Financial Times Europe - 10.03.2020

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Briefing

i on to buy Willis TowersA

in $30bn all-share deal

The second and third-biggest

insurance brokers have agreed a

deal that will forge an industry

leader in the latest stage of a long

consolidation process. Aon said

there would be $800m of

synergies.— PAGE 11; LEX, PAGE 10

i U seeks Turkey accordE

Brussels chief Ursula von der

Leyen has said the bloc wants a

“future-proof” strategy to halt

conflicts at its border with

Turkey ahead of a meeting with

Recep Tayyip Erdogan.— PAGE 4

i ate wave propelled BidenL

FT analysis has shown that White

House hopeful Joe Biden’s Super

Tuesday sweep was driven by

voters who decided on him only a

week before.— PAGE 4; NOTEBOOK,

PAGE 8; GIDEON RACHMAN, PAGE 9

i ustralia sues FacebookA

Canberra’s privacy watchdog has

started proceedings against the

platform over the Cambridge

Analytica scandal, in which

personal data were harvested for

political advertising.— PAGE 4

i orsey stays in Elliott dealD

The activist hedge fund and

Twitter have agreed a ceasefire

that will see Jack Dorsey keep his

post as chief executive, while the

company prepares a $2bn share

buyback.— PAGE 11; LEX, PAGE 10

i alcone assets freezeF

A judge has made an order

against hedge fund boss Philip

Falcone after he failed to pay

millions in fees to a law firm that

had defended him in high-stakes

battles with regulators.— PAGE 14

Datawatch

TUESDAY10 MARCH 2020 WORLD BUSINESS NEWSPAPER EUROPE

World Markets

STOCK MARKETS

Mar 9 prev %chg

S&P 500 2826.27 2972.37 -4.

Nasdaq Composite 8206.11 8575.62 -4.

Dow Jones Ind 24561.18 25864.78 -5.

FTSEurofirst 300 1323.72 1432.45 -7.

Euro Stoxx 50 2976.10 3232.07 -7.

FTSE 100 5965.77 6462.55 -7.

FTSE All-Share 3334.86 3600.95 -7.

CAC 40 4707.91 5139.10 -8.

Xetra Dax 10625.02 11541.87 -7.

Nikkei 19698.76 20749.75 -5.

Hang Seng 25040.46 26146.67 -4.

MSCI World $ 2149.29 2192.35 -1.

MSCI EM $ 1012.08 1039.34 -2.

MSCI ACWI $ 514.88 525.64 -2.

CURRENCIES

Mar 9 prev

$ per € 1.142 1.

$ per £ 1.310 1.

£ per € 0.871 0.

¥ per $ 102.545 105.

¥ per £ 134.365 137.

SFr per € 1.062 1.

€ per $ 0.876 0.

Mar 9 prev

£ per $ 0.763 0.

€ per £ 1.148 1.

¥ per € 117.091 119.

£ index 79.404 79.

SFr per £ 1.218 1.

COMMODITIES

Mar 9 prev %chg

Oil WTI $ 32.71 41.28 -20.

Oil Brent $ 35.95 45.27 -20.

Gold $ 1683.65 1659.60 1.

INTEREST RATES

price yield chg

US Gov 10 yr 0.51 -0.

UK Gov 10 yr 0.15 -0.

Ger Gov 10 yr 107.38 -0.86 -0.

Jpn Gov 10 yr -0.15 0.

US Gov 30 yr 135.34 0.92 -0.

Ger Gov 2 yr 106.06 -1.01 -0.

price prev chg

Fed Funds Eff 1.58 1.55 0.

US 3m Bills 0.45 0.62 -0.

Euro Libor 3m -0.52 -0.50 -0.

UK 3m 0.52 0.55 -0.

Prices are latest for edition Data provided by Morningstar

At some point the music stops playing

for investors. Yesterday’s steep drop in

the oil price senttraders across

equities, credit and emerging markets

rushing for the pause button.

Theinitialshockwasthecoronavirus

outbreak’simpactontheglobal

economy.Thencametheblowofanoil

pricewar.Nextisescalatingfinancial

contagion.Marketsarelikelytoburn

untilthefuelofhighdebtlevelsand

aggressiverisktakingisextinguished.

Investorsareseekingatleastsome

protectionin“longbonds”astheir

portfoliossufferahitacrossequities.

Manyportfolioswerealreadynursing

lossesfrombigfallsoverthepasttwo

weeks.Andwhileanoilpricewarraises

thepressureonenergysharesanddebt,

italsoreinforcesdemandforthesafety

oflong-datedgovernmentbonds.The

fallintheUS’s30-yearTreasuryyield—

from1.7tojust0.7percentinthepast

threetradingdays—suggestsinvestors

donotbelievecentralbankscanprevent

the w orldfromsinkingintodeflation.

Bigmarketshake-outscanescalate

overweeksasriskmanagerssubject

portfoliosandtradingdeskstotighter

limits.Thereisalsotheprospectof

increasedmargincallsontradersto

increasecollateralontheirpositions.In

turn,thatislikelytocompelthesaleof

sharesthathaveperformedstrongly

untilnow.Amoretroublingsignfor

marketswouldbeassetmanagers

“gating”theirfunds,orpreventing

investorsfromsellingtheirholdings.

Manyseasonedinvestorswillnote

thatmarketsultimatelybounceback

fromboutsofturmoil.Buyingthedip

hasworkednomatterhowtoughtimes

havelooked.Thescaleofyesterday’s

equitydeclinesisanecessary

developmentbeforemarketseventually

stabiliseandrecover.Onesmall

consolationisthatthecombinationof

ultra-lowinterestratesandoilprices—

alongwithgovernmentsboostingtheir

spending—shouldstarttolifttheglobal

economyinthenextfewmonths.

