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Quick update from S&P on Friday:
Worldwide catastrophe losses in the first quarter of 2011 could set a new record, as losses from the Japanese earthquake and subsequent tsunamis are tallied. Insured losses from last month’s New Zealand earthquake are currently estimated at $10 billion, and still rising. Insured losses from unrest in North Africa and the Middle East are also still being calculated, with the tab at $8 billion to $10 billion and also rising. Read more
After Thursday’s reports that Saudi Arabian security forces had shot at protesters in the country’s eastern region, there was a good chance the long-anticipated Day of Rage would be one of today’s big market stories.
Instead the earthquake in Japan has rightly been the focal point, while the Day of Rage fizzled. The Washington Post reported earlier that all was quiet even in Qatif, the site of yesterday’s shootings. Read more
The latest from the wires and the FT’s live blog is that the death toll is “set to exceed 1,000″ and that aftershocks of magnitude 6.6 and 5.8 have been detected in northern Japan.
A “nuclear emergency” remains in place. As the FT reports on Friday, Japanese officials are considering whether and how to reduce pressure in reactors in the Fukushima Daiichi facility. Reuters reports that the Japanese government has warned there could be a “small radiation leak.” It’s unclear yet whether this was due to engineers’ efforts to reduce pressure and heat in the facility. Read more
As we noted earlier on Friday, there’s nothing quite like a killer earthquake and tsunami to boost a currency — at least, that seems to be the case in Japan where the yen not only recovered after dipping in the wake of Friday’s 8.9-magnitude earthquake and massive tsunami, but went on to rack up some fairly astonishing gains.
In most countries, a natural disaster of that scale would drive a currency down, as seen in New Zealand, where the earthquake that devastated central Christchurch drove down the kiwi and prompted the central bank to cut rates. Read more
Live markets commentary from FT.com
At Vincent Tchenguiz’s Cannes party on Thursday night, sans Vincent Tchenguiz:
Live markets commentary from FT.com
FT Alphaville’s Gwen Robinson reports from Tokyo.
It began mid-afternoon — 2.46pm local time, to be precise — with the kind of gentle shaking that one accepts as part of Tokyo life, but rapidly developed into a rolling series of violent upheavals that ravaged northeast Japan and shook up Tokyo and neighbouring towns. Read more
Forces loyal to Colonel Gaddafi have left rebels in control of only isolated pockets of Ras Lanuf, a key Libyan oil terminal, after a ferocious counter-offensive, Al Jazeera reports. Saif Gaddafi, the dictator’s son, has ruled out negotiations with the rebel national council. The director of US national intelligence said he believed regime forces ‘will prevail’ in the longer term, the FT says. As it becomes apparent that the rebels are losing, the White House is divided on how to support them short of military action, the NYT reports. Read more
The Saudi Arabian capital remains quiet on Friday ahead of planned ‘Day of Rage’ protests, Reuters reports. Protest is illegal in the Saudi kingdom. Oil prices surged more than $2 minutes after reports that police in Saudi Arabia had dispersed a demonstration in the country’s oil-rich Eastern province yesterday, the FT says. Demonstrators who refused to leave were fired on by police with rubber bullets and percussion bombs, eyewitnesses said. A heavy police presence is apparent across Saudi cities on Friday despite the quiet seen so far, Al Jazeera reports. Even without a large protest, the spark of reform has begun in the Kingdom, the FT says. “The gas has leaked into the house already,” said one lawyer. Read more
AOL is axing 900 staff as chief executive Tim Armstrong continues to restructure the company to focus on content production in addition to integrating staff from last month’s acquisition of the Huffington Post, reports the FT. The job losses will affect 200 employees in the US deemed redundant in the wake of the Huffington Post purchase. In India, 400 jobs are to go, with a further 300 being outsourced to third-party groups. Armstrong did not rule out further cuts. Wired has Armstrong’s full memo to staff — and argues that the cuts make AOL’s commitment to high-quality content rather hollow. Read more
The Securities and Exchange Commission has ordered Bank of America to eliminate compensation that protects executives from falling house prices when they relocate, the FT says. Shareholders have attempted to repeal the policy via the bank’s proxy statement, which BofA has resisted. Institutional Shareholder Services, a proxy advisory company, has also been critical of companies that offer relocation subsidies, including Microsoft, Walmart and Electronic Arts. Meanwhile, BofA executives have joined other banks in attacking the government’s ‘mega settlement’ of the foreclosure crisis, arguing that it will harm the economy, the WSJ reports. Read more
Greece five-year spread to bunds: +15bps 1232bps
Portugal five-year spread to bunds: +18bps to 522bps
And Spanish bonds — well, they were pretty much unchanged on the day. Read more
AIG has offered $15.7bn in cash to buy back a portfolio of mortgage-backed securities from the Federal Reserve in a deal that could hand the government a profit on a key component of the insurer’s bail-out, reports the FT. In a regulatory filing, AIG said on Thursday that it was offering to buy the assets of Maiden Lane II, a vehicle housing impaired RMBS, in a deal that would produce a $1.5bn profit for the New York Fed. AIG would in turn reduce its obligations to the government by about $13bn, to $26bn. The deal involves buying about 800 securities, which are backed by mostly subprime mortgages, at roughly 50 cents on the dollar. Read more
Anil Kumar, a former McKinsey partner, has testified that he shared client secrets with Raj Rajaratnam, the Galleon founder being tried for insider trading, because he felt obligated to him after agreeing to accept $500,000 a year in consulting fees, the FT says. Mr Kumar has pleaded guilty to securities fraud and is co-operating with the government in hopes of a lighter prison sentence. He has agreed to forfeit $2.7m in fees and profits he received from Galleon. Lawyers played a phone recording in which Mr Kumar tells Rajaratnam of an imminent transaction that will boost the shares of AMD, a McKinsey client, the WSJ reports. Read more
The yen sharply fell and then rose against the dollar following the massive earthquake in Japan, FT Alphaville reports. It’s a pattern followed by the yen before after disasters. After the earthquake that struck Kobe in 1995, killing thousands, the yen also appreciated due to Japanese repatriation of foreign assets. Ironically, then, Japan’s earthquake may have negative consequences for non-Japanese assets. Insurers are taking the brunt in European markets, FT Alphaville adds. Stock markets across Asia closed down more than one per cent, reports Reuters. Read more
Japan has been reeling after an 8.9 magnitude earthquake hit the northeast of the country, causing many injuries, fires and a 12m tsunami along parts of the country’s coastline, the FT reports. The country was bracing for further waves at least 20 foot high. Countries around the Pacific have issued tsunami alerts, Reuters reports. An oil refinery outside Tokyo is in flames but no nuclear power stations are damaged, Al Jazeera reports. The Tokyo stock exchange’s systems were unaffected by the quake, although little time was left for stocks to respond to the damage before close of trading, the FT reports. The Nikkei was down 1.7 per cent at the close. The WSJ’s Japan Real Time will be liveblogging events. Read more
Japan was reeling on Friday after the region northeast of Tokyo was hit by the biggest earthquake since the temblor that devastated the port city of Kobe in 1995.
Buildings were also damaged in Tokyo amid reports of injuries, and airports were closed as well as some rail services. Office buildings were evacuated and the suspension of all mobile phone networks added to the impression of panic and chaos. Read more