Live news updates from October 21: Rishi Sunak reaches nomination threshold, Yen falls to 32-year low

Rishi Sunak has reportedly reached 100 nominations from Conservative party members to become the first candidate to proceed to the ballot on Monday.

Conservative MP Tobias Ellwood tweeted on Friday evening that he was “honoured” to be the 100th Tory MP to support Rishi Sunak.

“The free [market] experiment is over — it’s been a low point in our Party’s great history,” Ellwood tweeted on Friday. “Time for centrist, stable, fiscally responsible Government offering credible domestic & international leadership.”

https://twitter.com/Tobias_Ellwood/status/1583560922139791361

The Conservatives on Thursday announced that candidates for prime minister would need a minimum of 100 nominations by 2pm on Monday to proceed to the first ballot, which will be held between 3.30pm and 5.30pm London time on Monday. A maximum of three MPs can make it on Monday’s ballot.

A journalist at The Guardian also tweeted, citing unnamed sources, that Sunak became the first candidate to reach the threshold.

The news comes as rating agency Moody’s downgraded the UK’s outlook to “negative” from “stable” after the political turmoil that has sent gilts and the pound into a tailspin.

In a report, Moody’s said there was an “increased risk to the UK’s credit profile from the heightened unpredictability in policymaking amid a volatile domestic political landscape, which challenges the UK’s ability to manage the shock arising from weaker growth prospects and high inflation.”

US stocks closed higher after a choppy week of trading, with investors on Friday buoyed by news that the Federal Reserve might begin to slow the pace of interest rate rises.

The broad S&P 500 rose 4.7 per cent for the week, including a 2.4 per cent rise on Friday. The technology-heavy Nasdaq Composite advanced 2.3 per cent, capping a 5.2 per cent gain over the past five sessions. Both indices recorded their largest weekly gains since June.

Stocks surged on Friday as an article from The Wall Street Journal suggested that Fed rate-setters might shift towards a tamer pace of rate rises from December. The US central bank has lifted borrowing costs by an extra large 0.75 percentage points over each of its past three meetings, taking its target range to 3 to 3.25 per cent.

Markets on Friday were pricing in expectations of US rates rising to just under 4.9 per cent by May 2023, down from expectations of 5.02 per cent on Thursday.

In government debt markets, US bonds steadied after coming under pressure earlier in the session. The yield on the benchmark 10-year US Treasury note was flat at 4.22 per cent.

Investors were also scrutinising the latest financial statements from companies during the ongoing earnings season, searching for signs of strain from high inflation, rising borrowing costs and challenging economic conditions.

Shares of Snap tumbled 28.1 per cent after the developer of camera and messaging app Snapchat revealed late on Thursday that revenue growth had slowed and losses had ballooned in the third quarter.

Read more on the day’s market moves here

Evans Hankey, Apple’s industrial design chief who oversees the look and feel of the tech giant’s most important products, will be leaving the tech giant next year, the company said on Friday.

Apple confirmed it has not yet lined up a successor for Hankey, who was appointed to the role three years ago when Sir Jonathan Ive — the primary designer of the iPod, iPhone and iPad — departed Apple in the summer of 2019.

Ive was replaced by Hankey and Alan Dye, vice-president of human interface design, with each reporting to chief operating officer Jeff Williams.

Commenting on Hankey’s departure, which was first reported by Bloomberg, Apple said its design team “has strong leaders with decades of experience”.

The company added that the move would not be immediate: “Evans plans to stay on as we work through the transition, and we’d like to thank her for her leadership and contributions.”

The iPhone continues to be Apple’s most important product by far, accounting for about half of company revenue, but the company is widely expected to unveil an augmented reality headset — its first big new product category in at least half a decade — next year.

The cost of living crisis has hit order growth at food delivery companies Deliveroo and Just Eat Takeaway, as inflation compounds an industry slowdown after last year’s lockdown restrictions eased.

Deliveroo on Friday blamed “tough market conditions” for a 1 per cent year-on-year drop in orders globally for the three months to September. It also saw a “slightly more pronounced” decline in monthly active customers than its usual seasonal fluctuations, down from 7.8mn in the second quarter to 7.3mn in the third.

Earlier this week, Just Eat Takeaway said group orders declined 11 per cent year-on-year.

Both companies said that the order declines were offset by growth in customer spending on their apps, as restaurants raise their prices and delivery fees rise.

Even so, Deliveroo warned that growth in gross transaction value for the full year would be at the lower end of its previous guidance, between 4-8 per cent in constant currency.

Will Shu, Deliveroo chief executive, pointed to a divergence in consumer behaviour. While it is “quite clear that . . . there are people that are struggling out there”, Deliveroo was also seeing that “the more affluent a consumer, the higher the engagement is on the platform”.

Jitse Groen, chief executive of Just Eat Takeaway, told reporters on Wednesday that while the end of Covid restrictions since last year accounted for the “lion’s share” of its fall in orders, “we do believe that part of the trend is caused by a more difficult environment for consumers”.

