Investment market update
UK stocks are expected to open slightly higher this morning, as US traders get ready to return to the floor after celebrating Labor Day and with mixed messages coming out of Asia overnight.
Asian stocks fell and the dollar weakened against most major peers after a China trade report highlighted the fragility of global demand just one week before the Federal Reserve decides whether to increase US interest rates.
US markets were closed on Monday for the US national Labor Day public holiday.
UK and European stocks ended higher yesterday as miners provided much of the momentum on the FTSE 100. Glencore announced plans to suspend its dividend, raise $2.5bn by selling new shares, and to offload various assets. Its shares gained 7%, fellow miner Antofagasta climbed 7.5% and Anglo American was up 1.4%.
China’s imports fell 14.3% in August (in yuan-denominated terms) from a year ago, while exports fell by 6.1%. The fall reflects lower commodity prices globally, particularly crude oil. China recently revised down its 2014 economic growth from 7.4% to 7.3%, its weakest for almost 25 years.
Just about every indicator is telling the Federal Reserve Chair a rate move at next week’s policy meeting would cause government bonds little disruption. Her guidance has money markets pricing an extraordinarily slow pace of tightening, volatility metrics show no signs of panic, and forwards indicate benchmark rates will remain contained.
Tesco has sold Homeplus, its South Korean business, for £4.2bn as the troubled supermarket chain seeks to shore up its balance sheet. The proceeds will be used to pay down debt and help revitalise its UK business.