Business Headlines.
Obama effect fades after one day
Markets tumbled around the world as the euphoria surrounding the election of Barack Obama as American President proved short-lived. In the US the Standard & Poor's 500 Index fell 5.3 per cent, its worst fall for two weeks, and markets in Asia followed suit, with the MSCI Asia Pacific Index sliding 6.4 per cent. Japan's Nikkei 225 Index fell 7.5 per cent, after a six-day winning streak. Traders took fright as the prospect of global recession moved ever closer. In the UK, futures showed the FTSE 100 was likely to open around three per cent lower.
The biggest bank heist ever 
America is eager to stand tall once again
BOE seen cutting rates to zero
Bank of England Governor Mervyn King is going to have to consider "the most radical round of interest-rate cuts since World War II", which might involve a base rate of zero, said Bloomberg.com. A number of economists, including Citigroup's Michael Saunders and Roger Bootle of Capital Economics, believe that the current level of interest rates is too high and that they could be pushed down as far as zero as a result of the deteriorating economy. The UK's 4.5 per cent base rate is expected to be lowered to four per cent today.
Cash was king - now gold is God
Economy grim reality for Obama
While the economic crisis helped Barack Obama in his “historic” election victory, it also presents him with a “formidable set of challenges” said the Financial Times. His predecessors had varying degrees of economic success, with Franklin D Roosevelt triumphing and Jimmy Carter “consumed” by it. The problems are far-reaching, with consumer confidence at a record low, manufacturing activity at a 26 year low and the housing market suffering its “biggest decline since the Great Depression”.
Spectre of deep recession in UK
The threat of a deep and lengthy recession increased yesterday, with a new set of "bleak" economic figures, said the Times. The service sector, which accounts for more than half the economy, was shown to have shrunk last month "at its fastest pace for at least 12 months", with the latest CIPS/Markit purchasing managers' survey plummeting to 42.4. All measures on the index fell dramatically, with new business inflows, business outstanding and future expectations down sharply and conditions in the financial and hospitality sectors "particularly grim".
A trillion reasons to be gloomy about the economy
ArcelorMittal outlook bleak
ArcelorMittal, the world’s biggest steelmaker "shocked the market" yesterday when it announced it was to double production cuts and see earnings decline, reported the Independent. The move to a global recession "has taken its toll" on the company, as its earnings missed estimates, and it reported that profit may halve to $2.5bn in the fourth quarter. Major steel users like the US car industry are seeing declines in demand and emerging markets China and Russia are also seeing their appetite for metals decline.
People: Lakshmi Mittal loses half his fortune
Next predicts tough 2009
High street retailer Next said that it expected revenues to keep falling next year as sterling's weakness takes effect, reported the Guardian. Chief executive Simon Wolfson said that rising costs were worse than expected, due to the dollar's strength against sterling, with "much greater pressure" on prices from suppliers. He also said that he expected sales to continue falling at between four and seven per cent during the winter. The outlook for 2009 was "mixed", with lower interest rates offset by consumer unease.
After the credit crunch, what next for the world?
...in brief..................
European Commission investigates Commerz and Rok shocks markets
The European Commission is probing the German government's €8.2bn capital injection into Commerzbank. The regulator is worried that the bank is paying too little for funds, in the first example of a disagreement between Brussels and an individual country…………
Daniel Hannan: Euro federalists spot credit crunch opportunity
Google has "abandoned" its advertising partnership with Yahoo, as a result of an antitrust lawsuit launched by the US Justice department. Yahoo issued a statement saying that it was "disappointed" by the decision and would have preferred to see Google fight it in court…………
Directors of Swiss bank UBS "could be forced to repay bonuses" already awarded, as the bank comes under pressure on its finances, said the Independent. The review into employee compensation will be presented at an extraordinary general meeting later this month…………
Media magnate Rupert Murdoch is considering further job cuts at his UK newspaper operations, reported the Daily Telegraph. His company News Corporation, owner of the Times, would not give specific targets but Murdoch talked about seeing "leaner operations"…………
The Council of Mortgage Lenders warned yesterday that homeowners should not expect cheaper mortgage repayments, even if the Bank of England cuts interest rates today. The banking lobby group said its members should act purely along commercial lines…………
Construction company Rok shocked the market yesterday with a profit warning, and saw its shares plummet 50 per cent as a result. The company talked of a "serious deterioration" in its business after £150m of public and private sector projects were lost…………
Posts
