Asian stocks rose for a second day after a slump in US home sales reported Friday eased speculation about Fed tapering. The MSCI Asia Pacific rose 0.3% with the Japanese benchmarks largely flat while the Hang Seng rose 0.9% and the Shanghai Composite by 1.3%. The rupee resumed its fall, declining 1.2% against the dollar just after 9am, after gaining 2.1% last Friday. The Kospi was up 0.9% but most other markets were subdued. (Bloomberg)(FastFT)
Today: UK Nationwide house prices. US durable goods orders, Dallas manufacturing index.
Fears of EM instability grow: World leaders need to be more aggressive in handling the unfolding emerging markets crisis, South Africa's finance minister Pravin Gordhan told the FT. (Financial Times) His remarks were echoed by other developing country policy makers, such as Agustin Carstens, Mexico's central bank governor, at the Kansas City Fed's symposium in Jackson Hole, where the effects of Fed policy on the rest of the world took centre stage. (Financial Times)
German and Greek officials moved to dampen speculation of a debt write-down over the weekend. Angela Merkel said Greece wouldn't need a debt write-down, after comments by her finance minister Wolfgang Schaeuble provoked a storm last week, but she left open the option of more aid for Athens. Greek finance minister Yannis Stournaras also said another debt write-down was unnecessary, but conceded a third bailout package might be needed. He said such a package would be in the order of €10bn, much smaller than the previous two, and wouldn't be accompanied by any further austerity measure. (Wall Street Journal)(Reuters)
Banks step away from rates: Several global investment banks making further steps to shrink their businesses trading government bonds and other interest rate products, amid expectations of more muted returns and revenues. Analysts said the strongest players in the rates markets, such as Deutsche, Citibank and Barclays, would be best-positioned but those outside the top five "might have to rethink their cost base". Credit Suisse management aimed to reduce the rates business's capital base by a further 10 to 20%, people close to the situation said. (Financial Times)
Martin Weale voices concerns on BOE guidance: "From his office at Threadneedle Street, the external MPC member warns that the way the guidance was presented could cast doubt on the committee's inflation- fighting credentials." Weale was the sole dissenter at this month's MPC meeting. (Financial Times)
Anadarko has sold a 10% stake in its Mozambique offshore gasfield to India's ONGC for $2.64bn, in a deal that highlights the value of the vast gas discoveries in the country's waters. Anadarko is retaining a 26.5% stake. ONGC Videsh said the Area 1 field could become one of the world's biggest LNG projects. (Financial Times)
"Global corporate bond issuance has this month fallen to the lowest level in five years as market turmoil triggered by rising US Treasury yields persuades companies worldwide to shelve funding plans." (Financial Times)
"Chinese prosecutors demanded a heavy sentence for ousted top politician Bo Xilai on Monday, the fifth day of his landmark trial, saying his "whimsical" challenge to bribery, graft and abuse of power charges flew in the face of the evidence." (Reuters)
Goldman Sachs has put four senior technology specialists on leave after an embarrassing trading glitch last Tuesday that is likely to cost the bank tens of millions of dollars, according to a person familiar with the events. A Goldman spokesman declined to comment. (Financial Times)
COMMENT AND CURIOS:
- Gavyn Davies: Will the emerging world derail the global recovery? (FT blog)
- Asian nations are depleting foreign reserves in supporting their currencies. (Bloomberg)
- John Authers: The interesting absence of de-equitisation among US corporates. (Financial Times)
- US wages are still stagnant, and it's crimping growth. (Wall Street Journal)
- Stock multiples are rising at the fastest rate since the dotcom era. (Bloomberg)
- Yet there's a dearth of tech IPOs this year. (Wall Street Journal)
- Accelerating the velocity of money. (Bloomberg)
OVERNIGHT MARKETS: UP
Asian markets
Nikkei 225 up +8.64 (+0.06%) at 13,669
Topix down -0.97 (-0.08%) at 1,141
Hang Seng up +205.78 (+0.94%) at 22,069
US markets
S&P 500 up +6.54 (+0.39%) at 1,664
DJIA up +46.77 (+0.31%) at 15,011
Nasdaq up +19.09 (+0.52%) at 3,658
European markets
Eurofirst 300 up +4.62 (+0.38%) at 1,224
FTSE100 up +45.23 (+0.70%) at 6,492
CAC 40 up +10.35 (+0.25%) at 4,069
Dax up +19.10 (+0.23%) at 8,417
Currencies
€/$ 1.34 (1.34)
$/¥ 98.67 (98.68)
£/$ 1.56 (1.56)
Commodities ($)
Brent Crude (ICE) up +0.16 at 111.20
Light Crude (Nymex) up +0.55 at 106.97
100 Oz Gold (Comex) down -1.50 at 1,394
Copper (Comex) unchanged 0.00 at 3.35
10-year government bond yields (%)
US 2.83%
UK 2.71%
Germany 1.94%
CDS (closing levels)
Markit iTraxx SovX Western Europe -1.01bps at 88.98bp
Markit iTraxx Europe -2.48bps at 100.63bp
Markit iTraxx Xover -8.56bps at 412bp
Markit CDX IG +1.12bps at 86.56bp
Sources: FT, Bloomberg, Markit
