...the main business headlines..........
US stocks slump in renewed sell-off
Wall Street entered bear market territory yesterday as the financial sector suffered renewed declines. Financial stocks led the market lower in a session which saw the Dow Jones Industrial close down 3 per cent. Investors took fright as initial jobless claims surpassed expectations and retail sales proved to be sluggish. Respected Pimco fund manager Bill Gross added fuel to the fire after he said that a “financial tsunami” could occur if the US government failed to support the markets.
BOE leaves rates unchanged
The Bank of England left interest rates unchanged at 5 per cent yesterday, for the fifth month in a row. While there are calls for a drop in rates to help the economy withstand the effects of the credit crunch, the inflation rate stands at over double the BOE’s target of 2 per cent and is tying its hands. Economists believe the next move will be downwards, but this is unlikely to take place until inflation has peaked. Opinions vary on the timing from November to early in 2009.
House price fall fastest since records began
House prices fell by 1.8 per cent in August from July and 12.7 per cent since August 2007, according to new figures from Halifax, the UK’s largest mortgage lender. The drop is the biggest since the company started its monthly survey in 1983 and the first time it has been in double figures. Halifax’s chief economist said market conditions would remain “challenging” but added that the announcement by the government of a raising of the threshold of stamp duty was a “welcome development”.
Rouble in massive central bank support operation
Russia’s central bank intervened heavily to support the rouble yesterday in the wake of a loss of investor confidence in the currency, reported the Financial Times. It had fallen to R30.41, “its weakest level since the Russian central bank adopted its euro/dollar basket in February 2007”. The central bank governor admitted that there had been outflows in foreign capital since the start of the war in Georgia, a figure which analysts estimate could be as high as $21billion.
UK car sales skid to a halt
Car sales fell to their lowest level for more than 40 years in August, with the industry warning of cuts in production as customers desert the showrooms. Traders said just 63,225 new cars were sold in the month, the worst number since 1966, a result which is likely to send shockwaves through the entire industry. The most expensive cars were among the worst affected, with Jaguar seeing a 41 per cent drop to 422 cars and Aston Martin a 67 per cent slump to just 19 cars.
Wetherspoon profits fall sharply
J D Wetherspoon, owner of nearly 700 pubs in the UK, said that profit fell 24 per cent last year. Increased food and labour costs were to blame for the slump, and a ban on smoking in England also kept customers out of the pub. Just as the group moved away from alcohol sales to focus on meals, the rise in food costs in the wake of soaring commodities prices meant profits were constricted. The group plans to lower the second half dividend, while maintaining the full year payout.
...in brief..................
HMV sales up and Informa rejects bid approach
HMV, the largest music retailer in the UK, said 18 week revenue to Aug 30th increased 1.3 per cent, on demand for Nintendo’s Wii video-game console. However weaker book sales at the group’s Waterstone’s chain meant growth was weaker than in the previous period…………
Electricite de France is nearing a deal to buy nuclear generator British Energy, said the Financial Times. Talks with its UK investors “have begun to bear fruit” after its previous bid was rejected by shareholders in July. It is now believed to be considering a bigger offer…………
EasyJet carried 24 per cent more passengers in August after lowering ticket prices and buying GB Airways. Europe’s second-biggest discount airline flew 4.56 million travellers versus 3.71 million a year earlier and its load factor was up 3.9 per cent to 91.3 per cent…………
Unilever has hired an outsider as chief executive for the first time in its 78 year history. The cleaning products giant has put in place Dutchman Paul Polman, who spent the majority of his career at arch-rival Procter & Gamble. He beat four internal candidates to the post…………
Sony shares were down more than 4 per cent today in Tokyo, after the electronics maker announced the recall of 438,000 Vaio laptops due to possible overheating concerns. The concerns centred on the slow response to the problem and the hit to its reputation…………
Informa, owner of Lloyd’s List and academic publisher Routledge has rejected a formal offer from a private equity consortium including Providence Equity, Carlyle and Blackstone. It rejected a previous offer of 506p a share in June and the new lower offer of just 405p was dismissed as too low…………
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