The FTSE 100 closed down 1.77pc at 6,881.59
The Dow Jones closed down 1.54pc at 29,225.61
Sterling rose to $1.116 against the dollar, recovering from a low point of just under $1.04 which it touched at the peak of the market’s gloom on Monday morning.
But it slipped again in the afternoon after Liz Truss, the Prime Minister, and Mr Kwarteng met with the fiscal watchdog and confirmed markets would have to wait until Nov 23 for new economic forecasts.
It came as the Office for National Statistics revealed the economy grew by 0.2pc in the second quarter, rather than the previous estimate of a 0.1pc fall in GDP.
A recession is usually defined as two consecutive quarters of contraction.
It is now thought likely that a contraction began in the third quarter of 2022 instead.
That's all folks
What a week. Thanks for following events with us and we will see you on Monday.
FTSE up; bonds down
The FTSE100 has ended the day up a shade, gaining 0.18pc, although it is down 1.8pc on the week. The pound is at $1.111, having regained ground from the bloodbath earlier in the week.
In the bond market, benchmark 10-year UK government debt has the worst September on record, according to Reuters analysis. Their records go back to 1957. They pay out 1.31 percentage points more than they did at the end of August.
Tesla production push
Tesla plans a jump in production of its Model Y and Model 3 electric cars, Reuters reports, in a bid to overtake BMW as a producer.
If Elon Musk's firm hits its target, it will make almost 495,000 Model Y and Model 3s in the fourth quarter of this year as it gears up new factories in the US and Germany, the newswire says.
As it points out, however, Mr Musk likes to set tough targets and the car maker faces the same waning consumer confidence, inflation and parts shortages as everyone else.
China certifies passenger jet contender
China has certified its C919 passenger jet, placing it a step closer to competing with the western duopoly of Boeing and Airbus.
The 168-seat jet is the same size as a, A320 or 737, the short-range single aisle workhorses of the incumbent giants. This size, used for flights of a few hours rather than trans-ocean long-haul journeys, is by far the most popular for airline customers, with hundreds ordered per year.
While China's COMAC has built the plane, it is heavily reliant on western components from firms like General Electric and Honeywell. A truly Chinese jet is at least a decade away, analysts said.
The jet will now need a production certificate from regulators before it can be sold.
Bank's Gilt sale delay also hit the pound, says economist
The Bank of England’s now postponed plans to sell gilts worth tens of billions of pounds is equally to blame for the market chaos following Kwasi Kwarteng’s mini-Budget, according to one veteran City economist
Albert Edwards, a Société Générale economist known for his contrarian views, said the Bank “should also shoulder their share of the blame for this debacle” after a record-breaking plunge in the pound and UK bonds.
Liz Truss and the Chancellor have been criticised for the market mayhem after announcing £45bn of debt-funded tax cuts.
However, Mr Edwards believes some of the market turmoil was caused by the Bank’s plan to begin selling UK bonds bought under quantitative easing. This process is known as quantitative tightening (QT) but the Bank has shelved the sales after problems in gilt markets.
While the Chancellor’s extra borrowing would increase the supply of gilts in the market, the Bank had planned to start also selling its stock of government bonds from October 3 - plans now pushed back to October 31.
He said: “An increase in the gilt supply of £62.4bn instead of an expected £60bn… is hardly the stuff of gilt market nightmares, but full-blown QT most certainly is.”
Wall Street opens lower as US inflation picks up
So-called core inflation, which ignores energy and food costs, came in at 4.9pc, higher than the 4.7pc analysts had expected, according to Commerce Department data released today.
The broader personal-consumption expenditures figure that the department tracks rose 0.4pc in August compared to July. Cheaper petrol and low unemployment could be helping US consumers maintain their spending, which could feed back into inflation.
The Dow Jones fell 0.35pc, the bigger S&P 500 fell 0.19pc, while the technology-heavy Nasdaq fell 0.37pc at the opening bell.
