Rolling business and financial news: stock markets jittery as traders remain nervous over global outlook 9.10am BST Yields on Greek 10-year government bonds have topped 8% for the first time since February, amid concerns over early elections and Athens plans to wean itself off international aid. 9.09am BST Reuters is reporting that the European Central Bank has reduced the haircut it applies on bonds submitted by Greek banks as collateral to borrow funds, to boost their access to liquidity.A Greek central bank official told Reuters:The move was decided late on Wednesday evening after talks between the government, the ECB and Greeces central bank governor. Its a supportive move given the pressures in the last two days. 8.59am BST The recovery in European stocks has already petered out, less than an hour into trading. Some indices are tumbling again, such as Italys FTSE MiB which is now down 1.1%, and Spains Ibex has lost 1.3%. Frances CAC has also turned negative, and is trading 0.7% lower.The FTSE 100 index is still in positive territory but has pared gains, trading 18 points higher at 6230.10, a 0.3% increase. Germanys Dax is flat. 8.34am BST The AbbVie-Shire deal is the biggest so far to be wrecked by new US rules on tax inversions, designed to make it harder for American multinationals to shift their tax base abroad to cut their tax bills....so whither AbbVie? Its an embarrassing, and costly, failure for boss Rick Gonzalez especially because he had insisted that the deal wasnt just about tax savings.With reputation at stake and possible litigation to face, why did AbbVies board have such a dramatic change of heart? Perhaps it hopes to recoup its costs by suing the US government. Its intention is possibly hinted by ...impact of the U.S. Department of Treasurys unilateral changes to the tax rules...target specifically a subset of companies that would be treated differently than either other inverted companies or foreign domiciled entities... in this mornings press release. 8.33am BST The only consolation for Shire is that it will get a big break fee of $1.6bn. But its executives are losing out on retention payments worth £19m. Where next for the rare diseases specialist? Panmure Gordon analyst Savvas Neophytou says:In our view the fundamentals of the [Shire] business remain strong and valuation now looks attractive. We upgrade our recommendation to Buy (from Hold) and set a new price target of £4.Investors will worry that Shires defence plans are too ambitious. As part of its defence, Shire made a compelling case to revenue base of $10bn by 2020. For a company growing consistently in double digit range, the implied CAGR [compound annual growth rate] of 12-13% appears achievable. The company remains acquisitive... It is possible that the loss of four months strategic direction may have damaged those plans. Key staff may have made their own exit plans. However, Shires rare diseases business remains an attractive asset and we expect Shire to have multiple suitors. 8.10am BST European stock markets have bounced back more strongly than expected. The FTSE 100 index in London gained more than 60 points, a 1.1% rise, to 6280 in the first few minutes of trading. Shares in Shire are the only loser: theyve slumped another 11% to £35.68 after yesterdays 22% drop, after the UK drugmaker was spurned by US rival AbbVie. After the surprise news yesterday that it was reconsidering its agreed £34bn takeover of Shire, the AbbVie board called on shareholders to reject the deal in a statement this morning. Shire makes hyperactivity drugs and treatments for rare diseases, while AbbVie produces the worlds top-selling medicine, Humira for rheumatoid arthritis. 7.59am BST Oil prices have fallen further today. Brent crude is down 0.85% at $83.07 a barrel while New York light crude has lost 1.4% to $80.67 a barrel. 7.51am BST Paul Ashworth, chief US economist at Capital Economics, believes the panic in financial markets is overdone.The growing sense of market panic evident in the sharp declines in equity prices and the strong rally in US Treasury bonds over the past week is hard to square with the solid outlook for US economic growth. We would still argue that the declines in oil prices and long-term interest rates will provide a net boost to real US GDP growth, even after allowing for the sell-off in stock markets. While the prospects for economic growth in the euro-zone have deteriorated, the outlook for global economic growth hasnt changed that much at all. The impact of that eurozone slowdown on the US economy will be modest anyway. 7.41am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and the eurozone.European stock markets are expected to open slightly higher today after yesterdays sell-off. Poor US economic data triggered fresh fears over global growth, compounded by the rapid spread of Ebola in west Africa. US, UK and German bond yields also fell sharply and the price of oil hit a four-year low.The Fed Beige Book overnight did manage to paint a fairly positive outlook for the US economy, but that doesnt appear to be enough anymore to keep stocks at the levels weve become used to in recent weeks. Continue reading...
 |
| READ THE ORIGINAL POST AT www.theguardian.com |
