Good morning! Here’s what you need to know in the markets on Wednesday.
Shares across Asia popped on Wednesday, following on from a good day in Western markets on Tuesday.In Japan, the flagship Nikkei 225 closed up by more than 4%, while China’s main indexes all saw gains of more than 3%. The Dow Jones Shanghai index led the way, up by 4.2% at the time of writing. Australia’s ASX 200 reacted well to strong GDP figures coming out of the country, popping 2.01%.
China could have its credit rating cut. Rating agency Moody’s has cut China’s outlook to negative, suggesting that a rate cut could be in the offing. Moody’s provided three reasons behind the decision: weakening fiscal metrics, a continued fall in reserve buffers and uncertainty about the government’s ability to implement fiscal reforms.
China’s consumption of steel fell for the first time in 20 years in 2015. Li Xinchuang, the vice secretary general of the China Iron & Steel Association (CISA), told a conference that consumption of steel fell by 5.4% in 2015. Xinchuang added that the debt ratio of major steel mills rose 1.6 percentage points to 70.1 per cent from a year ago, taking the big mills’ debt to 3.27 trillion yuan ($499 billion) signalling the struggles of the steel industry.
The world’s biggest asset manager has warned about the economic problems that could be caused by Brexit. According to the Financial Times, Blackrock says that Britain’s economy would be hit hard by a vote to leave the EU, and that stocks, the pound and the London property market would all suffer. Blackrock also noted that David Cameron could lose control of the Conservative party, whatever the result of the referendum.
Australia has now gone 24.5 years since its last recession, the second longest stretch by a developed economy in history. The country’s economy grew at an annual pace of 3.0% in the year to December, the fastest pace since the September 2012.
It extends Australia’s run without technical recession — defined as two consecutive quarters of negative growth — to 98 quarters, bringing the nation closer to the record held by the Netherlands of 103 that came to abrupt halt in the global financial crisis.
A big package of fiscal stimulus in Japan could cause concerns about the country’s economy, according to ratings agency Standard & Poor’s. Japan’s government is unlikely to be able to launch a stimulus package to support its struggling economy without raising concerns about the size of its spending, ratings agency S&P said on Wednesday.
Sports Direct is about to be kicked out of the FTSE 100. The struggling sporting goods retailer is likely to be demoted from the UK’s blue-chip share index on Wednesday after losing nearly 50% of its market capitalisation since the summer of 2015. The move will likely be confirmed on Wednesday morning, although the Guardian is reporting that the demotion has already taken place. Bookmaker Paddy Power is one of the stocks expected to be promoted into the FTSE 100 during the LSE’s quarterly review of the index’s constituents.
London has been named the ‘soft power’ capital of the world. A new report from Big Four accountancy firm Deloitte showed that London generates more high-skilled jobs and is more internationally diverse than any other major city. London knocked New York off the top spot in the ranking. Deloitte’s report also warned on the potential for automation and the rise of robots in the capital’s jobs market.
Nearly half of the world’s best selling beer brand is set to be sold. Reuters reports that SAB Miller, the brewing giant recently acquired by AB InBev, is preparing to sell its 49% stake in Chinese brand Snow Beer — the most popular beer on earth. The stake will be acquired by China Resources Beer for around $1.6 billion (£1.15 billion).
An investigation into US pharmaceuticals giant was triggered when the company asked regulator’s to investigate allegations made by a short seller. The SEC’s regulatory probe of Valeant Pharmaceuticals is focused on the drugmaker’s relationship with specialty pharmacy Philidor RX Services and was triggered by Valeant’s own request that regulators investigate a short seller’s allegations, Reuters reports, citing people familiar with the matter.
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