The 6am London Cut

Markets: Australian equities lost momentum after the government revealed its 2014 budget — various welfare benefits would be cut, 16,500 public jobs would be axed, and a 2 per cent levy would be temporarily imposed on incomes above A$180,000 — while Asia-Pacific bourses elsewhere sought direction as traders waited for corporate earnings. The subdued tone in Asia followed a US session in which the S&P 500 hit 1,900 for the first time ever, but then pared back to close flat at 1,897. Tech stocks resumed their slide, with the Nasdaq losing 0.3 per cent. India’s stock markets keep moving upwards, anticipating a Modi victory. The nifty has climbed nearly 7 per cent in the past week. (FT’s Global Markets Overview)

Speaking of which, “Mukesh Ambani, India’s richest man, was the biggest gainer among the world’s billionaires as exit polls signaled Narendra Modi’s opposition bloc would win a majority in the country’s election. The chairman of Reliance Industries, operator of the world’s biggest oil refinery complex, added almost $800 million to his wealth yesterday… Gautam Adani was the second-biggest gainer worldwide as he added almost $700 million, giving him a net worth of $6.9 billion.” (Bloomberg)

Japan’s PM Shinzo Abe is poised to declare his support for the biggest shift in Japan’s defence policy in decades: the end of a prohibition on overseas combat missions by the military in a change that would stretch the limits of its anti-war constitution. A panel of experts picked by Abe is expected on Thursday to recommend a new interpretation of the constitution that would allow Japan to participate in so-called collective self-defence – fighting to protect allied countries even in cases where Japanese territory was not threatened. (Financial Times)

An explosion and fire in a coal mine in western Turkey claimed the lives of at least 151 miners, injured a further 75 and trapped more than 200 below ground, according to officials. More than 3000 workers have died in Turkish mines since 1941. The country’s deadliest coal mine disaster took place in 1992, when an explosion killed 263 workers in the Black Sea province of Zonguldak. (Financial Times)

Google and other US internet giants are braced for a blizzard of requests from European citizens demanding that sensitive personal information be removed from search results after a landmark ruling that redefines privacy in the internet age. The decision from the European Court of Justice marks the biggest blow yet to American internet companies over European privacy standards and moves towards enforcing “a right to be forgotten”. It is also the first time that the search engine has been forced to take down a link to information legally published elsewhere on the web. (Financial Times)

Russia is to deny the US use of the International Space Station beyond 2020 and will bar export of critical rocket engines to the US, in a move that has highlighted American dependence on Russian space technology. “The Russian segment of the ISS can exist independently from the US one, but the US segment cannot exist independently from the Russian one,” Dmitry Rogozin, Russia’s deputy prime minister said. (Financial Times)

“Anti-China mobs torched up to 15 foreign-owned factories [they believed were Chinese] and trashed many more in southern Vietnam as anger over the recent deployment by China of an oil rig in disputed Southeast Asian waters span dangerously out of control, officials and state media said Wednesday.” (AP)

Ed Balls, UK shadow chancellor, said Mr Osborne needed to rein in the Help to Buy scheme in London, and put fresh effort into building new towns and more social housing to boost supply. “You can’t, as chancellor, wash your hands of responsibility for balancing the housing market,” Mr Balls said. He added that Labour would use fiscal powers, such as a tax on homes worth more than £2m, to damp price rises. (Financial Times)

On the first of two days of parliamentary hearings, Pfizer acknowledged that its proposed £63bn takeover of AstraZeneca will lead to job cuts and a fall in research and development spending, as expectations mounted that it will raise the informal offer for its UK-based rival. Ian Read, Pfizer’s chief exec and chairman said he could not guarantee that jobs would not be lost in the UK or investment cut when he was pressed by MPs about his plans for the country’s second-biggest pharmaceuticals company. (Financial Times)

“Chinese authorities accused GlaxoSmithKline’s former China chief of ordering subordinates to commit bribery. Officials with China’s Ministry of Public Security said Mark Reilly, a British national, allegedly pressed his sales teams to bribe hospitals, doctors and health institutions. Using these means, the company reaped billions of yuan in revenue, the ministry said.” (WSJ)

BNP Paribas is being pushed to pay more than $3.5bn in penalties as US authorities seek to bring criminal charges against the French bank for allegedly violating sanctions, a person familiar with the negotiations said. Bank officials, including chief executive Jean-Laurent Bonnafé, met with prosecutors and regulators in Washington and New York last week, to appeal for leniency as settlement negotiations continue. A deal, if one is reached, is still weeks away, and the fine size could change as part of the talks, people familiar with the matter say. (Financial Times)

