Toshiba, Italian banks ripple calm markets
A PLUNGE in the share price of Toshiba over a possible write-down and the bailout of one of Italy’s top banks were the biggest ripples in otherwise placid trading yesterday.
“Markets are calm, as thin holiday volumes are in play,” said market analyst Ipek Ozkardeskaya at London Capital Group.
However a 12 percent meltdown in Toshiba shares on speculation that it may book a multi-billion-dollar loss over a US subsidiary’s acquisition of a nuclear power service company livened up trading in Tokyo.
After trading closed the Tokyo-based conglomerate said in a statement that costs linked to the 2015 transaction will possibly come to “several billion US dollars, resulting in a negative impact on Toshiba’s financial results”.
The exact figure of the potential onetime write-down, however, is “still subject to determination,” it added.
Toshiba said the possible write-down was related to the valuation of the purchase by its US subsidiary Westinghouse Electric of a US nuclear service company.
Italy bank bailout
In Europe, Frankfurt and Paris trod water in thin trading while London remained shut over the Christmas holiday period.
With little news to guide them, European investors were nervously eyeing the latest developments in Italy after troubled lender Banco Monte dei Paschi di Siena (BMPS) said the European Central Bank had called for it to receive a bailout of 8.8 billion ($9.2 billion).
The ECB’s reported need for recapitalisation at BMPS is over three billion euros more than previously judged necessary.
“The news of the day is about Banco Monte dei Paschi di Siena,” Daniel Larrouturou at Diamant Bleu Gestion in Paris told AFP.
He said the higher bailout sum could “weigh heavily on BMPS, whose shares are currently suspended, and possibly on the banking sector”.
However Milan’s FTSE-Mib index was flat in midday trading.
Italy on Friday approved a state-funded rescue of Tuscan lender BMPS without citing a specific figure. The move however is fraught with political and economic complications for a centreleft government preparing for an election in the next 15 months.
Trading is expected to be light this week as financial markets end a volatile year, with US stocks near a record high following the surprise US election victory of Donald Trump, with the Dow tantalisingly close to breaking the 20,000 barrier.
“The financial markets seem to have already priced in expectations toward a Trump presidency, and are shifting toward a market that’s waiting to gauge his actual policies,” Hideyuki Ishiguro, a senior strategist at Daiwa Securities in Tokyo, told Bloomberg News.
Crude mostly held onto its recent gains.
Prices have been boosted after OPEC announced at the end of last month its members would slash output by 1.2 million barrels per day beginning in January.
Earlier in December, non-OPEC members approved cuts totalling 558,000 barrels per day.
However, analysts sounded a note of caution.
“Questions remain on whether the rally will continue because unless there are new bullish items, the market may see more uncertainties in the long term,” said Will Yun, a Seoul-based commodities analyst at Hyundai Futures Corp, according to Bloomberg.