Markets: Japanese stocks wilted on Prime Minister Shinzo Abe's plan to raise consumption tax and introduce new fiscal stimulus. The benchmark Nikkei 225 index is down 0.7 per cent, a day after Mr Abe confirmed plans to raise the national sales tax and blunt any economic damage from it with a new Y5tn ($51bn) stimulus package. But he delayed providing full details of the stimulus package until later in the year. (Financial Times)
US takes 'extraordinary' measures to pay bills: "The US has begun implementing the "final extraordinary measures" to pay the nation's bills ahead of an October 17 deadline for Congress to approve new government borrowings, Treasury secretary Jack Lew told congressional leaders on Tuesday." (Financial Times)
Japan's Shinzo Abe reveals tax plan as business confidence soars: "Shinzo Abe, Japan's prime minister, pledged to press ahead with the first increase in sales tax for over 15 years despite objections from some of his closest advisers, gambling that measures to address the country's massive debts would not hinder his attempts to jump-start the economy." (Financial Times)
Volatility pushes companies to buy more forex protection: "Multinational companies are buying more financial protection against swings in emerging market currencies, after being hit by a summer of volatility in countries that account for an increasingly large share of their business." (Financial Times)
European groups buffeted by emerging market currency volatility: "Unilever's warning that "significant currency weakening" in emerging markets would cause quarterly sales growth to slow reminded investors this week that currency effects will weigh on European third-quarter corporate results." (Financial Times)
Unilever warning knocks consumer shares: "Shares in consumer goods companies fell on Tuesday after Unilever issued a sales warning, fuelling fears that the slowdown in emerging markets would hit the sector. The Anglo-Dutch maker of Ben & Jerry's ice cream and Dove soap said it expected underlying sales growth of just 3 to 3.5 per cent in the third quarter, compared with 5 per cent in both the first and second quarters." (Financial Times)
Banks turn uneasy on Help to Buy: Some of Britain's leading mortgage lenders have expressed misgivings about the government's latest "Help to Buy" initiative, leaving the state-backed banks Royal Bank of Scotland and Lloyds as the only pair to have endorsed the scheme. (Financial Times)
Carl Icahn stepped up his campaign for Apple to return cash to investors, saying he had made the case to Tim Cook, the chief executive, for a $150bn buyback. (Financial Times)
"Merck & Co. said it plans to slash its 81,000-strong workforce by 20% over the next two years, a stark show of the diminishing research-and-development capabilities of some of America's biggest health companies." (WSJ)
COMMENT AND CURIOS
Martin Wolf: America is flirting with self-destruction. (FT Alphaville)
US democracy is at stake (NYT) (Financial Times)
Boom, bust, flip — the US housing recovery and inequality. (NYT Magazine)
10 events that changed the repo market. (Scott Skyrm)
Factory 'boys': the changing face of China's production lines (Financial Times)
The McCutcheon case (NYT)
OVERNIGHT MARKETS:
Asian markets
Nikkei 225 down -237.71 (-1.64%) at 14,247
Topix down -16.67 (-1.40%) at 1,177
Hang Seng up +254.21 (+1.11%) at 23,114
US markets
S&P 500 up +13.45 (+0.80%) at 1,695
DJIA up +62.03 (+0.41%) at 15,192
Nasdaq up +46.50 (+1.23%) at 3,818
European markets
Eurofirst 300 up +8.83 (+0.71%) at 1,256
FTSE100 down -2.21 (-0.03%) at 6,460
CAC 40 up +53.16 (+1.28%) at 4,197
Dax up +94.74 (+1.10%) at 8,689
Currencies
€/$ 1.35 (1.35)
$/¥ 97.89 (97.89)
£/$ 1.62 (1.62)
Commodities ($)
Brent Crude (ICE) down -0.43 at 107.51
Light Crude (Nymex) down -0.51 at 101.53
100 Oz Gold (Comex) up +2.60 at 1,289
Copper (Comex) unchanged 0.00 at 3.27
10-year government bond yields (%)
US 2.65%
UK 2.76%
Germany 1.81%
CDS (closing levels)
Markit iTraxx SovX Western Europe -2.04bps at 86.1bp
Markit iTraxx Europe -4.97bps at 99.41bp
Markit iTraxx Xover -10.03bps at 398bp
Sources: FT, Bloomberg, Markit
