Most Asian stocks fell as a decline in Japanese banks after forecasting lower earnings offset a report that Japan’s economy expanded faster than analysts estimated in the first quarter. The Nikkei fell 1.2% and the Topix index was 1.5% lower, but the Hang Seng rose 0.4% and the Kospi was 1% higher. Sumitomo Mitsui, Mitsubishi UFJ Financial and Mizuho have all forecast monetary easing will push earnings lower. (Bloomberg)
Japan’s economy grew at the fastest pace in a year last quarter, with solid growth in consumer spending and exports suggesting Abenomics may already be having tangible effects. Real GDP grew at an annualised rate of 3.5% in the three months to March, the second consecutive quarter of growth after the last quarter of 2012 was revised upwards to 1%. Analysts surveyed by Bloomberg expected a 2.7% increase on average. Exports rose 3.8%, imports rose 1% and consumer spending was 0.9% higher. (Financial Times)(Reuters)(FT Alphaville)
Lawyers for JPMorgan Chase have demanded that Bloomberg hand over data logs of staff who searched for activities of the bank’s employees using Bloomberg terminals since 2008, as it decides whether to take legal action over the matter. The bank’s lawyers also sought the role of each Bloomberg employee who had searched for information, and demanded verification that Bloomberg had revoked reporters’ access to information about terminal users, as Bloomberg has said it did after a formal complaint from Goldman Sachs last month. (Financial Times)(Wall Street Journal)
Chinese FDI misses forecasts: Foreign direct investment in China in April was 0.4% higher than a year earlier, short of March’s 5.7% gain and Bloomberg consensus estimates of 6.2% growth. (Bloomberg)
“RP Martin has removed its chief executive and an executive director from their posts amid a probe into the firm’s role in the manipulation of Libor that saw two former employees arrested in December.” (Financial Times)
David Cameron is “open to all ideas” for returning RBS to private ownership but its finances must improve first, he told reporters on the last day of a three-day visit to the United States. (Reuters)
Platts fought an attempt to impose new regulations on world oil benchmarks last year. International regulators’ group IOSCO considered new controls after the bank Libor scandal, but Platts resisted the move, arguing it would affects its role, independence and impartiality. (Wall Street Journal)
Spanish banks are bracing themselves for a fresh financial hit, amid rising pressure from the Bank of Spain on lenders to write down the value of their €200bn portfolio of restructured loans to the country’s troubled companies and struggling households. The move could see NPL ratios rise further. (Financial Times)
Banks sue Lisbon over ‘toxic’ asset allegations: JPMorgan Chase and Banco Santander have filed lawsuits in London Portuguese state-owned companies as a bitter legal tussle intensifies over derivative contracts the Lisbon government has described as “toxic”. Portugal’s treasury secretary, said in April that Lisbon would take legal action against the two banks after two months of attempts at renegotiating the contracts failed to produce an agreement. (Financial Times)
Brazil raised a record R$2.8bn in its first auction of licences for oil exploration blocks in five years, with oil majors including ExxonMobil, Chevron and BP winning blocks, as well as BG Group of the UK. (Financial Times)
Warning over SWF opacity: Sovereign wealth funds from resource-rich countries controlling more than $500bn of assets operate with no disclosure, limiting their accountability and increasing the risk of corruption, says the Revenue Watch Institute, a New York-based group backed by charitable foundations and rich-country governments. The group’s report showed that eight large funds, including the investment authorities of Qatar, Kuwait and Libya, disclosed no details at all about their assets, transactions or investments. Only 11 of 58 resource-rich countries rated as ‘satisfactory’ overall. (Financial Times)
COMMENT AND CURIOS:
- The powerful few making oil benchmark prices. (Financial Times)
- Janet Yellen’s ascension to Fed chair is not assured, despite being favourite. (Financial Times)
- Sir Mervyn leaves Bank of England on an upbeat note. (Financial Times)
- CEO salaries flat, take-home pay rising. (Wall Street Journal)
OVERNIGHT MARKETS: MIXED
Asian markets
Nikkei 225 down -174.88 (-1.16%) at 14,921
Topix down -17.68 (-1.41%) at 1,235
Hang Seng up +82.80 (+0.36%) at 23,127
US markets
S&P 500 up +8.44 (+0.51%) at 1,659
DJIA up +60.44 (+0.40%) at 15,276
Nasdaq up +9.01 (+0.26%) at 3,472
European markets
Eurofirst 300 up +9.04 (+0.73%) at 1,246
FTSE100 up +7.49 (+0.11%) at 6,694
CAC 40 up +16.17 (+0.41%) at 3,982
Dax up +23.31 (+0.28%) at 8,362
Currencies
€/$ 1.29 (1.29)
$/¥ 102.20 (102.21)
£/$ 1.52 (1.52)
Commodities ($)
Brent Crude (ICE) down -0.39 at 103.29
Light Crude (Nymex) down -0.31 at 93.99
100 Oz Gold (Comex) down -1.80 at 1,395
Copper (Comex) down -0.10 at 326.60
10-year government bond yields (%)
US 1.93%
UK 1.93%
Germany 1.38%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.06bps at 89.39bp
Markit iTraxx Europe -1.81bps at 94.19bp
Markit iTraxx Xover -2.27bps at 385.73bp
Markit CDX IG -1.12bps at 71.63bp
Sources: FT, Bloomberg, Markit