The political situation in the UK has been a key focal point for financial markets in recent weeks and today is likely to be no exception. Earlier this morning, the Treasury announced that the new Chancellor, Jeremy Hunt – who replaced Kwasi Kwarteng in the role last Friday – would make a statement later today. Prior to that, speculation had been rife for a few days that policy U-turns were in the pipeline and resulted in an announcement that next April’s planned rise in Corporation Tax, from 19% to 25%, would go ahead having previously been cancelled in the ‘mini-budget’.

Over the weekend, the newly appointed Chancellor indicated that nothing was “off the table” and said that all the measures announced previously by Mr Kwarteng would be looked at again, with the prospect that further pledges made by the PM would be abandoned. Speculation over the weekend suggested that the planned 1p reduction in the basic rate of income tax would also be dropped, while the PM and Chancellor both noted that increases in public spending would go up less than previously expected. Media reports suggest that all of Kwasi Kwarteng’s £45bn of unfunded tax cuts, except for the reduction in NICs, will be scrapped. Today’s statement at 11:00BST is expected to see a number of these policy reversals formally announced by the Chancellor in a bid to regain the confidence of financial markets with a statement to the House of Commons expected at 15:30BST.

Ahead today, there are no UK releases due although later this week September inflation and retail sales reports alongside the latest read on UK consumer confidence (GfK) will provide useful updates. For today, a number of ECB officials – in the shape of Guindos, Nagel and Lane – are set to speak. Markets will be looking for further clues on the size of the interest rate increase expected at its upcoming policy meeting. Despite signs of economic weakness, ECB officials overall have remained hawkish and shown a determination to bring inflation down, which rose to 10.0%y/y in September.

In the US, the day is also void of any major economic data releases. However, the regional Empire manufacturing survey report for October is expected to show a further decline in its headline balance, a sign that activity has continued to moderate in response to a broad flatlining in new orders growth.

Overnight, meanwhile, the Q3 GDP and September industrial production and retail sales reports for China, will possibly be the most important pieces of data from a global perspective this week, given concerns that growth there is continuing to disappoint.