Good morning,
The pound neared a two-week high after reports that the Bank of England will delay its plans to sell off gilts in a process known as quantitative tightening that will reduce the amount of money flowing around the financial system. Sterling went to highs of $1.1410 against the dollar after the Financial Times broke the story on Tuesday morning.
The Bank of England will push back the plan to start selling £838bn of gilts bought under its quantitative easing programme until markets are calmer.
The FT reported that Bank officials have made the decision after assessing markets as being “very distressed”. The central bank maintains it can bring down rampant inflation by setting interest rates rather than quantitative tightening, the reversal of QE.
Unwinding all of the gilts will take at least a decade at the pace the Bank has planned currently.
What happened overnight
Hong Kong stocks opened strongly on Tuesday morning after a global rally. The Hang Seng Index climbed 1.49pc, or 247.30 points, to 16,860.20 The Shanghai Composite Index grew 0.32pc, or 9.98 points, to 3,094.93, and the Shenzhen Composite Index on China’s second exchange added 0.45pc, or 9.06 points, to 2,006.87.
Tokyo stocks similarly opened higher on Tuesday, with the benchmark Nikkei 225 index up 1.54pc, or 413.56 points, at 27,189.35 in early trade, while the broader Topix index was up 1.29pc, or 24.25 points, at 1,903.81.
5 things to start your day
1) George Osborne’s former Treasury right-hand man to advise Hunt on the economy
2) Europe must use 10pc less gas to avoid risk of blackouts, warns IEA
3) State pension triple lock under threat
4) Tax calculators: How much Jeremy Hunt’s mini-Budget U-turns will cost you
5) First-time buyers ditch homeownership dreams
Coming up today
Earning season is in full swing: Netflix, Goldman Sachs and J&J will be among the companies announcing their results today. Figures on US industrial production will also be published and ECB executive board member Isabel Schnabel speaks in the late afternoon.