Read more about inflation’s impact on food delivery companies here.

Donald Trump’s former chief strategist Steve Bannon has been sentenced to four months in prison after he was found guilty of defying a subpoena from the congressional committee investigating the attack on the US Capitol on January 6.

Judge Carl Nichols also imposed a $6,500 fine, adding that the 68-year-old, who did not take the stand during trial, had not taken responsibility for his actions. Bannon will remain free while he appeals against his conviction. Speaking outside the courthouse after the hearing on Friday, Bannon said he had “total respect” for the legal process.

A jury found Bannon guilty on two counts of contempt of Congress in July, for failing to appear before lawmakers or provide the records they requested.

Bannon’s legal team had claimed the former chair of Breitbart News believed he was protected under Trump’s executive privilege, even though Bannon had left the White House in 2017.

However, government lawyers noted that Bannon had refused to co-operate with the committee even after Trump had waived his executive privilege claim and that much of the evidence requested from Bannon was not privileged.

The US government had asked the judge to impose a six-month sentence — the most severe punishment possible under the guidelines — and $200,000 fine for his “sustained, bad-faith contempt of Congress”.

Read more about Steve Bannon’s sentence here.

More than half of Britons would be unhappy if Boris Johnson became prime minister again, while a slight majority of Conservative voters said they would like to see him back in the role, according to a YouGov poll.

After polling 3,429 UK adults, YouGov said 52 per cent would be unhappy to see Johnson lead the Conservative party again. Twenty-seven per cent indicated they would favour his return, with 56 per cent of respondents who voted Conservative in 2019 saying they would be happy with that outcome.

Seventy-one per cent of respondents believe Johnson knowingly lied about breaking Covid-19 rules, allegations that stirred controversy and ultimately pushed him to resign as prime minister in July. Half of the polled 2019 Conservative voters said that he intentionally lied, while 94 per cent of those who voted for Labour in 2019 agreed.

Voters were also split on how the next Conservative leader should be chosen. Conservative MPs should vote until one person is left, according to 37 per cent of respondents, while 27 per cent would prefer narrowing the field down to two, and voting between the candidates. The rest were undecided.

The yen has shot higher at what is typically a quiet time of the week for the Japanese currency, offering a reminder to traders that authorities do not want to see an endless stream of selling.

The dollar peaked at a new 32-year high close to Y152 earlier in the day. But the exchange rate plunged by more than 3 per cent to under Y147 in the London afternoon. Traders and analysts say the sudden ascent in the yen bore the signs of official purchases from policymakers.

“The Bank of Japan is doomed if it does, doomed if it doesn’t,” said Kit Juckes, a macro strategist at Société Générale. “You’ll get short-term success but achieving a sustained lower dollar-yen just with intervention, when the BoJ is still [buying government bonds] and the Fed is raising rates on 2 November is a big ask.” 

Despite a $20bn intervention by the BoJ in September, the yen has lost more than 24 per cent of its value against the dollar so far this year because of the gulf between the Bank of Japan’s ultra-loose monetary policy and tightening by most other big central banks, particularly the Federal Reserve. Traders have speculated that Japanese authorities have subtly stepped up since that September move to try and strengthen the currency.

Unilateral interventions have a poor record of success, however. Without co-operation from the US and Europe, which is unlikely as they jam interest rates higher to try and douse inflation, scattered interventions are unlikely to foster lasting strength in the currency.

Part of Friday’s drop in the dollar against the yen was also down to a report from The Wall Street Journal’s Fed reporter Nick Timiraos, which suggested that Fed rate-setters might shift towards a tamer pace of interest rate rises.

“Federal Reserve officials are barrelling toward another interest-rate rise of 0.75 percentage point at their meeting Nov. 1-2 and are likely to debate then whether and how to signal plans to approve a smaller increase in December,” he wrote.

Verizon, the biggest telecommunications group in the US, said it expected additional disconnections by customers in the current quarter in response to recent price increases for its services.

Signs of consumers’ sensitivity to prices, a reflection of the high inflationary environment afflicting many Americans, added to the disappointment of the company reporting slow subscriber growth and a plunge in third-quarter profits, sending shares to an 11-year low Friday.

Verizon had just 8,000 net subscriber additions for its wireless phone services in the third quarter, as it struggled against rivals in an increasingly competitive market. The company lost 189,000 consumer accounts in the quarter, but managed to add 197,000 business subscribers.

The New York-based company raised prices for its metred-data and consumer wireless plans in June, following rival AT&T’s plan to raise the cost of its older wireless phone plans.

“The pricing actions we took around administrative fees and metered plans led to an increase in disconnects,” chief financial officer Matthew Ellis conceded to analysts during a Friday earnings call. “With certain price-ups being phased in throughout the third quarter, we would anticipate some disconnect pressure to carry over into Q4.”

