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Investment market update

Early Trading

UK stocks have opened lower following a drop in crude oil and a suspension in Chinese trading overnight.

Chinese markets moved lower after the central bank cut its yuan reference rate by the most since August, sparking a selloff in stocks that forced the market to shut early. China’s securities regulators called an unscheduled meeting after the CSI 300 Index fell 7.2%, triggering a full-day trading suspension less than 30 minutes after exchanges opened.

Trading was halted for 15 minutes after the index lost 5%, but as stocks continued to fall the full-day closure was triggered. Beijing previously put in measures in December which automatically stop trading in stock markets that drop or appreciate too sharply – a 15-minute break if the CSI 300 Index moves 5% from the markets previous close, or a whole-day halt if it moves 7% or more. The measures, called circuit-breakers, were introduced to limit panic buying and selling.

Headlines

A record number of cars rolled off the forecourts at British dealerships last year as rising consumer confidence, low fuel prices and easy credit helped crown the market’s recovery from the financial crisis. UK car sales have staged a remarkable run over the past four years, with 43 consecutive months of growth only broken in October, when sales dipped about 1% versus the same month a year ago.

The US Federal Reserve’s (Fed) decision to raise interest rates in December was a ‘close call’, according to minutes from the Fed’s December meeting. Fed members voted unanimously to raise its key interest rate by 25 basis points to between 0.25% and 0.5%, a move widely expected. Some members were cautious, because of global concerns and low inflation. Economic conditions will likely justify ‘only gradual increases’ in the future, the minutes showed.

Oil’s volatile start to the year continued on Wednesday after Brent crude sank below $35 a barrel for the first time since 2004. Escalating tensions between Saudi Arabia and Iran over the execution of a prominent cleric took the international oil benchmark to almost $39 a barrel earlier this week, but the rally was short-lived as traders and investors focused on concerns of a supply.

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