Swiss stocks tumble a further 5.2%, Swiss bond yields turn negative for first time everCasualties mount as West Ham sponsor Alpari and Global Brokers NZ are forced to shutOil prices rise after IEA sees signs that the “tide will turn”Market summary 5.44pm GMT After all the turmoil of the Swiss central bank removing the currency cap against the euro, stock markets have moved sharply higher once more. Investors have become convinced the European Central Bank will unveil some kind of quantitative easing programme following its meeting next week, and the Swiss move has only added fuel to that particular fire. With oil and commodities also recovering some ground after their recent slides, shares have ended the week in fairly upbeat mood. The final scores showed: 5.07pm GMT Some speculation ahead of the ECB meeting next week, widely expected to unveil some form of quantitative easing:*ECB TO SET 20%-25% PURCHASE LIMIT FOR COUNTRIES' DEBT: SPIEGEL #ECB #QE PLANS SEE NATIONAL CENTRAL BANKS BUYING OWN-COUNTRY DEBT*GERMANY'S SPIEGEL MAGAZINE DOESN'T CITE SOURCES ON ECB QE PLAN 4.00pm GMT Meanwhile Reuters is reporting that Jefferies has expressed interest in a rescue deal for FXCM. 3.59pm GMT The euro continues to sink, as the prospects of the European Central Bank unveiling plans for quantitative easing next week grow, and the repercussions of the Swiss removing the currency cap continue to reverberate.After an early recovery against the Swiss franc the euro is now down 0.65% at 0.98 francs, while it has also lost ground against the dollar:#BREAKING Euro drops under $1.15 for the first time since Nov 2003 3.49pm GMT Meanwhile retail broker FXCM, which has admitted that it may be in breach of some regulatory capital requirements, is being monitored by US regulators after its shares tumbled around 90%A spokeswoman for the US Commodity Futures Trading Commission told Reuters: “We are reviewing the company’s situation.” 3.18pm GMT And still they come. US retail trader Interactive Brokers lost around $120m due to Thursday’s currency turmoil. In a statement it said:Due to the sudden move in the value of the Swiss franc yesterday, several of our customers suffered losses in excess of their deposit with us. Such debits amount to approximately $120m, less than 2.5% of our net worth. 3.13pm GMT Here’s Reuters full take on the Barclays story:Barclays lost tens of millions of dollars from the volatile moves in the Swiss franc on Thursday, an industry source said on Friday.Several banking sources said most major banks were likely to have lost money from the unprecedented surge in the value of the franc after the Swiss central bank abandoned a cap on the currency. 3.09pm GMT Back with US data, and consumer confidence has come in much higher than forecast, despite some weaker figures recently including retail sales.The University of Michigan consumer sentiment index showed a preliminary reading of 98.2 for January, compared to expectations of 94.1 and a final figure for December of 93.6.Michigan Confidence (Jan P) 98.2 versus 94.1 expected, previous 93.6 - Highest since 2004.The surge in Consumer Confidence right now is epic pic.twitter.com/OW8cqRo1DF 3.01pm GMT Reuters is reporting sources saying Barclays lost “tens of millions” of dollars following the volatile currency movements on Thursday after the Swiss central bank removed its currency cap against the euro. 2.43pm GMT Trading in US forex broker FXCM, which is battling for survival, has been delayed. Its stock tumbled nearly 90% in pre-market trading, as investors reacted to client losses suffered after the sharp appreciation of the Swiss franc yesterday. The broker has admitted that it may be in breach of some regulatory capital requirements.Absent an overnight capital raise FXCM will not be able to conduct business. 2.39pm GMT Wall Street has opened slightly higher. The Dow Jones is 0.2% ahead at 17,358.41 and the Nasdaq has gained 0.42% to 4591.065. 2.38pm GMT Most European stock markets have pushed into positive territory. The FTSE 100 index in London is trading nearly 30 points higher, or 0.4%, at 6527.09. The CAC in Paris is 0.5% ahead, Germany’s Dax has edged up 0.1%, Italy’s FTSE MiB is 1.3% higher and Spain’s Ibex is flat. 2.31pm GMT Meanwhile, Italy’s central bank has slashed its growth forecast for this year and predicted that deflation would persist throughout the year. The Bank of Italy is now predicting 2015 growth of just 0.4% – the first time the economy has grown since 2011 – compared with 1.3% in July.The eurozone’s third-largest economy has not posted a single quarter of growth in the last three years. 