However, the higher prices for wireless service helped boost consumer revenue 10.8 per cent from a year ago to $25.8bn in the third quarter.  In its smaller business segment revenue increased 1.9 per cent to $7.8bn.

Total revenue increased 4 per cent from a year ago to $34.2bn, as wireless service revenue growth and higher equipment revenue offset declines for wired services and the impact of merger and acquisition activity in 2021. That slightly beat analyst expectations for revenue of $33.79bn in the third quarter.

Verizon’s net income tumbled 23 per cent from a year ago to about $5bn in the third quarter, missing analyst expectations for $5.3bn.

The company maintained its full-year guidance of revenue growth in the range of 8.5 to 9.5 per cent and adjusted earnings per share of $5.10 to $5.25.

Verizon shares ended 4.5 per cent lower in New York on Friday, their lowest closing level since November 2011.

Penny Mordaunt has become the first MP to declare that she is standing for leadership of the Conservative party in the wake of Liz Truss’s resignation as prime minister.

Mordaunt, the leader of the House of Commons, said on Twitter that she had been encouraged by support from colleagues wanting a “fresh start”.

“I’m running to be the leader of the Conservative party and your prime minister — to unite our country, deliver our pledges and win the next general election,” she said.

Each candidate for the leadership needs the support of at least 100 MPs by the deadline of 2pm on Monday. The final pair will be put to the Tory membership in an online ballot with the winner announced by next Friday. 

Stock markets were subdued and global bond yields marched higher on Friday, as expectations of aggressive monetary policy tightening by the Federal Reserve and its peers brought a downbeat end to the week.

A FTSE gauge of global shares lost 0.5 per cent, as Wall Street’s S&P 500 made a flat start to the US trading session. The technology-heavy Nasdaq Composite lost 0.3 per cent.

Those moves came as shares of Snap tumbled almost 30 per cent, after the camera and messaging app group revealed late on Thursday that revenue growth had slowed and losses ballooned in the third quarter.

Advertisers were continuing to cut marketing budgets because of macroeconomic headwinds, Snap said. Shares of tech heavyweights Alphabet, Meta and Twitter were also down 1.3 per cent, 3 per cent and 4.8 per cent respectively after the New York opening bell.

Investors have been monitoring companies’ financial statements in recent days for signs of strain from high inflation, rising borrowing costs and challenging economic conditions.

The Federal Reserve has led the charge on monetary policy tightening this year, lifting interest rates by 0.75 percentage points at each of its past three meetings in an effort to curb inflation.

In turn, equity and debt markets have come under pressure this year, with the S&P down more than 20 per cent since early January. The benchmark Wall Street index last month closed out its longest streak of quarterly losses since the 2008 financial crisis.

Read more about markets here.

Snap shares continued to fall as markets opened in New York on Friday, after plunging more than 25 per cent in after-hours trading on Thursday on an earnings report that showed mounting losses at the app maker.

The tech company, developer of social media platform Snapchat, was trading at $7.78 a share, down 28 per cent after closing at $10.79 on Thursday before it released third-quarter earnings, in the stock’s biggest fall since July.

This time last year, the shares were trading at $75.

Snap reported mounting losses and slowing growth as it shakes up its business amid a broader industry slump and advertiser budget cuts.

Net losses increased 400 per cent to $360mn in the September quarter, in line with expectations. The restructuring, which included laying off roughly 1,300 employees, or a fifth of its workforce, led to $155mn in charges.

It also posted its slowest revenue growth since its initial public offering in 2017, with revenue up 6 per cent year over year to $1.13bn.

Gilts and sterling came under heavy selling pressure on Friday as markets grappled with uncertainty over the UK government’s borrowing plans following the departure of prime minister Liz Truss.

The 10-year gilt yield rose by 0.22 percentage points to 4.13 per cent, reflecting a fall in price. The pound was 1.4 per cent lower at $1.1082.

Economists at ING said there was a risk that leading candidates to replace Truss do not back chancellor Jeremy Hunt’s tax plans - which have reassured markets this week - or that the government’s fiscal plan is delayed beyond October 31 by the leadership contest.

“Investors may begin to question whether a fiscal plan can credibly be delivered a matter of days into a new prime minister’s tenure, with a set of measures that have been crafted without their input,” ING said.

The emergence of Johnson as a frontrunner to return to Downing Street had choked off any relief for sterling at the departure of Truss and driven the currency lower on Friday, according Jane Foley, head of currency strategy at Rabobank.

“The UK is facing a whole line up of weak fundamentals and earlier this year one of those was a lack of leadership from a government very distracted by one scandal after another,” Foley said. “That was the Boris Johnson government for investors, and the chance that that could come back is not going to be welcomed by markets. You would hope he is experienced enough to read the room and stick with Hunt’s plans, but until we know that, there’s going to be real nervousness.”

The Labour party is facing a by-election in the marginal constituency of Chester after Christian Matheson resigned over sexual misconduct.

