Alcoa rose more than six per cent the day after its earnings and US stock indices edged higher following Tuesday’s sharp sell-off. The Dow Jones Industrial Average rose by 0.7 per cent to 12,805 while the S&P 500 closed at 1,385 (Reuters).
The US filed suit against Apple and five publishers over e-book pricing, a rare case of an antitrust case getting to court. A conspiracy against Amazon’s pricing policy was formed over a series of phone calls and meals in the “private dining rooms of upscale Manhattan restaurants”, the DoJ alleges (Financial Times). The publishers are Macmillan and Penguin (owned by Pearson, publishers of the FT) and Hachette, HarperCollins, Simon & Schuster. The last three have agreed to settle the claims (Wall Street Journal). The settlement allows Amazon to set prices for e-books, and also requires the three to terminate ‘most favoured nation’ contracts with Apple (Reuters). At the heart of the dispute is the ‘agency model’ used by e-book publishers contrary to Amazon’s wholesale model of selling books (paidContent).
Another profit warning dealt a heavy blow to shares in Nokia. The mobile maker warned of negative profit margins for its handset business in the first quarter, having previously guided that it expected to break even (Nokia announcement, Wall Street Journal). Nokia chief executive Stephen Elop said he would consider “significant structural actions if and when necessary” (Bloomberg). Nokia’s stock sank to its lowest level in 15 years (Financial Times).
Natural gas prices have broken below the two-dollar marker. Natural gas for May delivery fell below $2 per million British thermal units in the last hour of trading on the Nymex, settling at a level not seen since January 2002 (Wall Street Journal). Overwhelming US supply and the difficulty of exporting it to European or Asian markets have sent prices 90 per cent off their 2005 highs (Financial Times).
The US economy recorded ‘modest to moderate’ growth from February to March, according to Beige Book data from the Fed. Job hiring remained steady but “contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come,” the Fed said, underling fears that energy costs could limit expansion (Reuters).
A European Central Bank board member hinted at more purchases of sovereign debt. “Will the ECB intervene? We have an instrument, the securities markets programme, which hasn’t been used recently but it still exists,” Benoît Coeuré said. The comments were enough to help push the Spanish ten-year bond yield below six per cent after Tuesday’s spike, but it is not clear whether greater purchases on the SMP have sufficient support from the board (Financial Times).
Vale is set to commission more than a hundred of its Valemax carriers, vying to nullify Australian miners’ geographic advantage in meeting China’s iron ore demand. Some 53 per cent of of the Vale’s revenue came from Asia last year, but it costs $20 a tonne to ship iron ore to China from Brazil, compared to $7 to $8 a tonne from Australia. Valemaxes have faced difficulties in China, whose ports have at times refused them entry. Analysts have pointed to pressure from Chinese shipbuilders (Financial Times).
A judge has permitted MF Global to release up to $375m of insurance funds for legal defence costs related Jon Corzine and other former executives. Customers who argued that they should receive some of the funds were overruled (Wall Street Journal).
US producer price inflation data land at 0830am New York time. Consensus for the (year-on-year) producer-price index is 3.4 per cent, up from 3.3 per cent last time. Trade balance figures and initial jobless claims also hit at 0830am.
– America was the world’s corporate king of 200 years ago, and America’s corporate kings were… banks, notes Bloomberg View.
– “People close to Goldman tell FOX Business 98% of the email muppet use referred to the movie.”
– Bonddad on banks’ frozen loan portfolios.
– …and Felix, on a frozen US housing crisis.