For the fourth day in a row, rising US rate drop expectations boosted stocks on Wednesday. Meanwhile, Europe’s markets had a remarkable few hours as Britain’s fiscal watchdog unintentionally released important new estimates ahead of a harsh UK budget.
The early release of the Office for Budget Responsibility’s Economic and Fiscal Outlook had already sparked a response when finance minister Rachel Reeves released the full UK budget details, which included yet another round of tax increases.
As the OBR’s numbers showed a better-than-expected picture of the UK’s fiscal space, sterling and gilt rates both increased. However, they then fluctuated during Reeves’ address. The issue is that the majority of the fiscal tightening in this budget has been backloaded, and there is short-term fiscal relaxation. Thus, the conflicting market response. Evelyne Gomez-Liechti, a Mizuho strategist, stated.
Before Reeves’ conclusion, European stocks were up 0.6% and UK stocks were up 0.4%. Wall Street is set for a higher restart later, while the MSCI’s world equities index increased by 0.4%. The high-wire act for its under-pressure government and finance minister Reeves was reflected in traders’ attention to the UK budget.
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