Britain's tax backdown bounces stocks and sterling



*

Britain scraps small part of tax plan; markets relieved

*

Reserve Bank of Australia surprises with a small hike

*

High VIX; Credit Suisse stock slide point to nerves beneath

By Tom Westbrook

SYDNEY, Oct 4 (Reuters) - Asian stocks bounced on Tuesday after Britain scrapped bits of a controversial tax cut plan, tentatively improving global market sentiment and rallying bonds and the pound.

Australia's central bank

added to that sense of relief in markets, surprising investors by lifting interest rates by a smaller-than-expected 25 basis points, saying they had already risen substantially. 0#RBAWATCH .

That pushed the Aussie dollar AUD=D3 down, lifted the S&P/ASX 200 index .AXJO by 3.6% and spurred benchmark 3-year bonds AU3YT=RR for their best day in 13 years.

In trade thinned by holidays in China and Hong Kong,

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.7%, led by gains in Australia.

UK stocks seemed set for a bounce, with FTSE futures FFIc1 up 0.8%.

"It feels short term it's a little bit oversold," said Geoff Wilson, chief investment officer at Wilson Asset Management in Sydney.

"Is this the bottom? It's nearly impossible to pick the bottom, but I don't think so," he said, referring broadly to markets.

Japan's Nikkei .N225 rose 2.8%. Sterling GBP=D3 drifted up to an almost two-week high of $1.1343, making for a bounce now of almost 10% from a record low hit last week after plans for unfunded tax cuts unleashed chaos on British assets.

"The about-face ... will not have a huge impact on the overall UK fiscal situation in our view," said NatWest Markets' head of economics and markets strategy John Briggs.

"(But) investors took it as a signal that the UK government could and is at least partially willing to walk back from its intentions that so disrupted markets over the past week."

Investors also took heart from stability at the long end of the gilt market, even though emergency purchases from the Bank of England were only relatively modest.

S&P 500 futures ESc1 rose 1%, following a 2.6% bounce for the index .SPX overnight.

British Finance Minister Kwasi Kwarteng released a statement reversing planned tax cuts for top earners. It makes up only 2 billion out of a planned 45 billion pounds of unfunded tax cuts that had sent the gilt market into a tailspin last week.

South Korea's Kospi .KS11 bounced 2.5%, lifting away from last week's two-year low, despite North Korea's firing a missile over Japan for the first time in five years.

STERLING BOUNCE

The recovery for sterling has settled some nerves in the currency market, though the persistent strength of the dollar still holds a lot of major currencies near milestone lows and has authorities throughout Asia on edge.

Japan's yen JPY=EBS hit 145 to the dollar on Monday - a level that prompted official intervention last week - and was last at 144.71. The euro EUR=EBS was at $0.9838, about three cents stronger than last week's 20-year trough.

Chinese authorities have rolled out manoeuvres to support the yuan ranging from unusually strong signals to the market to administrative measures that raise the cost of shorting it.

"More volatility is almost certainly assured as FX markets re-focus on U.S. recession risks, which continue to build," said ANZ senior economist Miles Workman, with U.S. jobs data on Friday the next major data point on the horizon.

The Australian dollar AUD=D3 fell to $0.6451 after the central bank meeting. The Reserve Bank of New Zealand meets on Wednesday and the kiwi NZD=D3 held just above $0.57.

Treasuries rallied in sympathy with gilts overnight and the benchmark 10-year yield dropped 15 basis points. It was steady in Asia at 3.62%, having briefly poked above 4% last week.

Other indicators of market stress abound. The CBOE Volatility Index .VIX remains elevated and above 30. Shares CSGN.S and bonds of Credit Suisse hit record lows on Monday as worry about the bank's restructuring plans swept markets.

Oil LCOc1 held overnight gains on news of possible production cuts, and Brent futures were last up 43 cents to $89.29 a barrel.



World FX rates YTD Link
Global asset performance Link
Asian stock markets Link



Editing by Sam Holmes


Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.