The 6am Cut London | FT Alphaville

The 6am Cut London

Asian markets were broadly lower after US earnings misses from Google and Microsoft. The Nikkei was volatile ahead of Sunday’s upper house elections, rising almost 1% in early trade before falling as much as 3.5%. WTI rose to $108.22, a 16-month high. (FastFT)(Bloomberg)

Today: JP Morgan and Wells Fargo Q2 earnings. University of Michigan confidence indicator.

Barclays rescue sheikh sells stake: The Abu Dhabi sheikh who came to the rescue of Barclays Bank with a £3.5bn capital injection at the height of the financial crisis, has sold his 7% stake. The sale happened in the past few weeks but its unclear what happened to the shares, although a 7% slump in Barclays’ share price in the days running up to disclosure of the sale of the shareholding on June 26 suggests at least some of it may have been placed in the market. (Financial Times)

George Osborne will pledge today to create the world’s most generous tax regime for shale gas as he attempts to galvanise the revolutionary industry in Britain. The tax on shale gas will be 30% compared to 62% on oil and other gas production. (Financial Times)

Morgan Stanley “on Thursday posted better-than-expected second-quarter earnings despite a steep rise in interest rates, and surprised investors with a plan to repurchase company shares for the first time since the financial crisis.” (Wall Street Journal)

Insurance ‘GSifis’ identified, may face stricter capital rules: The Financial Stability Board has named nine insurers as “global systemically important financial institutions”, including Germany’s Allianz, AIG of the US, French group Axa and Ping An Insurance of China. In 2019, GSifis could be required to have “higher loss absorption capacity” – extra capital on top of the minimum. (Financial Times)

Belgian pharma group in China probe. “UCB has become the latest focus of inquiries by Chinese officials in a growing clampdown on drug pricing and marketing practices in the country.” (Financial Times)

US regulator sharpens focus on HFT algorithms: Finra sent an examination letter sent to about 10 firms this week, indicating it is probing HFT algorithms. Finra’s head of market regulation, Thomas Gira, said the responses could lead to marching orders for the industry to improve risk-management. (Wall Street Journal)

Blackstone eyes shopping centre IPOs: “Blackstone Group has filed documents with regulators for an initial public offering of its shopping centre unit, as part of a first wave of property disposals by the private equity group since the financial downturn.” (Financial Times)

EARLIER:

Detroit filed for bankruptcy. (FT Alphaville, Financial Times)
Google missed Q2 estimates, fell 5% in after-hours trade. (Financial Times)(Wall Street Journal)
Microsoft also missed. (Financial Times)
Dell postponed buyout vote at the last minute, scrambling to save deal. (Wall Street Journal)
Moody’s affirmed the US Aaa rating and raised outlook to ‘stable’ from ‘negative’. (Reuters)

COMMENT AND CURIOS:

- The China Communist Party’s fate rests on farmers’ land rights and hukou reforms. (Bloomberg)

- William Pesek: The myth of China’s economic reform (and Likonomics). (Bloomberg)

- Jack Lew: Put job creation at the centre of the global recovery. (Financial Times)

- ETF investors piled into last week’s stock rally. (WSJ Moneybeat)

- Why everybody loves Tesla. (BusinessWeek)

- On Brazil’s inflation target. (FT Beyondbrics)

- Is US electricity regulator FERC just getting started? (Wall Street Journal)

- Roger Farmer: The UK should have an SWF .(Financial Times)

ON FT ALPHAVILLE:

A shadow banking map.

Art as the sophisticated man’s Bitcoin.

Annals of retention and the ECB.

How the mighty have fallen, EM edition.

OVERNIGHT MARKETS: MIXED

Asian markets
Nikkei 225 down -242.43 (-1.64%) at 14,566
Topix down -12.65 (-1.04%) at 1,209
Hang Seng up +32.17 (+0.15%) at 21,377

US markets
S&P 500 up +8.46 (+0.50%) at 1,689
DJIA up +78.02 (+0.50%) at 15,549
Nasdaq up +1.28 (+0.04%) at 3,611

European markets
Eurofirst 300 up +10.41 (+0.87%) at 1,209
FTSE100 up +62.43 (+0.95%) at 6,634
CAC 40 up +55.77 (+1.44%) at 3,928
Dax up +82.37 (+1.00%) at 8,337

Currencies
€/$ 1.31 (1.31)
$/¥ 100.03 (100.38)
£/$ 1.52 (1.52)

Commodities ($)
Brent Crude (ICE) up +0.11 at 108.81
Light Crude (Nymex) up +0.09 at 108.13
100 Oz Gold (Comex) up +7.60 at 1,292
Copper (Comex) up +0.01 at 3.15

10-year government bond yields (%)
US 2.52%
UK 2.26%
Germany 1.52%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.43bps at 100.2bp
Markit iTraxx Europe +1.64bps at 113.57bp
Markit iTraxx Xover +9.58bps at 455.56bp
Markit CDX IG +1.12bps at 86.56bp

Sources: FT, Bloomberg, Markit