Nord Stream 1 leak expected to continue until Sunday
Gas leaks in the Baltic Sea due to ruptures on the Nord Stream pipeline are expected to continue until Oct 2, the RIA Novosti news agency reported, citing the pipeline operator, Nord Stream AG.
There has been no information about when gas from the Nord Stream 2 pipeline, which runs parallel to Nord Stream 1 and was also affected by the ruptures this week, would stop pouring into the sea.
Pound erases gains after Chancellor fails to accelerate OBR report
The pound has erased its earlier gains against the dollar today after it emerged that the Treasury has not asked the Office for Budget Responsibility (OBR) to speed up the delivery of its economic forecast.
The report was confirmed after the meeting between Liz Truss, Kwasi Kwarteng and OBR officials, with readouts from both sides saying the forecasts will be delivered in time for Mr Kwarteng's medium term plan on November 23.
Sterling traded 0.2pc lower at around $1.11 after earlier soaring more than 1pc amid speculation that Truss could water down her policies, including unfunded tax cuts, which have roiled markets.
Barclays pays £326m penalty for "staggering" failures
Barclays has agreed a $361m (£326m) penalty with US regulators for "staggering" failures that led it to oversell $17.7bn of structured products, in another error that has blighted boss CS Venkatakrishnan's first year.
The conduct dates back to March this year when Barclays revealed it had accidentally oversold complex structured and exchange-traded notes, overshooting by about 75pc a $20.8 billion limit on such sales it had agreed with the Securities and Exchange Commission (SEC).
The bank failed to implement internal controls to track such transactions in real time, the SEC found.
"While we acknowledge Barclays' efforts to identify, disclose and remediate this conduct, the control deficiencies and the scope of the conduct at issue here was simply staggering," said Gurbir Grewal, director of the SEC's Division of Enforcement.
Do the robot
Tesla boss Elon Musk has said the company's robot business will be worth more than its cars.
And today investors, customers and potential workers expect to see a prototype at Tesla's "AI Day" that could prove whether the bot named "Optimus" is ready for work, Reuters reports.
The robot will be the star of the AI show, but Musk is also expected to discuss Tesla's long-delayed self-driving technology. In May, Musk said that the world's most valuable carmaker would be "worth basically zero" without achieving full self-driving capability, and it faces growing regulatory probes, as well as technological hurdles.
"There will be lots of technical detail & cool hardware demos," Musk wrote on Twitter late on Wednesday, adding the event was aimed at recruiting engineers.
Tesla's live demonstration record is mixed. Launches typically draw cheers, but in 2019 when Musk had an employee hurl a steel ball at the armored window of a new electric pickup truck, the glass cracked.
In full: Treasury readout on OBR meeting
Here is the Treasury's full readout on Liz Truss and Kwasi Kwarteng's meeting with the OBR:
That last bullet, given the Chancellor's decision to eschew OBR scrutiny last week, is going to raise eyebrows.
LDIs? Me neither
If you've struggled to understand the simply mind-boggling complexity that nearly tipped the UK's pension system into meltdown this week, you may perhaps feel better knowing that even a seasoned economist can find it difficult to grasp.
LDI is like an onion. Every time I think I finally understand it I find another layer to peel away. And then I find myself crying.
— Duncan Weldon (@DuncanWeldon) September 30, 2022
OBR to send Chancellor forecast next week
Liz Truss and Kwasi Kwarteng, the Chancellor, have concluded their meeting with bosses from the independent spending watchdog, the Office for Budget Responsibility (OBR).
In a short statement afterwards, the OBR confirms it will next week deliver the first version of a forecast that will go with Kwarteng's medium term plan in November:
The OBR’s Budget Responsibility Committee met with the Prime Minister and Chancellor this morning. We discussed the Economic and fiscal outlook and the forecast we are preparing for the Chancellor’s Medium-term Fiscal Plan. We will deliver the first iteration of that forecast to the Chancellor on Friday 7 October and will set out the full timetable up to 23 November next week. The forecast will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the Government’s policies.
