Global stocks and the pound rose on Monday as markets reacted to the news that former finance minister Rishi Sunak was set to become Britain’s new prime minister.
Europe rises despite data showing UK and Germany headed for recession and the Hong Kong stock market plunges as Chinese President Xi Jinping hands over key economic posts to supporters of coronavirus zero strategy The market closed in positive territory.
Wall Street stocks continued their gains on Monday. The Dow Jones rose about 1% by 1530 GMT, fueling sentiment on expectations that the US Federal Reserve (Fed) will soon slow the pace of rate hikes.
Traders were also boosted by news that European gas prices were at their lowest in four months. The Dutch benchmark TTF fell below €100 ($99) for the first time since June, and on Monday he reached €98.60 per MWh at around 1030 GMT.
Analysts at Energi Danmark said the fall in prices was due to mild weather in Europe and high gas supplies as the government replenished its stockpiles for the winter after cuts from Russia.
Oil Price Down
Oil prices also fell on fears of a recession. North Sea Brent crude fell 0.6% to $90.81 a barrel and West Texas Intermediate fell 0.9% to $84.33 a barrel.
All eyes were on Britain as his Sunak prepared to become his third prime minister less than two months after the resignations of Boris Johnson and Liz Truss.
The ruling Conservative Party’s last rival, Penny Mordaunt, declined to run on Monday, paving the way for Sunak to become prime minister.
“Many see new potential PMs as a source of some stability, so the pound is likely to rise higher, especially compared to the turbulent tenure of the Truss government, which saw significant volatility across markets. It started trading,” noted Walid Koudmani, chief market analyst at XTB.
Yields on UK 10-year government bonds also fell after a recent rally on the back of a disastrous budget that led to a fall in the truss, with the benchmark FTSE 100 index closing 0.6% higher.
AJ Bell financial analyst Danny Hewson said, “Investors clearly want Sunak to stabilize the economic and political climate, but we’ll see what’s a tougher job at the moment. is difficult,” he commented.
After the historic victory of the Italian Brotherhood, a post-fascist political party, in the September 25 general elections and the appointment of Giorgia Meloni as Italy’s new prime minister, the euro was also in the spotlight.
Meloni’s new government was the most right-wing in Italy since World War II. It is in power during decades of high inflation and an energy crisis linked to Russia’s invasion of Ukraine.