02 Apr 2012: Q2 starts on a mixed note, LSE to buy LCH.Clearnet

  • Q2 trading starts on a mixed note: Easing of Eurozone tensions, and central bank aid provide an undercurrent of support; however, manufacturing in the Eurozone has shrunk for the 8th consecutive month. Both German and US bond yields have risen slightly, perhaps, betraying the improving mood. Forex is flat mainly; commodities show mixed signs too with Gold down, and Copper gaining.
  • Stocks: FTSE All World is up 0.1%, and FTSE Eurofirst is down 0.1%; In Asia, FTSE Asia Pacific has lost 0.4%, while Tokyo opened 0.26% higher; S&P 500 is expected to be flat at open; FTSE 100 opened flat but has fallen from its day high of 5802 to 5767
  • Currencies: Euro has gained against Dollar and is at $1.3354; Dollar has lost 0.63% against Yen and is at 82.47. Sterling has gained against dollar and is at 1.6028
  • Debt: US 10-years rise to 2.22%; 10-year Bunds at 1.83%; 10-year Gilts are at 2.25%
  • Commodities: Brent Crude falls 0.4% cents to $122.44/barrel; Copper gains 0.5% and is at $3.85/pound; Gold falls $3 to $1664/ounce
  • LSE set for majority stake in LCH.Clearnet: The London Stock Exchange is set for a majority stake in the Anglo-French, London Clearing House. LSE’s offer of €20 per share has been accepted by stake holders holding more than 60% in LCH.Clearnet. The deal implies a valuation of €813 million for LCH. This deal will allow LSE to have its own clearing house, hence, implying higher fees obtained from clearance while obtaining synergies from combined operations of the exchange and clearing.
  • AIG eyes a way back into the market: AIG Insurance, which was bailed out by the US-government for disastrous activities in the mortgage market is looking for a way back into the market by buying home loans. The programme is likely to be underway in Q4 this year. AIG had lost nearly $100 billion on reversals on sub-prime mortgages and on credit default swaps in 2008.
  • Japanese exporters remain gloomy: A comparison of manufacturers reporting positive business conditions to those reporting negative has revealed a figure of -4 in Japan. This figure is the same as it was in December last year. It was expected to improve to -1. Despite a very moderate performance from the Dollar index this year, the Japanese yen has fallen 7% against it. But Japanese experts expect the Yen to gain this year, which will push the currency under the break-even mark. Sony, Sharp and Panasonic are all predicting record losses.

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