Pound bounds higher on new PM, stocks rise

Wednesday, 26 October 2022 00:15 - - {{hitsCtrl.values.hits}}

LONDON, AFP: The pound shot higher Tuesday as former finance chief Rishi Sunak became Britain’s prime minister, while stocks mostly rose as bond yields slid.

Sunak on Tuesday promised to bring economic stability after the turmoil that forced predecessor Liz Truss out of Downing Street.

“Right now, our country is facing a profound economic crisis,” he told the nation in a televised address.

He vowed to place “economic stability and confidence at the heart of this government’s agenda” and kept Jeremy Hunt on as finance minister.

His reassuring message resonated on bond markets, where the yields on British government bonds, or gilts, fell. Rising bond yields had helped push Sunak’s predecessor Liz Truss out of office.

“UK gilt yields have continued to track lower, as Rishi Sunak’s journey to Downing Street further improves market sentiment after a tumultuous month,” said Joshua Mahony, senior market analyst at online trading platform IG.

“With yields falling into a one-month low, we are seeing markets provide a clear vote of confidence that Sunak will manage to avoid the kind of missteps taken by his predecessor,” he added.

The pound was up 1.9% at $ 1.489 in late European trading.

A strong pound is not good for many multinational firms listed on London’s blue-chip FTSE 100 index, which ended the day down half a point.

Frankfurt stocks rose 0.9% and Paris jumped 1.9%.

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