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#MoneyBeat WSJ City PM: Investors Swing From Exuberance to Prudence, Europe’s Special Tax Cut for London Bankers

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Good afternoon from the WSJ City desks in London. WSJ City is the app that delivers concise, smart news on business and finance for mobile. Download for iPhone or Android. Here’s essential reading on today’s developments.


At the beginning of the year, investors were exuberant. One month later, caution is king. Fund managers who responded to Bank of America Merrill Lynch’s monthly survey in February said they were increasingly taking protection against a dive in equities. Why This Matters: This is a significant shift: In January, fund managers deemed the most crowded trade to be one that bet on calm markets. New data released by the US Commodity Futures Trading Commission shows exactly how quickly investors went off that trade.

Bankers looking for a post-Brexit tax-break might be surprised at their options. Some of Europe’s most legendary tax-heavy countries – among them France and Italy – are cutting special deals to woo rich expats with the promise of smaller personal tax bills.

Consumer prices in the UK rose 3% year-on-year in January, above consensus estimates, and strengthening the Bank of England’s case that borrowing costs need to rise to bring inflation back to its 2% annual goalWhy This Matters: Inflation in the UK has been above the BOE’s 2% annual target for 12 straight months. Officials led by Governor Mark Carney on Thursday said that they expect to raise interest rates at a swifter pace than they anticipated last year to contain growth in prices.

South African President Jacob Zuma dismissed an order from his own party to resign immediately, potentially forcing the ruling African National Congress into a damaging vote to oust him in parliament. Senior ANC members have openly said that they want Zuma to leave so the party has time before next year’s national elections to try to restore its image, which has been marred by multiple allegations of corruption against the President. The rand fell on Tuesday.

Some investors were spooked after last week’s stock market dip, but it did have a silver lining: Stock valuations now look a lot more attractive. Shares are trading closer to their long-term price/earnings ratios, and the global economy is growing. There’s still a case to be made for stocks.

Walgreens Boots Alliance has made a takeover approach to drug distributor AmerisourceBergen, a move that could help boost profitability at the drugstore giant and insulate it against external threats in an increasingly competitive health-care landscape. Why This Matters: In December, Walgreens rival CVS Health signed a $69 billion deal to buy health insurer Aetna. Some analysts saw that acquisition as a response to Amazon’s potential move into the pharmacy business.

A Japanese bank has become the latest tenant to sign up for space in a City office development undergoing a major revamp, FN reports. Sumitomo Mitsui Banking Corporation Europe has pre-let three floors at 100 Liverpool Street in Broadgate, according to a statement from property group British Land, which owns the campus in a 50:50 joint venture with Singaporean sovereign fund GIC.


Foreign Firms Laud US Tax Change, But Some Could Get Hit – The Wall Street Journal

US Strikes Killed Scores of Russia Fighters in Syria, Sources Say – Bloomberg

Wall Street Traders Boosted by Return of Volatility – Financial Times (£)

Shale Output Hasn’t Grown This Fast Since Oil Was at $100 – The Wall Street Journal

London Metal Exchange Aims to Ban Metal Sourced With Child Labour – Reuters


US stocks traded lower as investors remained on edge following last week’s sharp selloff. The Dow Jones Industrial Average slipped 0.5%, the S&P 500 fell 0.4% and the Nasdaq Composite was 0.2% lower.

In Europe, the Stoxx Europe 600 closed down 0.6% in choppy trade. The UK’s FTSE 100 was 0.1% lower. Most Asian markets gained, though Japanese stocks fell.

Shares in AmerisourceBergen jumped more than 8% after the Journal reported that the firm has received a takeover approach from Walgreens Boots Alliance. Amerisource is one of the largest drug distributors in the US and Walgreens is the world’s biggest drugstore chain by number of stores.

Sterling was 0.4% higher against the dollar after data showed that consumer prices rose by 3% in January, the 12th month in a row that inflation has been above the Bank of England’s 2% target, strengthening the Bank’s case for hiking interest rates.

Oil prices resumed their recent slide – with US benchmark WTI down 0.5% and the international Brent Crude down 0.2% – after the International Energy Agency added its voice to the chorus warning that US shale could drown the rally of the past year.

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