Kwarteng's plan is due to be revealed on November 23 but the City - and many MPs in his own party - want him to bring it forward much sooner.
The OBR meeting is being seen as an attempt to reassure markets that the PM and her Chancellor are taking fiscal responsibility seriously, after last week's tax-cutting mini-Budget sent investors running for the hills.
'More human' Charles to appear on 50p coins
The first portrait of King Charles III to appear on currency was unveiled on Friday as the Royal Mint marks the end of one era and the start of another with its first “double monarch” coin.
The new King’s image, designed to look “more human” than previous official portraits of sovereigns, will appear on commemorative £5 coins and 50p coins in circulation before the end of the year.
They will be joined in the same coin by pictures of the late Queen Elizabeth II in a gentle transition for the public into a new reign.
The King’s effigy has been created by sculptor Martin Jennings, and has been personally approved by him, the Mint said.
Hannah Furness, our Royal Editor, has the story here.
TGIF: FTSE 100 and 250 tick up
Investors must have that Friday feeling.
The blue chip FTSE 100 index index is up by almost 0.8pc to 6,936.48 this morning, while the FTSE 250 index of mid-sized companies is revving almost 1.8pc higher to 17,086.29.
Unfortunately both remain down on the month, as international investors flee UK equities amid the gilt market’s disorder.
Think tank: UK borrowing 'less out of control than markets think'
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research (CEBR), has an interesting comment on the ill-fated mini-Budget announced by Kwasi Kwarteng (pictured above).
He says the Chancellor's failure to show the Government's workings to markets (with complete costings and independent analysis) made the plans look more spendthrift than they really are.
It takes some explaining, but the CEBR's argument boils down to this:
The Government's own costings are "on the high side". For example the cost of abolishing the top rate of tax and the reintroduction of VAT relief for tourists will raise revenue, rather than cost it, the think tank says.
The estimates take no account of "fiscal drag". Fiscal drag occurs when tax thresholds do not rise in line with inflation and wages, meaning the Government pulls in more income tax simply by keeping rates the same.
Growth of tax revenues from goods that are rising in price and rising wages will be faster than the growth of public expenditure, which is being frozen on current plans.
The cost of the Government's energy support package will fall as the price of gas falls. The European benchmark price is about €193 per megawatt hour today, well below the high of €345 hit earlier this year.
McWilliams says this means that CEBR's estimate for borrowing in 2023/24 falls from £154bn to £64bn after adjustments, with the figure for 2024/25 falling from £80bn to a "tiny surplus". He adds:
It would appear that the Chancellor has managed to burn his reputation for fiscal prudence for no good reason at all. He would have been so much better advised to have done his sums before presenting his budget to the markets.
Kremlin calls up Russia Inc to war effort
Vladimir Putin's partial mobilisation of reservists in Russia, as the embattled president tries to bolster his military's flagging invasion of Ukraine, has been widely reported.
But what is less well-known, according to the Business & Human Rights Resource Centre, is the impact the law also places on companies with operations in the country.
Businesses are legally required to assist the Russian government with its war mobilisation effort, including surveying employees and delivering summons. They may also have to make buildings, land, transport and information available.
Ella Skybenko, a senior researcher at the centre, says:
If companies abide by this law, there is a significant risk they could be directly contributing to the war efforts of the aggressor country, which has so far resulted in mass torture and killings of civilians, as well as other crimes against humanity.
Mortgages surge to highest level since January as buyers rush to lock in rates
Mortgage approvals have surged to their highest level since January as buyers race to take their last chance to lock in cheaper rates, writes Melissa Lawford, the Telegraph's property correspondent.
There were 74,300 mortgage approvals for home purchases in August, a 17pc jump compared to July, according to the Bank of England.
This was in sharp contrast to the downward trend over the previous months and 11pc higher than the pre-pandemic average.
