Asian stocks fell, erasing earlier gains, on fears about China’s manufacturing sector growth after flash PMIs were published. The MSCI Asia Pacific was 0.3% lower and the yen rose slightly. The Nikkei was 0.2% lower and the Hang Seng fell 1.2%. (Bloomberg)
China’s flash PMIs fell in April: China’s manufacturing sector expansion appears to be slowing this month, as preliminary HSBC/Markit PMI was 50.5 for April, compared to 51.6 in March and below the 51.5 consensus forecast of economists surveyed by Bloomberg. This month’s survey was being watched particularly closely for signs of Q2 economic momentum, after the Q1 GDP growth reported last week missed expectations. (Bloomberg)
S&P says there’s a more than 1-in-3 chance it will downgrade Japan because of risks and uncertainties about how ‘Abenomics’ policies will work. The country’s long-term debt is rated AA- by S&P. (Reuters)(Statement)
Europe may have hit the political limits of how far it can go with austerity policies because of the growing opposition in the eurozone’s recession-hit periphery, European Commission president Jose Manuel Barroso said on Monday. While such policies were “fundamentally right”, they may have reached a limit of social and political acceptance. (Financial Times)(Reuters)
EU warns on ‘protectionist’ US bank capital plans: Plans to force foreign banks operating in the US to hold more capital are a threat to harmonious global regulation and risk “a protectionist reaction”, the EU commissioner in charge of financial services, Michael Barnier, warned in a letter to Ben Bernanke. The Fed responded by defending the “targeted adjustments” for foreign banks, saying they stemmed from those banks having had “significantly greater reliance on potentially unstable, short-term wholesale funding”. (Financial Times)
“News Corp looks set to reap a sizeable payout from the $139m settlement of a class-action lawsuit that alleged that directors harmed shareholders by letting Rupert Murdoch use the company he chairs as “his personal fiefdom”.” Insurers will pay the sum to News Corp for the ‘derivative’ class action, which sought to sue board members on behalf of the company. A lawyer for the plaintiffs said it was reasonable to expect most of the money would go to News Corp. (Financial Times)
Libor ‘unsustainble’, says CFTC chair: “Gary Gensler, head of the Commodity Futures Trading Commission, told the Financial Times that Libor replacements were needed “to restore market integrity and promote financial stability”.” (Financial Times)
Walmart directors working on the retailer’s investigation into bribery allegations in Mexico had their cash pay doubled to at least $120,000 last year because of the extra work. Four members of the retailer’s audit committee received an extra $60,000 last year, on top of $60,000 in retainers and equity awards worth $175,000. (Financial Times)
COMMENT AND CURIOS:
- How much will a weak yen really help today’s Japanese economy? (Financial Times)
- Asian banks offer perks to private banks whose clients buy their bonds. (Bloomberg)
- Just 22 companies account for half of all cash held by non-financial S&P 500 firms. (Wall Street Journal)
- Apple under pressure on products. (Financial Times)
- Italian bonds strengthened on president news. (Wall Street Journal)
- Ralph Lauren’s $1.6m bribery settlement. (NYT Dealbook)
OVERNIGHT MARKETS: DOWN
Asian markets
Nikkei 225 down -26.90 (-0.20%) at 13,541
Topix up +0.32 (+0.03%) at 1,146
Hang Seng down -270.65 (-1.23%) at 21,774
US markets
S&P 500 up +7.25 (+0.47%) at 1,563
DJIA up +19.66 (+0.14%) at 14,567
Nasdaq up +27.49 (+0.86%) at 3,234
European markets
Eurofirst 300 up +1.81 (+0.16%) at 1,155
FTSE100 down -5.97 (-0.09%) at 6,281
CAC 40 up +0.17 (0.00%) at 3,652
Dax up +18.15 (+0.24%) at 7,478
Currencies
€/$ 1.30 (1.31)
$/¥ 98.57 (99.21)
£/$ 1.53 (1.53)
Commodities ($)
Brent Crude (ICE) down -0.63 at 99.76
Light Crude (Nymex) down -0.51 at 88.68
100 Oz Gold (Comex) up +24.30 at 1,424
Copper (Comex) down -0.50 at 312.70
10-year government bond yields (%)
US 1.69%
UK 1.67%
Germany 1.23%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.96bps at 98.03bp
Markit iTraxx Europe -2.44bps at 111.05bp
Markit iTraxx Xover -7.94bps at 450.1bp
Markit CDX IG -1.23bps at 83.75bp
Sources: FT, Bloomberg, Markit