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Investment market update

Early Trading

UK stocks are expected to open in positive territory this morning, regaining some of yesterday’s losses.

World Markets

Asian stocks closed broadly mixed, after a lacklustre session from Wall Street amid uncertainty over US monetary policy.

US stocks retreated, as investors’ required further clarity on the Federal Reserve’s stimulus policy. Caterpillar Inc. lost 6.3% after lowering its sales outlook and will cut as many as 10,000 jobs through 2018 in response to a slowdown in the mining and energy industries. Biotechnology shares continued to weigh on the broader health-care group, with Biogen Inc., Celgene Corp. and Regeneron Pharmaceuticals Inc. losing at least 1.7%.

UK stocks closed lower yesterday, with mining shares seeing the biggest declines. Glencore was the biggest faller, down 9.6%, after Goldman Sachs cut its target price for the stock. Shares in Anglo American fell 5% after Goldman Sachs confirmed its ‘sell’ rating for the company.

Headlines

Federal Reserve Chair Janet Yellen said she is ready to raise interest rates this year. Yellen placed herself squarely in the camp of those Federal Open Market Committee officials who favour raising rates in 2015. “Most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year,” she said Thursday.

The pound is being held back by comments from Bank of England policy makers that suggest they’re in no hurry to tighten monetary policy. While sterling ended Thursday little changed against the dollar, it has declined more than 2% since the Federal Reserve refrained from raising interest rates last week. The timing of a US move is important because the BOE is widely expected to follow in the wake of its counterpart across the Atlantic.

Oil swung around $45 this week as investors grapple with conflicting signs of an easing glut and slowing growth in China. Oil has fallen more than 25% from this year’s closing peak in June amid speculation a global glut that drove prices to a six-year low will be prolonged. US crude stockpiles remain almost 100 million barrels above the five-year seasonal average.

Vietnam’s economy is benefiting from cheap oil as disappearing inflation boosts domestic demand, early indicators of growth this quarter show. The Asian Development Bank raised its 2015 growth forecast for Vietnam to 6.5% and 6.6% for 2016, saying private consumption is benefiting from low inflation, improved consumer confidence and growth of non-farm wage employment.

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