05 June 2012: Stocks rebound, G7 to hold emergency talks

Markets- Stocks rebound, Commodities stable: Hopes of stimulus to encourage growth after the positive data yesterday seem to be providing positivity for the markets.
•    Stocks: FTSE All World is unchanged as FTSE Eurofirst climbed 0.4%; In Asia mood is bullish as FTSE Asia Pacific gained 1.4% and Tokyo’s Nikkei rose 1%; S&P 500 was flat in the last session but will open a bit higher today; FTSE 100 is closed today and is at 5260
•    Currencies: Euro trades at $1.2453 against Dollar; Sterling against dollar is down 0.2% at $1.5346
•    Debt: The German Bunds rose 2bp to 1.21% while US 10-years gained 3bp to 1.55%, their lowest level in more than 60 years; in contrast Madrid’s 10-year yield is at 6.35%
•    Commodities: Brent Crude lost 2 cents to trade at $98.83/barrel; Copper gains 0.4% today to sit at $3.32/pound; Gold advanced 0.08% to $1613/ounce

Global Economy
•    G7 to hold emergency eurozone talks: The markets are quite anxious about the risks from a possible Spanish banking crisis and that the June 17 election in Greece might lead it to leave the eurozone. It has been agreed upon that some eurozone countries haven’t taken adequate measures to prevent the crisis from deepening- several banks are undercapitalised the level of public debt quite high.

Companies
•    Russian court reopens $13bn BP suit: A Siberian court has called for a new hearing into the $13bn lawsuit which was filed by minority shareholders in TNK-BP. This was filed against BP over a failed bid last year to form an alliance with the state-owned Rosneft. It was claimed by these minority shareholders that BP’s bid to form an alliance had damaged TNK-BP as it had failed to include it as the partner. Only days back, BP had announced that it wanted to sell its 50% stake in its Russian oil venture, and this will bring fresh pressure.
•    Qantas issues profits warning: Qantas has unexpectedly slashed its earnings forecasts blaming the rising fuel prices, sovereign debt crisis and higher competition. Analysts had expected earnings of A$ 227m for the year ending June 30th, but Qantas said that this figure is more likely to be between A$50m- A$100m. Qantas’ stock fell 19% after this announcement.

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