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BoE buys record £2.38bn worth of gilts at reverse auction

The Bank of England accepted all of the £2.3754 billion ($2.63 billion) of long-term conventional gilts offered to it in its reverse auction, a record sum as the temporary purchase is coming to an end.

The volume of gilts bought by the BoE was the highest of any daily reverse auction since the program began on September 28, although the total sum offered was well below the £5bn the BoE said it was ready to offer. to buy.

Earlier on Wednesday, the BoE said it bought 1.9798 billion pounds of pegged gilts.

—Reuters

Moving Stocks: Chr. Hansen up 13%, Philips down 9%

Shares of Danish bioscience company Chr. Hansen jumped more than 13% by mid-afternoon after a strong quarterly earnings report and promising outlook.

At the bottom of the Stoxx 600, shares of Philips fell more than 9% after the Dutch health-tech company issued a third-quarter profit warning and highlighted a charge of 1.3 million euros. euros ($1.26 billion) for its struggling sleep and respiratory care business.

United Kingdom: Chaos in the government securities market shakes up eurozone bonds

The turmoil in UK gilt markets spread to the eurozone on Wednesday, with yields on eurozone government bonds rising sharply after the Bank of England confirmed on Friday the end of its gold-buying program. emergency bonds.

The German Bund 10 years the yield rose 8 basis points to 2.3880% during the afternoon in Europe, after hitting its highest point in more than a decade, while 10-year Italian construction yields also jumped. Yields move inversely to prices.

UK 30-year gilt yields rose about 16 basis points to 4.963% while Return over 10 years rose more than 9 basis points to 4.533%.

-Elliot Smith

Bank of England must keep gilt market functioning smoothly, economist says

Samy Chaar of Lombard Odier says “it’s very easy to say that pension funds need to get their act together”, but they would need a functioning gilt market with liquidity to do so.

Moving Stocks: Chr. Hansen up 11%, Philips down 11%

Shares of a Danish bioscience company chr. Hansen jumped more than 11% in early trade after a strong quarterly earnings report and bright outlook.

At the bottom of the Stoxx 600, Phillips shares fell more than 11% after the Dutch health-tech company issued a third-quarter profit warning and highlighted a 1.3 million euro ($1.26 billion) charge ) for its troubled sleep and respiratory care business.

-Elliot Smith

Pound soars after mixed messages from Bank of England

UK economy shrinks 0.3% in August

Britain’s GDP contracted 0.3% month-on-month in August, the Office for National Statistics said on Wednesday, below expectations of stagnation in a Reuters poll of economists.

The drop in activity was partly explained by weak manufacturing and maintenance work on oil and gas installations in the North Sea, the ONS said, while production and services activity have falled.

July GDP growth was revised down to 0.1% from a previous estimate of 0.2%.

“While this figure is not what the country wants to see, it will not make much difference to the path we are already on. The Bank of England (BoE) will continue to raise its base rate as that it is struggling to tame runaway inflation,” said Marcus Brookes, chief investment officer at Quilter Investors.

“The BoE continues to face the incredibly difficult task of guiding the country through this uncertain period where it finds itself at an impasse by raising rates to meet inflation, but embarking on a buying operation of gilts to help stabilize markets after the turmoil precipitated by the mini budget.”

-Elliot Smith

CNBC Pro: It’s too early to buy the dip, says investor, naming 8 stocks to buy when the time comes

Fund manager warns against buying the dip, despite 25% decline in S&P500 This year.

Instead, investors should reposition towards interest-rate-sensitive stocks, said John Ricciardi, head of asset allocation and fund manager at Deuterium Capital.

He names three stocks in the consumer staples, three in utilities and two in materials sectors that investors can pick up when the time comes.

CNBC Pro subscribers can learn more here.

U.S. economy doing well amid economic uncertainty, Treasury Secretary Yellen says

Treasury Secretary Janet Yellen said the United States is “doing very well” amid global economic uncertainty.

Although the U.S. economy has slowed after a strong recovery, jobs reports point to a resilient economy, she said in an interview with CNBC’s Sara Eisen on Tuesday.

She also acknowledged that inflation is too high and that reducing it is a priority for the Biden administration, and stressed the importance of maintaining a healthy labor market while doing so.

—Chelsey Cox, Tanaya Macheel

IMF lowers global growth forecast for next year

CNBC Pro: This stock is a better bet than even U.S. Treasuries, fund manager says

Nick Griffin, chief investment officer at Munro Partners, is so bullish on a stock that he says it’s a better bet than US Treasuries.

“It’s cheaper than a US Treasury. It’s growing faster than the US Treasury, and it probably has a better balance sheet than the US Treasury. So from our perspective, it’s a pretty safe place to [put your] cash,” he said. Short-term US Treasuries have gained popularity with investors lately as yields rise.

CNBC Pro subscribers can learn more here.

—Weizhen Tan

European markets: here are the opening calls

European markets head for a weaker open on Wednesday as global growth concerns dominate sentiment and investors anticipate Thursday’s US inflation data

Britain’s FTSE index is expected to open down 22 points to 6,867, Germany’s DAX down 56 points to 12,148, France’s CAC down 27 points to 5,799 and Italy’s FTSE MIB down 127 points to 20,511, according to IG data.

On Tuesday, the International Monetary Fund cuts its global growth forecast for next year to 2.7%. The forecast is 0.2 percentage points lower than its July forecast and suggests that 2023 will look like a recession for millions around the world.

European markets closed lower on Tuesday, with all major exchanges and the majority of sectors ending the trading session in the red. Markets across the region have suffered back-to-back losses as volatility continues to rattle sentiment.

The Bank of England intervened again on Tuesday to restore order to UK markets, with volatility in long-term government bonds posing what it called a ‘significant risk to UK financial stability’ .

—Holly Ellyatt