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Investment market update

Early Trading

UK stocks are expected to open marginally higher this morning, lifted by gains in Asian and US markets, with the index extending a rebound from the end of last week that was driven by new funding plans for banks from the European Central Bank (ECB).

World Markets

Asian stocks climbed overnight in the wake of last week’s aggressive stimulus measures by the ECB and as investors turned their focus to policy decisions this week from the Federal Reserve, Bank of Japan and Bank of England.

US stocks joined a global rally on Friday, sending the S&P 500 Index to its highest close this year, as investors reassessed stimulus measures in Europe and warmed to the steps taken to boost growth. Banks and commodity shares were the best performers, continuing to pace a month long advance. Citigroup Inc. and Wells Fargo & Co. added more than 2.6%.

UK stocks gained on Friday trimming last week’s decline. Miners and financial firms rebounded, with Glencore Plc and Anglo American Plc adding 3% or more. Barclays Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc advanced at least 3.6%.

Headlines

A British exit from the European Union may not be an immediate shock to London’s standing as a global financial hub. The City, after all, just got a vote of confidence from Europe’s biggest exchange operators, who are considering a £20 billion tie-up that would place its holding company in London. Deutsche Boerse AG and London Stock Exchange Group Plc have said the merger makes sense whether or not Britain votes for an EU “Brexit.”

The British Chambers of Commerce (BCC) has downgraded its growth forecast for the UK economy, blaming ‘global headwinds and uncertainty’. It now expects the UK’s economy to grow by 2.2% this year, down from a previous estimate of 2.5%. The BCC also cut its growth forecast for 2017 to 2.3% from 2.5%, and expects growth of 2.4% in 2018. It said the downgrade was due to weaker growth in most areas of the economy, reflecting the global slowdown.

There is evidence that oil prices are stabilising and could even begin to rise again, according to the International Energy Agency (IEA). It said lower oil output in the US and other countries was helping to curb the surplus in the supply of oil. The increase in supply from Iran has also been less dramatic than first feared, the IEA said. Oil prices have plummeted 70% since June 2014, falling as low as $27 per barrel earlier this year.

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