Futures put the S&P/ASX 200 1.25 per cent lower at Monday’s open, after rising recession odds sank Wall Street and the UK’s gamble with tax cuts shredded the British pound.
The rising risk of recession in the world’s biggest economy tipped the Dow briefly into a bear market as a fresh fiscal crisis enveloped the UK, where new Prime Minister Liz Truss’ tax cuts pushed sterling to a 37-year low against the dollar.
pledging the largest tax cuts since 1972 to rescue the UK economy from what the Bank of England last week conceded was the beginning of a recession.Advertisement The currency finished the New York session fetching US65.27¢, the lowest level since May 2020. The Australian dollar is buying 60.1 pence, the highest cross-rate since 2017, when the British government under Theresa May was at odds with Brussels over the timeline of Brexit.Oil retreated to January levels, but its outlook is complicated by the actions of Russia in its war with Ukraine.
Vladimir Putin is facing newfound resistance at home to his chaotic invasion as Russia last week began its first mobilisation since World War IIAs the outlook appears more uneven, the two-year US Treasury rate hit a 15-year high of 4.2 per cent. It is aiming to save up to $US2.7 billion to steady its business in the present financial year, including by parking aircraft and cutting back express service flights.Citi strategist Vasileios Gkionakis said the pound would drift closer to parity.
“A strong UK economy has always depended on a strong financial services sector,” he said. “We need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York.
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