Markets up after Bank of England bond-buying pledge

September 29, 2022 3:10 pm

[Source: BBC News]

Stock markets in Asia and the US have risen after the Bank of England said it would buy £65bn of UK government bonds.

The announcement came after Friday’s mini-budget sparked financial market turmoil and the pound plunged.

Investors also demanded higher returns on government bonds, or “gilts,” causing some to slide in value.

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Speaking in New York on Wednesday, new UK trade secretary Kemi Badenoch defended the government’s economic policies.

Hong Kong’s benchmark Hang Seng index was 1.2% higher, while Australia’s ASX 200 rose by 1.8% and South Korea’s Kospi gained 1%.

That came after New York’s main stock indexes rebounded from a six-day losing streak to end Wednesday’s trading day around 2% higher.

In morning Asia trade, the pound was 0.9% lower at $1.08, after earlier making strong gains on the Bank of England’s bond-buying announcement.

The currency hit a record low on Monday after chancellor Kwasi Kwarteng unveiled plans to tax cuts, funded by borrowing, in a push to boost economic growth.

Analysts said the Bank’s pledge to buy government bonds at an “urgent pace” to help restore “orderly market conditions” had helped to calm market volatility.

Yeap Jun Rong, market strategist at online trading platform IG, said the move had “provided some much-needed relief to recent market jitters.”

In New York, the UK’s international trade secretary used her first visit to the US since taking the role to try to shore up investor confidence.