26 ★ Tuesday28 January 2020

Richard Henderson

Markets Insight

Coronavirus fears dominated the US
market with casino operators the worst
performing sector on worries about their
Macau exposure.
Mainland visits to Macau fell 6 per 6
cent in the first three days of the Chinese
new year holiday, government data show.
Wynn Resorts ed the fallers after al
downgrade from Bank of America.
Royal Caribbean Cruises as weakestw
among the travel stocks ahead of a
trading update expected next week.
Each Chinese sailing cancelled by Royal
Caribbean will cost about $0.02 in
earnings per share, said Wedbush
analysts, who saw a wider fallout after
running a consumer survey.
“Western travellers were less calm than
we anticipated and so we would expect at
least a short-term depression of travel
bookings,” the broker said.
Estée Lauder lipped afters
Oppenheimer turned cautious based on
the cosmetics maker’s reliance on China.
Arconic allied on unchanged 2020r
guidance, in spite of the metal panel
maker’s potential exposures to Boeing’s
grounded 737 Max jet and the Grenfell
Tower tragedy.
HousebuilderDR Horton it a recordh
high on better than expected quarterly
earnings.Bryce Elder

Wall Street Eurozone London

European luxury goods stocks extended

their recent drop on worries about the

coronavirus and Chinese sales.

But outperforming the sector were

Moncler, which was upgraded to

“outperform” at Exane BNP Paribas, and

Prada, which was raised to “hold” at

Kepler Cheuvreux.

Moncler should regain its sector lead

for organic sales growth on a mixture of

store investment, brand momentum

among young consumers and product

diversification — with takeover

speculation providing a floor for the stock

if the initiatives fail, said Exane.

Meanwhile, Kepler argued that Prada

was a global brand gaining traction so

was a credible target for peers such as

Gucci ownerKering. “Even though

management denied that the company

was for sale, we think that its current

position in its life cycle makes it a

potential target for predators in the

sector,” said the broker.

Renault as under pressure afterw

Redburn downgraded to “sell”.

A lack of new models was exacerbating

a cash crunch stemming from the French

carmaker’s need to meet new European

Union emissions rules, Redburn said.

Brick makerWienerberger ose afterr

UBS raised its price target.Bryce Elder

Rio Tinto,Antofagasta,Kaz Minerals nda

Ferrexpo ll weakened in tandem witha

metals prices, which were lower as the

spread of the coronavirus led investors to

fear a slump in demand.

China consumes 70 per cent of the

world’s iron ore supply and about 50 per

cent of copper production, according to

RBC Capital Markets, though the broker

saw little balance sheet risk across the

mining sector from a short-term shock.

RHI Magnesita aded after thef

Competition and Markets Authority said

it was looking into the refractory

materials specialist’s acquisition of

Turkish minerKumas Manyezit Sanayi,

which was announced in September.

Burberry ollowed European peersf

lower after MainFirst turned cautious.

A valuation of 23 times earnings left

little room for any mis-steps withthe

fashion group’s turnround plan, while

consolidatorsLVMH, Kering nda

Richemont ere unlikely to be interestedw

in bidding in the near future, it said.

Computacenter ose after Berenbergr

added the IT outsourcer to its “buy” list.

It said the stock was at an unmerited

discount to peers given a rebound for its

US division, continued strength in

Germany and “notoriously conservative”

management guidance.Bryce Elder

3 Stocks retreat as investors weigh
impact of coronavirus
3 Oil sinks to three-month low on
demand fears
3 Italian debt rallies on hopes Salvini
defeat ushers in spell of political stability

Global stocks and oil prices tumbled
yesterday on fears over the potential
impact of the coronavirus, which has
killed at least 80 people in China and
reached a dozen other countries.
The FTSE All-World index sank 1.6 per
cent after the mayor of Wuhan, the city
where the outbreak was first identified,
said the number of coronavirus cases in
the region could rise by another 1,000.
Wall Street, which has hit intraday
highs this month, retreated.
By midday in New York, the S&P 500
index was down more than 1.5 per cent,
on track for its worst day since October,
while the technology-heavy Nasdaq
Composite index dropped 1.9 per cent.
The Dow Jones Industrial Average,
which had recently breached 29,000
points for the first time, slid 1.6 per cent.
“With markets ‘priced for perfection’,
disruptive events that shake investor
sentiment are capable of having outsized
influence,” said Seema Shah, chief
strategist at Principal Global Investors.
Among the worst-hit stocks were travel
and casino groups suchAir France-KLM
in Europe and Nevada’sWynn Resorts,
which has operations in gambling hub

Macau. Mining and oil were other sectors

under pressure on concerns over weaker

demand from China, which is a major

importer of commodities.

