Investment market update
UK stocks are expected to open higher this morning, adding to yesterday’s gains and tracking overnight moves by Wall Street and in Asia.
Asian stocks rose amid a rally in Chinese shares and as Tokyo equities were propelled higher by a first-day surge for Japan Post. The Australian dollar strengthened with emerging-market currencies.
US stocks extended a rally, with the Standard & Poor’s 500 Index reaching a three-month high, as beaten-down commodity producers continued to pace the recovery from a third-quarter fall. Chevron Corp. and Exxon Mobil Corp. gained more than 1.8% as crude oil climbed to a three-week high.
An end-of-day advance pushed UK stocks up in the final hour of trading, helped by climbing shares of BP Plc and Royal Dutch Shell Plc as oil rose higher. Standard Chartered Plc dropped 6.7% saying it will raise £3.3 billion in a rights offer while posting a surprise loss. Barratt Developments Plc, Persimmon Plc, Taylor Wimpey Plc fell at least 2.4% each after Liberum Capital Ltd. cut their ratings to sell from hold, saying valuations are “too optimistic” to withstand expected gross margin pressure.
The Bank of England (BOE) will probably raise its benchmark interest rate in February, marking the first tightening of UK policy since 2008, according to the National Institute for Economic and Social Research. While the institute forecasts low average inflation next year, early signs of stronger price pressures can currently be seen in earnings growth, Niesr economist Jack Meaning told reporters in London on Tuesday. It sees inflation averaging 1.1% next year and 1.8% in 2017, below the BOE’s 2% goal, but higher than it forecast in August.
Marks & Spencer Group Plc reported first-half earnings that beat analyst estimates and increased its profitability forecast as the UK retailer procures more products direct from manufacturers to cut costs.
European Central Bank President Mario Draghi said officials will look again at their policy stance in December to assess whether enough support is being provided to the economy. “The degree of monetary policy accommodation will need to be re-examined at the Governing Council’s December meeting,” Draghi said at a cultural event in Frankfurt on Tuesday, reinforcing a signal first given on October 22.