Markets: Global equities hit fresh cyclical highs but commodity prices and the dollar fell back as weak US and eurozone economic data fueled concerns over the outlook for global growth. The FTSE All-World equity index climbed 0.5 per cent to its highest since June 2008, while the S&P 500 rose 0.3 per cent to a fresh record closing and intra-day peak. However, the FTSE Eurofirst 300 eased back 0.2 per cent even as eurozone inflation and labour market figures heightened expectations that the European Central Bank would cut interest rates this week. Consumer price inflation in the region fell to a 38-month low in April while the unemployment rate rose to a record 12.1 per cent in March says the FT’s Global Markets Overview. Read more
The yen has gained back 2.4 per cent against the US dollar since it threatened but failed to break Y100 ahead of the most recent, and quiet, Bank of Japan meeting — the first since April 4, when QE on steroids was announced.
Now, we are not suggesting this is definitely the start of a yen correction — if we could predict FX moves for sure we’d be on a yacht, Japan isn’t lacking the political will to give it a further shot, this dip is small in context and we’ve seen its like before — but there is clearly a threat.
Simon Derrick, chief global markets strategist at Bank of New York Mellon, sent through a few thoughts which we think capture that threat quite nicely: Read more
Since 2009 the stark contrast between oil prices (high) and natural gas prices (low) in the US has prompted questions, and visions of a new future of transport fuels.
There was some excitement that this might be gathering steam when Warren Buffett’s freight train network BNSF revealed it would trial LNG powered trains. This is the sort of thing that T. Boone Pickens has been pushing for years: use domestic natural gas as transport fuel to reduce costs, reduce emissions and diminish US dependence on oil imports, while providing a ‘bridge’ to renewables-based infrastructure. Read more
Liquidity and credit are not always best friends — Funding for Lending in the UK and the LTROs spring to mind. However, blaming liquidity alone for the lack of credit out there is obviously [expletives removed].
For one, banks can’t lend if they can’t find borrowers — although it might be unfair to blame borrowers who are seeing unappealing terms — and for two, central banks have poured a fair amount of liquidity out there with more available on tap.
Live markets commentary from FT.com
US expects first debt cut since 2007 || Federal prosecutors launched a new criminal investigation focused on corp boards || Luxembourg to share company bank details || BP beats expectations despite post-Deepwater disposals || Japan manufacturing PMIs grow faster and consumer spending rises || Letta’s push in Italy || Cyprus announces plans to cut down on graft and reform its political system || Greek firms dip back into bonds || France plans to cut its armed forces headcount || Alfredo Sáenz resigns as Santander chief ahead of legal ruling || Abu Dhabi-UK clean energy investment talks || Deutsche Bank bites bullet on stock || Kodak’s UK pension fund gets old film assets || Markets || FTAV’s latest including dour EU unemployment stats Read more
Some stagnant stats out of Eurostat on Tuesday….
Euro area unemployment rate at 12.1%
EU27 at 10.9%
Here’s the damage, broken down… Read more
Hans-Werner Sinn — he of Target2 imbalance fame — had a piece on Project Syndicate last week in which he stood firm against George Soros and his demands for Germany to leave the euro if it continues to block the introduction of Eurobonds.
Though not because he thinks Germany is wrong to oppose Eurobonds, but rather because he believes there is no legal basis for such demands. Article 125 of the Treaty on the Functioning of the European Union, he says, expressly forbids the mutualization of debt. Read more
Elsewhere on Tuesday,
– The algo trader nexus.
– Desperately seeking $6bn.
– Better mental hygiene. Read more
Asian stocks set for highest close since 2008: The MSCI Asia Pacific Index was 0.7% higher at 3am UK time, with almost three shares rising for each that fell. The measure has advanced 4.4% this month, poised for the biggest monthly gain since June. Japanese shares were mixed after Honda shares fell 3.4% when a profit forecast missed analysts’ estimates. Earlier, the S&P 500 closed at a fresh all-time high. (Bloomberg)(Financial Times)
Luxembourg to share company bank details: Luc Frieden, finance minister, said Luxembourg was willing to expand the number of accounts covered by new information-sharing agreements with the US and the EU to include global companies. The accords, agreed this month, currently only cover individual taxpayers. (Financial Times) Read more