“Thecatalystsforamarketturnare

morelikelytobesomecombinationof

peakinfectionrates,underweight

positioningandverycheapmarkets,”

saysJPMorgan’sJohnNormand.

Onthosemetrics,financialmarkets

facequiteawaitbeforethemusicstarts

playingagain.

Music stops for investors as aggressive,

debt-driven strategies near their finale

© THE FINANCIAL TIMES LTD 2020
No: 40,344★

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha

Big ReadiPAGE 7

Barclays bosses’ acquittal

spurs calls for UK reform

Austria €3.90 Malta €3.
Bahrain Din1.8 Morocco Dh
Belgium €3.90 Netherlands €3.
Bulgaria Lev7.50 Norway NKr
Croatia Kn29 Oman OR1.
Cyprus €3.70 Pakistan Rupee
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.
Egypt E£45 Qatar QR
Finland €4.70 Romania Ron
France €3.90 Russia €5.
Germany €3.90 Serbia NewD
Gibraltar £2.90 Slovak Rep €3.
Greece €3.70 Slovenia €3.
Hungary Ft1200 Spain €3.
India Rup220 Sweden SKr
Italy €3.70 Switzerland SFr6.
Latvia €6.99 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.90 UAE Dh20.
North Macedonia Den

The coronavirus crisis will stretch health

services. Japan and South Korea have the

most hospital bedsper capita; the UK

ranks among countries with the lowest

Virus strains

Hospital beds per 

inhabitants ()

    

Japan

South Korea

Germany

France

China

Italy

Spain

US

UK

Source: OECD

FT REPORTERS

Marketsreacted violentlyyesterdayas
Saudi Arabia embarked on an oil price
war with Russia that sent prices falling
atthefastestpaceinthreedecades.
Prices plunged30 per cent at the start
of Asian trading, triggering a string of
stock market declinesthat leftthe S&P
500andtheFTSE100downbycloseto
per cent. “At such a time of uncertainty
and potential vulnerability to the world
economy... playing Russian roulette
with the oil market may well have grave
consequences,” said Fatih Birol, execu-
tive director of International Energy
Agency,theglobalbody.
The spread of coronavirus also stoked
market fears. While President Donald

Trump played down the impact of the

virus, circuit-breakers limited the trad-

ing of the biggest US stocksin an

attempttocalmpanickyselling.

Investors,bruised by weeks of sell-

offs in response to the outbreak,shifted

further out of risky assets, such as equi-

ties and high-yield bonds, and into the

perceivedsafetyofgovernmentdebt.

“In just over two weeks, investor sen-

timent has swung from complacency to

panic,” said Paul O’Connor, a portfolio

manager at Janus Henderson Investors.

“What started as a virus-driven de-

risking has now mutated into a broad-

based,multi-assetcapitulation.”

The triggering of the 15-minute trad-

ing break in New York — the first time

the measure has been usedsince it was

introduced in 2013 — was “an exclama-

tion point on how bad things are”, said

Mike Kagan, a portfolio manager for

ClearBridgeInvestments.

Italy’s FTSE MIB was hit especially

hard, shedding more than a10th of its

value after 16m people in the country’s

prosperous north werelocked downin

anefforttocontrolthevirusoutbreak.

Government bonds, meanwhile, shot

higher, reflecting growing anxiety— as

well as strong expectation that central

bankswillridetothemarkets’rescue,as

they have done several times since the

financialcrisisof2008.

While 10-year US government bond

prices rattled higher, yields sank to a

record low of0.32 per cent. The US Fed-

eral Reserve cut interest rates by half a

percentage point in an unscheduled

move last week, but investors are still

pricing in an additionalcut this month

and a shift to near-zero interest rates in

the US by the summer. Some UK gov-

ernment bond yields also turned nega-

tiveforthefirsttime.

Shares in US oil majorsExxonMobil

andChevronfell by more than 10 per

cent.TheUK’sBP umbledbyafifthandt

UK independentPremier Oilfell almost

60 per cent. Corporate bond markets

alsopunishedUSoilexplorationgroups.

“No one has an information advan-

tage when it comes to coronavirus. s aA

result, the path that investors are taking

is to take risk off the table, regroup and

re-evaluate when more clarity becomes

available,” said Michael Arone, chief

Saudi-Russia oil price war sends

tremors through global markets

3 Crude plummets 30% 3 FTSE and S&P battered 3 New York exchange triggers circuit breaker

$52.

Tuesday

Mar 3 8am

Low $31.

$36.

Monday

Mar 9 5pm

investment strategist for State Street

GlobalAdvisors.

“The mantra right now is: ‘You can

forget about return on investment, it’s

return of investment. Will I get my

money back?’ hat’s all investors careT

about,” said Alex Tedder, head of global

equitiesforSchroders.

Reporting by Katie Martin,

Philip Georgiadis, Adam Samson,

Richard Henderson & Colby Smith

Virus & oil reports ages 2 & 3p

Editorial Comment age 8p

Ray Dalio & Mohamed El-Erian age 9p

Lex age 10p

Tail Risk age 11p

Oil industry risks age 13p

Markets reports age 19p

Markets Insightpages 20

OPINION

Michael

Mackenzie

FTSE 100

-7.7%

Stoxx 600 oil & gas

-16.8%

FTSE 100

-8.2%

S&P 500 energy

17.6%

S&P 500

-7.7%

Oil price

Saudi Arabia’s de facto

leader Prince Mohammed

bin Salman

Market prices above are intraday for S&P

Getty Images

MARCH 10 2020 Section:FrontBack Time: 3/20209/ - 18:57 User: simon.roberts Page Name:1FRONT USA, Part,Page,Edition:EUR , 1, 1