- The FTSE 100 retreats after a bright start, down 31 points
- UK GDP falls 0.2% in third quarter
- Pound at highest level since August
3.10pm: FTX starts US bankruptcy proceedings
Cryptocurrency exchange FTX will begin bankruptcy proceedings in the United States and CEO Sam Bankman-Fried will step down, after a liquidity crisis at the cryptocurrency group has prompted the intervention of regulators around the world.
The struggling cryptocurrency trading platform has been scrambling to raise billions in funding to stave off collapse while under intense regulatory scrutiny.
The company said in a statement Friday, shared via a tweet, that FTX and its affiliated crypto trading fund Alameda Research and approximately 130 other companies have filed for voluntary Chapter 11 bankruptcy proceedings in Delaware.
Press release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
2.45pm: The FTSE is little changed as the US gives up some of yesterday’s gains
The Footsie is little changed for the US open as markets across the pond make a muted start to the day giving up some of yesterday’s stellar gains.
The pound’s strength against the US dollar weighed on dollar producers and exporters in the blue-chip index, as London underperformed other European bourses.
At 2.45pm, the FTSE 100 was down 31 points, but the FTSE 250 continued to rise, 254 points to 19,632.
In the US, stocks slipped into the red as investor optimism faded after weaker-than-expected CPI data sparked the biggest rally since the start of 2020 yesterday.
Just after the market opened, the Dow Jones Industrial Average was down 142 points or 0.4% at 33,574, the S&P 500 was down 7 points or 0.2% at 3,950 and the Nasdaq Composite was down 6 points or 0.1% to 11,108 points.
ING analysts noted that a CPI did not pivot. “For once, the US CPI release broke the bad habit of surprising to the upside and the market quickly jumped on the ‘pivot’ bandwagon,” analysts wrote in a report.
14.25: The pound reaches its highest levels since August
The pound hit its highest level against the US dollar since August, after the greenback continued to weaken following yesterday’s weaker-than-expected CPI figures.
Sterling posted its biggest gain since March 2020 against the greenback yesterday after US inflation figures suggested the Fed was winning its battle to control inflation by supporting expectations of ‘a lower-than-expected peak for US rates.
The British currency extended those gains today to trade up 0.25% at US$1.174.
Lots of moves after US inflation came in below expectations on the day, so time for a quick ????UPDATE???? – Pound up to $1.18 compared to US$. Highest since August: Markets now 4.5% high on @bankofengland int rates. Down from 4.75% last week. – Equity markets are very happy too pic.twitter.com/Hr46ee7qkn
— Ed Conway (@EdConwaySky) November 11, 2022
2.10 pm: The EC lowers the economic forecasts for 2023
The European Commission has upgraded its growth forecast for the euro zone this year, but lowered its forecast for 2023, citing the impact of the war in Ukraine.
The EC said in its autumn economic forecast that the bloc will grow by 3.2% this year, up from a forecast of 2.7% in July.
However, growth next year is now expected to slow to 0.3% from an earlier forecast of 1.4%.
Inflation, meanwhile, will decrease to 6.1% in 2023 from 8.5% this year and to 2.6% in 2024.
“After a strong first half of the year, the EU economy has entered a much more challenging phase,” the Commission said.
“Shocks triggered by Russia’s war of aggression against Ukraine are weighing on global demand and strengthening global inflationary pressures.”
The unemployment rate is expected to rise to 7.2% in 2023 from 6.8% this year, before returning to 7.0% in 2024.
1.40pm: Legal moves to delay the Octopus/Bulb deal
Octopus Energy’s takeover of energy supplier Bulb faces a delay of up to three weeks after rivals asked a London court to halt the approval process, according to the Telegraph.
The Government has approved a deal for Octopus to buy Bulb, which collapsed last year at an estimated £2.2bn cost to the taxpayer.
The lawyers of the two companies went to court today to request approval of the agreement.
However, Scottish Power, Eon and British Gas have intervened in the court hearing to ask for more time.
David Allison, a lawyer for Scottish Power, asked for a three-week delay because it had been “impossible” to deal with key documents since the deal was announced at the end of October.
Lawyers for British Gas told the court there was a “serious lack of transparency” in the process.
But Bulb administrators said the court should allow the deal to go through on November 17, when regulator Ofgem begins its next observation window for wholesale coverage.
