Investment market update
UK stocks are expected to open higher this morning after US private company jobs figures were better than expected.
Asian stocks rose as reports showing a stabilisation in China’s manufacturing activity boosted demand for riskier assets. Equity gauges in Australia and Japan followed a bounce back in US stocks, extending their advance as the Chinese purchasing managers indexes came in ahead of estimates.
US stocks rose with buying focused in areas that have seen the most significant devaluation over recent months, with energy, raw-material and healthcare shares among the leaders of the S&P 500’s 10 main groups. Chesapeake Energy Corp. climbed 8% to lead the gains in energy companies, while capping a 34% quarterly retreat, its biggest since 2008. Auto-related companies rose for a second day as a sell-off sparked by Volkswagen AG’s emissions scandal abated. General Motors Co. added more than 2.9%.
UK stocks experienced their biggest advance since August, driven by a 14% rise in Sainsbury’s. The company announced annual profit will beat estimates on improved sales. Peers Tesco Plc and Wm Morrison Supermarkets Plc each rose at least 6.4%. Glencore Plc advanced 14%, taking its two-day gain to a record 33%. After a slump on Monday, the mining and trading company looked to silence concern over its debt load by saying yesterday it has no solvency issues.
China’s official factory gauge stabilised around a three-year low as government stimulus measures showed signs of steadying the weakness in manufacturing. The reports signal that five central bank interest-rate cuts since November and the government unleashing new rounds of infrastructure spending are gaining traction, helping to cushion the world’s second-largest economy.
Congress passed a stopgap US government spending bill hours before a shutdown deadline Wednesday, a temporary win that provides no road map for how deeply divided lawmakers will handle their next must-do priorities. The 277-151 House vote, after Senate passage earlier in the day, came as current funding was due to expire at midnight.
Weakness in the Japanese economy and the slowdown in Asia have damaged the nation’s business confidence, with the latest survey from the central bank showing sentiment among large manufacturers worsening. There’s growing concern that Japan’s economy may have contracted in the quarter that’s just ended, which would tip the nation into its second recession since Japanese Prime Minister Shinzo Abe took office in 2012.
In the UK, most gauges of manufacturing and services declined in Q3 vs Q2, British Chambers of Commerce says. In manufacturing, gauges of exports, investment, confidence, employment expectations and cash flow fell in Q3 vs Q2. “Results signal moderate economic growth over the next year” with serious global challenges, BCC says.