2.29pm GMT Angela Merkel, the German chancellor, met with ECB president Mario Draghi on Wednesday ahead of next week’s policy meeting, at which the central bank is widely expected to unveil large-scale bond-buying. A German government spokesman told Reuters: It was one of the informal meetings that take place regularly. 2.25pm GMT Here’s more detail on the earlier news that two major Greek lenders have applied for emergency funding from the country’s central bank. Executives at both Eurobank and Alpha said this was precautionary and related partly to their exposure to Swiss franc mortgages. Both have yet to make use of the emergency liquidity assistance funds. A Eurobank executive told Reuters:Swiss franc loan exposure is part of the reasons but not the main one. 2.20pm GMT More US data: Factory output rose 0.3% last month, the Federal Reserve said, slightly better than expected. That marks the fourth month in a row manufacturing has grown, although it was much slower than November’s revised 1.3% growth. 2.15pm GMT 2.14pm GMT Bankers at Goldman Sachs were paid an average of $373,265 (£245,544) in 2014 after profits at the highest profile firm on Wall Street rose 5%, our banking correspondent Jill Treanor writes.Some $12.7bn was set aside to pay its 34,000 staff, who will learn the size of the individual payouts in the coming days. Some of them will receive far more than the average; data for 2013 shows that its most senior executives received an average of £3m.But in the fourth quarter, profits at Goldman Sachs were down 7% after revenue fell in each of its four divisions - investment banking, client trading, lending and fund management - compared with a year earlier. 1.54pm GMT US online trading platform Gain Capital says it made a profit on yesterday’s market turmoil.Its CEO Glenn Stevens says: Our strong risk-management framework allowed us to generate a profit on one of the most turbulent days for the global currency markets in recent years... We have positioned ourselves to effectively manage risk during both calm and tumultuous markets and our performance during this recent event shows that. 1.40pm GMT US consumer prices showed their biggest fall for six years in December, as the slump in oil prices took its effect.The consumer price index fell 0.4% last month, after declining 0.3% in November. In the 12 months to December, the index increased 0.8% after a 1.3% rise the previous month.US CPI and PPI pic.twitter.com/Uu6akUwAGh 1.24pm GMT FXCM, the biggest US retail foreign-exchange brokerage, has seen its shares collapse in spectacular fashion in pre-market trading.Earlier it admitted it had been hit by the Swiss bank move and that client debts could mean it was in breach of some capital requirements. 12.31pm GMT Swiss government bond yields continue to slide.50 basis points ... for 50 years. Swiss 50 year yield falls to just 0.5%: pic.twitter.com/tXlj7XF08H 12.29pm GMT Dublin-based online forex broker AvaTrade has sought to reassure customers by saying the Swiss turmoil has had no material effect on the company, and its financial position remains strong. 12.05pm GMT The UKs Financial Conduct Authority says it is working closely with Alpari, the insolvent retail currency broker, the latest casualty of the Swiss currency chaos. 11.30am GMT Spread-betting firm City Index also said “it’s business as usual”.It has come to our attention that a number of retail brokerages have announced that this has resulted in them experiencing acute financial pressure. Following this and queries from customers, we would like to take the opportunity to reassure our clients and confirm to the market that City Index has not suffered any material impact as a result of yesterday’s volatility and our financial position has not been affected.It is very much business as usual for City Index and our global client base. 11.29am GMT Peter Cruddas, chief Executive of CMC Markets said while the firm has suffered “some losses” from the Swiss currency turmoil, it’s business as usual.Yesterday’s unprecedented move by the Swiss National Bank created a large amount of volatility in the Swiss Franc and Foreign Exchange markets.Like many of our competitors, CMC Markets sustained some losses, however, the overall impact including possible bad debts has not materially impacted the Group. 