UK ‘will fall into recession’ following bond market chaos – latest updates

Urban investment giant Abrdn is forecasting that the UK may yet slip into recession after bond market turmoil.

The cost of government borrowing has risen since data on Wednesday showed the UK economy’s core inflation, which excludes volatile food and energy prices, rose to a 31-year high of 6.8 percent in April.

Luke Hickmore, investment director at Abrdn, said a higher interest rate would impact people’s mortgage costs and lead to a recession “late 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 an agreement on the US government debt or face a potentially catastrophic default.

Tokyo and Seoul rose while Shanghai and Sydney fell. Hong Kong was closed for a public holiday.

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

The Shanghai Composite Index was down 0.1 percent to 3,196.89, while the S&P/ASX 200 in Sydney was up less than 0.1 percent to 7,142.60.

Wall Street closed sharply higher on Thursday after a mega-prediction from Nvidia sent the chipmaker’s shares soaring and sparked a rally in AI-related companies, while investors looked for signs of progress in the debt ceiling negotiations in the US US waited.

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

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

Meanwhile, yields on policy-sensitive two-year government bonds hit their highest level since March as investors continued to demand a premium for securities that face the greatest risk of not being repaid if the government exhausts its borrowing capacity.


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