European stocks recovered some of yesterday's losses on Tuesday morning in London, as new data from the Office for National Statistics showed the UK's public sector borrowing had seen its second highest August on record.
Public sector net borrowing (excluding public sector banks, PSNB ex) was estimated to have been £20.5bn ($28bn) in August 2021, £5.5bn less than in August 2020.
Meanwhile, central government receipts in August 2021 were estimated to have been £61.2bn, £5.3bn more than in August 2020. Central government bodies spent £79.6bn in August 2021, £1bn less than in August 2020.
The FTSE 100 (^FTSE) was 0.7% higher at the open, Germany's DAX (^GDAXI) was up 0.6% and France's CAC (^FCHI) rose 1% after a day of losses.
"We are determined to get our public finances back on track — that’s why we have set out the focussed and responsible steps we are taking to keep debt under control," said chancellor Rishi Sunak.
US stocks also looked set for a higher open later on Tuesday. S&P 500 futures (ES=F) were trading 0.6% higher at the open in London. The Dow (YM=F) looked set to rise 0.7% and Nasdaq futures (NQ=F) were up 0.4%.
The rebound in the US and Europe comes following a mixed day of trade in Asia. The Hang Seng (^HSI) finished the day flat following a day of losses. Meanwhile Japan's Nikkei (^N225) declined 2.2% and the SSE Composite (000001.SS) rose 0.2%.
"The crisis at Evergrande and in the Chinese real estate sector was the catalyst most people were talking about, but truth be told, the market rout we’re seeing is reflecting a wider set of risks than just Chinese property, and comes after increasing questions have been asked about whether current valuations could still be justified, with talk of a potential correction picking up," said Deutsche Bank analysts in a research note.
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