“Thousands more victims of Bernard L. Madoff’s Ponzi scheme could receive compensation for their losses based on the preliminary findings of a new claims process administered by the Justice Department. Richard C. Breeden, the “special master” in charge of the Justice Department effort, said the large number of claims suggests the fraud was even bigger than previously known.” (WSJ)

Goldman Sachs’ lead technology banker has moved to a hedge fund, leaving the team that landed the Twitter IPO. Anthony Noto, co-head of the technology, media and telecoms group, is joining Coatue Management, according to both companies. (Financial Times)

Hillman, the maker of nuts, bolts and screws, has been put on the auction block by its private equity owners, Oak Hill Capital Partners, as financial sponsors continue to cash in on the buoyant deal-making environment. The exact price tag that has been put on Hillman could not be ascertained, but a figure of between $1.2bn and $1.4bn was suggested by one of the people. A deal is not certain and the process is at an early stage, however. (Financial Times)

Bob Diamond is aiming to more than double his war chest for African bank acquisitions, with a second fundraising in less than six months as he prepares for more purchases in the sector. Mr Diamond, the former chief executive of Barclays, is set to announce a capital raising through his Atlas Mara cash shell imminently, according to people familiar with the situation. The vehicle secured $325m in December through an initial public offering on the LSE. (Financial Times)

“Ackman’s Pershing Square Capital… called for a nonbinding referendum among Allergan shareholders on whether the company should negotiate to sell itself to Valeant Pharmaceuticals… The move, which lawyers and other deal advisers called novel, comes a day after Allergan rejected outright the $46 billion stock-and-cash offer that Valeant made last month.” (WSJ)

US steel imports surged 25.7 per cent in the first quarter, fuelling concerns that it is foreign producers, rather than American manufacturers, that are reaping the benefits of the shale gas revolution. Between January and March, the US imported 8.8m net tons of steel products, up from 7m net tons in the first three months of 2013, according to data analysed by the Economic Policy Institute, a liberal think-tank in Washington. The EPI declared it the “worst import crisis” for the US steel industry since the mid-2000s. Both volumes of imported steel and the share of imported steel as a fraction of US steel consumption have increased since 2010, in the aftermath of the recession. (Financial Times)


Time for Draghi to open the sluice (Financial Times, Wolf)

The Co-op and University of Oxford as models of failed governance (Financial Times, Kay)

Benefits of Shanghai Free Trade Zone still shrouded in mystery (Financial Times)

An index of stocks JPMorgan Chase & Co. says benefit most from reform sank 10 percent this year through yesterday (Bloomberg)

Smoking in China, whither the totalitarian solution? (Financial Times)

Interview: Ginni Rometty, IBM chief exec, says the group is reinventing itself but Wall St is growing impatient (Financial Times)

“The relationship between investors and entrepreneurs is like a couple’s, nobody can say who is taking advantage of the other,” Alibaba’s Ma said in an emoticon-filled post (Reuters)

Investors may have gotten early word of changes to Federal Reserve policy between 1997 and 2013 (Bloomberg)


Asian markets
Nikkei 225 down -31.03 (-0.22%) at 14,394
Topix up +2.56 (+0.22%) at 1,181
Hang Seng up +197.06 (+0.88%) at 22,549
ASX 200 down -6.49 (-0.12%) at 5,492

US markets
S&P 500 up +0.80 (+0.04%) at 1,897
DJIA up +19.97 (+0.12%) at 16,715
Nasdaq down -13.69 (-0.33%) at 4,130

European markets
Eurofirst 300 up +4.27 (+0.31%) at 1,369
FTSE100 up +21.33 (+0.31%) at 6,873
CAC 40 up +11.37 (+0.25%) at 4,505
Dax up +51.97 (+0.54%) at 9,754

€/$ 1.37 (1.37)
$/¥ 102.13 (102.25)
£/$ 1.69 (1.68)
€/£ 0.8138 (0.8143)

Commodities ($)
Brent Crude (ICE) up +0.18 at 109.42
Light Crude (Nymex) up +0.31 at 102.01
100 Oz Gold (Comex) down -0.20 at 1,294
Copper (Comex) unchanged +0.02% at 3.15

10-year government bond yields (%)
US 2.62%
UK 2.69%
Germany 1.42%

CDS (closing levels)
Markit iTraxx SovX Western Europe 34.77bp
Markit iTraxx Europe 66.06bp
Markit iTraxx Xover 255.91bp
Markit CDX IG 62.48bp

Sources: FT, Bloomberg, Markit

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