The UK’s prime minister could be about to shake up the City of London
As Liz Truss officially becomes prime minister, questions are being asked about her plans to change how the U.K.’s main finance district – the City of London – is regulated.
Truss’ campaign team originally suggested a merger between the big three regulators – Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and the Payment Services Regulator (PSR) – in the Financial Times last month.
In an email to CNBC, former FCA insider Matthew Nunan asked what the move would achieve.
“If the answer is the reformation of the old Financial Services Authority, what was the question? Or is it simply change for change’s sake?”
— Hannah Ward-Glenton
U.S. Treasury yields rise as investors monitor economic data
U.S. Treasury yields were higher as market participants awaited a fresh batch of economic data and Treasury auctions following Monday’s Labor Day recess.
The yield on the 2-year Treasury note jumped nearly 7 basis points to trade at 3.466%.
— Sam Meredith
German industrial orders slide 1.1% on the month
German industrial orders declined by 1.1% in July, data from the federal statistics office showed on Tuesday, below expectations of a 0.5% contraction from a Reuters poll of analysts.
The fall marks a sixth consecutive month of shrinkage as the war in Ukraine continues to squeeze activity in Europe’s largest economy, with rising costs and material shortages hampering industry.
– Elliot Smith
Stocks on the move: D’Ieteren up 9%, Marks & Spencer up 7%
Sterling jumps on reports of new UK PM’s energy bill plans
Sterling climbed 0.6% against the dollar in early trade on Tuesday after Bloomberg reported that incoming British Prime Minister Liz Truss has drafted plans to freeze energy bills for U.K. households, in a bid to mitigate the country’s spiraling cost of living crisis.
The pound was changing hands for around $1.158 shortly after 8 a.m. in London, having slid below $1.15 on Monday.
The report overnight suggested that Truss plans to fix typical household gas and electricity prices at their current level £1,971 ($2,300) per year. British energy regulator Ofgem recently announced an 80% increase to the country’s energy price cap from Oct. 1, which would take the cap to £3,548 per year.
— Elliot Smith
Reserve Bank of Australia expected to lift rates again for a fifth time in a row
The Reserve Bank of Australia is expected to raise interest rates Tuesday by another 0.5 percentage points on the back of a “fully employed labor market, a massive inflation overshoot and the fact that financial conditions are still highly accommodative,” Goldman Sachs chief economist for Australia and New Zealand Andrew Boak said.
Boak told CNBC’s “Squawk Box Asia” markets do not expect the central bank to soften its position on reining in inflation when it announces its rate decision at 2:30 p.m. Australian Eastern Standard Time.
“I think markets will be particularly sensitive to any sort of signal the RBA is thinking about stepping down the pace of tightening to say 25 basis point increments,” Boak said.
“I think key language will be retained around expecting to tighten further over the coming months. But also the caveat that policy is not on a preset path.”
There are risks with continued interest rate lifts such as the “disorderly unwind in the housing market” but Boak says “that is not our central scenario.”
— Su-Lin Tan
CNBC Pro: Forget the volatility. Buy this ETF for a long term growth story, analyst says
Investors should navigate the ongoing market volatility by getting into ETFs with a long-term growth story, according to one portfolio manager.
“The idea of owning ETF instead of one specific player — you have the whole basket and ride the wave of more capital investment into the cyberspace,” John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC.
He names his favorite cyber security ETF, along with two others.
— Weizhen Tan
Russian energy minister says price cap will lead to shipping more Russian oil to Asia
A worker walks from the Sans Vitesse accommodation towards the gas receiving compressor station of the Nord Stream 1 natural gas pipeline in Lubmin, Germany, on Tuesday, Aug 30, 2022.
Krisztian Bocsi | Bloomberg | Getty Images
Russian energy minister Nikolai Shulginov said the country will ship more oil to Asia in response to price caps on its oil exports, Reuters reported.
“Any actions to impose a price cap will lead to deficit on (initiating countries’) own markets and will increase price volatility,” he told reporters at the Eastern Economic Forum in Vladivostok, according to Reuters.
Last week, the G-7 economic powers agreed to cap the price of Russian crude to punish Moscow for its unprovoked invasion of Ukraine. Before the invasion, Russia exported approximately half of its crude and petroleum product exports to Europe, according to the International Energy Agency.
— Natalie Tham
CNBC Pro: Hold cash as it’s beating the market, say the pros
Strategists are urging investors to allocate more of their portfolios to cash during these volatile times, as interest rate hikes mean it’s now offering higher yields.
“Cash was king” last month, Bank of America said in a Sept. 1 note, as most asset classes — such as stocks, bonds and even commodities — posted losses.
Here’s how to add it to your portfolios, according to the pros.
— Weizhen Tan
European markets: Here are the opening calls
European stocks are expected to open cautiously higher on Wednesday with the U.K.’s FTSE index seen 18 points higher at 7,560, Germany’s DAX 33 points higher at 13,944, France’s CAC 40 up 18 points at 6,616 and Italy’s FTSE MIB up 42 points at 23,029, according to data from IG.
Data releases include preliminary euro zone unemployment data for the second quarter as well as second quarter gross domestic product. The latest U.K. inflation numbers for July will be released as well as preliminary second quarter Dutch GDP.
Earnings come from Uniper, Carlsberg, Persimmon, Balfour Beatty, BAT and National Grid.