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		</div><h2>London</h2>
<p>UK financial markets took a hit today as investors worried that the country&#8217;s largest tax cut in over a decade could send inflation soaring.</p>
<p>The UK Chancellor Kwasi Kwarteng announced a tax-cutting budget, and a £60bn energy support package aimed at achieving 2.5% annual growth. The package includes reductions in income tax rates, the cancellations of the increase in the national insurance contribution and corporate taxes.</p>
<p>The Bank of England (BoE) said it would not hesitate to raise interest rates after the Pound dropped to its lowest-ever level against the US Dollar. GBP/USD dropped to 1.09, marking a 37 year low. Recently, the BoE raised its key rate policy by 50bps from 1.75% to 2.25%, marking the highest level since the start of the Global Financial Crisis.</p>
<p>In addition, the Monetary Policy Committee (MPC) unanimously voted to reduce the stock of British government bonds by £80bn over the next 12 months, to BP £0.758bn. This is inline with the previous communication at the August meeting, and it will commence on October 3rd, 2022.</p>
<p>Looking at other data, UK composite PMI fell to 48.4 in September, marking a 20-month low. The decline in output was driven by the services sector, which fell for the first time since February 2021 following the increase of the cost of living. The manufacturing sector also took a hit, dropping amid weaker intakes of new business, and also shortages of inputs.</p>
<h2>Markets</h2>
<p>US equities also declined for the second consecutive week amid intensifying recession fears following interest rate hikes from the Boe, US Federal Reserve, SNB and Riksbank. The S&;P 500 stayed closed to the mid-June low, but the NASDAQ fell more than a third below its January record highs.</p>
<p>In the FX markets, the dollar gained on all major currencies as the FOMC&#8217;s 75bp hike and Chairman Powell&#8217;s hawkish message hammered risk sentiment.</p>
<p>By London Glossy Editorial Team</p>
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