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Investment market update

Early Trading

UK equities are expected to open higher this morning as equities recovered overnight and China gave assurances that they will control their currency depreciation.

World Markets

Asian markets swung between gains and losses after China devalued its currency for a third day, while signalling it will control the pace of depreciation. Companies that rely on China for sales reversed two days of losses, with Murata Manufacturing Co. gaining 1.1%.

The Standard & Poor’s 500 Index reversed a 1.5% decline as investors turned to US shares. Energy and utility shares rallied more than 1.5%, while Apple jumped 1.5% after earlier sliding as much as 3.4%.

UK shares fell for a second day as China’s decision to devalue its currency spurred concern the global economic recovery is faltering. Glencore Plc slumped 5.7%, leading the mining sector down to near its lowest level since 2009. Unilever declined 4.3% after Goldman Sachs Group Inc. recommended selling the stock. Luxury-goods maker Burberry Group Plc fell 3.5%. HSBC Holdings Plc and Vodafone Group Plc lost more than 2%.

Headlines

Yuan declines eased after the central bank signalled support for the currency, bringing an end to two days of panic selling. The onshore rate weakened 0.5% in Shanghai after a two-day loss of 2.8%. The freely traded offshore yuan rebounded 1.1% after losing at least 2% on each of the last two days. The People’s Bank of China intervened to support the currency in mainland trading on Wednesday, according to Bloomberg. The PBOC said in a rare press conference on Thursday that there’s no basis for depreciation to persist and that it will step in to control large fluctuations. China is shifting to a more market-determined exchange rate after a four-month de facto peg that prevented depreciation as the prospect of higher US interest rates buoyed the dollar.

Nestle SA’s first-half sales growth exceeded analyst estimates, led by KitKat chocolate bars and Dolce Gusto coffee, as the world’s largest food company benefited from accelerating revenue in the Americas. Sales increased 4.5% on an organic basis, the Switzerland-based company said in a statement Thursday. Analysts expected 4.2%, according to the median estimate of 14 analysts.

London’s housing shortage is worsening, bolstering the prospect for further price gains in the capital, a survey found. The Royal Institution of Chartered Surveyors said on Thursday that its measure of the housing stock for sale dropped to minus 16 last month from minus 11 last month. That’s a sixth month of declines and boosted near-term price expectations to the highest in more than a year. The dynamic in the capital mirrors that seen across the U.K., with a measure of stock per agent dropping to a record low. The imbalance is proving “worrying,” and may last until the Bank of England raises its key interest rate, according to RICS, though it noted that any policy tightening will probably be very gradual.

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