Stocks, Pound rise as Rishi Sunak Becomes New British PM

• Stocks, Pound rise as Rishi Sunak Becomes New British PM
• Britain and Germany headed for Recession
• ECB plans to Increase Interest Rates to tame inflation beast

Pound rise as Rishi Sunak Becomes New British PM: Market reaction to Rishi Sunak’s election as the new prime minister of the United Kingdom saw both global stocks and the pound rise.

Despite statistics indicating that Britain and Germany are bound for recession and a falling Hong Kong stock market, European and American shares also increased as Chinese President Xi Jinping appointed supporters of his zero-Covid agenda to important economic positions.

Monday’s opening on Wall Street was positive as well, buoyed by expectations that the Federal Reserve will shortly lower the rate at which it raises interest rates.

The fact that European gas prices were at a four-month low encouraged traders as well. On Monday, around 1030 GMT, the reference Dutch TTF fell below 100 euros for the first time since June, reaching 98.60 euros per megawatt hour. Following the resignations of Liz Truss and Boris Johnson, Sunak became the nation’s third prime minister in less than two months.

READ MORE: How To Invest in British Pound (Top 5 Ways)

After a failed bid earlier this year, Sunak’s final opponent for the leadership of the dominant Conservative party, Penny Mordaunt, withdrew from the contest on Monday.

According to XTB’s chief market analyst Walid Koudmani, “The pound started the week trading higher as many consider the next possible PM as a source of some stability, particularly when compared to the tumultuous tenure served by the Truss administration which saw tremendous volatility across markets.”

Britain and Germany headed for Recession

Following recent increases in the wake of Truss’ terrible budget, which contributed to her collapse, yields on UK government bonds also decreased. Following the appointment of new Italian Prime Minister Giorgia Meloni, attention turned to the euro. On September 25, general elections saw a historic win for Meloni’s post-fascist Brothers of Italy.

Her new administration, which is the most far-right in Italy since World War II, takes office amid an energy crisis attributed to Russia’s invasion of Ukraine and decades-high inflation. As Italian government bond yields also decreased, Milan’s stock market rose 1.3% in early afternoon trade on Monday, echoing significant advances in Frankfurt and Paris.

London was up 0.6% in mid-afternoon trading, but dealers said the hefty energy sector was being hurt by the stronger pound and decreasing oil and gas prices. In the meantime, the eurozone was anticipating Thursday, when the European Central Bank is anticipated to announce yet another significant increase in interest rates designed to lower sky-high prices. On the business front, Dutch medical equipment maker Philips stated it would eliminate 4,000 positions after being forced into the red by the recall of faulty sleep respirators.

READ MORE: ECB plans to Increase Interest Rate to tame inflation beast