Daily Agenda: U.S. Equity Investors Eye the Exit

Greece declares it will honor debts; Virtu files for IPO; Glencore’s cooling period for Rio Tinto merger talks set to expire.


The recent slowdown in U.S. activity measures, combined with a disappointing employment report on Friday, have cast a pall over U.S. dollar-denominated risk assets. Despite a rough patch in economic data, markets are still prepared for the Federal Reserve to begin raising benchmark rates later this year, meaning that the bad-news-is-good cycle of recent years past is over. With earnings season kicking into high gear later in the week, there may be further gloom on the horizon. Consensus analyst estimates for the S&P 500’s first-quarter 2015 results have fallen by nearly 6 percent. For now, investors in U.S. equity markets appear to be focused on the exit door as macro headwinds and diminished expectations weigh on sentiment.

Greece gears up for debt payment. Despite a looming liquidity crisis if Greece does not reach its terms of credit with the European Union, Yanis Varoufakis, finance minister of Greece, announced over the weekend that his nation will make a scheduled debt payment to the International Monetary Fund on April 9. Prime Minister Alexis Tsipras is meeting with Russian President Vladimir Putin in Moscow tomorrow to discuss Greek-Russian relations. Most analysts anticipate that Russia will is unlikely to directly aid the government in Athens.

Glencore-Rio Tinto moratorium to end. On Tuesday the six-month cooling period prescribed by U.K. regulatory law will expire, allowing discussions of a merger between commodity trading giant Glencore and mining company Rio Tinto to resume. Last autumn Rio Tinto, the world’s largest iron ore producer by volume, rejected a $150 billion overture from Switzerland–based Glencore.

High-frequency trading company to launch IPO. A filing with the SEC released today indicated that high-frequency trading company Virtu Financial plans to offer roughly 16.5 million shares in a public float priced between $17 and $19 each. When completed, the initial public offering will see the high-frequency trading firm valued at $2.6 billion.

RBS’s loss Mizuho’s gain. Mizuho Financial Group has indicated that it will absorb as many as 200 U.S.–based employees of Royal Bank of Scotland Group as part of an acquisition of loans from the beleaguered U.K.–headquartered bank. The $36.5 billion credit portfolio was acquired by the Japanese lender in a $3 billion transaction.

U.S. nonmanufacturing service-sector data on deck. In the U.S., critical data for the service sector will be released this morning by the Institute for Supply Management. The March nonmanufacturing index final reading is expected to contract slightly, however the primary focus for investors will be the employment subindex as markets digest last week’s disappointing job data.

Spanish unemployment declines. In the biggest drop since 2002, March jobless claims fell by 1.3 percent in Spain, according to data released today by the country’s labor ministry. Service-sector claims fell by the largest margin at nearly 2 percent as the total number of employed persons paying into the nation’s national pension rose by nearly 1 percent.