half. It also noted a more positive outlook for energy affordability, stemming from the government's recent energy price cap.
Essentra jumped 16%.
The firm said Chief Executive Officer Paul Foreman has decided to step down at the end of 2022. Scott Fawcett, currently the manager of its components division, will take his place from the beginning of January.
The Milton Keynes, England-based components maker also agreed on the disposal of its Filters business for £262.1 million to a subsidiary of Centaury Management Ltd.
‘This will provide Essentra Components with the flexibility to pursue value-creating organic and inorganic opportunities, including future bolt-on acquisitions,’ the firm said.
The sale of its Packaging business completed on Saturday, it noted.
The sales will make Essentra a ‘pure-play’ components business, with a ‘healthy balance sheet’. Essentra said that once the Filters sale is completed, it will return £150 million to shareholders through a special dividend.
easyjet dropped 4.4% early Monday, after HSBC cut the stock to 'hold' from 'buy'. Peer IAG fell 0.9%, though HSBC lifted it to 'buy' from 'hold'.
Intellectual property firm Hipgnosis Songs Fund was 4.6% higher, after announcing a successful refinancing of its credit facilities. It entered into a revolving credit facility of $700 million, to run for five years.
‘In an increasingly unpredictable debt market, this deal materially reduces our interest margin and the swaps we hope to close imminently provide long term certainty and a stable platform to take advantage of our industry's tailwinds,’ CEO & Founder Merck Mercuriadis said.
In AIM, Tortilla Mexican Grill plunged 25%.
It said interim pretax profit shrunk to £264,052 from £2.6 million the year before, for the 26 weeks ended July 3.
‘Sales over the summer period were more challenging than anticipated, due to a combination of train strikes, the heatwave, and pent-up consumer demand for overseas holidays,’ the Mexican restaurant owner explained.
Times remain tough with cost pressure still elevated, it noted.
The Nikkei 225 index in Tokyo closed 1.1% higher, while the S&P/ASX 200 in Sydney ended down 0.3%. In China, the Shanghai Composite was closed for National Day Golden Week. In Hong Kong, the Hang Seng in Hong Kong was down 1.0% in late trade.
Brent oil was quoted at $87.32 a barrel at the London equities open Monday, up from $86.35 late Friday.
Gold was quoted at $1,662.84 an ounce at the London equities open Monday, lower against $1,672.50 at the close on Friday.
Still to come on Monday's international economic events calendar, there are a slew of manufacturing PMI figures due, with Germany at 0855 BST, eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. The ISM manufacturing PMI is due at 1500 BST.
In Zurich, Credit Suisse was down 9.3% in early trade.
The Telegraph reported that the Bank of England has been monitoring developments at the financial services firm, liaising with Swiss banking watchdogs.
Credit Suisse moved to reassure its staff in the face of market turmoil and a stock price slide, Bloomberg reported on Friday.
In a memo, Chief Executive Officer Ulrich Koerner told staff that the Swiss bank has a ‘strong capital base and liquidity position’.
Koerner told staff not to confuse its recent share price slide with a sign that the bank's day-to-day performance is weakening.
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