Matheson, who was elected in 2015, held the seat in North-west England with a majority of 6,164.

The constituency has changed hands several times in recent decades: it was held by Labour until 2010 after which it was represented by a Conservative MP for five years.

The parliamentary watchdog recommended that Matheson should be suspended from the Commons for four weeks for “serious sexual misconduct”. It upheld two allegations of sexual misconduct by a former member of his staff.

The alleged conduct included “inappropriate sexual remarks about other women, invading the complainant’s personal space and unwanted touching at work social events, inappropriate and unwanted hugs . . . and an attempted kiss on the mouth, all of which were unwanted and unwelcome”, the report found.

Matheson said in his statement that he had always accepted that he had committed a “minor breach of the code” but maintained that several of the allegations were untrue. “I had no sexual motivation in this matter,” he said.

He said the “honourable and right thing to do” was to resign and seek to rebuild his life elsewhere. He apologised to the people of Chester, to the House of Commons, and to the complainant.

“Whilst I believe that this is an excessive and unfair penalty, I cannot challenge the process further,” he said. “This matter has also caused a great toll on my health, requiring my hospitalisation, and I ask that my privacy is respected while I recover.”

Ben Wallace has again ruled himself out of the contest to become Conservative party leader and shored up his desire to remain as UK defence secretary.

At one point over the summer, Wallace was a favourite to replace Boris Johnson as leader but never put his name forward.

Wallace told the BBC on Friday that he was “leaning towards” supporting Johnson should the former prime minister stand again, though added he would “still have some questions”.

He backed Jeremy Hunt to remain chancellor: “He is calm, he is experienced, he is knowledgeable about all that needs to be done.”

Wallace said he could add “best value in keeping people safe at defence by being the defence secretary”, adding that it’s a job he intends to keep. “So I am not going to be standing for prime minister this time.”

He stressed the importance of considering which candidate will recognise the “pressing security concerns that face this country. Without national security there is no economic security.”

He added that was keen to see what Rishi Sunak says on defence and security and investment.

“The Tory party has to settle down and get on with delivering its mandate that it was elected on in 2019,” Wallace said.

Wallace said in a tweet: “The reasons I gave last time for not standing have not changed. I will be looking to all candidates to recognise that you cannot have economic security at home without national security. This requires real investment for our Armed Forces and intelligence agencies.”

Schlumberger, the world’s biggest oilfield services group, reported another bumper quarter, driven by a booming international market even as growth stalled in its North American business.

The company posted revenues of $7.5bn in the third quarter, up 28 per cent from the same period of 2021 and 10 per cent over the previous quarter.

“The second half of the year is off to a great start with strong third-quarter results that reflect the acceleration of international momentum,” said chief executive Olivier le Peuch.

The results, which beat Wall Street expectations, were driven by a jump in activity in the company’s international and offshore businesses. International revenue increased to $5.9bn, or 13 per cent over the second quarter, while revenue was flat in North America at $1.5bn.

Net income, excluding charges, was $907mn, up 27 percent over the previous quarter and 77 per cent over the third quarter of last year.

Oilfield services groups, which carry out the grunt work of the oil and gas industry, are cashing in on a tight market. 

Rival Baker Hughes on Wednesday also reported an uptick in revenue, though at a slower pace. Baker brought in $5.4bn during the third quarter, up 5 per cent from the same period of 2021 and 6 per cent over the prior quarter. 

Schlumberger shares were up over 2 per cent in pre-market trading.

The Japanese yen extended its slide against the US dollar to break through the ¥151 level and hit a 32-year low.

The currency dropped 0.8 per cent by the late morning in London to trade at ¥151.34, the lowest level against the dollar since mid-1990.

It had slipped on Thursday through ¥150, keeping investors alert to another potential intervention to support the currency.

The Bank of Japan on Thursday said it would launch an emergency bond-buying operation, offering to purchase ¥250bn ($1.7bn) of government debt as it works to pin down yields even as long-term interest rates rise globally.

The yen has tumbled 24 per cent against the dollar this year, its decline reflecting the yawning gap between the BoJ’s ultra-loose monetary policy and the tightening trend demonstrated by other major central banks. The currency’s fall comes despite a $20bn intervention by authorities last month.

By comparison, the dollar has advanced 18 per cent in 2022 against a basket of international peers. The US Federal Reserve has jacked up interest rates aggressively this year in efforts to tame inflation, with extra-large increases of 0.75 percentage points at each of its past three meetings.

Pakistan’s election commission has barred Imran Khan from holding office for five years over allegations that the former prime minister sold gifts he received during his tenure.

Khan’s Pakistan Tehreek-e-Insaf party confirmed the commission’s judgment to the Financial Times on Friday, adding that it would challenge the decision in Islamabad’s high court.

“The election commission of Pakistan is entirely pro-government,” the PTI said. “You will see the public come out and protest. Increasingly there will be growing tension all across Pakistan.”

