The London 6am Cut | FT Alphaville

The London 6am Cut

Cliff deal leads to big market rally but strife looms: “The last-minute deal over the US fiscal cliff triggered a lift in equity markets around the world as the threat of sharp tax rises and spending cuts tipping the world’s biggest economy into a new recession receded. But the rally in the wake of the deal may not last long, as the White House and Republicans are already positioning themselves for a series of even greater confrontations over the budget in the early months of the year.” (Financial Times, see also Wall Street Journal)

Asian stocks continued to rise on Thursday after positive data from the US and China. The December ISM survey data indicated US manufacturing was expanding slightly faster than economists expected, and China’s services PMI for the same month was 56.1 compared to 55.6 in November. The MSCI Asia Pacific ex-Japan rose 0.2% to 477.17, its highest level in 17 months. Chinese and Japanese markets are closed. Australia’s ASX S&P200 reached a 19-month high. (Bloomberg)(Reuters)

Banks close to settlement with regulators over foreclosure abuses: “Banking regulators are close to a $10 billion settlement with 14 banks that would end the government’s efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.” (New York Times)

BofA to raise lending after years of cuts: “Bank of America is ramping up mortgage and corporate lending after two years of focusing on capital levels and cost-cutting under chief executive Brian Moynihan. Mr Moynihan said the company should overtake JPMorgan Chase in direct-to-consumer mortgage lending in the next six months and he had directed bankers to be ‘more aggressive’ in lending to companies.” (Financial Times)

CVC buys Cerved Group: “CVC Capital Partners, the European private equity group that is preparing to raise up to €11bn for a buyout fund this year, is to buy Cerved Group, a corporate intelligence and rating agency based in Milan. The deal, signed on December 31, values the company at about €1.13bn.” (Financial Times)

US banks retain key tax break in cliff deal: “Extending the so-called “subpart F exception for active financing income” will allow multinationals to defer paying US taxes on certain financial transactions undertaken outside the US. The companies are taxed by the US on that income only when it is brought back to the country.” (Financial Times)

Al-Jazeera is buying Current TV for an undisclosed amount. (Wall Street Journal)

Avis Budget to buy Zipcar: “Avis Budget Group, the US car rental chain, has agreed to buy car-sharing network Zipcar for nearly $500m. Zipcar had one of the strongest US debuts when it launched in April 2011 with its shares soaring 56 per cent on their first day of trading. They have since fallen 72 per cent from their peak.” (Financial Times)

COMMENT AND CURIOS:

- Markets and fiscal cliff: just another day in Beirut (Greg Ip, Free Exchange)

- Online news is getting pricier (John Gapper)

- Maybe the “Big Sort” never happened? (Monkey Cage)

- This year, America’s 1 per cent will pay its highest rate since 1979. (The Atlantic)

- Deferring six figures on Wall Street for a teacher’s salary (Dealbook)

- The doctor cliff (Quartz)

OVERNIGHT MARKETS: UP

Asian markets
Nikkei 225 up +72.20 (+0.70%) at 10,395
Topix up +5.71 (+0.67%) at 859.80
Hang Seng up +26.00 (+0.11%) at 23,338

US markets
S&P 500 up +36.23 (+2.54%) at 1,462
DJIA up +308.41 (+2.35%) at 13,413
Nasdaq up +92.75 (+3.07%) at 3,112

European markets
Eurofirst 300 up +23.44 (+2.07%) at 1,157
FTSE100 up +129.56 (+2.20%) at 6,027
CAC 40 up +92.86 (+2.55%) at 3,734
Dax up +166.39 (+2.19%) at 7,779

Currencies
€/$ 1.31 (1.32)
$/¥ 87.24 (87.29)
£/$ 1.62 (1.63)

Commodities ($)
Brent Crude (ICE) down -0.34 at 112.13
Light Crude (Nymex) down -0.28 at 92.84
100 Oz Gold (Comex) down -1.10 at 1,687
Copper (Comex) up +0.20 at 372.65

10-year government bond yields (%)
US 1.84%
UK 2.00%
Germany 1.45%

CDS (closing levels)
Markit iTraxx SovX Western Europe -5.07bps at 108.02bp
Markit iTraxx Europe -10.98bps at 106.45bp
Markit iTraxx Xover -47.41bps at 435.5bp
Markit CDX IG -10.19bps at 85.2bp

Sources: FT, Bloomberg, Markit