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Investment market update

Early Trading

UK stocks are expected to open lower this morning following falls in Asia and the US overnight as investors struggle to shrug off global growth and Federal Reserve uncertainty.

World Markets

Asian stocks fell, dragged down by a retreat in Japanese shares as the nation’s markets opened after a three day holiday. Energy and material companies led losses.
US stocks posted their fourth loss in the five days since the Federal Reserve’s rate decision, as a fall in the price of crude led commodity shares lower.

UK stocks rebounded from their lowest level in almost a month as gains in banks and energy companies outweighed further evidence of China’s economic slowdown. HSBC Holdings Plc led lenders higher, rising 1.6%. Premier Oil Plc led oil and gas gains, jumping 12% after saying that production is ahead of its 2015 guidance. Mining giant Glencore Plc continued to fall losing a further 2.2%.

Headlines

Bank of England Deputy Governor Ben Broadbent said the labour market dynamics that limited pay growth during the economic recovery seem to be easing and may explain recent gains in wages. “There was a distinct skew in recent job creation toward the less well paid in 2013 and 2014, one that has subsided in the first half of the year,” Broadbent said in a speech in London on Wednesday.

Divided global bank regulators are preparing for a showdown on rules intended to make sure taxpayers won’t be on the hook when one of the world’s biggest lenders fails. The Financial Stability Board holds a plenary meeting in London on 25 September to finish work on total loss-absorbing capacity, or TLAC. Nations such as the US and Germany, which are pushing for the toughest possible rules, are pitted against Japan, France and others that prefer a softer line.

Bill Gross said the Federal Reserve needs to raise interest rates as soon as possible, trading some near term market losses for longer term stability and a healthier financial system. If zero interest rates become the long term norm, economic participants will soon run on empty because their investments aren’t producing the gains or cash flow needed to finance past promises in an aging society, he wrote in an investment outlook on Wednesday for Denver based Janus Capital Group Inc.

China will further cut its target for economic growth next year amid excess capacity, sluggish investment and weaker manufacturing, economists said. Government leaders will announce a growth objective between 6.5% to 7% for 2016, according to eight of 15 economists in a Bloomberg News survey.

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