European Markets Close Higher, Pound Jumps After UK Tax Reversal

Bridgette Randall
03 Oct, 2022
Frankfurt

European markets rebounded from the lows of the day to close higher on the first day of the fourth quarter after global growth worries resurfaced.

Purchasing Managers' Index for manufacturing declined to a 27-month low of 48.4 in September from 49.6 in August, S&P Global said in a report Monday. 

The euro zone manufacturing sector growth contracted at the fastest pace since mid-2020 after production and orders declined in the month.   The index was lowered from 48.5 in the preliminary reading. 

Any reading below 50 indicates contraction and above shows growth. 

Rising prices and falling demand volumes further weakened the manufacturing sector. France and Germany both registered worst declines and dropping to the lowest levels last seen in the first-half of 2020.  

Market indexes reversed earlier losses following the gains in New York. 

The DAX index roe 0.8% to 12,209.48, the CAC 40 index gained 0.59% to 5,794.105 and the FTSE 100 index increased 0.2% to 6,908.76. 

 

Oil Jumps 5% 

Crude oil prices jumped more than 5% ahead of the meeting of OPEC+ nations this Wednesday. 

The energy producing nations are expected to cut as much as one million barrels a day to lift the price of oil. 

Crude oil jumped $4.83 to $84.34 to a barrel  and natural gas declined 31 cents to $6.46. 

Brent crude oil jumped 5.2% to $89.56 and the TTF natural gas price declined 6.1% to 177.26 euros a megawatt hour. 

 

Pound Rebounds After UK Govt U Turn

European markets advanced after a week of losses and the British government reversed its recent tax proposal in the mini-budget after market turmoil and party rebellion. 

Finance minister was forced to reverse some of the proposals after bond and currency markets went into a tailspin and several members of his party rebelled. 

Finance minister Kwasi Kwarteng said that the government will not cut tax rate to 40% from 45% for income higher than 150,000 pounds. 

"It is clear that the abolition of the 45 percent tax rate has become a distraction from our overriding mission to tackle the challenges facing our country," said Chancellor of the Exchequer Kwasi Kwarteng in a statement released Monday. 

The euro edged lower to 97.65 U.S. cents and the British pound edged higher to $1.12. 

 

Swiss Inflation Drops in September 

Inflation rate in Switzerland unexpectedly declined to 3.3% in September from 3.5% in August, the Swiss Federal Statistics Office said Monday. 

 

Stock Movers 

Credit Suisse AG dropped 5.9% to 3.61 Swiss francs and the troubled investment bank assured investors over the weekend about the health of the company. 

Natuzzi SpA jumped 15.3% to $6.79 after the Italy-based leather furniture maker reported sixth consecutive quarterly revenue growth in a row. 

Revenue in the fiscal second quarter increased 7.8% to