Al-Qaida threat hits financial markets
London, January 20:
Osama bin Laden threatened to disrupt a new mood of calm in the world’s financial markets when he warned that fresh terrorist attacks on the United States were being planned.
After a day in which a rise in share prices had removed the immediate pressure from the gilts market in London, oil prices hardened in London and New York yesterday afternoon following the statement from the al-Qaida leader.
Concern about supply disruptions from Nigeria and Iran, coupled with reports that the recent mild weather in the US may be coming to an end, left the price of crude in New York hovering around $66 a barrel - only $5 below the record reached in the aftermath of Hurricane Katrina last year.
The upward drift in oil prices took the shine off a day in which rising global share prices affected the appetite for government bonds in the UK. In Japan, the Nikkei index of leading shares shrugged off the apparent suicide of one of the former senior executives of Livedoor - the company that triggered the stock market turbulence earlier this week - to post its biggest one-day rise in three months.
In London, the FTSE 100 index ended the day 29.5 points up at 5693.2,while Wall Street’s Dow Jones index was modestly higher in early trading. Yields on gilts in London rose from the 50-year lows reached on Wednesday, helped by the quarterly snapshot of the economy from the British Chambers of Commerce which dampened expectations of an early cut in interest rates from the Bank of England.
Traders in the gilts market said the reassuring noises from the government’s Debt Management Office that it was monitoring the market closely had helped to push up yields. At one stage on Wednesday, the real yield of 50-year index-linked gilts fell to a mere 0.38 per cent, barely a third of the 1.112 per cent they were sold at last year.
Analysts said gilts traders had heeded warning signs that the massive new-year buying spree could end in tears. “No surprise that gilt yields are higher today,’’ said Kit Juckes, head of bond research at RBS Financial Markets. “It’s not surprising because the bubble is burstable.’’
The investigation into alleged share price manipulation by Livedoor, a Japanese internet company, took a macabre turn with reports that Hideaki Noguchi,a former senior executive of the firm, had died, apparently having committed suicide after being questioned by prosecutors.
Noguchi, vice-president of HS Securities, was discovered stained with blood at a capsule hotel on the southern Japanese island of Okinawa on Wednesday afternoon. He had not left a suicide note and a knife was found nearby, police said. He was taken to hospital where he died from loss of blood.
Prosecutors said they had not questioned Mr Noguchi. Prosecutors are, however, preparing to question Livedoor’s 33-year-old chief executive Takafumi Horie over allegations that the firm boosted its share price by providing false information about its 2004 acquisition of the publisher Money Life.