Week 11 2017

Week 11 2017

13 March – 17 March

 

13 March

 

The pound is holding on to its daily gains this morning, remaining steady after Scotland’s First Minister confirmed she would be seeking a second referendum on Scottish independence as the UK gets ready to begin its Brexit process.

 

Misys, the British fintech group, is to be merged with DH Corp, a Canadian rival, as its private equity owner attempts to create a leading provider of financial software. Vista Equity Partners, the US private equity group that owns Misys, has beaten rival buyout group Advent International to acquire the Toronto-listed company in a deal worth C$4.8bn (US$3.6bn) including debt.

 

Iceland announced its return to financial normality almost nine years after its devastating banking crash by declaring it would on Tuesday lift capital controls.

 

Investors are primed for a more aggressive policy stance from the Federal Reserve, setting the stage for an escalation in the selling of Treasury bonds.

 

14 March

 

During the financial crisis I found that mugging up on economic history, particularly from emerging markets, was often more helpful than talking to conventional policymakers hooked on their fair-weather economic models. The rise of economic nationalism and the threat to globalisation means I find myself using emerging market parallels again. I cannot help wondering if investing in western markets may become more like investing in emerging markets.

 

Toshiba, the troubled Japanese conglomerate, has had a rollercoaster ride of a day. Shares fell more than 8 per cent in early morning trade when the company missed its earnings deadline for the second time. But an announcement that it would “aggressively consider” selling a majority stake in Westinghouse, its US nuclear business that is reeling from large cost overruns on flagship projects, prompted a sharp recovery as markets appeared to applaud the company’s move to a possible break-up. Westinghouse has been plagued by problems at two projects in Georgia and South Carolina and liabilities related to those projects mean it is unlikely to be an easy asset to sell.

 

Kenya’s central bank has started lifting its 16-month moratorium on new banking licences after giving permission to two institutions to complete their permit applications.

 

Asia Pacific investors’ enthusiasm for energy stocks returned as oil prices steadied following Monday’s drop, while fixed income investors sat on the sidelines ahead of Wednesday’s monetary policy decision from the US Federal reserve.

 

15 March

 

Investors await the Federal Open Market Committee statement and press conference from Janet Yellen later on Wednesday. In the space of three weeks the bond market has swung from downplaying a March policy tightening to expecting a quarter-point shift in the overnight Fed funds band to 0.75 per cent to 1 per cent today.

 

Retail sales in Italy unexpectedly fell in January compared to the same period a year ago. Sales in Italy’s retail sector were up 1.4 per cent in January compared to December on a seasonally adjusted basis, Italian stats agency Istat said – higher than analyst expectations of a 0.2 per cent rise.

 

Prepare very soon for the next battle in active managers’ rearguard action against the ever more successful army of marketers for passive funds. Two decades of superior inflows into passive funds have tipped over the past two years in an outright exodus from active funds and into passive.

 

A drug produced by AstraZeneca has reduced the risk of disease progression in ovarian cancer patients, in a boost for the Anglo-Swedish drugmaker as it seeks to meet ambitious growth targets.

 

16 March

 

The planned takeover of Vauxhall by Peugeot has sparked warnings that Britain’s car industry, and more broadly manufacturing, is about to be hammered by Theresa May’s free trade Brexit plans. The truth is quite different.

 

Something for gold bugs to cheer. The precious metal, which was down as much as 0.1 per cent to $1,197.59 a troy ounce earlier on Wednesday, popped 1.3 per cent to $1,214.96 a troy ounce after the Federal Reserve held its rate forecast steady.

 

When Romeo impatiently hankered after Juliet, the sage friar Lawrence dispensed some valuable advice: “Wisely and slow; they stumble that run fast.” It is a dictum the Federal Reserve clearly intends to live by, despite the improving economic outlook.

 

Oracle’s shares jumped more than 5 per cent in after-market trading on Wednesday after the US business software company said it was on the verge of showing profit from its move into cloud computing.

 

17 March

 

Conservatives in Congress are pushing Donald Trump to block the International Monetary Fund from participating in a European-led bailout of Greece, as his administration signalled it would take a tougher line with global institutions.

 

This was an anxious week, with a Federal Reserve meeting, Dutch elections, the National People’s Congress in Beijing, and a “triple witching” day on Friday when a mass of derivatives contracts expire. But far from bewaring the Ides of March, we have had the March of the Bulls.

 

Cargill, one of the world’s largest commodity traders, has agreed to sell its petroleum business to Australia’s Macquarie, the infrastructure and natural resources focused investment bank.

 

The FTSE 100 hit a record high on Thursday but Merlin Entertainments was left behind. The theme park and attraction operator faded 2.9 per cent to 481.8p after Berenberg turned negative. Not only is growth from its Legoland franchise slowing, a poor performance at Midway hints at wider problems, the broker said.