11.25am GMT Here are some more quotes from the IEA report, which has fuelled oil prices. The agency said in its monthly outlook:How low the market’s floor will be is anybody’s guess. But the sell-off is having an impact. A price recovery – barring any major disruption – may not be imminent, but signs are mounting that the tide will turn. A rebalancing may begin to occur in the second half of the year. 11.19am GMT Time for another look at the markets. 10.55am GMT It’s not the first time West Ham have lost their sponsor (forex broker Alpari has filed for insolvency, which spells an end to its £3m-a-year sponsorship for the London football club). Here’s our story. In 2008, when its then-sponsor XL Leisure went bust, its players had to wear patches on their shirts.First XL, now WHU Sponsor @AlpariUKForex 'insolvent'! Third time lucky? Time for the patches! http://t.co/iiR3MoapuC pic.twitter.com/tPxuF9522p 10.50am GMT The Swiss stock market is still down more than 5% at 7976.83.Christoph Riniker, head of equity strategy at Julius Baer, warned investors not to sell Swiss equities at current levels. In contrast, he reckons that risk-aware investors might want to buy Swiss stocks.Foreign investors are partly hedged from these losses as they could gain on the foreign exchange side. Given the marked international sales exposure of Swiss companies in aggregate, the dependency on Swiss franc price moves is not to underestimate. Consequently, companies with higher international sales exposure were hit more while purely domestically oriented companies only saw minimal losses. Investors who hold positions in the Swiss equity market should remain patient and not sell on current levels. In contrast, we think that risk-aware investors might add Swiss equity exposure on current levels. There are a number of unanswered questions but after all, the Swiss economy has proved in the past that it can live with a strong Swiss franc. We would suggest concentrating on domestic and US dollar expo-sure and rather limit euro exposure going forward. We still believe that the US currency looks more robust than the euro, a tendency which might be even more pronounced once the ECB should start its quantitative easing programme. 10.39am GMT London Capital Group estimates its total exposure to the Swiss franc’s surge at up to £1.7m, but reckons there won’t be a material impact on its business. The impact on the company’s balance sheet from market and credit exposure will be dependent on the Company’s ability to recover client debts, but in total it will not exceed £1.7m.All clients’ positions were closed at a more beneficial level than the company could close its own exposure. 10.31am GMT Swiss 10-year government bond yields have turned negative for the first time ever. They’ve fallen to 0.003%, according to Tradeweb data. 10.30am GMT Meanwhile, oil prices could continue their slide, “but signs are mounting that the tide will turn,” the International Energy Authority said in its latest monthly oil report. The agency has cut its estimate for non-OPEC oil supply growth this year by 350,000 barrels a day since last month, to 950,000. It added: “lower prices do not appear to be stimulating demand just yet”. 10.22am GMT Brokers aren’t the only casualties of the Swiss currency chaos. The Polish zloty tumbled more than 20% against the Swiss franc yesterday. In Poland, mortgages denominated in francs were worth 131bn zlotys at the end of November. However, FT Alphaville noted that is not very much, as a percentage of Poland’s GDP, in a blog entitled Stop worrying about Swiss franc mortgages in Poland.The zloty fell 0.3% against the euro today but gained 1.6% against the franc as the Swiss currency pulled back from its highs. The Warsaw stock market shed 1.3%. Hungarian assets stabilised, with the forint rising 0.5% versus the euro. 10.08am GMT Just a reminder, London-based interdealer broker IG Group said yesterday it would take a hit of about £30m following the Swiss turmoil. 10.07am GMT Alpari said in a statement on its website:The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. Retail client funds continue to be segregated in accordance with FCA rules. 10.03am GMT Elsewhere, the European Commission has issued a preliminary finding that Amazon’s tax arrangements in Luxembourg probably amount to “state aid” – despite Luxembourg’s claims to the contrary. 