Alarm

Dive dive dive!

The head of Google, an American technology company, has awarded himself a $199m bonus, perhaps in recognition of the huge savings in corporation tax he has achieved for the firm. It certainly was not a reward for Google shares outperforming the stock market: both are down by -10% on the year.

There was another equity sell-off yesterday in Europe and North America. It carried through to the Far East, knocking more than 5% off Tokyo's Nikkei index. As has been the case so often this year there was no concrete news to start the rot. It was simply a re-emergence of risk aversion. The biggest gainers were Japanese government bonds and the yen itself. JGBs have joined Swiss bonds to trade on a negative yield. Investors no longer receive interest on their money: they are paying the two governments to keep it safe for them.

The yen strengthened by an impressive 2.9% on the day. In second place was the Swiss franc with a 1.6% gain and the euro took third with a rise of 1.3%. The South African rand's -0.9% decline put it bottom position and the Australian dollar was down by -0.2%. Defying the flight to safety, the Canadian and NZ dollars both managed modest gains of a third of a cent and a fifth of a cent respectively.

No safe haven

A poor performance by the British pound provided a reminder that sterling is not, at least for the moment, perceived as a safe haven currency. A supportive comment by Italy's prime minister backfired slightly when he said "I'm backing David" Cameron because leaving the EU "would be terrible for the UK".

The pound has fallen by an average of -0.7% against the other dozen most actively-traded currencies. Its only gains are against the rand and the Aussie. Paradoxically, the only UK economic statistic to have emerged over the last 24 hours was a good one: The British Retail Consortium's retail sales monitor put sales in January 2.6% higher than the same month last year. Investors also ignored a report by Goldman Sachs which said Britain's chance of a recession in the next two years is negligible.

Among the few other ecostats Euroland investor confidence faded to a below-forecast 6.0, Swiss unemployment was steady at 3.4% and Australian business confidence was unchanged at 2.

What now?

As London opens today there is no immediate sign of the panic which gripped the Far East. Shares in London and Frankfurt are steadyish and the yen is off its highs.

The euro is lower too, largely on account of unexpected declines in German industrial production and foreign trade. Other data on today's list cover Britain' balance of trade, US wholesale inventories and not very much else.

So it will all be down to sentiment. If investors decide that the overnight flight to safety was overdone there could be a corrective rally for risk assets. If not, watch out for sterling to slip again.