the main headlines..........
Markets fall as outlook dims
Asian and American stocks fell as commodity prices retreated and worries persisted over the reduced potential for corporate earnings. In the US yesterday the S&P Index fell another 2.26 per cent, while in Asia the region’s representative MSCI Asia Pacific Index declined 2.8 per cent. After a day’s holiday Japan’s Nikkei 225 Stock Average slumped 4.5 per cent as bankruptcies rose for the seventh month in a row. Mitsui & Co, a trading company making half its profits from commodity dealing, fell 8.8 per cent and Rio Tinto was down 3.3 per cent in Australia. In London the FTSE 100 opened one per cent lower.
Tesco sees strong Christmas growth
Tesco, the largest retailer in the UK, announced that growth in revenues accelerated during the Christmas period after it reduced prices, reported Bloomberg.com. Like-for-like sales at outlets open for at least a year rose 2.5 per cent in the seven weeks ending January 10th, outstripping the two per cent growth rate in the third quarter. Sales outside the UK jumped 33 per cent, with stores in Asia, namely China and Malaysia, “particularly strong”. Fresh & Easy, the group’s US division, saw “strongly double-digit” growth.
UK economy sees rapid deterioration
The British Chambers of Commerce announced yesterday that December was “one of the worst months ever recorded” for the UK economy, reported the Daily Telegraph. Meanwhile the British Retail Consortium said that there was an “unprecedented” fall in retail sales during the month, while business output and the housing market declined to new lows. The BCC said there had been a “frightening deterioration” towards the end of the year in its quarterly economic survey, with output at its worst since records began twenty years ago.
Housing market slowest for 30 years
The housing market slowed to a “virtual halt” at the end of last year, with the number of properties sold reaching a “record low”, reported the Times. The Royal Institution of Chartered Surveyors, who announced the data, blamed the lack of mortgage finance for the lowest transaction levels in 30 years. Buyers, it said, were unable to take advantage of lower prices because lenders were not offering home loans at “affordable” interest rates. RICS reported that an average 10.1 properties per surveyor changed hands in the fourth quarter, the lowest level since 1978.
Spain in credit warning
Spain became the third eurozone country to be warned about its “deteriorating public finances” yesterday, reported the Financial Times. Ratings agency Standard & Poor’s said Spain’s triple A credit rating “could be downgraded” because of problems with its public finances, after it entered recession in the fourth quarter. The move underlined the “growing dangers” for Europe, with Greece and Ireland having been warned by the agency on Friday that they risk downgrades. Lower ratings increase borrowing costs.
RBS reveals $3.5bn loans to bankrupt chemicals group
Royal Bank of Scotland revealed yesterday that it has exposure of $3.47bn in loans to bankrupt American chemicals company Lyondell Chemical, reported the Independent. RBS took over the loans in the “ill-fated” acquisition of ABN Amro’s investment bank at the peak of the markets in 2007 and analysts warned that the bank was at risk of losing “a sizeable proportion of the money”. The news is just the latest “banana skin” for the bank in relation to the £10bn ABN Amro deal, which has helped it to huge first half losses.
...in brief..................
Land of Leather enters administration and pensions see record shorfall
Land of Leather, the 109-store furniture specialist, became the latest retail chain to fall into administration yesterday, reported the Independent. 1,000 jobs are at risk at the group, although Deloitte says that there are “several interested parties” in its operations…………
Air France-KLM beat Germany’s Lufthansa to buy a 25 per cent stake in the re-launched Italian airline Alitalia for about €323m, said the Financial Times. Alitalia keeps its name after its merger with Air One and its emergence from administration, with it now owned by 21 shareholders…………
JCB is to cut almost 700 jobs, with the construction machinery group blaming “lack of credit” from the banks, reported the Guardian. It said the improvement it had been expecting in business showed “no signs of materialising”, and production levels would be 75 per cent of the same period last year…………
As the likes of Tesco eke out small increases in sales, Aldi UK “confirmed its position” as a high street winner, said the Financial Times. The German chain saw sales rise 25 per cent over the last year as household budgets tightened due to the economic downturn…………
Merrill Lynch and Bank of America are to cut around 1,900 staff at their London headquarters, in “one of the biggest single staff reductions in the history of the City”, said the Times. Staff at Merrill Lynch have been told of the 30 per cent job cuts in the wake of the takeover by BoA…………
Nine out of ten defined benefit pension scheme face a funding shortfall according to recent figures from the Pension Protection Fund, said the Daily Telegraph. The 7,800 schemes monitored by the fund ended last year with a £194.5bn deficit, up from £136bn at the end of November…………
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