SITUATION IN CYPRUS AND ITALY HOLDING BACK EUROPEAN MARKETS - Despite the global economic uncertainty, markets have been rallying of late, especially in the US where markets hit fresh highs overnight. The last quarter saw the Dow Jones in New York gain 11% while the S&P500 was up 10%. Europe's ascent has been less marked, however, with continued unease across the euro zone weighing on sentiment.
Mark Murnane, head of trading at Shelbourne Markets, said the resolution to the fiscal cliff problems, as well as positive economic figures - especially jobs numbers - indicate that the US economy might be beginning to improve. But the situation in Spain and Italy - as well as Cyprus's problems - pulled back some European indices. "It's really affecting the peripheral markets such as Spain and Italy which finished the quarter down. Certain investors are worrying about what happened in Cyprus in relation to depositors. It seems some are worried about investing in economies like Spain and Italy as a result," Mark Murnane said.
Trading got back up and running in Cyprus yesterday where the market closed 2.5% down. Mr Murnane said the fall was not really surprising, given what's happened. ''People are now looking to Italy and whether a government can be formed after inconclusive elections. A lot will depend now on what happens in Italy and Slovenia. That's another country that's being mentioned as possibly needing assistance,'' he adds.
Mark Murnane says it is unlikely that the ECB will announce a rate cut at its monthly meeting tomorrow, but said the press conference would be closely watch for indicators of a cut in the coming months.
MORNING BRIEFS - Britain's energy regulator has fined gas and electricity supplier SSE £10.5m sterling for mis-selling. It is the biggest fine it has ever imposed on an energy supplier. Ofgem said it had found failures relating to telephone, in-store and doorstep sales "at every stage of the process", including at the management level.
*** Irish pharmaceutical company Elan has completed the sale of its 50% stake in Tysabri, the company announced overnight. Biogen Idec now has full ownership of the drug and in return it paid $3.25 billion upfront to Elan, while it will also also pay royalties on 25% of future sales. The process clears the way for a financial return to investors who will get one-fifth of the royalty share as well as a further billion dollars in a share buyback. Elan will seek shareholder approval next week to commence the share buyback scheme. Elan was the subject of takeover speculation in recent weeks and months when Royalty Pharma made a $6.6 billion dollar bid for the company, an offer which which Elan rejected.
*** In a change to the existing rules in the US, companies can now make important announcements on social media sites as long as they tell investors which sites they will use. The US Securities and Exchange Commission issued the new disclosure regulations following an investigation into a post by Netflix chief executive Reed Hastings on his personal Facebook page last summer. The SEC looked into whether his announcement that the streaming service had hit a billion hours viewed last June violated a rule that requires important information to be disclosed to investors at the same time. It decided not to initiate action against Netflix but said investors must be given prior notification of where important company announcements will be made from now on.