12.50pm: BoE governor says battle against inflation could take up to two years
Bank of England Governor Andrew Bailey said today that efforts to get inflation under control were likely to take 18 months to two years, adding that inflation was “well above where (we want) it to be”. .
“Inflation is bad for the less well-off in general and this inflation is particularly bad,” Bailey said in an interview with Newcastle newspaper The Journal and its Business Live website.
Bailey said interest rates were likely to rise in the coming months, but said he expected inflation to peak over the winter.
He has also praised companies for targeting wage increases to the lowest-paid workers.
He said it is “sensible” that companies “are doing more to target their pay rises”.
Mr Bailey told BusinessLive: “I wouldn’t direct them to do it, it’s not for me to do it, but when I talk to companies, I can understand why they do it.”
12:00pm: US markets are expected to continue rising
The FTSE 100 might be struggling, but other European bourses are pulling ahead and the US is also set for further gains today.
US stocks are expected to rise on Friday, still basking in the effects of softer-than-expected inflation data for October that pushed the S&P 500 to its biggest daily gain since 2020 in trading on Thursday.
Dow Jones Industrial Average futures rose 0.3% in premarket trading, while S&P 500 futures rose 0.3% and Nasdaq-100 futures rose 0.5%.
According to data yesterday, US headline inflation fell to 7.7% in October, compared to the 8.0% expected by analysts and from 8.2% published a month earlier, stoking expectations that the US rate-setters will reduce further interest rate hikes, after having produced four consecutive increases. Increase of 75 basis points so far this year.
“And more importantly, core inflation also fell more than expected. In addition, there are signs that both core and headline numbers could cool further in the coming months, including the drop in housing, used car and clothing prices,” noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Because inflation is the only thing that matters to the Fed, there was an impressive repositioning in markets after the data release, he said, noting that the S&P500 soared 5.50%, the Nasdaq rose 7.50% and the Dow Jones rallied 3.70% on Thursday.
“Stocks soared, US yields and the US dollar sank on expectations that the Fed might settle for a lower final rate to call victory in its fight against inflation.”
“Investors reacted to the latest US inflation data as if a miracle had happened. But in reality, US inflation remains very high compared to what the Fed is willing to achieve: the target of 2%,” Ozkardeskaya said, adding that the Federal Reserve is still likely to raise interest rates by 50 basis points in December and by two 25 basis points. basis points in 2023.
“So yes, yesterday was a great day, really, but the markets clearly got way ahead of themselves and we will certainly see some correction and consolidation going forward,” he warned.
Given the overreaction to the inflation numbers, the University of Michigan’s consumer sentiment index, due at 10 a.m. ET today, is likely to pass quietly even if it weakens as s ‘I expected.
11:30 a.m.: The price of oil rises by 3%
Oil prices soared more than 3% on Friday on hopes that an easing of some Covid rules in China would support the economic superpower and lead to higher demand for the commodity.
Chinese authorities said quarantine times for incoming passengers and close contacts of people infected with Covid would be reduced, while close contacts of close contacts could no longer be traced.
The new guidelines from China’s National Health Commission mark the first significant easing of China’s “zero-Covid” policy, which this year has hit economic activity and fuel demand in the world’s top oil importer and has depressed the oil market.
The market warmed to the news with the advance in oil prices extending yesterday’s gains.
Brent crude rose 3% to $95.79 a barrel, while US West Texas Intermediate gained 3.3% to $88.65 a barrel.
10.51am: GSK falls as UBS cuts rating to sell
GSK shares fell 4.77% to 1,341p as broker UBS downgraded the stock to sell and cut its price target to 1,300p from 1,820p.
The broker pointed to two factors that pose risks to the long-term earnings base: blockbuster vaccine Shingrix will exhaust its recovery patient pool in the U.S. around 27, and HIV product dolutegravir faces the expiration of the patent at the same time that it foresees that it could erode around 20. % of the income.
READ: GSK hit with ‘sell’ rating on long-term risks
GSK has already suffered a pair of setbacks this week with the failure of a key clinical trial for a new bone marrow cancer drug and today reported that second-line applications of its cancer drug will have a scope limited following a request from the US FDA.
10.30 am: The chancellor warns that the road is difficult
Commenting on the latest UK GDP figures,…