UK ‘will fall into recession’ after bond market chaos

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Urban investment giant Abrdn predicts the UK will fall into recession after all, following bond market turmoil.

Government borrowing costs have risen since data on Wednesday showed core inflation in the UK economy, which excludes volatile food and energy prices, rose to its highest level in 31 years at 6.8%. in April.

Abrdn’s chief investment officer, Luke Hickmore, said the prospect of higher interest rates would hurt people’s mortgage costs and lead to a recession “toward the end of this year or early next year.”

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what happened overnight

Asian markets were mixed on Friday as a deadline loomed for Congress to reach a deal on US government debt or face a potentially calamitous default.

Tokyo and Seoul rose while Shanghai and Sydney fell. Hong Kong was closed for holidays.

Shares of technology companies also rose in Asia, where Tokyo’s Nikkei 225 gained 0.7% to 31,019.61. In Seoul, the Kospi rose 0.2% to 2,559.91, helped by a 2% rise in the share price of Samsung Electronics, South Korea’s largest company.

The Shanghai Composite Index fell 0.1% to 3,196.89, while Sydney’s S&P/ASX 200 added less than 0.1% to 7,142.60.

Wall Street closed sharply higher on Thursday after an explosive Nvidia forecast sent shares of the chipmaker soaring and prompted a rally in AI-related companies, as investors waited for signs of progress in the talks. on the US debt ceiling.

The S&P 500 rose 0.9% to close the session at 4,151.28 points.

The Nasdaq Composite rose 1.7% to 12,698.09 points, while the Dow Jones Industrial Average fell 0.1% to 32,764.65 points.

Meanwhile, policy-sensitive two-year Treasury yields hit their highest level since March as investors continued to demand a premium on securities that are most at risk of default if the government exhausts its borrowing capacity.