Stocks climb on recession watch; pound rallies

Stocks climb on recession watch; pound rallies

LONDON: Stock markets recovered further Thursday as investors weighed recession risks, while the pound rallied on the resignation of Britain’s scandal-hit Prime Minister Boris Johnson as leader of the Conservative party.

“Stocks bounce as pressure points ease,” said independent markets analyst Stephen Innes.

The Federal Reserve on Wednesday stressed its readiness to continue hiking US interest rates to tackle soaring inflation.

Minutes of their last meeting made clear that officials did not plan to let up in efforts this year to try to cool prices.

Inflation stands at the highest levels since the early 1980s both in the US and Britain, where attention Thursday was firmly on political upheaval gripping the nation.

The pound rallied against the dollar and euro. Gains by London’s blue-chip FTSE 100 stock index accelerated following Johnson’s announcement, standing up 1.3 percent in trading.

“The pound is pushing higher, hitting session highs inching closer back up to … $1.20, a critical support level it broke below this week amid the political and economic uncertainty,” said Victoria Scholar, head of investment at Interactive Investor.

“The currency market is relieved that Johnson is finally resigning, removing some of the political uncertainty that was priced into the pound and paving the way for a new prime minister,” she added.

Berenberg Bank Senior Economist Kallum Pickering said that “the UK economy and its financial markets look set to benefit from more stable leadership.”

The euro meanwhile remained under $1.02 — a level it slumped under this week on its way to hitting a 20-year low.

The European single currency is being hammered by growing fears of a recession for the eurozone and the likelihood of more aggressive US interest-rate hikes.

In afternoon trading, Paris stocks were up 1.5 percent and Frankfurt rose 1.7 percent.

Wall Street stocks rose at the opening bell, with the Dow adding 0.7 percent.