Marketmind: In Hunt we Truss

Marketmind: In Hunt we Truss

A look at the coming day in European and global markets from Ankur Banerjee

It didn’t take Britain’s new chancellor Jeremy Hunt long (four finance ministers in four months for those following the path) to poke holes in Prime Minister Liz Truss’s financial plans.

And while Hunt insisted Truss, who is struggling to keep her job, is indeed to blame, she has cataloged the mistakes made in the past few weeks and indicated stricter spending controls and some tax increases are on the way.

“I think what the state wants now is stability.”

Monday will test all sides in UK gold markets now that the central bank’s emergency bond purchase program is over.

Hunt has already spoken to Bank of England Governor Andrew Bailey, where he agreed on the need for fiscal reform.

Sterling rose after Truss reversed some of her government’s economic plan, not long after Kwasi Quarting was fired as finance minister. However, bond investors remained skeptical of the recent turnaround.

Meanwhile, China and Hong Kong stocks fell after Chinese President Xi Jinping dashed hopes for any changes in the novel coronavirus non-proliferation policies and real estate sector restrictions in a speech on Sunday.

Banking sources told Reuters on Monday that major state-owned banks in China have been spotted exchanging the yuan for US dollars in the forward market and selling those dollars in the spot market.

On the corporate front, the Wall Street Journal reports that Goldman Sachs (NYSE:) will combine its investment and commercial banking businesses into a single unit as part of an overhaul.

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Elsewhere, the yen slipped near a 32-year low as markets waited for signals of intervention from the Japanese authorities. In Washington, Bank of Japan Deputy Governor Masazumi Wakabe said the recent volatility in the yen was “obviously too fast and too biased,” while the country’s authorities continued their warnings to the market of an aggressive response to excessively rapid declines.

Key developments that may affect the markets on Monday:

Economic events: CPI data from Italy

Speakers: Luis de Guindos of the European Central Bank and Philip Lane to speak at various events

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