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Global stocks fall as US bond yields soar

Equity markets sold off but the Pound rallied on rising hopes of resolving the Irish border issue.

A rout in US treasuries, which began yesterday, 4 October, has spread across the globe triggering a sell-off in stock markets, with the US S&P 500 having dropped by more than 1.2 per cent.

The Pound rallied above 1.30 against the Dollar yesterday following a Financial Times report that Ireland backed UK Prime Minister Theresa May’s plan for an all-UK customs union with the European Union, breaking the current impasse in Brexit negotiations.

Earlier this week, in her closing speech to the Conservative Party conference, May pledged to end austerity. However, her ambitious plan could leave a £35 billion hole in the budget.

Despite the positive Brexit news, the figures for monthly new car sales in the UK disappointed. The total number of newly registered vehicles were down by 20.5 per cent in September compared to the same month last year, according to the Society of Motor Manufacturers and Traders. A major car maker, Nissan attributed the plunge to the potential negative effects of a no-deal Brexit.

The US labour market showed signs of improvement as the number of weekly initial jobless claims in September fell to 207,000, below economists’ forecast of 215,000. The number of continuing jobless claims also dropped from 1.663 million to 1.650 million, with both metrics at multi-decade lows.

Today, focus will remain on the health of the US jobs data, particularly the average hourly earnings. Analysts expect the labour market increased by 185,000 jobs in September and the unemployment rate dropped to 3.8 per cent, matching the May level as the best since 1969.

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