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Trade FX with a leading bank BUSINESS WITH PERSONALITY BOURSES IN REVEALED: OUR SHORTLIST BATTLE OF TOP DEALMAKERS LSE FIGHTS TO KEEP TMX MERGER CITY A.M. AWARDS P20 ON COURSE P4 Issue 1,410 Friday 24 June 2011 www.cityam.com FREE OIL PLUNGES AFTER RESERVES RELEASE BRENT CRUDE OIL FUTURE INTRADAY CHART The release stoked political feuds, International Energy with Republicans and the oil industry accusing President Obama of vot- Agency’s emergency ing for the measure to boost America’s sluggish recovery. “This action threatens our ability supply tapped for just to respond to a genuine national security crisis and means we must third time in 37 years ultimately find the resources to replenish the reserve – at significant ▲ WORLD ECONOMY cost to taxpayers,” said Republican BY JULIAN HARRIS politician John Boehner. The move also puts pressure on oil FRENZIED trading saw oil drop by cartel Opec, which earlier this over six per cent yesterday, after the month failed to decide whether to International Energy Agency (IEA) release more oil into the market. said it would release 60m barrels of Some analysts said the release emergency reserves in the next could temporarily ease inflationary month, “in response to ongoing dis- 8:00 am 10:00 pm pressures in the West. Growing infla- ruption of oil supplies from Libya”. tion in Europe and the US has seen Brent crude sank to $107.14 Price: Price: central banks, particularly the (£75.63) per barrel, close to $7 down $114.21 Federal Reserve, come under fire. on the day, while US crude sank $107.26 A drop in the price of oil to $95 per close to $91 a barrel, down roughly barrel would wipe half a percentage five per cent from the day’s high. Oil prices plummeted yesterday after the IEA announced it would unlock 60m barrels of emergency reserves in the coming month point off inflation forecasts in the The news sent a chill through UK and Europe over the next 18 markets, helping to send the FTSE to hover dangerously near its 200-day behind the euro crashing to an all- reserves since it was founded in 1974 months, according to Alan Clarke of dropping 1.7 per cent to its lowest moving average. Positive news on the time low against the Swiss franc. in the wake of the Arab oil embargo. Scotia Capital. “For the Bank, this close since 16 March, when markets Greek budget, however, helped the Goldman Sachs said Brent crude The Gulf War (1990-1991) and could contribute to further delaying were plunging in the aftermath of US markets pare losses. could fall by $10-$12 a barrel by the Hurricane Katrina (2005) prompted the first interest rate hike, and may the Japanese earthquake. Weak employment data for the US end of July, after the surprise the two previous occasions when add to speculation of another round The Dow fell over one per cent also dented stocks across the pond, announcement from the IEA. supply was disrupted enough to con- of quantitative easing,” he said. immediately after the news, while while poor services and manufactur- It marked only the third time that vince the IEA to release millions of ALLISTER HEATH: P2 the S&P 500 Index shed 1.4 per cent ing data in the Eurozone was partly the IEA has unlocked emergency barrels per day in reserves. ECONOMICS: P17 ▼ ▼ ▲ ▼ Certified Distribution FTSE 100 5,674.38 -98.61 DOW 12,050.00 -59.67 NASDAQ 2,686.75 +17.56 £/$ 1.60 -0.01 £/¤ 1.12 unc ¤/$ 1.43 unc 02/05/11 till 29/05/11 is 103,467 Why Trade FX anywhere else? CitiFX Pro is an offering by professionals for professionals. Get a direct relationship with a leading FX brand, institutional-grade research & commentary, special events with CitiFX strategists, spreads from 1.2 pips and more. >> visit www.citifxpro.com for full details CitiFX® Pro © Citigroup, Inc., 2011. Trading foreign exchange involves a high degree of risk. CitiFX Pro is only available to Professional Clients in the UK. CitiFX Pro is a service offered to you by Citibank International plc which is authorized and regulated by the Financial Services Authority. Registered Ofﬁ ce: Canada Square, Canary Wharf, London E14 5LB. VAT registration number GB 429 625 629 2 News CITYA.M. 24 JUNE 2011 Lessons to learn from Swiss watches NEWS | IN BRIEF Williams wades into energy deal US energy group Williams Companies last night tried to break up a rival’s do extremely well. Being the best at the boom in the emerging world is chosen to release 60m barrels of oil takeover deal with pipeline company something very special and unique incredibly exciting and is doing won- from its strategic inventories. At first Southern Union by making an unsolicit- almost guarantees success. This can be ders to cut poverty. World trade is set sight, the rationale looks clear: the IEA ed $4.9bn cash bid. Energy Transfer goods, agricultural products or servic- to rise from $37 trillion in 2010 to $150 is trying to compensate for the