The decision sets up an ugly stand-off between Khan, a former cricket star, and prime minister Shehbaz Sharif. Khan was replaced by Sharif in April after losing a no-confidence vote in parliament, though his popularity has since surged.

Many analysts see Khan as the most popular candidate in the upcoming elections, which need to be held by late next year. Sharif’s government has struggled to contain an escalating economic crisis, with the country hit by catastrophic flooding and a surge in import costs following Russia’s invasion of Ukraine.

The election commission’s judgment pertains to allegations that Khan unlawfully raised funds by selling gifts that he had received while prime minister. He denies the allegations.

The UK’s main opposition party sees a potential return of former prime minister Boris Johnson as a “powerful argument” for a general election, as Conservative MPs throw their weight behind candidates for leader.

“Only three months ago Boris Johnson left office, because most of those who were serving him on his front bench had declared that he was unfit for office,” Labour leader Sir Keir Starmer told Sky News on Friday.

“So to go from the kamikaze budget under Liz Truss back to a man [whose] own party has declared is unfit for office is the most powerful argument you could possibly have for a general election,” Starmer said.

He added: “The risk is not a general election; the risk is continuing with this chaos.” 

Starmer said the economic plan of the Labour party is based on “working people”, recognising that “they create the wealth and they should benefit from that wealth”.

The opposition leader said the Labour party would “stabilise the economy, with a plan for growth [and] a plan for jobs”.

Elsewhere, Tory MPs began to pledge support for the likely candidates in the Conservative party’s leadership race. Energy minister Jacob Rees-Mogg tweeted “I’m backing Boris” and “#BORISorBUST”.

Tory MP Crispin Blunt backed former chancellor Rishi Sunak, the bookies’ favourite to snag the top job.

American Express: Investors will look for any signs of a slowdown in consumer spending when the credit card company reports third-quarter earnings. With household budgets strained by high inflation, American Express may increase the amount it sets aside in loan loss provisions in preparation for a potential decline in consumer credit quality. The group’s quarterly revenue is anticipated to increase 22 per cent from a year ago to $13.5bn.

Other earnings: Oilfield services company Schlumberger and telecoms group Verizon and will join American Express in reporting before the bell. Analysts expect Schlumberger to report a jump in revenue, and will watch for any signals that oil producers might increase output after an Opec+ decision to cut production. Verizon is also expected to report higher revenue year-on-year, with analysts awaiting any commentary on price increases.

Fedspeak: New York Fed president John Williams will give opening remarks focused on skilling up local workers for in-demand careers at an event in Hudson, New York.

Economic data: Mexico and Canada will both release retail sales figures for August. Mexico’s sales are expected to have ticked up 0.3 per cent in August, increasing at a slower pace than July’s 0.9 per cent, for an annual rate of 6.1 per cent, according to analysts polled by Refinitv. Meanwhile, monthly Canadian retail sales are expected to gain 0.2 percentage points after declining 2.5 per cent in July. Excluding auto sales, growth would be 0.4 per cent. Canada will also report data on pricing for new homes.

UK regulators have fined Barclays £50mn for allegedly “failing to disclose certain arrangements” about the bank’s controversial Qatari fundraising 14 years ago.

Mark Steward, head of enforcement at the Financial Conduct Authority, said Barclays had failed to make appropriate disclosures about paying “hundreds of millions of pounds in fees to certain Qatari investors so that they would contribute new capital” at the height of the financial crisis.

“Barclays’ failure to disclose these matters was reckless and lacked integrity and followed an earlier failure to disclose fees paid to Qatari investors in June 2008,” Steward added. “There was no legitimate reason or excuse for failing to disclose these matters.”

Barclays, which has faced several legal cases over the Qatar fundraisings, is contesting the FCA’s decision to the regulator’s Upper Tribunal. The FCA first issued a warning notice about the deal in 2013, but paused its action pending the outcome of cases brought by the Serious Fraud Office which concluded in 2019.

“Barclays has referred the findings of the regulatory decisions committee to the upper tribunal for reconsideration,” it said.

Treasury yields rose to their highest levels in a decade and a half on Friday, as strong US employment data fuelled expectations of further interest rate rises by the Federal Reserve.

Yields on the benchmark 10-year US Treasury climbed above 4.25 per cent for the first time since June 2008, rising as much as 0.05 percentage points to 4.272 per cent, according to Refinitiv data, while the price of the bonds fell. The two-year US Treasury yield climbed as much as 0.03 percentage points to a new 15-year high of 4.639 per cent.

Those moves came after US labour market data on Thursday showed unemployment claims had fallen last week from 226,000 to 214,000, while economists polled by Reuters had expected a rise to 230,000.

Analysts said the robust job market reading would reinforce expectations that the Fed would continue with aggressive monetary policy tightening.

