Stock markets have retreated again over worries of further US interest rate rises after the Federal Reserve defied Donald Trump to increase rates for the fourth time this year.

The EU has confirmed it is “actively investigating” a potential breach of its diplomatic communications network, following reports that secret cables had been stolen by hackers.

The Bank of England has welcomed a “crucial and positive” move by the EU to help keep a key part of the financial system functioning in the event of a “no-deal” Brexit.

A handful of banks will be forced to write multimillion pound cheques to buy shares in the construction giant Kier Group after some of its biggest investors snubbed the chance to take part in a £250m fundraising.

GlaxoSmithKline (GSK) is to merge its consumer healthcare unit with that of rival Pfizer, to create a new market leader with almost £10bn in annual sales.

 

Santander has been fined more than £30m for “serious failings” in processing the accounts of dead customers, the Financial Conduct Authority (FCA) says.

FINANCE TOP STORIES

Stocks buoyed by deal to avert US government shutdown

Stocks buoyed by deal-GBO

Asian shares gained as investors hoped a new round of US-China trade talks would help to resolve a dispute that has dented global growth and some corporate earnings

Market sentiment also got a boost on news that US lawmakers had reached a tentative deal on border security funding that could help avert another partial government shutdown. Congressional aides, however, said that it did not contain $5.7bn that US President Donald Trump wanted for a border wall.

S&P 500 e-mini futures were up nearly 0.5%.

Spreadbetters expected European stocks to track Asia and open higher, with Britain’s FTSE gaining 0.25% and Germany’s DAX and France’s CAC each adding 0.5%.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.3%.

The Shanghai Composite Index rose 0.35%, South Korea’s KOSPI climbed 0.6% and Australian shares were up 0.3%. Japan’s Nikkei advanced 2.6% after a market holiday on Monday.

US and Chinese officials expressed hopes that the new round of talks, which began in Beijing, would bring them closer to easing the trade war that has been going on for months.

Both Beijing and Washington are trying to hammer out a deal before a March 1 deadline, without which US tariffs on $200bn worth of Chinese imports are scheduled to increase 25% from 10%.

Mutsumi Kagawa, chief global strategist at Rakuten Securities in Tokyo, stated: “There will be no winner in a trade war. So at some point they will likely strike a deal.”

The trade dispute has already started to impact global growth, hitting businesses confidence, factory activity and disrupting supply chains. The worry is that a protracted Sino-US tariff row could severely hurt corporate earnings globally.

Now, Analysts are expecting that US corporate earnings for the current quarter to drop 0.2% from last year, which would be the first contraction since the second quarter of 2016. In the currency market, the dollar held firm, having gained for eight straight sessions against a basket of six major currencies, its longest rally in two years.

Although the Federal Reserve’s dovish turn dented the dollar earlier this year, some analysts noted the US currency still has the highest yield among major peers and that the Fed continues to shrink its balance sheet.

“We see the dollar’s strength essentially stemming from the Fed’s balance sheet reduction,” stated Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities.

Growing evidence of a loss of momentum in the global economy has also lifted the US currency, most recently led by the European Commission’s downgrade of growth in Europe, making the dollar a better investment option by default.

The dollar index rose to its highest in almost three months, at 97.123, on Monday. It last stood at 97.055. In contrast, the euro dropped to as low as $1.1267, its weakest in 2-1/2 months, and last traded at $1.1277.

The dollar popped up to a six-week high of 110.65 yen .

Oil prices ticked up after falls on Monday as traders weighed support from OPEC-led supply restraint and a slowdown in the global economy.

US crude futures traded at $52.68 per barrel, up 0.5%. Brent crude rose 0.6% to $61.89 per barrel. 

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