Individuals’ net borrowing of mortgage debt increased from £5.1bn in July to £6.1bn.
But analysts warned the spike will not last. Buyers are racing to secure mortgage deals before soaring interest rates price them out of the housing market for good.
Timer Aboody, of lender MT Finance, said the jump was a “final bid” from buyers to take advantage of rates.
Following Chancellor Kwasi Kwarteng’s mini-Budget last Friday, interest rate forecasts have surged, with many analysts now expecting average rates on new mortgage deals will soon exceed 6pc.
Stuart Wilson, of Air, a later life lending website, added: “These August figures might be the last ‘business as usual’ data we see for a while.”
'For most people, this feels like a recession'
Economist Duncan Weldon tweets this about today's ONS numbers:
The household income numbers tell the real story at the moment. For most people this feels like a recession. pic.twitter.com/hdzU9JOQeK
— Duncan Weldon (@DuncanWeldon) September 30, 2022
Liz Truss faces "difficult task" on GDP growth
Danni Hewson, a financial analyst at AJ Bell, says the good news of today's GDP figures is largely "offset by the bad":
Despite the end of lockdowns and life returning to somewhat normal, the UK economy has still not recovered its mojo as the only G7 country to have failed to claw its way back above pre-pandemic levels.
And the real test is yet to come. The full extent of sky-high inflation and now increased borrowing costs will only begin to be truly felt in the second half of the year. Even with the government’s energy support package many households will see their bills shoot up, leaving them less cash to pay for any of those discretionary goods and services that help UK Plc soar.
Looking at today’s figures, delivering sustained growth of 2.5pc and above seems an even more difficult task. The new government says it has the right strategy, that it will lay out clearly in November, but judging by the past week two months might seem like a millennia.
One in five adults on the job hunt due to cost of living
If you've been job hunting recently, you're far from alone.
In fact, one in five working adults are looking for a better-paid role as the cost of living crisis bites, according to the ONS:
Because of the rising #CostOfLiving:
👩💼 19% of working adults are looking for a job that pays more money (including promotion)
⏰ 15% are working more hours than usual in their main job
🏢 7% are going to their workplace more often to reduce energy costs pic.twitter.com/HzW3Gk6M92
— Office for National Statistics (ONS) (@ONS) September 30, 2022
House price growth slows in September
House price growth slowed to single digits in September for the first time since October last year.
Annual house price growth cooled in September to 9.5pc from 10pc in August, figures from Nationwide show. The average house price fell from £273,751 to £272,259 in the same period.
This is the latest sign of slow down in the property market amid rising interest rates and inflation stretching household budgets.
UK economy growth eases recession fears
Britain's economy grew in the second quarter of this year, easing fears of an economic contraction.
UK's gross domestic product increased by 0.2pc from April to June, an improvement on the previously forecast decline of 0.1pc according to the latest figures from the Office of National Statistics.
The ONS also revealed that Britain's economy is estimated to have shrunk by 11pc during the first year of the pandemic, rather than 9.3pc as previously thought.
Sterling recovers with euro as UK fiscal angst recedes
Sterling and the euro rose to fresh one-week highs on Friday, buoyed by the Bank of England's moves to calm markets and hawkish signals from the European Central Bank.
The British currency was headed for its best week against the U.S. dollar in 2 1/2 years as the BoE waded into the debt market to buy gilts for a second day on Thursday, buoying UK yields.
Heated German and Dutch consumer inflation data also served as a reminder that the job of the ECB, BoE and other central banks is not done, with the figure for the wider 19-country euro zone due later on Friday.
The pound touched $1.1222 early in the Asian session, taking it very close to erasing all of the precipitous losses in the aftermath of the new government's so-called mini budget last Friday.
Benefits hit as Liz Truss tries to stem the mini-Budget bleeding
Benefits payments are set to fall in real terms under government plans to reassure the City that it will control spending.
