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Investment market update

Early Trading

UK stocks are expected to open slightly higher this morning after China took action to stabilise its financial system.

World Markets

European and US shares fell in the first trading session of the New Year, as markets dropped in the wake of losses in China. All but two stocks fell in the UK, with Randgold Resources Ltd. and Fresnillo Plc bucking the trend as investors seeking safer assets boosted gold prices.

Headlines

China moved to support its stock market as state-controlled funds bought equities and the securities regulator signalled a selling ban on major investors will remain beyond this week’s expiration date. Government funds purchased local stocks on Tuesday after a fall in the market on Monday triggered a market-wide trading halt. The China Securities Regulatory Commission asked bourses to tell listed companies that the six-month sales ban on major stockholders will remain valid beyond 8 January.

The US justice department is suing Volkswagen over the emissions scandal that saw the German car giant fit software in millions of cars to cheated emissions tests. In September last year, following an investigation by US regulators, VW admitted fitting the so-called defeat device on 11 million vehicles globally. The scandal has hit sales of VW’s worldwide. The company has put aside billions of euros to deal with the fallout.

The UK’s manufacturing sector grew at its slowest pace for three months in December. The Markit/CIPS UK manufacturing PMI fell to 51.9 in December, down from 52.5 in November and October’s measure of 55.5. Although any figure over 50 indicates expansion. The reading was still above average for 2015 and means the sector has expanded for almost three years.

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