Asian markets were mixed, with the Nikkei and Topix both falling more than 0.6% after disappointing Japanese GDP numbers, but the Hang Seng rose 1.6% and China's Shanghai Composite was up 1.3%, after recent Chinese economic data beat expectations. (Financial Times)
Today: German wholesale price index, US monthly budget statement.
Japan's GDP misses expectations, prompts sales tax rise questions: Annualised growth was 2.6% for April - June. Although it was the third consecutive quarter of growth, it fell well short of consensus forecasts from a Bloomberg survey of 3.6%. The growth may provide support to those arguing a 3 percentage point rise in the sales tax, scheduled for April, should be delayed or staggered. (Financial Times)(Bloomberg)(Reuters)
Europe's biggest banks will have to cut €661bn of assets and generate €47bn of fresh capital over the next five years to meet Basil III regulations, according to an RBS analysis. "Overall, the region's banks need to shed €3.2tn in assets by 2018 to comply with Basel III regulations on capital and leverage, according to RBS. The burden is greatest on smaller banks, which need to shed €2.6tn from their balance sheets, raising fears that lending to the region's small and medium size enterprises will be sharply reduced as a result." Eurozone banks have already shrunk their balance sheets by €2.9tn since May 2012. (Financial Times)
Charges prepared against two JP Morgan 'whale' traders: "Prosecutors with the US attorney's office in Manhattan may take the case to a federal grand jury as early as this week, these people said, and seek an indictment of Javier Martin-Artajo, a London-based supervisor overseeing the portfolio in JPMorgan's chief investment office, and Julien Grout, a lower-level trader. Bruno Iksil, the trader nicknamed the "London whale", is co-operating with authorities and is not expected to be charged, a person familiar with the matter said." (Financial Times) The probe has focused on whether CIO knowingly misvalued positions. (Wall Street Journal)
World's biggest airlines say they won't move from Heathrow: "All three global airline alliances have said they want to stay at Heathrow, even though some of the options being considered by an independent inquiry into the hub's overcrowded runways would require them to move to one of the smaller airports around London." (Financial Times)
Brazil is considering pushing for its own trade deal with the EU, after years of struggling to reach one alongside Argentina, Venezuela, Paraguay and Uruguay as part of the Mercosour trade bloc. (Financial Times)
Growth momentum shifted to developed world, says Bridgewater: "For the first time since mid-2007, the advanced economies, including Japan, the U.S. and Europe, together are contributing more to growth in the $74 trillion global economy than the emerging nations, including China, India and Brazil, according to an estimate by investment firm Bridgewater Associates LP." (Wall Street Journal)
The US is probing use of antipsychotic drugs on children in the Medicaid system. The review into drug use by recipients aged 17 and under "applies to a newer class of antipsychotic drugs known as "atypicals," which include Abilify, the nation's No. 1 prescription drug by sales". (Wall Street Journal)
A Chinese cargo ship is attempting the country's first ever commercial transit of the Northeast Passage above Russia, as a changing climate opens a short-cut that promises to reduce shipping times between China and Europe. (Financial Times)
Neil Heywood's mother speaks: In a statement, Ann Heywood expressed disappointment that there had been no substantive or practical response and is urges Chinese authorities to show "decisiveness and compassion" to mitigate the effects of her son's death on their family, especially his two children. (Wall Street Journal)
China's LDK Solar expects to return to profit after EU trade deal: The company "started generating positive cash flows from selling wafers used in solar cells in June, President Tong Xingxue said in an interview at his Xinyu office." (Bloomberg)
COMMENT AND CURIOS:
- Environmental protection to be elevated to 'pillar industry' status, says China's State Council. (Reuters)
- Philip Stephens: Whether Summers or Yellen, Fed decisions will be at the margin. (Financial Times)
- Chinese urbanisation will hit roadblocks, say advisers. (Bloomberg)
- Oil majors are spending more, but finding less. (Financial Times)
OVERNIGHT MARKETS: MIXED
Asian markets
Nikkei 225 down -85.67 (-0.63%) at 13,530
Topix down -7.82 (-0.69%) at 1,133
Hang Seng up +363.16 (+1.67%) at 22,171
US markets
S&P 500 down -6.06 (-0.36%) at 1,691
DJIA down -72.81 (-0.47%) at 15,426
Nasdaq down -9.02 (-0.25%) at 3,660
European markets
Eurofirst 300 up +7.42 (+0.61%) at 1,230
FTSE100 up +53.71 (+0.82%) at 6,583
CAC 40 up +12.23 (+0.30%) at 4,077
Dax up +19.99 (+0.24%) at 8,338
Currencies
€/$ 1.33 (1.33)
$/¥ 96.52 (96.17)
£/$ 1.55 (1.55)
Commodities ($)
Brent Crude (ICE) down -0.03 at 108.19
Light Crude (Nymex) up +0.15 at 106.12
100 Oz Gold (Comex) up +17.20 at 1,330
Copper (Comex) down -0.01 at 3.30
10-year government bond yields (%)
US 2.58%
UK 2.47%
Germany 1.67%
CDS (closing levels)
Markit iTraxx SovX Western Europe (technical problem)
Markit iTraxx Europe +0.22bps at 95.86bp
Markit iTraxx Xover +1.65bps at 400.12bp
Markit CDX IG (technical problem)
Sources: FT, Bloomberg, Markit
