..........the business headlines.......
Rally in Asia continues
Markets in Asia rose for the eighth day in a row – the longest winning streak in five years – on optimism a global recovery is becoming more likely. The rally came after stocks rose in the US on Friday, with the benchmark S&P 500 rising 28.55 points to 931.80, or 3.16 per cent. The MSCI Asia Pacific Index rose 1.3 per cent, with Japan’s Nikkei 225 Average gaining 2.1 per cent as game-maker Nintendo moved ahead on hopes that its US sales would benefit from tax-cuts by President-elect Obama. In London the FTSE 100 Index opened up 0.9 per cent.
Obama in tax cut plan
Officials have indicated that President-elect Barack Obama is to advocate “hundreds of billions of dollars-worth of tax breaks” in his upcoming stimulus package, said Bloomberg.com. Obama is said to want tax cuts to make up 40 per cent of the package, worth up to $300bn of the $775bn total. A democratic aide said the plan might boost consumer demand with tax cuts of $500 for individuals and $1000 for couples. The measures have found favour with Republicans, with Senate Minority Leader Mitch McConnell indicating his party “would support” tax cuts.
Brown promises to help savers
Prime minister Gordon Brown pledged on Sunday to “help pensioners and savers” hit by “plummeting” investment returns, days before the Bank of England is set to cut interest rates again, reported the Financial Times. He intervened after it emerged that some lenders “quietly cut” savings rates during the Christmas break, so that some accounts are paying as little as 0.1 per cent. Until now the prime minister has been pressuring banks and building societies to pass on rate cuts to borrowers “in full”, now calls are mounting for help for savers.
Rates set to hit 314-year low
The Bank of England is expected to cut interest rates to an all-time low, as it steps up its efforts to “breath life into the stalled economy”, reported the Times. It has reduced the base rate by 2.5 per cent in the past two months, to a level of two per cent, and the Bank’s Monetary Policy Committee is “poised to take more radical action” when it meets this Thursday. It is expected to reduce rates by “at least” a half-point, to 1.5 per cent, although City economists are “divided” over the scale of the move, with some expecting a cut of a full percentage point.
Companies in rush to rights issues
An “influential” investor group has lowered its requirements for rights issues, a move likely to lead to a “slew” of cash calls among listed UK companies in 2009, reported the Independent. In a bid to speed up the process, the Association of British insurers has issued a new set of guidelines recommending that companies only need shareholder votes when increasing their share capital by “more than two thirds”. Previously they had recommended the procedure for issues of more than one third. The guidance is not “legally binding” but widely seen as best practice.
Italian bond scandal to hit banks
Several “high-profile banks”, including Deutsche Bank and UBS, could be ensnared in lawsuits over lending to Italian local governments, reported the Daily Telegraph. According to some estimates, Italian authorities could be sitting on €35bn of liabilities on bonds they took out in the 1990s, which promises to be the country’s “biggest financial scandal since the Parmalat fraud”. Milan has said it is looking at legal action against lenders including Deutsche, JP Morgan Chase and UBS, which helped arrange a deal on repayments of €1.7bn of bonds.
...in brief..................
Berkshire Hathaway performance slumps and fears grow over M&S
Billionaire Warren Buffet’s Berkshire Hathaway “slumped 32 per cent” last year, its worst performance in over thirty years, said Bloomberg.com. The company’s equity and derivative holdings suffered, with the last three months of the year seeing “most of the stock decline”…………
Irish china and glassware group Waterford Wedgwood said today that it had brought in the receiver and some of its units “would shortly be put in administration”, reported the Independent. It has also requested its stock be suspended from trading on the Irish Stock Exchange…………
LyondellBasell, the troubled chemicals group, is poised to appoint a restructuring expert as it tries to “stave off bankruptcy”, said the Times. The company, part of the business empire of Russian-born oligarch Len Blavatnik, is due to repay $281m in fees and loan interest…………
Mosaic, the company behind fashion chains Oasis, Warehouse, Karen Millen and Principles is facing “crunch talks” with its lenders over its future, reported the Guardian. Chief executive Derek Lovelock has been involved in a “last-ditch hunt” for a white knight investor…………
Wall Street companies had suspicions “privately” about Bernard Madoff’s investment business, but were “reluctant” to share their concerns with regulators, said the Financial Times. Banks were sceptical that he could deliver his “consistently high returns”, and therefore do not figure on his list of victims…………
Fears are growing that Marks and Spencer, the “first high-street heavyweight” to update investors on its pre-Christmas performance, will be forced to cut its dividend, said the Daily Telegraph. Shares in the retailer fell before the end-of-year break on concerns over its “heavy discounting”…………
Posts