London’s FTSE 100 index, with its

heavy weighting to miners, sank 2.3 per

cent for its worst day since early October.

Global oil benchmark Brent crude

plummeted 3 per cent to $58.87 a barrel,

a three-month low.

Elsewhere in Europe, where all major

bourses dipped, Frankfurt’s Xetra Dax

index fell 2.8 per cent following an

unexpected fall in German business

confidence in January, according to

survey data from the Ifo Institute, a

Munich-based think-tank.

Milan’s FTSE MIB retreated 2.3 per

cent, although Italy’s debt rallied strongly

after the rightwing League party failed to

unseat their centre-left rivals in regional

elections last weekend.

The yield on the 10-year Italian bond

was pushed 19 basis points lower to 1.03

per cent yesterday on hopes that the

election outcome would avert further

political instability in the country.

Ray Douglas

What you need to know

Investors seek Italian bonds after Salvini defeat

Benchmark -year yield ()

Source: Bloomberg













Dec



 Jan

The day in the markets

Markets update

US Eurozone Japan UK China Brazil
Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa
Level 3249.92 1619.00 23343.51 7412.05 2976.53 115295.67
% change on day -1.38 -2.26 -2.03 -2.29 -2.75 -2.60
Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $
Level 97.887 1.101 108.905 1.306 6.930 4.226
% change on day 0.035 -0.181 -0.484 -0.077 0.000 1.023
Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond
Yield 1.604 -0.387 -0.052 0.528 2.997 6.604
Basis point change on day -8.620 -5.100 -2.730 -5.400 0.000 -0.200
World index, CommodsFTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 372.97 58.83 52.60 1564.30 17.83 2763.60
% change on day -1.44 -3.18 -3.17 0.09 1.31 -1.03
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.

Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index

| |||||| |||||||| |||||

Nov 2020 Jan

3040

3120

3200

3280

3360

| |||||||||||||||||||

Nov 2020 Jan

1520

1560

1600

1640

1680

| |||| |||||||| |||||||

Nov 2020 Jan

7040

7360

7680

Biggest movers
% US Eurozone UK

Ups

Arconic 2.99

Amcor 2.81

Ball 2.53

Dr Horton 2.50

Clorox 1.98

Colruyt 0.38

Bureau Veritas 0.27

Iliad 0.22

Edf 0.09

Sodexo -0.22

Nmc Health 0.93
Bt 0.54
Polymetal Int 0.24
Flutter Entertainment 0.09
Reckitt Benckiser -0.33
%

Downs

Wynn Resorts -6.78

Freeport-mcmoran -6.76

Royal Caribbean Cruises Ltd -6.25

Las Vegas Sands -5.87

Ipg Photonics -5.57

Prices taken at 17:00 GMT

Cnh Industrial -6.94

Amadeus It -6.13

Stmicroelectronics -5.77

Tenaris -5.01

L'oreal -4.62

Based on the constituents of the FTSE Eurofirst 300 Eurozone

Int Consolidated Airlines S.a. -5.48

Prudential -5.04

Rio Tinto -5.01

Carnival -4.99

Easyjet -4.92

All data provided by Morningstar unless otherwise noted.

B

ig banks and asset managers

are grappling with a common

problem — how to link the

scores of computer programs

that dominate today’s mar-

kets.Inrecentyearstradinghasbecome

highly automated, relying on huge

amounts of data coursing down the

fibre-optic wires that link fund

managerstobanksandexchanges.

Even the most hidebound corners of

capital markets, such as fixed income,

havelurched into the modern age sa

bond traders haveswitched the phone

forthekeyboardtobuyandsell.

This means data must move cleanly

and seamlessly between different

systemstoavoidlagsanderrors.

