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Investment market update

Early Trading

UK equities are expected to open higher this morning following strong gains on Wall Street overnight.

World Markets

Asia stocks rose as a US equity rebound bolstered investor appetite for risk assets. Toyota Motor Corp. strengthened 3.5% after announcing plans to re-start production in Tianjin, China.

US Stocks rose as dovish words from the Federal Reserve and improving economic data triggered the biggest rally since 2011. Technology companies led the gains with Apple Inc., Google Inc. and Intel Inc. rising at least 5.5%. Amazon.com Inc. surged 7.4%, and Netflix Inc. posted a two-day gain of 14%.

UK stocks declined with commodity producers leading the index lower once again. Glencore Plc, Antofagasta Plc and Anglo American Plc fell more than 3.5%.

Headlines

As Greek Prime Minister Alexis Tsipras steps down, his bid to regain a parliamentary majority with early elections risks failing as low turnout and disarray within his Syriza party threaten to yield no clear winner.

A September interest rate increase is looking increasingly in doubt, though not totally off the table, amid market turmoil and weakened Chinese growth. That’s the message Federal Reserve Bank of New York President William C. Dudley delivered in an unscheduled statement yesterday, the first from a senior Fed official to explicitly dial back expectations for a September rise.

As China struggles to help calm a global rout its surprise currency devaluation triggered, its central bank may be making matters worse. Cutting lending rates, as the bank did on Tuesday, causes more funds to flow to state-owned enterprises already experiencing overcapacity in industries such as steel. That deepens deflationary pressure and could potentially push real interest rates higher, not lower, according to the Conference Board.

J Sainsbury Plc, Britain’s third largest grocer, is increasing wages for about 85% of its workforce, heading off the necessity to do so when the UK government’s National Living Wage is introduced next year.

Mutual fund giant Fidelity Investments is warning deflationary pressures in the US are building. The Federal Reserve will raise interest rates slowly as a result, according to the Boston based investment company, which has $2.1 trillion in assets. Investors should own high quality bonds to diversify their holdings amid a stock market rout, Fidelity said.

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