Closing summary
Time for a recap, on a day in which the cost of living crisis worsened, and UK companies were hurt by rising inflation and falling confidence.
Supermarket inflation in the UK has hit a record high, driving up the average bill by £682 per year.
Grocery prices were 14.7% higher than a year ago in October, Kantar Worldpanel reports, as shoppers continued to be hit by rising costs. Demand for own-branded items jumped, while Aldi and Lidl outpaced other supermarkets again last month.
Retailers are feeling the squeeze too, with Primark’s owner saying it had faced cost inflation across an unprecedented range of inputs in the last year, leaving it with an extra £1bn of costs over the last year.
The discount clothing store has also decided not to raise prices further this year.
With consumers are cutting back on spending, Britain’s retailers are bracing themselves for a tough Christmas trading period.
The Bank of England is preparing to further raise interest rates over concerns that inflation could become embedded in the British economy, despite the growing risks of a prolonged recession, its chief economist has warned.
Huw Pill said there was “still more to do” to tackle soaring inflation after the central bank raised interest rates to 3% last week with the biggest single rise in borrowing costs since 1989.
Dropping the broadest possible hint that the Bank’s monetary policy committee (MPC) would use its next meeting in December to push interest rates higher, he said:
“I think there is more to do. We’ve done some, that’s what we did last week. And there’s still more to do.”
Pill also warned the UK was entering recession, and gave an eye-catching denial that the Bank’s monetary policy committee were ‘inflation nutters’. He says they were committed to fighting rising prices while minimising damage to the economy.
House builder Persimmon has given a clear warning that the property market is slowing.
Persimmon’s average sale prices have dropped 2% in the last six weeks, with fewer new sales and more buyers cancelling orders.
The world’s “most potent greenhouse gas” escaped during work on Scotland’s largest offshore windfarm, forcing the evacuation of workers.
UK rail services have been disrupted again, as train operators try to resume normal operations after this week’s strikes were cancelled.
Wall Street has opened cautiously, as investors anticipate deadlock on Capitol Hill after today’s midterm elections.
The Dow Jones industrial average has gained 57 points, or 0.18%, at the open to 32,884 points, while the broader S&P 500 index is flat.
Polls suggests the Republicans are well positioned to regain control of the House of Representatives and potentially the Senate as well.
That would create a divided government in Washington, making it considerably harder for president Biden to push through his plans.
Deadlock on Capitol Hill, depressingly enough, is seen as 'bullish for equities’, as Stephen Innes of SPI Asset Management explains:
Well, at least that’s the conventional wisdom, and the rationale is pretty straightforward.
Gridlock cross-checks each party’s “worst impulses,” and less activist fiscal policy is conducive to lower market volatility. That could be particularly helpful in 2022 and 2023 to the extent it calms rates volatility, the principal sponsor of this year’s historic cross-asset malaise.
You can follow the midterm election drama here:
