Shares of banks and other financial institutions surged as fears about a U.K. budget crisis subsided. U.K. Chancellor of the Exchequer Kwasi Kwarteng ditched a plan to cut the 45% top rate of income tax, bowing to pressure from financial markets and Conservative Party lawmakers.
The Bank of England's intervention to settle the British "gilt" bond market has stirred hopes that central banks are changing course, said one strategist.
"Investors are starting to doubt central banks globally will remain aggressive with fighting inflation as financial stability risks are growing; first we almost had a gilt market crash and now Credit Suisse is struggling with capital concerns," said Edward Moya, senior market analyst at foreign-exchange brokerage OANDA Group.
Credit Suisse shares rebounded after hitting multiyear lows early in the session amid a crisis of confidence in the Swiss bank.
Investors have driven up the cost of credit-default swaps, derivatives that would pay out in the event of the bank's failure, to levels not seen since the financial crisis, while the value of its riskiest debt has fallen sharply.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
10-03-22 1654ET
