he pound jumped against the dollar on Monday morning after the Government U-turned on its policy to scrap the additional rate of income tax, and by the end of the day the FTSE 100 had turned around a fall.
When markets closed in London, the FTSE 100 had closed up 0.2%, or nearly 15 points, ending the day at 6,909.
But the rise masked an earlier fall which briefly saw the FTSE trading down 1.4% – hitting as low as 6,797 and coming within spitting distance of an 18-month low.
The index had briefly dropped just 10 points lower than this back in March when a nuclear power plant caught fire in Ukraine.
But by the end of trading on Monday, the index had staged a turnaround, with retailers B&M and JD Sports, telecoms giant BT, and a couple of the biggest housebuilders in the country leading the way.
Sterling was also up, increasing around 1.2% to just under 1.3 dollars to the pound a little after the London Stock Exchange closed.
It puts the currency at around the same level as before Chancellor Kwasi Kwarteng’s mini-budget.
The rise today came after Mr Kwarteng said he would axe the abolition of the additional rate of income tax which he had promised to do in the mini-budget.
In Europe, the German Dax index closed up 0.8% while France’s Cac 40 gained 0.6%.
On Wall Street, the S&P 500 had risen 2% and the Dow Jones gained 2.2%.
In company news, 11 UK water companies will be forced to slash bills for their customers by around £150 million in total after missing pollution targets, water regulator Ofwat said.
The businesses will have to return the money to households during the next financial year, it added.
But these companies did not include listed water firms Severn Trent and United Utilities, which “exceeded their targets in areas like biodiversity and are able to recover more money from customers,” Ofwat said.
Seven Trent’s shares closed up 1.7%, while United Utilities saw its share price drop heavily late in the afternoon after trading up all day before then.
The biggest risers on the FTSE 100 were BT, up 5.35p to 126.7p, Fresnillo, up 29.2p to 798.4p, B&M, up 11.2p to 317.3p, Barratt Developments, up 12p to 354.2p, and JD Sports, up 3.45p to 103.65p.
The biggest fallers on the FTSE 100 were Scottish Mortgage Investment Trust, down 33.6p to 748.8p, Endeavour Mining, down 58p to 1,583p, Haleon, down 8p to 270.8p, Flutter Entertainment, down 244p to 9,694p, and Diageo, down 90p to 3,707.5p.