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Investment market update

Early Trading

UK stocks are expected to open lower this morning as oil and mining companies continue to impact the wider market.

World Markets

Global stocks declined over the last 24 hours after oil extended the week’s struggle, including the FTSE 100 declining by 2.3% as investors shunned risk assets. As has been the case in recent months on the UK market, miners and oil stocks drove the market downwards with Anglo American Plc, BHP Billiton Ltd. and Royal Dutch Shell Plc falling at least 4.3%. BP Plc fell by 8.7% after reporting a 91% decline in fourth-quarter earnings. However, Hikma Pharmaceuticals Plc jumped 3.3% after Bank of America Corp. recommended buying the shares. J Sainsbury Plc gained 2.4% after agreeing to buy Home Retail Group Plc for about £1.3 billion, handing the British supermarket chain control over hundreds of shops selling everything from jewellery to televisions.


Oil held losses near $30 a barrel after the biggest two-day fall in almost seven years as US industry data showed crude stockpiles increased, exacerbating a global surplus. Futures were little changed in New York after falling 11% in the previous two sessions, the most since March 2009. Inventories expanded by 3.8 million barrels last week, the American Petroleum Institute reported on Tuesday. Government data on Wednesday is forecast to show supplies rose further from a record though Exxon Mobil Corp. is cutting its drilling budget to a 10-year low amid the price slump.

The pound rose against the dollar after a report showed an index of UK manufacturing unexpectedly rose in January. While the British currency advanced versus all of its 16 major peers on Monday, gains were limited before the Bank of England presents the Monetary Policy Committee’s new growth and inflation forecasts alongside its interest-rate decision on 4 February.

EasyJet Plc, Europe’s second-biggest discount carrier, said weaknesses at network rivals Air France-KLM Group and Deutsche Lufthansa AG will allow it to carry on gaining market share in key countries after suffering a series of setbacks while seeking to attack new markets. Chief Executive Carolyn McCall says she’s unperturbed at having to rein in operations to Moscow as a result of the weakening Russian economy and stricter visa rules, North Africa as a result of the deteriorating security situation and in Italy after encountering heightened competition.

The Bank of Japan (BOJ) will look into a media report that said the board was discussing a negative interest rate policy just minutes before it surprised observers with the announcement. BOJ Governor Haruhiko Kuroda told Parliament on Wednesday that the central bank wants to determine if the story was speculation or whether somebody passed on information from the policy meeting to the reporter. Finance Minister Taro Aso said he hopes there was no ethical breach and that the government will wait for the results of the BOJ inquiry.

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