the main business headlines..........
Stocks in Asia soar
Asian stocks and bonds jumped after China and Taiwan cut interest rates, with the MSCI Asia Pacific Index adding 7.9 per cent in late Tokyo trade, its third day of gains. In South Korea the Kospi index enjoyed an 11 per cent gain, after the US agreed a $30bn currency swap with the country and in Japan and Hong Kong the benchmark indices soared 10 per cent. US and European index futures prices rose in reaction and in the UK the FTSE 100 responded with an early 1.5 per cent jump.
US cuts rates to 1 per cent
The US Federal Reserve slashed rates by half a percentage point last night, to one per cent, in response to the deteriorating state of the economy. Unprecedented declines in consumer confidence and retail spending forced the Fed’s hand, the Open Market Committee revealed in its statement. Inflation worries have all but disappeared as oil and other commodity prices plummet, and the Fed said that stability in prices was returning to these markets. The US market response was encouraging, with strong upward pressure.
A trillion reasons to be gloomy about the world economy 
Volkswagen trades investigated
A formal investigation has been launched by the German regulator into possible manipulation of Volkswagen shares, reported the Financial Times. After a huge increase in the carmaker's value, which at one point made it the largest company in the world, the regulator, Bafin, is launching a probe into Porsche's shareholding. A number of hedge funds were caught short by the latter's sudden announcement that it had 74 per cent of VW's shares and scrambled to buy back stock, making huge losses as a result.
How Porsche stung the hedge funds
House prices sag 14.6 per cent
House prices have fallen by 14.6 per cent since October last year, down 12 months in a row, the Nationwide Building Society reported today. Britain’s largest mutual said this morning that the average price of a UK house has fallen to £158,872, nearly £30,000 less than a year ago. The monthly drop was 1.4 per cent, down from September’s fall of 1.5 per cent, but the annual decline worsened from 12.4 per cent, and is the most severe drop ever measured by Nationwide. The society said that the market has reached stalemate.
BoE member criticizes colleagues
The Bank of England has been attacked by monetary policy committee member David Blanchflower for its slow response to the economic downturn. He criticized his colleagues on the MPC for their lack of response to the imminent recession and for delaying cutting interest rates until it was too late. In a speech in Canterbury yesterday, Blanchflower, who was the only one on the nine member committee to call for rate cuts during the summer, said that his warnings had been ignored.
Russia agrees oligarch bail-out
Russian state development bank VEB has approved a $10bn refinancing plan for “struggling oligarchs” reported the Times. The first beneficiary is Oleg Deripaska, whose company UC Rusal has effectively been bailed out by the Kremlin after securing a $4.5bn loan. VEB has been given $50bn by the Russian authorities to rescue firms with debt problems, and its injection into Rusal shows the country’s intention to keep “strategic assets” in the hands of Russian businessmen. Deripaska has already lost control of foreign assets.
Oleg Deripaska: last man standing
...in brief..................
Lufthansa buys BMI and Japan launches fiscal spending plan
German national carrier Lufthansa is buying the UK’s BMI for €400m in the latest example of European airline consolidation, said the Independent. Richard Branson’s Virgin Atlantic is “pitching for a partnership” with the new group, to create Europe’s biggest airline…………
Figures from the Building Societies Association show that customers withdrew £170m from building societies in September. The recent takeovers of Derbyshire and Cheshire have highlighted possible problems in the industry and led to public unease…………
Standard Life, the UK’s fifth-biggest insurance company, has cut payments on with-profits policies by up to 13 per cent and slapped large exit penalties on its customers. The insurer blamed conditions in financial markets for its decision, which took effect yesterday…………
Royal Dutch Shell said third-quarter profits rose 22 per cent on record oil prices in the period, even though it suffered production cuts in Nigeria and the Gulf of Mexico. Europe’s biggest oil company said that CFO Peter Voser will take over as chief executive in July………..
Germany’s biggest bank, Deutsche Bank, reported a “surprise” third-quarter profit, said Bloomberg.com. New accounting rules allowed the bank to report fewer writedowns, after analysts had initially predicted a loss. Its shares have fallen 72 per cent this year…………
Japan is set to announce a new ¥5tr fiscal stimulus package, the Yomiuri and Asahi newspapers reported. The country’s premier, Taro Aso, is also likely to delay the country's upcoming elections as his ruling Liberal Democratic Party sees its popularity sliding…………
Posts
