Global stocks tumble on swathe of factors. Asian and European (FEZ) shares, as well as U.S. stock futures, have fallen across the board today, weighed down by a kaleidoscope of factors that includes tepid Chinese services PMI, caution ahead of the U.S. jobs report on Friday, massive unrest in Egypt, and the re-emergence of the eurozone debt crisis via trouble in Greece and Portugal (see below for more details).
Egyptian army planning coup d'etat - report. Egypt's army is reportedly preparing to remove President Mohamed Mursi after he declared that he would not bow to demands from protestors to step down. Mursi has until 5 pm today (11 am ET) to come to an agreement with opposition leaders in order to end widespread unrest, or the army will act against him, suspend the constitution and install an interim government pending new elections. Egypt's Case30 index surged 4.9% yesterday but was -1.5% at midday today.
Crude oil continues to climb amid Egyptian unrest. WTI crude oil (USO) was +1.5% at $101.08 at the time of writing, having passed through $100 for the first time since September, as Egypt teetered on the brink of a coup d'etat. Brent futures were +0.7% at $104.69. While the country isn't an oil producer, it controls the Suez Canal, one of the world's most important shipping lanes. However, some analysts believe the spike in prices is temporary. "There is more than enough crude supply and there is relatively weak demand," says consultant Tony Regan.
Top Stock News
Liberty set to give up on Kabel Deutschland. Liberty Global (LBTYA) is reportedly unlikely to increase its €85-a-share bid for Kabel Deutschland (OTCPK:KBDHY) after Vodafone (VOD) agreed to acquire the German cable company for €87 a share, or €7.7B. Liberty reckons Vodafone's proposal is expensive, while John Malone's company also recognizes that a tie-up with Kabel would probably face antitrust difficulties, as it already owns Germany's second-largest cable firm, Unity Media.
Prudential to contest "systemic risk" label. Unlike AIG (AIG) and GE Capital (GE), Prudential Financial (PRU) is contesting the Financial Stability Oversight Council's decision to label the insurer a non-bank "systemically important financial institution" (SIFI). "Non-bank SIFI has the potential for being very disruptive to their business model, if they're required to hold capital at a level that puts them at a disadvantage to other insurance companies," says analyst Ed Shields.
FCC OKs Sprint deals - report. The FCC has reportedly approved SoftBank's (OTCPK:SFTBY) $21.6B acquisition of 78% of Sprint (S) by a vote of 2-1 and it has authorized the U.S. carrier's purchase of the roughly 50% of Clearwire (CLWR) that it doesn't already own. FCC backing was the final U.S. regulatory hurdle that needed to be overcome. Clearwire shareholders are due to vote on the Sprint deal on Monday.
BP disaster payments to hit profits. BP's (BP) payouts under the settlement for victims of the 2010 Gulf of Mexico spill are reportedly on course to hit the company's earnings by the year-end unless it is successful in a legal challenge due to be heard in court next week. BP has been making the payouts via the $20B trust fund for spill victims it set up in 2010, but commitments had reached $18.3B by March, leaving just $1.7B for future claims.
U.S. to impose stricter rules on large banks. The FDIC will introduce a draft of leverage limits for major banks (XLF) on July 9, including for JPMorgan (JPM), Morgan Stanley (MS), Bank of America (BAC) and Citigroup (C). The regulations are expected to require banks to hold 3-6% of their total assets in capital compared with Basel III requirement of 3%. Many large U.S. lenders are already thought to be above the upper level, while the ones below shouldn't have a problem reaching it.
Apple nears content deal with Time Warner Cable. Apple (AAPL) is reportedly close to securing a TV-content agreement with Time Warner Cable (TWC) and has hired Hulu executive Pete Distad to handle the negotiations. The deal will give Apple TV users access to TWC's TV channels. Meanwhile, Apple has hired Yves St Laurent CEO Paul Deneve as a VP working on "special projects." Deneve held a sales/marketing position at Apple Europe from 1990-1997.
Judge authorizes $1.92B HSBC settlement. U.S. District Judge John Gleeson has approved HSBC's (HBC) record $1.92B deal with authorities to settle charges that the bank illegally carried out financial transactions for Mexican and Colombian drug cartels, money launderers and other wrongdoers. Gleeson authorized the agreement despite "heavy public criticism" that HSBC is being spared criminal charges under a "deferred-prosecution agreement."
Big Oil wins reprieve from foreign-payments rule. A U.S. federal judge has handed the oil industry a big win, rejecting a new SEC regulation that would require companies to reveal what they pay foreign governments in exchange for mineral rights. Forcing firms to publish the payments, even when countries bar such disclosure, "drastically increased the rule's burden on competition and cost to investors," the judge said.
Top Economic & Other News
Portuguese markets plunge on political turmoil. Portuguese markets have gone into meltdown as an austerity induced political crisis has threatened the government's existence. Ministers from the CDS-PP, the ruling coalition's junior partner, are reportedly ready to follow their leader and Foreign Minister Paulo Portas out the door after he resigned yesterday. Portas' departure came after Finance Minister Vitor Gaspar quit on Monday. The PSI 20 was -5.4% at midday in Europe, while 10-year government bond yields had shot through 8%.
Chinese business activity contracts - HBSC. China's HSBC composite PMI indicated contraction for the first time in 10 months in June, slipping to 49.8 from 50.9 in May, while the services print edged up to 51.3 from 51.2. The official services PMI slid to 53.9 from 54.3. "The underlying growth momentum is likely to be softening for services sectors, along with the slowdown of manufacturing growth," says HSBC, adding that it expects the expansion in services to decelerate in the coming months.
Large businesses win postponement of Obamacare requirements. The Treasury Department will delay penalties for large employers who fail to provide workers with health insurance after being inundated by questions from firms about the healthcare overhaul. The requirements were initially scheduled to begin when the bulk of the law takes effect next year, but the administration will now wait until 2015 before enforcing mandatory employer and insurer reporting guidelines.
End of QE? U.K. services sector booms. The U.K. services sector accelerated to its fastest pace in 2 1/4 years in June as Markit's Business Activity Index jumped to 56.9 from 54.9 in May. Growth was supported by the strongest gain in new businesses and employment for six years, while confidence hit a 14-month high. "Is this the end of QE?" tweeted Markit's Chris Williamson. "U.K. PMI (chart) tracked against BOE policy. Rise in June pushes PMI well out of stimulus territory."
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In Asia, Japan -0.3% to 14056. Hong Kong -2.5% to 20147. China -0.6% to 1994. India -1.4% to 19195.
In Europe, at midday, London -1.6%. Paris -1.7%. Frankfurt -1.7%.
Futures at 7:00: Dow -0.5%. S&P -0.5%. Nasdaq -0.6%. Crude +1.5% to $101.08. Gold +0.2% to $1245.90.
Today's economic calendar:
7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 International Trade
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
12:00 EIA Natural Gas Inventory
NYSE Close at 1:00 PM
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