Investment market update
UK stocks are expected to open slightly lower following dashed hopes of an oil production cut. Saudi Arabia’s oil minister signalled that there would be no reductions to global supply, resulting in US oil prices falling 5%.
UK stocks fell as renewed selling in crude oil concerned financial markets. BHP Billiton Ltd. fell 6.1% after making a larger-than-expected cut to its dividend, lowering the pay-out for the first time in 15 years. Standard Chartered Plc declined 6.7%, the most since 2014, after reporting a surprise full-year loss. London Stock Exchange Group Plc soared 14% after saying it is in merger talks with Deutsche Boerse AG, a tie-up that would create one of the biggest exchange companies in the world. InterContinental Hotels Group Plc rose 3.5% after saying it plans to return $1.5 billion to shareholders in the form of a special dividend.
US stocks declined from six-week highs, paced by banks as the recent rally’s strongest performers lost momentum, while investors assessed global growth prospects amid renewed concern that China will remain a drag.
Asian stocks fell, following the declines in US shares, as oil resumed losses and a stronger yen weighed on Japanese equities.
A UK vote to quit the European Union would make a quick decision on the location of a new runway serving London an even higher priority, Heathrow Airport Ltd. Chief Executive Officer John Hollande-Kaye said. Rather than further delaying a verdict on expanding Heathrow — Britain’s top passenger hub and freight gateway — an anti-EU majority in June’s referendum would make the addition of flight capacity vital as the focus of the British economy changed, Holland-Kaye said Tuesday. “If there is a Brexit vote it puts more emphasis on trade with non-European Union markets, and the only way you can get there is by air from Heathrow,”.
The UK and Scottish governments agreed a new fiscal framework implementing a deal that paved the way for Scotland staying in the union and gives the nation new borrowing powers. The agreement implements the recommendations of the Smith Commission, which gave new powers to Scotland, including the ability to manage its own budget and invest as much as £3 billion in infrastructure, the Treasury said in a statement on Tuesday. The Scottish government will get £200 million to implement the new powers.
Mark Carney said Bank of England officials have scope to loosen monetary policy if needed as concerns that Britain may leave the European Union put further pressure on the pound. “If we were in a position where the economy needed additional stimulus, we do have considerable room,” the central bank governor told lawmakers in London on Tuesday. Officials have “conventional policy” options such as cutting rates or quantitative easing or they could “adjust” the horizon over which the BOE aims to return inflation to the 2% target, he said.