...the main headlines..........
Stocks slump on profit concerns
Markets around the world declined sharply as investors re-evaluated the length of the economic turn-down. In New York the Standard & Poor’s 500 Index fell three per cent and the weakness carried over into Asia, with the MSCI Asia Pacific Index dropping 3.2 per cent, wiping out its gains for 2009. In Tokyo the Nikkei 225 Stock Average slumped 3.9 per cent and in Hong Kong Bank of China shares slid 5.3 per cent, while PC-maker Lenovo tumbled 22 per cent after forecasting a loss. The FTSE 100 opened down 0.76 per cent.
BoE expected to cut rates to low
The Bank of England is widely expected to cut interest rates to their “lowest ever” level today, reported Bloomberg.com. The Monetary Policy Committee, under the leadership of Governor Mervyn King, is thought likely to reduce the base rate by half a percentage point to 1.5 per cent according to a survey of 60 economists. The cut would be the fourth since the global co-ordinated action on October 8th and would bring the level to its lowest since the Bank’s foundation in 1694. It is thought “quantitative easing” will be the next step.
More US jobs shed then expected
US employers are cutting workers more quickly than expected by economists, said the Independent. Private sector companies shed 693,000 jobs in December, up “sharply” from the 476,000 reported in November, payroll administrator ADP Employer Services said yesterday. The figure was 200,000 higher than expected and suggests the depth of the recession is worse than thought. The US stock market fell sharply after the announcement of the data, as it gives an early indication of the official unemployment rate, due tomorrow.
$1bn fraud at Indian IT group
The head of one of India’s biggest outsourcing companies has admitted to fixing the books, in a $1bn fraud being talked of as the country’s “Enron”, reported the Financial Times. B. Ramalinga Raju, chairman and chief executive of Satyam Computer Services, resigned yesterday after confessing to manipulating the company’s accounts for “several” years to increase profits, in one of the country’s biggest-ever scandals. The news sent Satyam shares down 80 per cent, and helped to drag India’s benchmark Sensex Index down seven per cent.
Sainsbury’s bucks negative trend
J Sainsbury today bucked the gloom in the retail sector, reporting a 4.5 per cent gain in sales over the Christmas period, reported the Times. The chain claims the performance is its “best-ever” over the festive season and it beat analysts’ expectations of a 3.9 per cent improvement, in “stark contrast” to Marks & Spencer, which yesterday revealed its food sales were down 5.2 per cent. Sainsbury’s performance tallies with that of Waitrose, which reported a 41 per cent “surge” in sales in the week to December 27th.
RBS eyes Bank of China sale
Royal Bank of Scotland, the government-owned UK bank, is looking at selling its £2bn stake in Bank of China, reported the Financial Times. Newly-appointed chief executive Stephen Hester visited executives at the bank this week in Beijing, amid a “scramble by foreign investors” to cash in lucrative shareholdings. RBS acquired the shares in 2005 at a cost of £800m in a consortium which included Merrill Lynch, and the three-year “lock-in period” expired last week. Several other banks, including Goldman Sachs and Citigroup, are also expected to cash in.
...in brief..................
Shares in Lenovo collapse and hopes of falls in energy bills fade
Shares in Lenovo Group fell 22 per cent after it forecast its first quarterly loss in three years and announced a cut in staffing levels, said Bloomberg.com. The world’s fourth-biggest PC-maker said it will cut 11 per cent of its workforce as the global recession reduces demand…………
Singaporean state investment fund Temasek is counting its losses on its Merrill Lynch stake, the investment bank acquired by Bank of America, said the Financial Times. The deficit could be as much as $2bn, but is not the only problem for the fund, 40 per cent invested in financials…………
Sport Media Group, the publisher of the Daily Sport and Sunday Sport, admitted yesterday to breaching a banking covenant, said the Independent. The group has not yet come to an agreement with its banks on revised terms as it “continues to struggle” amid the poor economy…………
ITV is expected to announce today that it has signed its “largest ever” syndication deal, giving Virgin Media customers on-demand access to its shows, reported the Daily Telegraph. The agreement follows a year of talks and would give 3.5m viewers access to programmes like Coronation Street…………
Banks “moved swiftly” yesterday to sell the UK operations of Adolf Merckle, the German billionaire who committed suicide on Monday as his empire collapsed, reported the Times. Phoenix Group, which owns the third-biggest drug distribution business in the UK, and the Rowlands pharmacy chain will “go on sale”…………
Hopes of cuts in household energy bills “faded yesterday” as prices were driven up in the wake of the Russian gas crisis, reported the Guardian. UK wholesale prices have “leapt” in recent days, with the price of gas hitting 73p a therm, up 26 per cent in the last three days alone…………
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