reduc- Equity had already offered Southern es such as foreign exchange trading or trillion in 2030 (in constant dollars) tion in Libyan supply, though this is a Union $4.1bn in a stock deal. Southern private secondary education. The sec- and $370 trillion by 2050. The explo- bit strange given that the soft patch in Union shares rose around 15 per cent in ond lesson is that it confirms the grow- sion in wealth this entails is mind-bog- the EU, UK and US economies means after market trading last night. Barclays ing importance of Asia; the Merrill gling. Intra-emerging markets trade is that demand for oil ought to fall. and Citi are advising Williams on its bid. EDITOR’S LETTER Lynch Cap Gemini world wealth report set to overtake trade within advanced What is really happening is that the this week revealed that there are now economies by 2015 and overtake trade IEA is trying to act like a modern cen- AIB in talks over capital raising ALLISTER HEATH more people with liquid assets of $1m between advanced economies and tral bank: it is attempting a hubristic Allied Irish Banks announced yesterday or more in Asia than there are in emerging markets trade by 2030, game of aggregate demand manage- that discussions are continuing with the IT is my favourite fact of the day: Europe. This is not a zero sum game: according to Citi. But the opportuni- ment, hoping to boost consumer and Government over the terms and struc- exports of Swiss watches jumped by an the City has a huge opportunity to sell ties are immense for individuals, com- corporate spending on non-energy ture of a capital raising in order to satis- astonishing 40 per cent in May. Exports its wares to Asia. At the moment, this panies and countries that are willing items by temporarily pushing down fy recent stress tests. Ireland, which to China were up 41 per cent in May, to opportunity is partly being squan- to fight for them, as I argued last night the price of oil. It is a dangerous game already owns 93 per cent of the bank, South Korea by 39 per cent and to dered by self-inflicted regulatory and in my speech to the Lord Mayor’s excel- and it won’t work – though Barack could end up taking more control of the Singapore by 35 per cent. Even tax attacks on our competitiveness. lent formal dinner for the property Obama will of course be hoping to ben- bank and buying more shares, resulting Western demand is recovering, albeit The third lesson is that while overall industry at Mansion House. We need efit politically. The price of oil won’t in potentially significant additional dilu- not by as much. Swiss watches are not consumer spending is growing only to be on the right side of history – that stay low for long, so the IEA will have tion for existing ordinary shareholders exactly a mainstream industry – but marginally in many Western means being sufficiently competitive, used up a chunk of its reserves for not other than the state. It is expected that they make for a fascinating indicator economies, there is plenty of demand educated and savvy to cash in on the very much gain. Rather than going for discussions with the Government will and highlight several important les- for premium products globally. The next few decades of booming trade. short-term bursts of stimulus, the IEA finalised within a week and AIB then sons we must all learn. better-off have bounced back from the would be better off holding its fire in expects to be in a position to announce The first is that countries that spe- recession because their wealth and OIL POLITICS GONE MAD case of a real crisis. the final terms and structure of any cap- cialise in high value added products – incomes are highly leveraged to the IT is good news for consumers that the [email protected] ital raising transaction with the State. even manufactured goods – can still economic cycle. What is clear is that International Energy Agency (IEA) has Follow me on Twitter: @allisterheath AIB expects to remain as a listed firm. 7th Floor, Centurion House, 24 Monument Street, London, EC3R 8AJ IMF endorses Tel: 020 7015 1200 Fax: 020 7283 5334 Email: [email protected] www.cityam.com Editorial Editor Allister Heath Deputy Editor David Hellier Greek budget News Editor David Crow Acting Night Editor Marion Dakers Business Features Editor Marc Sidwell Lifestyle Editor Zoe Strimpel ▲ EUROZONE Greek lawmakers must pass the Sports Editor Frank Dalleres BY KASMIRA JEFFORD new new round of austerity measures Greek PM George Papandreou still faces an uphill battle to avoid a default Art Director Craig Gaymer through parliament next week in Pictures Alice Hepple GREECE has agreed on the details of a exchange for second rescue package Commercial five-year austerity plan with EU and worth €120bn that has been agreed to Sales Director Jeremy Slattery IMF inspectors hoping to steer the in principle by Eurozone members.

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