UK government bonds were similarly under pressure on Friday. The yield on the benchmark 10-year gilt rose 0.06 percentage points to 3.97 per cent, as traders grappled with the ramifications of UK prime minister Liz Truss’s resignation on Thursday and the prospect of a new leader for the country.

Despite Truss’s departure, analysts at ING said the new leadership contest could lead to further uncertainty over the government’s fiscal plans. As a result, “gilts should continue to trade with a risk premium”, they wrote.

The pound slipped 0.2 per cent to trade at $1.121 against the dollar.

Those downbeat moves also came as new data showed that UK retail sales fell more than expected in September, heightening concerns that the country was headed for a recession.

Read more about markets here.

Public support for the UK Conservatives has fallen below 15 per cent, according to a new poll, highlighting public discontent over the turmoil that has split the party and resulted in a succession of leadership changes.

The Tory party was backed by 14 per cent of respondents to the People Polling survey released on Friday, down 4 percentage points from its previous poll last week.

Labour’s support was flat at 53 per cent, leaving the country’s main opposition with a near-40 percentage point lead over the governing party.

Support for the Liberal Democrats was up 3 points at 11 per cent, the Greens were flat at 6 per cent, while the Scottish National party backing edged down 1 percentage point at 5 per cent.

People Polling said the poll was conducted online on Thursday, the day that Liz Truss quit as prime minister and the Tory party launched into its latest leadership contest. Data was collected from 1,237 respondents.

In response to the question: “What word or phrase first comes to mind when you think about the Conservative government?” some of the most common responses from those polled included “shambles”, “useless”, “incompetent” and “chaos”.

Conservative MP Crispin Blunt has said that the party needs to get over the Boris Johnson “psychodrama”, and has backed Rishi Sunak to be the next leader.

Blunt, who has backed Johnson in the past, told Sky News that the time was not right for the ex-prime minister to return. “I don’t think we can go back there for the next two years,” he said, adding that he would support former chancellor Rishi Sunak if he made a second bid for the top job.

“I think [Sunak] can bring not only the Conservative party together, he can bring the nation together to address the challenges that we face,” said Blunt. 

The Conservative leadership race is now under way, with the winner to be announced by October 28 at the latest.

The latest betting makes Sunak the favourite, followed by Johnson.

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Sterling fell and gilt yields rose on Friday after a clutch of UK economic data came in worse than expected.

Public sector borrowing for September was £20bn, above the £17bn forecast by economists polled by Reuters. That will pile pressure on Liz Truss’s successor as prime minister ahead of the budget due on October 31.

Meanwhile, retail sales fell 1.4 per cent between August and September, which was worse than the 0.5 per cent forecast by economists.

Gilt prices fell following the release of the data, with yields on the 10-year gilts rising 0.07 percentage points to 3.98 per cent.

Sterling fell 0.14 per cent against the dollar to $1.121.

London Stock Exchange Group has reported revenue of £1.9bn in the third quarter, up 16 per cent year-on-year, as the exchange and clearing house owner benefited from rising market volatility.

LSEG, which owns the London Stock Exchange and London Clearing House, on Friday reported a 15.4 per cent rise in income from data and analytics services to £1.2bn in the three months to September. It continues to integrate its acquisition of data provider Refinitiv.

Income from post trade activities rose 10.4 per cent and there was a “good performance in over the counter markets as we helped customers manage their risk in an uncertain market environment,” LSEG said on Friday morning.

Capital markets revenues rose 8.6 per cent to £369mn with a “benefit from volatility” in September when the UK’s “mini” Budget triggered frenzied selling in gilts.

LSEG’s net treasury income rose 40.4 per cent as increased cash collateral was held.

Higher debt interest payments pushed UK public sector borrowing up last month to much higher levels than economists were expecting, laying bare the challenges facing the next prime minister.

Public sector net borrowing was £20bn in September, £2.2bn more than in the same month last year, and the second highest September borrowing figure since monthly records began in 1993, according to data published by the Office for National Statistics on Friday.

The figure was much larger than the £14.8bn forecast in March by Office for Budget Responsibility, the UK’s official watchdog, and was also higher than the £17bn forecast by economists polled by Reuters.

Interest payments on government debt rose to £7.7bn in September, £2.5bn more than in the same month last year. Higher Interest payments reflect the rise in the retail price index to which index-linked gilds are linked.

James Smith, economist at ING, said that from the perspective of gilts, “all investors really want to see is a credible fiscal trajectory” from whoever takes over as prime minister next week.

British retail sales fell more than expected in September due to soaring inflation, low consumer confidence and the impact of the Queen’s funeral, fuelling concerns of a looming recession.

The quantity of goods bought in Britain contracted 1.4 per cent between August and September, following a sharp contraction in the previous month, according to data published on Friday by the Office for National Statistics.

This was a worse result than the 0.5 per cent contraction forecast by economists polled by Reuters.

