Market Snapshot
Asia: Japan -4% to 16931. Hong Kong -3% to 20557. China -2.1% to 3038. India +0.4% to 25730.
Europe: London -0.5%. Paris -0.2%. Frankfurt flat.
Futures: Dow +0.2%. S&P +0.4%. Nasdaq +0.5%. Crude +1.1% to $44.91. Gold -0.5% to $1126.30.
Economic News
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
8:30 Producer Price Index
10:00 Reuters/UofM Consumer Sentiment
Markets
European stocks were mixed and U.S. futures appear to be stable after their whipping yesterday. The beating US equities took in the previous session helped push Asian equities sharply lower today, while continued fears about China’s economy didn’t help. However, India’s Sensex rose after a greater-than-expected rate cut by the central bank.
The U.K.’s Serious Fraud Office is investigating whether Bank of England officials told banks and building societies how to bid in liquidity auctions during the financial crisis in 2008 in order to allay fears about their balance sheets. The SFO is expected to decide whether to proceed with charges later this year, although it might decide that it wouldn’t be in the public interest to do so amid arguments that the BOE was acting to prevent a market meltdown.
The Senate yesterday passed a procedural vote to extend federal agency funding levels until December 11 as Congress moved to avoid a government shutdown on Thursday, when the new fiscal year starts. The move comes amid a row over attempts by some Republicans to cut off federal funds for women’s healthcare group Planned Parenthood. The Senate is now set to vote on the stop-gap spending bill by tomorrow, and should it pass, will send the measure to the House.
The Reserve Bank of India has reduced its policy interest rate by a greater-than-expected 50 basis points to a four-and-a-half-year low of 6.75%, citing low inflation as a main reason. The reduction follows three cuts of 25 bps this year and record-low consumer inflation of 3.66% in August amid falling commodity prices. The RBI’s move also comes after Q2 GDP came in at a slower-than-expected annualized rate of 7%.
Stocks
Glencore’s shares stabilize in London, although down from earlier highs, after collapsing 29% yesterday amid fears that the company’s debt burden won’t allow it to survive the rout in commodity prices.
Reynolds American has agreed to sell the international rights to its Natural American Spirit division to Japan Tobacco for about $5B. The deal doesn’t include the brand’s U.S. operations, Winston-Salem. Reynolds American’s (RAI) shares appeared to be untraded premarket.
Headlines related to Volkswagen’s diesel-emissions scandal continue apace. In the U.S., lawyers are looking to bring class-action lawsuits against VW (VLKAF) from across the country before one federal judge. In Germany, prosecutors yesterday launched a criminal fraud investigation into ex-CEO Martin Winterkorn and other unnamed executives. Winterkorn’s replacement, Matthias Mueller, said VW has drafted a “comprehensive” action plan to ensure that the company’s diesel models will meet emissions standards.
Valeant shares dived 16.6% yesterday following news that House Democrats want to subpoena the company for documents related to its increases in drug pricing. Valeant (VRX) hiked the prices of Nitropress and Isuprel 212% and 525% respectively the day it bought them. “We believe it is critical to hold drug companies to account when they engage in a business of buying old neglected drugs and turning them into high-priced specialty drugs,” the representatives said.
Yahoo’s board has authorized the company’s plan to spin off of its 384M-share stake in Alibaba (BABA) even though the IRS has declined to rule on whether the move will be tax free. Yahoo (YHOO) cautioned that the spinoff is still “subject to certain other conditions, including final approval by Yahoo’s Board of Directors (and) receipt of a legal opinion with respect to the tax-free treatment of the transaction.” The stake is worth $22.75B.
Sprint has confirmed expectations that it won’t take part in the FCC’s broadcast incentive auction for wireless spectrum next March. “Sprint (S) has the spectrum it needs to deploy its network architecture of the future,” said CEO Marcelo Claure. The auction, for prized low-band airwaves that will help with indoor penetration and in rural areas, won’t be cheap, so skipping it should make a major difference to cash burn, a vital issue for Sprint.