Lots more of this in prospect over the coming days – cable volatility.
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Exit polls indicate the Conservatives will win 307 seats in the new Commons, with Labour on 255 and the Lib Dems 59. That would leave all the major parties short of the 326 needed to form a majority administration after the general election, the FT said. If the polls prove accurate, Conservative leader David Cameron will almost certainly become UK prime minister, taking his party back into power for the first time in 13 years. The prospect of a hung parliament sent sterling more than a cent lower against the dollar, trading around 1.4747 at pixel time.
Swooning global markets claimed a big Asian victim as Hong Kong’s Swire Properties Ltd., citing a “sharp deterioration in market sentiment,” shelved an initial public offering aimed at raising up to US$3.09 billion, the WSJ reported. Swire’s push for a price that was increasingly out of line with where its peers were trading damped demand from potential investors, the newspaper added.
Morgan Stanley celebrated Thursday the start of a joint venture with Japan’s Mitsubishi UFJ Financial Group, a move which the WSJ says “gives the Wall Street titan deep access into the difficult-to-crack Japanese market and a chance to put a US stamp on the hidebound Tokyo institution.”
A four-storey, concrete and steel dome built to trap oil spewing from a crippled deep-sea well in the Gulf of Mexico arrived by barge early on Thursday over the site of the 5,000-barrel-a-day leak. The cofferdam, weighing almost 100 tons, will be lowered by cable to the wellhead over the next three days in an operation never attempted at such depths, the FT reported. The dome will not stop the leak but BP hopes it will allow escaping crude to be siphoned up to the surface to a drillship.
PSA Peugeot Citroën said it had signed a letter of intent with Chang’an Automobile Group to create a 50:50 joint venture in China. The French carmaking group said the venture would produce low-emission light commercial vehicles and passenger cars. Peugeot gave no details on the cars it planned to produce in the new joint venture except to say they would be “environmentally friendly”, the FT said.
The Greek parliament on Thursday approved a tough austerity package agreed with its eurozone partners and the IMF. George Papandreou, the prime minister, said that the cuts in wages and pensions as well as tax rises would avert a default, the FT reported. But FT Alphaville noted the ECB had clashed with Greece over certain provisions in the package.
The European Central Bank on Thursday dashed hopes it would act soon to calm the eurozone’s escalating fiscal crisis as it left its main interest rate unchanged at the record low of 1% for the 12th consecutive month, reports the FT. Jean-Claude Trichet, president, said the ECB’s governing council had not discussed the option of buying government bonds, and gave no signals that other measures were under consideration. As FT Alphaville notes, neither bond, currency and CDS markets nor analysts were well pleased with Trichet’s response.
The US Congress hurt credit flows when it “stigmatised” the $700bn bank bail-out programme, Hank Paulson, the former Treasury secretary and previous chief executive of Goldman Sachs, suggested on Thursday. Mr Paulson did not specifically blame lawmakers, but the limits on executive pay and calls for mandatory lending that he identified as the stigma emanated from Congress in 2008, the FT said.
Three of the world’s leading private equity groups are teaming up to attempt the biggest buyout since the financial crisis, eyeing a bid for payments processor Fidelity National Information Services (FIS) that would top $10bn, the FT reported, citing people familiar with the deal. Blackstone, THL and TPG, would all invest equally in an offer for the company that could be launched within the next two weeks. Blackstone and THL intially approached FIS, according to the people familiar with the situation, and were later joined by TPG.
A sudden and calamitous plunge in late trading on Wall Street rattled markets on Thursday. Both the Dow and the S&P 500 fell more than 5 percentage points within a ten minute period and left traders, regulators, dealer banks and exchanges struggling to find an explanation for the move. At one point, the Dow slipped below 10,000 but recovered to close at 10,520.32, off 3.2 per cent or 347.8 points. The S&P 500 closed 3.2 lower at 37.72 per cent.
The FTSE All-World equity index fell 3 per cent. The euro slumped to 15-month lows versus the dollar and 2002 lows versus the yen, while gold surged above $1,200 an ounce. The price of crude oil sank 3.5 per cent, the FT said. US 3-month Libor rose for the 13th consecutive day to stand at 0.377 per cent, its highest setting since August and up from 0.30 per cent in mid-April. Eurozone money market rates rose for the 12th day in row, with 3-month euro Libor at 0.623 per cent, in a sign of growing worries that the sovereign debt crisis could spark a seizure in interbank lending. Read more
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Mayhem on Wall Street.. Read more
Hot off the embargoed presses at BNP Paribas, a bold call for the Mighty Drachmark vs the dollar. Emphasis FT Alphaville’s:
We have revised our EURUSD projection sharply lower and now expect a decline to parity by Q1 2011. While we have had one of the most EUR bearish forecasts in the market, these previous projections now appear too moderate given current developments. We had feared that the structural weakness of the eurozone, due to the increasing economic divergence, would make it more difficult to obtain an optimal policy response. This has played out, but the inner EMU bond spread divergence and its impact on capital flows has been more severe than had been initially anticipated. Read more
FT Alphaville has stopped staring at screens for just long enough to post the following:
That plunge in the chart above? That was the Dow going from -500 to -1000 in the space of seconds. We’re investigating. Read more
Here’s a sample of the research notes that hit the FT Alphaville inbox on Thursday, any emphasis ours. Read more
A disappointing week for bullish investors got worse today as it became clear that the credit market was in the midst of its most severe correction since the early months of 2009. The positive feedback loop between states and their banking sectors has re-emerged, and is having a seismic impact on the broader market. Read more
RTRS-EURO NOW DOWN 4.8 PCT VS DOLLAR THIS WEEK, DOWN MORE THAN 11 PCT IN 2010 Read more