Wednesday Morning Cheat Sheet: 3 Stories Moving Markets
Global markets were mixed on Wednesday. In Asia, Japan’s Nikkei closed up 0.18 percent, the Hang Seng climbed 0.69 percent, and the S&P/ASX 200 jumped 0.90 percent. Positive movement in the U.S. markets on Tuesday helped catalyze these gains.
Cyprus continued to weigh heavily on Europe as major markets declined in mid-day trading. As New York headed toward its opening bell, Germany’s DAX was off 1.19 percent, London’s FTSE 100 was off 0.67 percent, and the STOXX 50 was off 1.62 percent.
U.S. futures at 8:35 a.m.: DJIA: -0.44%, S&P 500: -0.44%, NASDAQ: -0.49%.
Here are three stories to keep an eye on:
1) The central bank of Cyprus has fired the CEO of the Bank of Cyprus, the nation’s largest commercial financial institution. The move is largely unsurprising given the dire economic straits that the nation has found itself in and the enormously difficult transition period that lays ahead. The bank’s chairman submitted for resignation on Tuesday, and a special administrator has been appointed to run the operation in the interim.
Reuters indicates that there are unconfirmed reports that the central bank has called for the resignation of the bank’s entire board. Meanwhile, Cypriot policymakers are putting the final touches on capital controls that will go into effect when the banks reopen tomorrow. The euro hit a four-month low of $1.27930.
2) “The aggregate capital shortfall at end 2012 was around £25 billion,” or $38 billion, reported the Bank of England on Wednesday. Meeting earlier in March, the nation’s Financial Services Authority and the Financial Policy Committee examined the capital of U.K. fbanks and found that, while some appeared to be safe, others appeared to be unprepared to possible future losses.
The BoE is requiring these banks to raise the $38 billion to cover potential losses on commercial real estate and penalties related to ongoing legal probes. Like most central banks in the post-crisis era, the BoE is trying to make sure that the financial sector is more resistant to tremendous economic shock.
3) Closing arguments are due today in the federal court trial over whether or not Stockton, California, can default on payments to bondholders in order to fund pension programs. With a touch of similarity to the situation in Cyprus, bondholders of major municipalities have usually gone unscathed during bankruptcies. Reuters reports that lawyers familiar with the case expect Stockton — and several other U.S. municipalities barreling into bankruptcy — to break the trend.
Don’t Miss: What Can Warren Buffett Teach Us About Cyprus?