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Investment market update

Early Trading

UK stocks are expected to open lower this morning, with yesterday’s eagerly awaited monetary policy announcement from the European Central Bank failing to impress, while the UK bombing campaign in Syria adds to negative market sentiment.

World Markets

Global equities fell as the scale of additional stimulus from the European Central Bank disappointed investors and Federal Reserve Chair Janet Yellen reiterated her stance that the US economy is strong enough to withstand tightening. Miners resumed losses after metals prices fell – Anglo American Plc fell 2.7% extending a 1999 low, and BHP Billiton Plc fell 3.3%. Sports Direct International Plc also fell 5.4%, posting the biggest decline on the FTSE 100 Index, as Goldman Sachs cut its target price.

Headlines

The European Central Bank has moved to bolster the eurozone economic recovery by cutting a key interest rate and extending its stimulus programme. The overnight deposit rate was cut from -0.2% to -0.3%, to push banks to lend instead of parking money at the ECB. The ECB also extended its monthly €60bn stimulus programme by six months to March 2017, but left its main interest rate on hold at a record low of 0.05%. Many analysts were underwhelmed by the news and had forecast tougher measures.

Federal Reserve Chair Janet Yellen has told Congress that the economy is reaching a point where it can handle an interest rate rise. She said that raising interest rates would show ‘how far our economy has come in recovering from the effects of the financial crisis’. Her remarks came after a string of data indicated a strengthening US economy. Many investors are confident the Fed will raise rates at its next meeting on 15 and 16 December.

Households receiving insurance renewal quotes will be told how much they paid the previous year to compare prices, under new proposals. A trial by the Financial Conduct Authority, found that including the previous year’s premium on renewal notices prompted people to shop around. The City watchdog said there were concerns that loyal customers were paying higher prices for insurance.

The rapid closure of final salary pensions to new members over the last decade appears to have stalled in the last year, a regulator suggests. The proportion of defined benefit pension schemes, including final salary schemes, open to new employees dropped from 43% in 2006 to 13% in 2015.

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