FTSE 100 rises but tax policy reversal a ‘sticking plaster’ on market turmoil
The FTSE 100 ended the session 0.12% higher, or 8.52 points, at 6,858.79.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.London markets have closed in the green after an extraordinarily turbulent week that ended with the Chancellor ousted and the Prime Minister reversing a key policy in their fiscal plan.
It has been a difficult week for the FTSE 100 which closed at an 18-month low on Wednesday that shaved off 0.9% of the index’s value.
But it seems investors were reasonably happy about Kwasi Kwarteng getting the sack after just 38 days as Chancellor, during which time mortgage rates soared and the pound plummeted.
The FTSE 100 ended the session 0.12% higher, or 8.52 points, at 6,858.79.
Moves on corporation tax have gone a long way to bolstering sentiment today. But it is a sticking plaster that’s already curling at the edges.
Meanwhile, the pound and UK Government bonds came back under pressure despite the Prime Minister’s U-turn on corporation tax rises, which will see the Government raise more than £18 billion a year.
Sterling went up in value earlier on Friday after the Chancellor’s exit was confirmed but fell back after Liz Truss’s press briefing – suggesting that investors think that reinstating the corporation tax rise will not go far enough to claw back extensive Government debt.
The pound was down 1% against the dollar at 1.1211 at close. It was also down 0.66% against the euro at 1.1509.
Danni Hewson, a financial analyst at AJ Bell, said: “Markets were terrified that the ‘mini-budget’ was unfunded and fiscally irresponsible.
“The new regime was untried and seemingly unwilling to follow the accepted playbook for updating, in this case upending, fiscal policy.
“The writing was on the wall when markets surged in anticipatory delight on the news that another post-budget U-turn was imminent and moves on corporation tax have gone a long way to bolstering sentiment today.
“But it is a sticking plaster that’s already curling at the edges.”
It has been a choppy session for markets elsewhere in Europe but the top indices also closed in the green. The German Dax was up by 0.93% and the French Cac was 1.18% higher.
Sentiment was not so good in the US and the S&P 500 was down 1.7% when European markets closed, while Dow Jones had dropped 0.86%.
In company news, hospitality chain Loungers told shareholders that it was planning to open 19 more sites over the rest of the financial year, adding to the 206 venues that it currently has in its estate.
The firm, which owns chains Cosy Club and Lounge, hailed a strong performance of its new venues. Its share price moved up by nearly 1% on Friday.
FTSE 100-listed packaging and paper firm Mondi echoed the optimistic sentiment and revealed its earnings more than doubled over the third quarter.
The global firm said that higher average selling prices of its products had more than offset cost inflation of key materials including wood.
Its share price was up by 2%.
The biggest risers on the FTSE 100 were Ocado Group, up 21p to 456.8p, Segro, up 27.6p to 739.4p, Unite Group, up 23.5p to 829.5p, Rentokil Initial, up 13.3p to 500.2p, and United Utilities Group, up 20.8p to 854.4.
The biggest fallers on the FTSE 100 were Harbour Energy, down 21.1p to 399.1p, Fresnillo, down 26p to 702.2p, BAE Systems, down 28.8p to 790.8p, Rio Tinto, down 126.5p to 4,751.5p, and Prudential, down 20.6p to 872.2p.