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Investment market update

Early Trading

UK stocks are expected to open higher this morning, reversing some of yesterday’s losses, with investors continuing to weigh the European Central Bank’s (ECB) decision to introduce more aggressive easing measures in an effort to kick-start the eurozone economy.

World Markets

Asian markets reversed early losses to trade mostly higher on Friday, as traders digested fresh easing from the ECB overnight. Japanese exporters benefitted from the yen weakening with Canon Inc. rising 1.9% while Sony Corp. gained 0.3% to erase an earlier drop of as much as 2.2%.

US stocks closed little changed after swinging between gains and losses, as investors assessed fresh stimulus measures released by the ECB and whether selling on Thursday went too far in the face of the new initiatives. Seven of the S&P 500’s ten main groups gained, while technology, industrial and financial shares declined 0.1%.

UK stocks fell for the third time this week, slipping the most in a month amid a decline in miners and financial firms. Anglo American Plc and BHP Billiton Ltd. dropped more than 3.6%, while Royal Bank of Scotland Group Plc and Standard Chartered Plc slid at least 4%. Ashtead Group Plc fell 7.9% as Deutsche Bank AG recommended selling shares of the building-equipment rental company.

Headlines

The ECB has cut interest rates across the eurozone to zero as it unveiled an unprecedented package of growth-boosting measures against the backdrop of a fragile global economy. Amid growing concerns of an economic slowdown, the eurozone’s central bank surprised financial markets by cutting interest rates in the region to an all-time low, expanding its money printing programme and reducing a key bank deposit rate further into negative territory. The ECB chief, Mario Draghi, implied interest rates would stay “very low” for at least another year and predicted the region would remain mired in negative inflation for months to come.

The ECB is asking the larger banks it oversees to analyse the risks they would face if the UK left the European Union. The ECB is engaging with the lenders individually and is encouraging firms to be prepared for all the potential impact from the vote. Bank of England Governor Mark Carney has warned Britain’s potential exit from the EU would hurt the City of London, the capital’s financial centre, and worsen risks to financial stability.

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