Stock markets in Europe opened on the front foot at the start of the final quarter of a tumultuous year marred with economic, markets and geopolitical chaos.
In London, the bluechip FTSE 100 (^FTSE) jumped 1.2% to 6,994 points after the opening bell, the CAC 40 (^FCHI) was 1.8% higher on the day, and in Frankfurt the DAX (^GDAXI) rose 1.7%.
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Chancellor Kwasi Kwarteng is expected to outline how his £43bn package of tax cuts will be paid for later this month, rather than until 23 November as originally planned.
It comes after the UK government decided to U-turn on part of its previous tax cutting plan on Monday, abolishing the planned scrapping of the 45p top rate income tax announced just 10 days prior.
The move had a positive affect on sentiment generally, with the pound (GBPUSD=X) pushing to a two-week high in early trade on Tuesday — bouncing back from its previous record lows against the dollar.
Sterling shot up 0.7% to $1.13 against the dollar in early trade.
Read more: Pound hits two-week high as Kwasi Kwarteng brings forward debt plan
Richard Hunter, head of markets at Interactive Investor, said: “Nonetheless, the longer term impact of the attempt to stimulate growth is yet to be proven, while the government’s initial announcement seemed at odds with what the Bank of England is trying to achieve.
“More volatility is likely to follow as the global economy grapples with high and persistent inflation and the central banks’ attempts to tame it without tipping into recessionary territory.”
Across the Atlantic, US indices also started the new quarter higher, as traders’ sentiment rose after a long losing streak.
Wall Street’s S&P 500 (^GSPC) advanced 2.6% on close, the tech-heavy Nasdaq (^IXIC) added 2.3%, while the Dow Jones (^DJI) closed up 2.7% — its best day since June.
Neil Wilson, chief market analyst at Markets.com notes this is because of softer US data, that has prompted thoughts that the Federal Reserve might need to take a step back and pause raising rates earlier than maybe thought.
“After a very sharp runup for bond yields last week as the UK’s gilt market broke, Monday saw a very abrupt correction,” Wilson added. “Rate cut bets in 2023 are on the rise again …. but thoughts of pivots are a little premature,”
Asian shares finished mixed overnight as markets in mainland China are closed all week for a national holiday.
In Tokyo, the benchmark Nikkei (^N225) closed up 3%, and the Hang Seng (^HSI) down 0.8% in Hong Kong.
Watch: How does inflation affect interest rates?
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