U.K. net borrowing rose to £16.6 billion ($21.59 billion) in September, the Office for National Statistics said Tuesday, up £2.1 billion from the year before.
It was also higher than the £15.1 billion forecast by the government’s independent advisory group, the Office for Budget Responsibility, and the third highest September borrowing since monthly records began in January 1993.
Chancellor Rachel Reeves gives a speech at the Treasury on July 8, 2024 in London, England.
Pool | Getty Images News | Getty Images
It comes as the Labour government prepares to deliver its first budget on Oct. 30.
Analysts say policymakers are in a difficult spot, having pledged to reduce debt as a share of GDP within the next five years and balance the budget so revenues meet costs, while also promising not to increase several major taxes, including on income, sales and corporations. U.K. Finance Minister Rachel Reeves, who took her post in July, has meanwhile accused the previous administration of leaving a £22 billion financing shortfall for the coming year.
Reports suggest she may use the budget to change the way debt is calculated by the Treasury in order to create more room for capital expenditure.
The latest borrowing figures “highlight the limited scope the [Finance Minister] has to increase day-to-day spending without raising taxes,” Alex Kerr, U.K. economist at Capital Economics, said in a note.
“That said, if she tweaks her fiscal rules, she will still have room to raise public investment,” Kerr said, predicting Reeves would raise current spending — which excludes investment — by a net £25 billion a year funded by tax rises.
A change in debt rules would allow for borrowing for public investment by an additional £53 billion, Kerr added.
— Jenni Reid
The container ship Gunde Maersk sits docked at the Port of Oakland on June 24, 2024 in Oakland, California.
Justin Sullivan | Getty Images
Shipping giant Maersk raised its full-year 2024 guidance Monday citing strong third-quarter performance along with “strong container market demand and the continuation of the Red Sea situation.”
The Danish company posted preliminary, unaudited earnings before interest, taxes, depreciation, and amortization (EBITDA) of $4.8 billion, above an analyst consensus of $3.7 billion.
Maersk hiked its full-year EBITDA forecast to $11 billion to $11.5 billion, up from a previous forecast of $9 billion to $11 billion, and said it now sees free cash flow of at least $3 billion, up from at least $2 billion previously.
The outlook for global container market volume growth for the year has risen to around 6% from 4%-6% previously, it added in a trading update published after the market close Monday.
Maersk share price.
The Red Sea crisis has this year seen shipping companies divert trade around the southern coast of Africa, avoiding the Red Sea and Gulf of Aden following attacks on its vessels by Houthi rebels. That has added to journey times, taking capacity out of the global container market.
Citi analyst Sathish Sivakumar said in a Monday note that Maersk’s full-year consensus upgrade was “mostly driven” by the improved third-quarter results, and that he also expected an increase in fourth-quarter consensus along with more detail in the full company results due on Oct. 31.
Sivakumar, who has a sell rating on the stock, said there were upside risks to Maersk falling to his target price, including improved consumer confidence, a favorable freight rate environment and ongoing tight supply chain conditions.
— Jenni Reid
European markets are expected to open in mixed territory Tuesday.
The U.K.’s FTSE 100 index is expected to open 15 points lower at 8,306, Germany’s DAX up 68 points at 19,522, France’s CAC up 2 points at 7,533 and Italy’s FTSE MIB up 8 points at 34,798, according to data from IG.
Earnings are set to come from Randstad, Tele2, DnB and InterContinental Hotels Group, and the IMF publishes its latest World Economic Outlook report.
— Holly Ellyatt
Macroeconomic uncertainties, mounting geopolitical tensions and a desire to hedge against inflation have given gold — the classic “safe haven” asset — a blistering rally.
Spot gold prices have soared above $2,700 an ounce, rallying for the fifth day on Monday to hit another record high of over $2,733 an ounce. Year-to-date, spot gold is up over 30%.
And Michael Widmer, head of metals research at Bank of America, says it has further to go.
Gold
‘If gold doesn’t rally now, then I’m not sure when it ever will. Actually, I think the fundamental backdrop looks actually quite good,” he told CNBC’s “Squawk Box Europe” on Monday.
Others like John Reade, senior markets strategist at the World Gold Council, urge some caution.
CNBC Pro subscribers can discover more here.
— Amala Balakrishner
Despite a tight U.S. presidential election remaining too close to call, UBS remains constructive on equities and does not think any uptick in volatility could harm a strong market.
“As neither party holds a clear advantage in any of the key swing states that could decide the outcome, the race remains too close to call, and we expect volatility to pick up in the coming weeks amid elevated uncertainty,” UBS Global Wealth Management chief investment officer Solita Marcelli wrote Monday. “But we also think the potential volatility is unlikely to derail positive equity fundamentals, and remind investors not to make dramatic portfolio changes based on expected election outcomes.”
— Brian Evans
Scotiabank has highlighted three biotechnology companies as their “top picks,” each with the potential to more than double in stock price over the next 12 months.
The bank believes interest rate cuts are a notable tailwind that will likely reignite wider investment interest in the biotech sector.
CNBC Pro subscribers can read more here.
— Ganesh Rao