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Markets Commentary

 

The main event was the price of Brent rising above $50 for the first time since November with WTI rising as high as $49.97.

Output troubles in Nigeria and Venezuela and lower US stockpiles contributed to the gains in Brent, which is up more than 80 percent from January’s low of $27.10. The Bloomberg Commodity Index rose to the highest in a week as metals also advanced, and miners in the Stoxx Europe 600 Index headed for their biggest three-day jump in more than a month.

Brent is recovering in the wake of  a 12-year low in January. Presently, the International Energy Agency and Goldman Sachs Group Inc. say an excess is scattering as low costs take their toll on supplies. That may leave costs sufficiently high to lighten the danger of collapse and still sufficiently low that they don’t invade on financial development. “It could well be that we have touched base at a ‘sweet spot’ – sufficiently low to bolster buyers and diminish industry work cuts, yet not sufficiently high to bother national banks and security markets,” said Michael Ingram, a business sector strategist at BGC Partners.

There´s trust that Yellen will give some further sign of what the Fed will do tomorrow when she talks at Harvard. “Markets are currently  tolerating  a U.S. rate increase,” said Mitsushige Akino, a Tokyo-based official officer at Ichiyoshi Asset Management Co. “The thinking is that an expansion won’t stop the U.S. economy from growing, however in the event that the worldwide economy moderates, they have the way to change their strategy/policy.

European  bank stock dropped after Spain’s Banco Popular tumbled 20% on a €2BN offer deal. Accordingly Spain’s benchmark IBEX 35 Index was the greatest decliner among western-European markets.

Market Wrap Now

  • S&P 500 futures up than 0.1% to 2090
  • Stoxx 600 down 0.1% to 348
  • FTSE 100 up less than 0.1% to 6267
  • DAX up 0.2% to 10226
  • S&P GSCI Index up 0.4% to 372.3
  • MSCI Asia Pacific up 0.3% to 127
  • Nikkei 225 up less than 0.1% to 16772
  • Hang Seng up 0.1% to 20397
  • Shanghai Composite up 0.3% to 2822
  • S&P/ASX 200 up 0.3% to 5388
  • US 10-yr yield down less than 1bp to 1.86%
  • German 10Yr yield up less than 1bp to 0.16%
  • Italian 10Yr yield up less than 1bp to 1.36%
  • Spanish 10Yr yield up 2bps to 1.49%
  • Dollar Index down 0.15% to 95.21
  • WTI Crude futures up 0.5% to $49.83
  • Brent Futures up 0.6% to $50.02
  • Gold spot up 0.3% to $1,228
  • Silver spot up 0.5% to $16.40

Top Global News

  • Lenovo Profit Misses Estimates as Motorola Smartphones Struggle
  • UniCredit Said to Seek Buyers for $838 Million of Bad Loans
  • Ubisoft Said to Seek White Knight to Fend Off Vivendi Approach
  • Abe Warns G-7 Leaders of Risk of Lehman-Scale Economic Crisis
  • Qatar Stuns Mideast Debt Market With Record $9 Billion Bond
  • Hedge Funds May Lose 25% of Assets, Blackstone’s James Says

Media Digest

WSJ

– Hillary Clinton’s use of a private email server and her lax record keeping while secretary of state violated the department’s policies, an independent watchdog said, a rebuke that keeps the issue alive as she campaigns for president. (http://on.wsj.com/1WkWoYk)

– Twitter Inc on Wednesday confirmed it is curtailing an advertisement effort that encouraged people to purchase products from merchants without leaving the social-media service. (http://on.wsj.com/25iWph3)

– Eleven states, led by Texas, are suing the Obama administration over a new policy saying public schools must let transgender students use the bathroom of their choice – calling the directive “a massive social experiment” running roughshod over “common-sense policies”, according to the complaint. (http://on.wsj.com/1WkWvDf)

 

FT

* British Prime Minister David Cameron urged young people to register to vote for the EU referendum scheduled next month.

* Microsoft Corp said on Wednesday it will cut back and take a charge of about $950 million for its smartphone business, just two years after it bought handset maker Nokia.

