Stocks continue to decline in the US, Asia and Europe, with futures trades indicating further losses and lower oil prices, as the coronavirus outbreak widens. President Donald Trump has appointed Vice President Mike Pence to spearhead the US response to the outbreak.
Hedge funds appear to have been influenced by the bullish sentiment that affected other investors as net leverage rose by roughly 5% during February, according to Morgan Stanley's prime brokerage unit, while figures from Goldman Sachs show their clients also increased their leverage.
The pound suffered losses during trading yesterday as hopes faded that UK chancellor Rishi Sunak would announce significant fiscal stimulus measures in his March 11 budget statement. "My sense is the market is pulling back on long pound positions originally destined to run into an upbeat expansionary fiscal stance in next month's budget," said Mizuho trader Neil Jones.
Global corporate debt markets from investment-grade to high-yield are moving into the same downward performance cycle as equity markets and look set to shed the gains made so far this year, as a result of the coronavirus outbreak. The debt markets shrugged off most of last year's political and economic turmoil but Peter Tchir, head of macro strategy at Academy Securities, predicts that "The environment for credit is going to get a little bit harder than it's been."
Drive financial performance and value Deepen your understanding of capital markets and corporate finance with Chicago Booth's Executive Finance Program. This new 5-day program is designed to help leaders make a significant impact on the financial health of their companies. Learn more.
Attorneys Baker McKenzie are weighing up their options for appealing on behalf of their clients against a decision by tax authorities in the Netherlands to levy VAT at 21%, backdated to last April, on collateralised loan obligation management fees. Industry figures say the move could see business shift to rival jurisdictions such as Luxembourg and Ireland.
Money managers are concerned by a European Commission suggestion that a ban on bundled research and transaction payments under the revised Markets in Financial Instruments Directive be amended to exempt small and midsize businesses. "I think it would be a danger to consider exempting some parts of the market from those rules, as that will only create further unintended consequences," Federated Hermes investment manager Eoin Murray says.
The US Alternative Reference Rates Committee is preparing to impose stricter deadlines for transitioning to the Secured Overnight Financing Rate from Libor, sources say. This follows establishment of deadlines by the UK Financial Conduct Authority and the Bank of England for switching to the Sterling Overnight Index Average.
Investors have awakened: can you compete? Investor demands have moved beyond transparency and client service to expectations of a more integrated solution that seamlessly caters to their needs. Transformative technology stands to open another front in the battle for client loyalty and satisfaction. Read more.