The 6am London Cut | FT Alphaville

The 6am London Cut

Markets: “Asian stocks rose, joining a global rebound as better U.S. earnings offset the downing of a passenger jet in Ukraine and Israel’s invasion of Gaza. Emerging-market currencies climbed while corn fell to the lowest since 2010. The MSCI Asia Pacific excluding Japan Index advanced 0.3 percent as of 11:44 a.m. in Hong Kong, with three stocks rising for every two that fell. Futures on the Standard & Poor’s 500 Index (SPX) were little changed after the U.S. gauge climbed from its biggest loss in three months. Indonesia’s currency added 0.4 percent versus the dollar before the result of presidential elections is announced. Corn slumped 1.3 percent on U.S. production. Natural gas slid 1.9 percent.” (Bloomberg)

MH17 crash: Evidence suggests pro-Russian separatists and Russian military personnel shot down MH17, by mistake, with a Buk-M1 surface-to-air missile launcher from near the towns of Snizhne and Torez, according to briefings given by Ukrainian and US intelligence officials at the weekend. The officials say the missile system was probably supplied by Russia and smuggled across the border into eastern Ukraine in recent weeks. (Financial Times)

Western leaders on Sunday night set an ultimatum for Vladimir Putin as the international outcry over the treatment of bodies from Malaysia Airlines Flight MH17 led to calls for Russia to be further punished over its role in Ukraine. During a weekend of fast-paced diplomacy, Britain, France and Germany warned the Russian president that he faced further sanctions on Tuesday unless he ensured that air accident investigators had full access to the crash site in eastern Ukraine. (Financial Times)

But the EU remains divided over the severity of any sanctions: Some differences have narrowed and pro-sanctions leaders such as British premier David Cameron see resistance from Paris and Berlin fading. But Europe remains far from united on whether to target Mr Putin’s inner circle, ensnare Russian energy groups, and move to some form of arms embargo. These differences will probably come to the fore on Tuesday, when EU foreign ministers meet for the first time since the crash, armed with a recently enhanced legal mandate that allows them to target a broader range of individuals and companies. There are no preparatory meetings planned on Monday, giving the gathering an unpredictable edge. (Financial Times)

Death toll mounts as Israel intensifies ground war in Gaza: At least 60 Palestinians, many of them civilians, were killed by Israeli tank shells, air strikes, or gunfire in the Gaza Strip’s largest city on Sunday, and thousands more fled their homes, during the most intense fighting seen yet in Israel’s nearly two-week-old war against Hamas. (Financial Times)

BoE chief Carney leads push to break ‘too big to fail’ impasse among leading G20 countries as they prepare a landmark set of proposals aimed at tackling the problem. Talks under the auspices of the global Financial Stability Board over the summer are approaching a key stage as officials aim to clinch an agreement on bailing in creditors of globally significant, cross-border banks that get into trouble. However, the complexity of the topic and differences between countries’ legal regimes and corporate structures are raising questions over how detailed any framework will be. (Financial Times)

The UK’s main anti-fraud agency is gearing up to launch a full-blown criminal investigation into alleged rigging of the $5.3tn-a-day FX market, adding to the web of regulatory and criminal investigations around the world. The Serious Fraud Office, which has been gathering intelligence over alleged forex manipulation during the past few months, could announce a formal investigation before the end of the month, according to people familiar with the situation. (Financial Times)

China will revive mortgage-backed debt sales this week after a six-year hiatus, as the government extends help to homebuyers in a flagging property market. Postal Savings Bank of China Co., which has 39,000 branches in the country, plans to sell 6.8 billion yuan ($1.1 billion) of the notes backed by residential mortgages tomorrow, according to a July 15 statement on the website of Chinabond. The last such security in the nation was sold by China Construction Bank Co. in 2007, Bloomberg-compiled data show.” (Bloomberg)

Emerging and frontier market countries have borrowed a record amount of money in capital markets in the first half of this year, even as central bankers warn that “debt market euphoria” could be storing up trouble for the future. International sovereign bond sales by emerging markets reached $69.47bn in the first six months of the year, a jump of 54 per cent on the same period in 2013. (Financial Times)