* Citigroup Inc has agreed to pay $425 million to resolve civil charges that it tried to manipulate foreign exchange and interest rate benchmarks

 

NYT

– Alibaba Group Holding Ltd, the e-commerce giant, said Wednesday it was under investigation by U.S. securities regulators over its accounting practices, a potential setback for a company long seen as a symbol of China’s growing technological might. (http://nyti.ms/1sAor9J)

– Volkswagen AG is challenging allegations made by the Justice Department over its diesel emissions scandal, questioning the American authorities’ jurisdiction and contending that the accusations against it do not justify penalties. (http://nyti.ms/248JVX1)

– The French pharmaceutical company Sanofi SA said on Wednesday it would seek to replace the board of Medivation Inc after the American drug maker’s directors rejected a $9.3 billion takeover offer. (http://nyti.ms/1qKPi1u)

– Citigroup Inc on Wednesday became the latest big bank accused of trying to manipulate global interest rates, a reminder of Wall Street’s wide-ranging abuse of power in these markets. The Commodity Futures Trading Commission, a federal regulator that oversees Wall Street, announced $425 million in penalties against Citigroup, covering two overlapping cases. (http://nyti.ms/1U90U5Z)

– Takata Corp, the Japanese airbag maker embroiled in a huge recall, has hired the investment bank Lazard and is seeking a cash infusion. The company said it was also seeking to work out a deal with affected automakers on sharing the costs of replacing millions of airbags, a move it said was crucial to “enabling Takata to remain a viable and valued global supplier.” (http://nyti.ms/1XUQnB9)

 

Canada

THE GLOBE AND MAIL

** Canada’s Competition Bureau is setting its sights on the booming condominium sector in the Greater Toronto Area, ordering more than 100 condo boards to hand over records as part of a sweeping criminal investigation. The bureau is probing what it calls “allegations of bid-rigging and conspiracy” involving the region’s multimillion-dollar condo renovation industry. (http://bit.ly/248YtpD)

** Canada Goose Inc is investing in its first branded stores later this year. A 4,500-square-foot location at Yorkdale Shopping Centre in Toronto will be the first to open in October, followed by a 4,000-square-foot store in the SoHo neighborhood of Manhattan, scheduled to open in November. (http://bit.ly/248YbyW)

** A cloud of noxious particles brewing in the air above the Alberta oil sands is one of the most prolific sources of air pollution in North America, often exceeding the total emissions from Canada’s largest city, federal scientists have discovered. (http://bit.ly/25hO8tQ)

NATIONAL POST

** Canada police have arrested 55 people and laid more than 300 charges following a joint investigation aimed at disrupting drug distribution networks in northeastern Ontario. Drugs have been blamed for fuelling a suicide and overdose crisis in Attawapiskat and other remote First Nations communities along the James Bay coast. (http://bit.ly/1TCih4Z)

** Bank of Montreal kicked off the latest bank earnings season by substantially increasing provisions for energy-related credit losses in the second quarter. At the same time, the bank took a C$132 million ($101.8 million) after-tax restructuring charge to cover severance costs to reduce the workforce by 4 percent as more customers shift to mobile and online banking. (http://bit.ly/1WPzubt)

** The Chinese insurance company Anbang Insurance Group Co Ltd is set for a major purchase in Canada. Sources indicate that the Beijing-based company with a reported $114 billion in assets has a deal to buy what amounts to a 34 percent stake in Bentall I, II, III and IV – a sprawling commercial 1.5-million-square-foot office complex, in the heart of Vancouver. (http://bit.ly/20FAmOl)

 

Britain

The Times

The sale of Tata Steel’s UK assets has been thrown into confusion after speculation that the business secretary has offered Tata a deal so attractive that it may yet keep Port Talbot and a dozen other facilities around the country. (http://bit.ly/1TAsAGK)

The Guardian

UK tax officials must “urgently” liaise with the French authorities to see if they have evidence of wrongdoing by Google that relates to the company’s UK tax affairs, John McDonnell has said. (http://bit.ly/1TAthjk)

The watchdog for global trade has said leaving the European Union would push back trade barriers at a cost of 9 billion pounds a year to British consumers. (http://bit.ly/1TAtm6G)

The Telegraph

A pair of BHS suppliers have toppled into administration, resulting in 350 job losses, as the pain caused from the collapse of the retailer spreads through the sector. (http://bit.ly/1TAt0gr)

Shell will axe almost twice as many jobs as planned following its controversial takeover of BG Group by cutting a further 2,200 from its global workforce. (http://bit.ly/1TAuzuL)

Sky News

Ministers will this week unveil proposals that would slash billions of pounds from the liabilities of the British Steel pension scheme as they seek to smooth a path for a buyer of Tata Steel’s UK operations. (http://bit.ly/1TAu1VN)

In an exclusive interview, Jon Woods, Coca-Cola’s general manager for the UK and Ireland, said while no decisions had been made yet it was likely that shoppers would have to pick up the bulk of the cost. (http://bit.ly/1TAuwPD)

The Independent

Accountants have accused the government of seeking to raise hundreds of millions of pounds from the public in accidental overpayments in the new era of online returns, citing HMRC’s botched handling of a shift to digital tax filings as fresh evidence of the dangers. (http://ind.pn/1TAtnri)

Cabin crew staff at travel operator Thomas Cook have voted to strike in a dispute over health and safety, the union Unite has said. (http://ind.pn/1TAu9V4)

 

 

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