The ONS said that “retailers continue to mention the effect of rising prices and the cost of living on sales volumes”, but noted that data for September 2022 were affected by the bank holiday for the funeral of Queen Elizabeth II, when many retailers closed.

UK inflation rose to a 40-year high of 10.1 per cent in September, according to official data published earlier in the week.

Food store sales volumes fell 1.8 per cent in September, still 3.2 per cent below their pre-coronavirus levels in February 2020.

This comes as consumer confidence hovered around the lowest level in 50 years, according to separate data by the research company GfK.

The figures highlight the precarity of the UK economic performance amid political turmoil, fast rising prices and higher borrowing costs. Many economists expect the country to enter an economic recession later in the year.

Anthony Albanese sounded a note of caution over the political chaos that has engulfed the UK as Australia continues to push for the completion of a free trade agreement.

The Australian prime minister, who noted that he has already met two British prime ministers since he was elected in May, told reporters he was “concerned about any delay that would occur to the Australian-UK free trade agreement” caused by the sudden resignation of Liz Truss as prime minister. 

Truss, who visited Australia in January to extol the benefits of the trade deal, had discussed accelerating the agreement between Australia and the UK with Albanese to conclude the deal by the end of the year.

Anne-Marie Trevelyan, an ally of Truss, visited Australia in August in her role of international trade secretary and said she expected the trade deal to be ratified early next year. 

Australia is also locked in negotiations with the UK over the Aukus security agreement. 

Richard Marles, deputy prime minister and defence minister who met Boris Johnson prior to his defenestration as prime minister, told the ABC that the political upheaval would not “impact on our relationship with Britain and our ability to engage on the really critical issues which we have with Britain in a timely way”. 

Britain’s political disruption still pales in comparison to Australia which has had seven prime ministers in the space of 15 years, but Albanese said his government was “stable”.

Treasury yields rose to their highest levels in roughly a decade and a half on Friday in Asia in the wake of strong US employment data that analysts said would bolster the case for further interest rate rises by the Federal Reserve.

Yields on the 10-year US Treasury rose as much as 0.04 percentage points to 4.2663 per cent, climbing above 4.25 per cent for the first time since June 2008. Meanwhile, the 2-year US Treasury yield climbed as much as 0.02 percentage points to a fresh 15-year high of 4.6335 per cent.

US labour market data released on Thursday showed unemployment claims had fallen last week from 226,000 to 214,000, while economists polled by Reuters had expected a rise to 230,000.

Analysts said the robust job market reading would reinforce expectations that the Fed would continue with aggressive monetary policy tightening.

Economists at Citigroup led by Isfar Munir said that US jobless claims “remain anchored to low levels and are indicative of a tight labour market”, adding that if next Friday’s quarterly reading for the US employment cost index confirmed stronger wage inflation, it would “keep the Fed firmly grounded in its hawkish stance.”

Elsewhere in markets, the pound sterling was off 0.4 per cent at $1.1192 as traders grappled with the ramifications of Prime Minister Liz Truss’s resignation on Thursday.

Futures pointed to a 0.4 per cent loss for the FTSE 100 when trading begins in London, while the S&P 500 was tipped to shed 0.3 per cent later in the day.

The Bank of Japan unveiled a second day of bond purchases on Friday, as yields on its sovereign notes came under pressure following the yen’s slump to its lowest level in more than three decades.

The BoJ offered to purchase up to ¥100bn ($665mn) of bonds with maturities between 10 and 25 years. The move comes after bond yields on some notes rose to multi-year highs despite a similar purchase offer made on Thursday.

Japanese government bond yields have come under pressure in recent months as the country maintains its ultra-loose monetary policy. The stance is it at odds with those of other central banks, which are raising interest rates to combat soaring inflation.

While inflation rose above the BoJ’s target range to an eight-year high in September, the bank has been reluctant to shift gears after struggling for years to lift the country’s economy out of a deflationary cycle.

The interest differential has pushed the yen down more than 23 per cent this year. The currency fell a further 0.1 per cent to trade at ¥150.31 per dollar on Friday, after breaching the ¥150 threshold for the first time in more than three decades the day before.

China’s onshore renminbi dropped on Friday to hover near a 14-year low against the surging dollar, as the country’s 20th party congress draws to a close.

The onshore renminbi slipped as much as 0.5 per cent to a low of Rmb7.248 against the dollar. That was just stronger than a 14-year low of Rmb7.251 hit last month, despite state bank intervention to support the currency.

The currency is down 12.3 per cent year-to-date against the dollar. The latest dip comes after investors were alarmed by China’s decision to delay the release of its third quarter gross domestic product figures.

The benchmark CSI 300 is down 2.3 per cent this week, while Hong Kong’s Hang Seng index dipped to its lowest level in 13 years on Thursday.

Traders in China said large state-run banks were swapping renminbi for US dollars in the country’s forwards market, then selling the dollars in the country’s onshore markets in an intervention to bolster the domestic currency, the Financial Times reported this week.