9.58am GMT Alpari has turned off its phone lines, and emails are bouncing back as undeliverable, my colleague Jill Treanor tells me. The online broker’s last tweet last night:Only 24hours to go #TradingTheWayItShouldBe @AlpariWestHam to win x2 WHU vs Hull tickets. Goodluck! #Alpari #COYI 9.54am GMT Online forex broker Alpari UK, which sponsors West Ham football club, has entered insolvency after its clients suffered huge losses on the Swiss franc. 9.40am GMT Greece’s Alpha Bank and Eurobank have applied for emergency liquidity assistance from the Greek central bank, Reuters reported, citing a banking source. 9.26am GMT The biggest US retail foreign-exchange brokerage FXCM also said client debts threatened its compliance with capital rules.FXCM said “clients experienced significant losses” after the franc’s surge. This “generated negative equity balances owed to FXCM of approximately $225m.”As a result of these debit balances, the company may be in breach of some regulatory capital requirements. We are actively discussing alternatives to return our capital to levels prior to today’s events and discussing the matter with our regulators. 9.21am GMT Casualties from the Swiss currency shock include a New Zealand-based dealer that has gone bust.Global Brokers NZ said losses from the franc’s surge are forcing it to shut down. Clients of the forex broker, which operates Excel Markets, have been told the company “can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business.” Here’s the statement in full.I would be astonished if we did not see more casualties. This was a 180-degree about turn by the SNB. People feel hurt and betrayed. 9.05am GMT BP is the biggest gainer on the FTSE 100 this morning, after a US judge ruled last night that the oil giant dumped 3.2m barrels of oil into the Gulf of Mexico in 2010 – about a quarter less than the US government had calculated. This means that BP faces a maximum fine of $13.7bn, less than a potential penalty of $18bn. Even so, this would still be the largest fine handed out for pollution in US history. BP shares rose 1.9% to 400p on the news.JD Sports shares are also up, leading the FTSE 250 with a 7.2% gain to 505.83p, after a bumper Christmas trading update. The sports retailer upgraded its full-year profit forecasts after enjoying 12% growth in like-for-like sales in the five weeks to 3 January. Independent retail analyst Nick Bubb writes:So Mike Ashley hasn’t yet succeeded in wiping out his old rival JD Sports... 8.56am GMT Inflation in Europe’s largest economy slowed to 0.2% in December, its slowest rate in over five years, Germany’s federal statistics office Destatis confirmed. You can read the press release here. 8.51am GMT The Swiss stock market continues to slide, now down 3.8% at 8081.36, a fall of 319.25 points. 8.49am GMT The euro suffered its biggest one-day drop against the Swiss franc in history yesterday after the shock move from the Swiss central bank. The single currency is holding just above an 11-year trough amid expectations that the Swiss move points to QE from the ECB next week, a large-scale programme of bond-buying. The euro tumbled 30% to 0.8696 Swiss francs within minutes after the SNB’s shock move yesterday, and is now trading at 1.0128. 8.31am GMT The FTSE 100 index in London is more than 20 points lower at 6477.15, a 0.3% fall. Germany’s Dax has shed 0.26% but other markets are up: Italy’s FTSE MiB has gained 0.5% and Spain’s Ibex 0.3%, while France’s CAC is flat. 8.25am GMT Gold prices have benefited from the turmoil as investors piled into safe haven investments. Spot gold is trading at $1,257.80 an ounce, after jumping to $1,266.11 yesterday, a level last seen in September. Bullion is on course to notch up its best weekly performance since last March, up about 3% so far.James Gardiner, a trader at MKS Group, told Reuters:Gold looks like the flavour of the month at the moment... The SNB announcement has really shaken the market. 8.14am GMT The Swiss stock market has lost another 2.7% in early trading, after plummeting as much as 14% yesterday to close down 8.7%. The Swiss franc has fallen back after yesterday’s massive gains, to 1.0184 per euro. 7.59am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.European stock markets are expected to open lower after yesterday’s Swiss turmoil. Overnight, most Asian markets fell, with the Nikkei in Tokyo down 1.4% and the Hang Seng in Hong Kong losing 0.9%. Chinese stocks were a notable exception, with the Shanghai composite index gaining 1.2%, after the country’s central bank announced it would increase relending quotas to banks by $8.1bn to support agriculture and small companies. Continue reading...
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