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Investment market update

Early Trading

UK stocks are expected to open in negative territory this morning, pressured by a fall in China’s manufacturing sector which may raise further concerns about the world’s second-largest economy.

World Markets

Asian stock markets were mostly higher on Tuesday despite the negative lead overnight from Wall Street and weaker than expected manufacturing data from China.

US stocks failed to hold on to a monthly gain after two weeks of advances, with the S&P 500 Index turning negative in afternoon trading. The S&P 500’s advance faltered amid trading volumes 15% below the 30-day average, as a decline in Endo International Plc dragged health-care shares lower.

UK stocks trimmed an earlier decline to close little changed, after posting a second straight week of gains. Online grocer Ocado Group Plc fell 7.8%, after Amazon.com Inc. stepped up its incursion into the nation’s grocery market by signing an agreement to sell hundreds of Wm Morrison Supermarkets Plc products. Morrison shares added 5.9%.

Headlines

Consumer prices in the Eurozone fell sharply in February to minus 0.2%, putting more pressure on the European Central Bank. The slide into deflation is a sharp reversal from the revised 0.3% increase recorded in January. It is the first fall in inflation since September when it shrank by 0.1%. Energy drove the decline, with prices down 8% in February compared to a 5.4% slide in January. The figures have dashed hopes that ECB efforts to boost prices were working. That raises the chance of the bank announcing further stimulus measures next month.

Volkswagen’s boss has warned that a deal with US authorities over its emissions scandal could take longer and cost more than expected. Speaking at the Geneva Motor Show, Matthias Mueller told the BBC that VW was still in ‘constructive dialogue’ with regulators and hoped the firm would be ‘judged fairly’. He said he was ‘impatient’ for answers. The VW boss also warned that the €6.7bn (£5.2bn) set aside to cover the costs of the scandal might not be enough. ‘I’ve postponed our year-end financial results and the AGM to improve their quality, so that we can be even more confident and take even more care and diligence in establishing the figures”.

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