That followed efforts by the People’s Bank of China last month to curb the currency’s depreciation by discouraging bets against the renminbi through derivatives markets.

On Friday, 90 per cent of traders surveyed in a Bloomberg poll said they expected the PBoC to allow the currency to weaken further after the conclusion of the party congress on Saturday.

Inflation in Japan rate rose to an eight-year-high of 3 per cent in September, though the country’s central bank is unlikely to reverse its loose monetary policy.

Official statistics released on Friday showed that both the consumer price index and core inflation, which excludes volatile food prices, rose 3 per cent in September from a year ago. Excluding the impact of tax rises in 2014, it was the fastest increase since August 1991. The reading was in line with market expectations.

Prices have risen on the back of the weakening of the yen, which on Thursday slipped past ¥150 against the dollar for the first time in 32 years, and rising costs of imported food and energy. September marked the sixth consecutive month that core CPI exceeded the longstanding target of 2 per cent set by the Bank of Japan.

But the central bank has been reluctant to increase interest rates after struggling for years to lift the country’s economy out of a deflationary cycle. There has been no pass through from higher prices to increased wages and the BoJ has said underlying demand in the economy is still weak.

The widening gap between the BoJ’s ultra-loose monetary policy and tightening by most other big central banks has caused the yen to lose more than 23 per cent of its value against the dollar year-to-date, despite a $20bn intervention by Japanese authorities in September.

Inflation: Hong Kong and Japan report their September consumer price index inflation rate data on Friday.

China: The week-long Communist party congress is scheduled to end on Saturday with Xi Jinping likely to secure a third five-year term as president. Corporate China has largely been shut out of the party congress compared with years past.

Markets: Stocks in South Korea and Japan opened lower, while futures in Hong Kong pointed higher on Friday. The benchmark Hang Seng index hit its lowest level in 13 years and the yen breached 150 per dollar for the first time since 1990 on Thursday. US stocks also reversed gains from earlier in the week, as traders scrutinised economic indicators that suggest monetary policy will continue to tighten. The S&P 500 index of blue-chip US stocks closed down 0.8 per cent, while the Nasdaq Composite gave up 0.6 per cent.

The Conservative party has revealed new details of how the contest for its next leader will be run.

Candidates need a minimum of 100 nominations to proceed to the first ballot, which will be held between 3.30pm and 5.30pm London time on Monday. As there are 357 Conservative MPs, a maximum of three can make it on to the ballot.

If there are three candidates, the one with the fewest number of votes will be eliminated. The result will be announced at 6pm.

If a second vote is required, it will be “indicative”, allowing party members to find out which of the candidates MPs prefer. This vote will be held between 6.30pm and 8.30pm on Monday, with a result announced at 9pm.

Once the parliamentary process is completed, party headquarters will assume responsibility for the administration of the vote, as long as two candidates remain. A ballot of Conservative party members will be conducted via secure online voting and will close at 11am on October 28. The result will be “announced later that day.”

Eight in 10 Britons believe Liz Truss was right to resign from her role as prime minister, according to the latest YouGov poll.

The survey, which questioned UK voters in the wake of Truss’ resignation on Thursday, showed that 81 per cent of 2019 Tory voters believe she was right to quit, compared to only 11 per cent who said it was wrong.

Almost two-thirds of respondents rated Truss as a “terrible” prime minister, including 57 per cent of Tory voters. Only 7 per cent viewed her premiership as “average” and just 1 per cent rated her as “good” and “great”.

 A majority of respondents — 63 per cent — said there should be a general election when the new prime minister is appointed, but more than half of Conservatives do not believe there should be a new general election.

The Conservatives have set a high threshold for leadership hopefuls to make it on to the ballot paper for the next party leader.

Candidates will have to have the support of 100 MPs — a big jump on the 20 MPs needed to enter this summer’s contest when Liz Truss was chosen.

As there are 357 Conservative MPs, a maximum of three can make it on to the ballot. After MPs have reduced the list to two, party members will vote online for the next leader.

Nominations are open now and will close at 2pm on Monday. The leader will be chosen by October 28.

“We fixed a high threshold but a threshold that should be achievable by any serious candidate who has a realistic prospect of going through,” Sir Graham Brady, chair of the 1922 committee, told reporters on Thursday.

He also said that if only one candidate was nominated by MPs, then the new leader will be confirmed on Monday.

Otherwise, party chair Sir Jake Berry confirmed that there would be an electronic ballot of the entire Tory membership to choose from the final two candidates.

He insisted that the party believed it could carry out a robust digital vote of around 200,000 members without external tampering.

The contest for the Conservative leadership will kick off in earnest later today when the party outlines the process it will use to choose Liz Truss’s replacement.

Follow all the latest betting on the contest with the FT’s tracker, based on Betfair data. As the contest gets under way, Rishi Sunak is the early favourite followed by Penny Mordaunt and Boris Johnson.

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