Pound jumps on UK tax cut reversal, oil swings higher



By Sam Byford

TOKYO, Oct 3 (Reuters) - Oil jumped on Monday as OPEC+ considered reducing output at its meeting later this week while the pound swung higher after the UK government said it would reverse a controversial tax cut that had roiled British markets.

Asian stocks mostly fell in holiday-thinned trade although Japanese markets found support on strong energy and semiconductor shares.

Sterling jumped in early London trade after the British government announced plans to reverse the proposed scrapping of the higher rate of income tax that has sparked a backlash in the governing Conservative Party.

The pound GBP=D3 rose as far as $1.128, its highest in 10 days, while FTSE futures FFIc1 hinted at a strong recovery in a stock market that has been battered by concerns over Prime Minister Liz Truss and her finance minister Kwasi Kwarteng's spending plans.

"From a market perspective, it is a good step in the right direction. It will take time for markets to buy the message but it should ease the pressure," said Jan Von Gerich, chief analyst at Nordea.

"Questions still remain and sterling will likely remain under pressure."

Outside Japan, stocks fell around Asia. MSCI's broadest index of Asia-Pacific shares ex-Japan .MIAPJ0000PUS was down 1.04%, on course for its fourth straight session of losses. It fell nearly 14% over the past quarter.

U.S. crude futures CLc1 rose 2.70% to $81.64 a barrel after OPEC+ sources told Reuters oil production could be cut by between 500,000 and one million barrels a day. Brent crude LCOc1 rose 2.55% to $87.31 per barrel.

Japan's Nikkei 225 .N225 rose 0.50%, with energy stocks leading gains on the index and upbeat quarterly earnings from Mimasu Semiconductor 8155.T boosting chip shares.

Minutes from the Bank of Japan's September meeting were also released on Monday, showing members debated the possibility of inflation outpacing expectations under the bank's ultra-easy monetary policy, which ultimately went unchanged.

"Some participants suggested that the BoJ should closely monitor whether the recent cost pressures will lead to a virtuous cycle of higher wages," wrote Ayako Fujita, a researcher at JPMorgan, in a note. "We think this confirmed that wage trends are the key condition for the BoJ to change its policy."

The yen JPY=EBS briefly fell as low as 145.4 to the U.S. dollar despite remarks this morning from Japan's finance minister, Shunichi Suzuki, that the government would take "decisive steps" to prevent sharp currency moves.

It was the first time the yen has fallen through the 145 barrier since Sept. 22, when the Ministry of Finance intervened to prop up the currency, which has hit 24-year lows against the dollar this year. It later pared losses and was last at 144.86.

In Australia, where some states are observing a public holiday, the S&P/ASX 200 index .AXJO fell 0.27%.

Hong Kong's Hang Seng index .HSI dropped 1.75%.

South Korea had a national holiday and China entered the Golden Week break on Monday. Hong Kong is closed for a public holiday on Tuesday.

Euro Stoxx 50 futures STXEc1 lost 1.63%.

Investor focus will later swing to the September U.S. ISM manufacturing index.

"ISM manufacturing is unlikely to dent the optimism around the U.S. economy that has been building up further with positive economic indicators released over the last few weeks," Saxo Bank market strategist Redmond Wong wrote in a research note.

The Reserve Bank of Australia meets on Tuesday, with markets widely expecting another 50 basis point rate hike while Japan's consumer price index is likely to show another pick up in inflation.

Spot gold XAU= was up 0.27% to $1,664.0900 an ounce.

Leading cryptocurrency Bitcoin fell 1.48% to $19,137.



World FX rates YTD Link
Global asset performance Link



Reporting by Sam Byford; Additional reporting by London and
Asia Markets Teams; Editing by Sam Holmes



Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.