Efforts to calm the markets in the wake of the mini-Budget came as a new poll showed Labour had a 33-point lead over the Conservatives – believed to be the biggest for any party since the late 1990s.
On Thursday, Liz Truss and Kwasi Kwarteng used interviews to insist they would not ditch any element of their tax-slashing announcements, made last Friday, after a week in which the pound fell to record lows and interest rates soared.
Instead, they made it clear that a squeeze on government departments was coming, with public spending remaining at levels agreed last year despite inflation eating into those budgets.
Read our front page story by Ben Riley-Smith and Nick Gutteridge here
Pound has 'stronger yield support', says Australian strategist
The pound has a "much stronger yield support now", a strategist from Sydney has said overnight, as the sterling rallied this morning.
“It’s a reminder that currencies are driven by a myriad of factors - it’s clearly not due to any improvement in the outlook for the UK,” said Sean Callow, strategist at Westpac Banking Corp.
“The pound does at least have much stronger yield support now. Loose fiscal policy is often supportive for currencies to the extent that it can force tighter monetary policy.”
Tory rebels threaten to block scrapping of 45p tax rate
Tory MPs are threatening to block the abolition of the 45p tax rate as Liz Truss faces a rebellion over the mini-Budget.
Some Conservative backbenchers are furious about the measure, arguing that it is “toxic” and has come at “a high political cost for very little benefit”.
MPs have told how they are getting “shouted at in the street” about the tax cut for top earners while their inboxes are flooded with correspondence from constituents angry about the move.
Rebel Tories are preparing to vote down sections of the Finance Bill to block the abolition of the 45p rate by supporting amendments that would see it struck out, The Telegraph understands.
Read the full story here
Pound back to where it was before mini-Budget shock
The pound is recovering as its rally early on Friday saw it briefly wipe out all of the losses it made since Kwasi Kwarteng began his speech last Friday.
It comes as the new government made efforts to calm the markets yesterday, after the mini-Budget sparked turmoil.
Liz Truss and Chancellor Kwasi Kwarteng will today meet the chairman of the Office for Budget Responsibility's (OBR) to discuss the fallout following last Friday's partial budget.
5 things to start your day
1) Eurozone facing 'severe risks' to financial stability, admits ECB The institution told the region’s banks to prepare for financial turmoil caused by huge falls in investments and potential disaster in the house market
2) UK net exporter of electricity to Europe for first time in decade Eight percent of the electricity generated in Britain in the three months to June 2022 was sent to other European countries through undersea power cables
3) HSBC considers leaving iconic Canary Wharf HQ as more bankers work from home The bank, one of Britain's largest employers, is reviewing whether to keep its towering London skyscraper or move to a new base
4) 60pc of people risk not having enough in their pension pots when they retire, MPs warn A report from the Work and Pensions Committee said urgent action was needed to help address the shortfall in savings
5) Britain launches urgent security review of North Sea energy pipelines after Russian 'sabotage' The energy industry is discussing with Government officials how to protect its oil and gas rigs and pipelines following the underwater explosions
What happened overnight
Asian shares on Friday were headed for the worst month since the onset of the COVID-19 pandemic, while jitters in currency and bond markets persisted over hawkish talk from central banks, worries about global recession and rising geopolitical risk.
MSCI's broadest index of Asia-Pacific shares outside Japan was largely flat on Friday, as a bounce in Hong Kong and among mainland Chinese bluechips offset declines elsewhere. Japan's Nikkei fell 1.6pc.
The Asian index was set to record a staggering 12.5pc drop for the month, the largest since March 2020 when the COVID-19 pandemic threw financial markets into chaos.
Coming up today
Economics: Gross domestic product (UK), Nationwide house price index (UK), mortgage approvals (UK), consumer credit (UK), unemployment rate (EU), personal spending (US)
Corporate: Cineworld, Dignity, Dp Eurasia (interims); Pennon (trading update)