Hence the rising interest in latformsp

that can combine systems across trad-

ing, portfolio management and invest-

ment banking, reducing the risk of

glitches byenabling data based on one

standard to be used across a range of

applications. Helping the banks do that

are providerssuch asOpenFin, Glue42

and ChartIQ,eachhopingtobecomethe

connectivetissueofWallStreet.

“Across all of the banks, there is lots of

legacy software,” said Tosha Ellison, a

director of FINOS, an industrybody. “A

lot of it is still core to day-to-day proc-

esses and still works — it’s about being

abletohookthosesystemstogether.”

Goldman Sachs s emblematic of thei

shift. The bank is trying to direct more

clients through its “digital storefront”

calledMarquee, whichenable them to

trade securities and churn through

investment research. In the process, it

hasshiftedthesystemontoOpenFin.

Goldman is also a big user of Sym-

phony, an instant messaging tool that

operatesontheOpenFinplatform.

As messaging became the preferred

method for traders to chat and to set up

deals,Goldmanledaconsortiumtopur-

chase and expand Symphony in 2014,

and the application is now available on

OpenFin.

“There’s a big shift from companies

building to buying tech,” saidMazy Dar,

chiefexecutiveofOpenFin.“Theimpor-

tant part of a shared platform is that it

allows different apps — internal and

fromvendors—toworktogether.”

Mr Dar, who previously led credit

derivative strategy at Intercontinental

Exchange and who served as chief strat-

egy officer at Creditex, co-founded

OpenFin 10 years ago with a former col-

league, Chuck Doerr. The company ini-

tially focused on building a platform for

banksandfundmanagerstohousetheir

apps, outsourcing the technology that

connectsthemtoChartIQ.

As the linking became a bigger draw,

OpenFin became a competitor. It now

has the biggest market share among the

more than 100 banks and fund manag-

ers that have adopted such software.

Glue42 and ChartIQ are gaining ground,

said Monica Summerville, director of

fintechresearchforTabbGroup.

For banks, the big appeal is lower

costs. Reducing the need for developers

to find ways to plug one piece of soft-

wareinto another could trim expenses

for the likes ofJPMorgan Chase. The

bank’sbill f or technology, communica-

tionsandequipmentcameto$9.8bnlast

year, up 12 per cent from 2018, twice the

rate of growth in net revenues. Tech was

easily the bank’s biggest non-interest

expense,afterwagesandbonuses.

“The industry as a whole is under

prettyseverepressureintermsofgener-

ating returns and managing expenses at

scale,” said Adam Korn, globalco-head

of securities division engineering at

Goldman, where communications and

tech costs rose 14 per centlast year ot

$1.17bn, while group revenues were flat.

“We don’t have to build our core infra-

structure; we can rely on the [platform

thatOpenFin]hasbuilt.”

Barclays ad also adopted OpenFin toh

stitch together software from hundreds

of providers, said Ying Cao, the bank’s

head of digital products. “If each is a

closed platform, we could build some-

thing but it wouldn’t be scalable and the

different systems wouldn’t talk to each

othereasily.”

The take-up of these platforms has

led the banks to buy stakes in them.

HSBC astmonthl injected$5m spartofa

a $22m fundraising round for OpenFin,

joining existing shareholders JPMorgan,

Barclays andWells Fargo. Last year Citi

joined a fundraising round for ChartIQ,

whichofferstheFinsembleplatform.

Backers of the technology hope it can

extend well beyond finance. Insurance,

telecommunications, retail, manufac-

turing and even gambling are likely tar-

gets for expansion, said James Wooster,

chiefoperatingofficerforGlue42.

There are roughly 450,000 jobs in

capital markets in the US, according to

Department of Labor data, but across

finance and insurance there are 6.3m —

acompellingdriverforexpansion.

“The numbers are big, that’s why this

is fiercely competitive,” said Dan

Schleifer, chief executive of ChartIQ.

“Weallseeamuchbiggeropportunity.”

[email protected]

Tech platforms vie to

become Wall Street’s

connective tissue

‘The industry is under

pretty severe pressure

in terms of managing

expenses at scale’

JANUARY 28 2020 Section:Markets Time: 1/202027/ - 19:20 User:stephen.smith Page Name:MARKETS2, Part,Page,Edition:LON , 26, 1