The Nikkei started the week with another sell-off. The index fell to a six-week low earlier on Monday with a 2.8 per cent fall, following Friday’s 1.4 per cent decline in the S&P 500 (Reuters). The Tokyo market is now more than 15 per cent off its multiyear high set on May 23 (Financial Times).
The HSBC/Markit manufacturing PMI for China fell to a seven-month low in May, another sign of weakening factory activity. The index’s 49.2 reading contrasted with April’s 50.4, and the official manufacturing PMI’s increase to 50.8 in May (Reuters).
Protesters clashed with police for a third day during Turkey’s strongest antigovernment demonstrations for years. Hundreds had been injured by Sunday night, and up to 2,000 detained. Prime Minister Recep Tayyip Erdogan described the protesters as “a few looters” in a televised address. They have in turn accused him of becoming autocratic after ten years in power (Financial Times). Civil unrest spread nationwide on Friday after police aggressively shut down a rally in Istanbul’s Gezi Park, organised against government plans to build a shopping mall over it (Wall Street Journal, Reuters).
Outside investors could pull $3.5bn from SAC Capital by today’s deadline for requests to withdraw money. The estimate by executives was preliminary, but would follow $1.7bn already taken out in February (Wall Street Journal). SAC began the year with $6bn in outside money (Bloomberg).
SAC faces a final battle with the US government over a wide-ranging investigation into insider trading on Wall Street, which could lead to criminal charges for the fund that would likely prevent it managing outside money in the future. While 60 per cent of its capital is owned by employees and its founder Steven Cohen, SAC’s ability to generate profit would be hurt by further large redemptions (Financial Times, NYT Dealbook).
Glencore Xstrata and Blackstone are among suitors chasing Rio Tinto’s Canadian iron ore assets. Vedanta Resources could also compete with the two bidders for the 59 per cent stake in Iron Ore Company of Canada, which Rio Tinto is selling off amid a seven-year low for iron ore prices. However, Glencore Xstrata’s interest in a bid may take a back seat to its need to integrate itself fully after its recent merger (Wall Street Journal).
Rio Tinto has also made plans to float its diamonds unit in London this year. The listing could still be cancelled if Rio Tinto receives a high enough offer from an outside bidder for the division. (Sky News)
ENRC’s founders have sought more time to assemble an offer to take it private. Their bidding consortium asked for three more weeks beyond the Takeover Panel’s deadline of June 3 for a formal offer to be tabled (Financial Times).
Vodafone will increase capital spending on its UK network by more than 50 per cent, to £1bn. It has already invested heavily in building the infrastructure for its next generation 4G network, which will launch at the end of the summer. But the company must also spend to integrate and improve the fixed-line system acquired with its £1bn takeover of Cable & Wireless Worldwide. (Financial Times)
George Osborne is “determined” to resist splitting up RBS as a crucial month for the UK bank dawns. June sees the release of parliamentary recommendations on whether a break-up of RBS could increase competition, and the Chancellor’s Mansion House speech. But Osborne has already warned that it would take too long to privatise the “good” part of RBS. (Financial Times)
China has been back buying base metals in the international market. The State Reserves Bureau, China’s stockpiling agency, bought about 30,000 tonnes of nickel in recent months, ending its hiatus since prices for the metal peaked in 2011, along with copper and aluminium. (Financial Times)
COMMENT AND CURIOS
- David Gardner on the Turkish protests: “Recep Tayyip Erdogan is – and behaves as – lord of all he surveys.” (Financial Times)
- Gavyn Davies: this isn’t the big one for bonds (yet), but their returns aren’t looking too appealing. (Financial Times)
- A new book busts some myths about the origins of Ireland’s debt crisis. (Financial Times)
- Who’s been accused of “careless talk-radio rants” by Paul Singer? (Financial Times)
- “There are 2,347 unread messages in my two inboxes and my soul is coping fine.” It’s Lucy Kellaway versus Inbox Zero… (Financial Times)
OVERNIGHT MARKETS: DOWN
Nikkei 225 down -391.63 (-2.84%) at 13,382
Topix down -24.18 (-2.13%) at 1,111
Hang Seng up +90.57 (+0.40%) at 22,482
S&P 500 down -23.67 (-1.43%) at 1,630
DJIA down -208.96 (-1.36%) at 15,115
Nasdaq down -35.39 (-1.01%) at 3,455
Eurofirst 300 down -11.24 (-0.9%) at 1,216
FTSE100 down -73.90 (-1.1%) at 6,583
CAC 40 down -47.72 (-1.19%) at 3,948
Dax down -51.36 (-0.61%) at 8,348
€/$ 1.30 (1.30)
$/¥ 100.64 (101.08)
£/$ 1.52 (1.52)
Brent Crude (ICE) down -0.07 at 100.32
Light Crude (Nymex) down -0.03 at 91.94
100 Oz Gold (Comex) up +1.70 at 1,394
Copper (Comex) up 0.02 at 3.31
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe at 85.95bp
Markit iTraxx Europe +2.8bps at 102.8bp
Markit iTraxx Xover +11.7bps at 421.24bp
Markit CDX IG +2.9bps at 79bp
Sources: FT, Bloomberg, Markit