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Investment market update

Early Trading

UK equities are expected to open modestly higher this morning following positive overnight sessions on Wall Street and in Asia as the Fed kept interest rates unchanged.

World Markets

Asian stocks rose driven by Japanese shares amid better-than-estimated company earnings. Nintendo Co. shares surged 8.5% after the company announced better-than-expected results.

US stocks rose as investors looked past the Federal Reserve’s musings on monetary policy to focus on company earnings and signs of stability in China’s equity markets. Twitter Inc. fell 15% after its top executives struck a critical tone on user growth and Facebook fell 2.4% in after-market trading as the social network reported an 82% jump in spending.

UK stocks rose for a second day, helped by gains in British American Tobacco Plc and Barclays Plc. British American Tobacco advanced 3.6% after first half profit beat estimates. Barclays rose 1.8% after Chairman John McFarlane pledged to step up the pace of his overhaul of the British lender as it reported an 8.8% increase in profit.

Headlines

Royal Bank of Scotland Group Plc unexpectedly posted a second-quarter profit as the British government prepares to reduce its stake in the lender, even as it set aside more money for litigation and restructuring.

The UK government may be the latest victim of the slide in global foreign exchange reserves. Investors outside of Britain cut their holdings of UK government debt by the most in five months in June, according to the Bank of England.

Royal Dutch Shell Plc, the oil producer buying BG Group Plc for more than $70 billion, said it plans to cut 6,500 jobs this year and reduce capital investment by $7 billion.

Lenders are by far the biggest contributors of gains in European corporate earnings this year, sending profit growth in the region above that of the US for the first time since the financial crisis, according to data from UBS Group AG.
The barriers to a Federal Reserve interest rate increase this year are getting smaller. Yesterday, the Fed expressed satisfaction with progress toward full employment, and it used one word “some” to describe the additional gains it wants to see before raising rates.

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