RJ Reynolds faces a potential bill of $23.6bn after a US court ordered the country’s second-largest tobacco company to pay punitive damages following a lawsuit filed by the wife of a smoker who died of lung cancer. Multibillion-dollar fines have been awarded against tobacco companies before, but have in general been drastically reduced after appeals. In 2002, a jury in Los Angeles landed Philip Morris USA with a $28bn fine in a similar case in 2002. This was later reduced to $28m on appeal. (Financial Times)

Severstal has agreed to sell its North American assets to US groups Steel Dynamics and AK Steel for $2.3bn, as the Russian steelmaker continues to shed its international assets to cut costs. Severstal will sell its Severstal Columbus plant to Steel Dynamics, the Indiana-based flat roll steel producer, and its Severstal Deaborn Plant to Ohio-based peer AK Steel. The Russian company agreed to sell its Pennsylvania coal units PBS Coals to Canada’s Corsa Coal Corp for $140m last week. (Financial Times)

AIG has recovered more than $2bn in settlements with banks over the soured mortgage bonds that helped push the world’s biggest insurer to the brink of failure during the financial crisis. The mostly private deals mean that AIG is unlikely to pursue further legal action against big banks for mis-selling mortgage-backed securities before 2008, effectively closing one of the most contentious chapters in the company’s 95-year history. (Financial Times)

“Murdoch’s 21st Century Fox is considering using proceeds from the sale of its Italian and German pay-TV assets to boost its offer for Time Warner, according to two people familiar with the matter. Fox may reach an agreement to sell its wholly-owned Sky Italia unit and its 57 percent stake in Sky Deutschland to British Sky Broadcasting Group in the next two weeks, the people said, asking not to be identified because the deliberations are private. The assets could be valued at about 10 billion euros ($13.5 billion), people familiar with the matter said in May. Fox owns a 39 percent stake in BSkyB.” (Bloomberg)


Republicans have reneged on their pact with business (Financial Times, Luce)

Putin’s next move – invade eastern Ukraine? (Financial Times, Stephens)

Eurozone needs QE (Financial Times editorial)

Argentina near cliff in risky debt game (Financial Times)

Battle escalates for dominance in treatments for Hepatitis (WSJ)

Modi would like to be remembered for building canals (Financial Times)

Your new $700 Walkman is manually carved from a block of expensive aluminum, which helps reduce noise (WSJ)

Carlos Slim wants a three day work week (Financial Times)


Asian markets
Nikkei 225 down -154.55 (-1.01%) at 15,216
Topix down -10.09 (-0.79%) at 1,263
Hang Seng up +2.37 (+0.01%) at 23,457
ASX 200 up +7.74 (+0.14%) at 5,539

US markets
S&P 500 up +20.10 (+1.03%) at 1,978
DJIA up +123.37 (+0.73%) at 17,100
Nasdaq up +68.70 (+1.57%) at 4,432

European markets
Eurofirst 300 down -0.08 (-0.01%) at 1,363
FTSE100 up +11.13 (+0.17%) at 6,749
CAC 40 up +19.19 (+0.44%) at 4,335
Dax down -33.86 (-0.35%) at 9,720

€/$ 1.35 (1.35)
$/¥ 101.22 (101.28)
£/$ 1.71 (1.71)
€/£ 0.7917 (0.7912)

Commodities ($)
Brent Crude (ICE) up +0.03 at 107.27
Light Crude (Nymex) down -0.11 at 103.02
100 Oz Gold (Comex) up +1.80 at 1,311
Copper (Comex) down -0.03% at 3.17

10-year government bond yields (%)
US 2.48%
UK 2.59%
Germany 1.17%

CDS (closing levels)
Markit iTraxx SovX Western Europe +0.07bps at 33.71bp
Markit iTraxx Europe -0.59bps at 61.14bp
Markit iTraxx Xover -1.32bps at 249.82bp
Markit CDX IG -1.75bps at 58.52bp

Sources: FT, Bloomberg, Markit