Stocks surge as UK budget calamity provides global warning

European markets lead the push higher, with the backlash for Liz Truss serving to warn off any potential governments seeking to employ a pro-growth policy. Meanwhile, Goldman Sachs closes out a period where US banks have highlighted ongoing economic risks despite improved margins.

Stock gains highlight warning for those considering pro-groth strategy

“European markets have continued the upbeat tone that has permeated through financial markets this week, with the DAX a particular outperformer after gaining 2%. The FTSE 100 has unsurprisingly lagged its European and US counterparts, highlighting how a resurgent pound will typically mute any recovery as internationally-focused stocks see their earnings devalued. While the UK is filled with concern over rising costs thanks to Jeremy Hunts less generous stance as Chancellor, the prospect of a tighter economic environment brings expectations that inflationary forces can be trimmed earlier than would be the case under Kwarteng’s pro-growth budget. Markets are clearly more optimistic after the UK’s missteps provided a stark warning that an expansionary government stance would simply prolongue the crisis if pitched against a central bank seeking to drive down inflation.”

Goldmans beat estimates but future remains clouded

“Goldman Sachs revealed better-than-expected earnings for the third quarter, with a 11% rise in trading revenues helping to lift the bottom line after a disappointing quarter for their investment banking arm. Soon both will be one entity, with the bank restructuring in a bid to simplify the business and step away from their retail banking offering. This represents the final major US bank to report, with investors continuing to watch for a collapse in activity on Main street as the cost of living crisis develops. While we are yet to see a major dent in consumer activity, the outlook remains unclear as higher rates bring both improved margins and lower demand. “