Markets rise on credit crisis hopes
Most markets in Asia rose after a recovery in the US on Friday saw the benchmark Standard & Poor’s 500 Index finish the day up 0.76 per cent. Optimism there centred on government attempts to bolster the banking system and investors gave stocks worldwide the thumbs-up as a result. The MSCI Asia Pacific added 0.3 per cent, with South Korea’s Kospi up 1.4 per cent and China’s CSI 300 climbing 1.2 per cent. Gains were capped by today’s upcoming market closure in the US for a holiday. In London the FTSE 100 gained 1.73 per cent in early trade.
Chancellor to unveil new bail-out
The Chancellor of the Exchequer is to unveil the second bank rescue plan in three months, reported Bloomberg.com. The proposed bail-out would use insurance to underwrite mortgage-backed debt and “toxic” assets and would reverse previous plans to reduce Northern Rock’s lending. It would also involve an increase in the government’s stake in Royal Bank of Scotland Group and Lloyds Banking Group, to reduce their borrowing costs. The new plan would add “at least” £100bn to the £250bn already committed.
RBS to reveal £20bn loss
Royal Bank of Scotland is set to announce a £20bn loss for 2008 later today, the latest instalment of bad news from the government-controlled lender, said the Financial Times. Executives at the bank were finalising a trading statement showing that it made “the biggest loss in British corporate history” last year, exceeding the £15bn deficit announced by Vodafone in 2006. Its share in the purchase of Dutch lender ABN Amro is causing it to take a hit of £15bn and it suffered £7bn-£8bn “additional writedowns on complex debt securities” incurred at the end of 2008.
European corporates sell record number of bonds this year
European companies have sold “record volumes of bonds” so far this year taking advantage of renewed demand, reported the Financial Times. Non-financial European corporates sold $15.2bn of bnds last week, one of the largest weeks ever for issuance, according to data company Dealogic. Companies including Gaz de France, Daimler and Deutsche Telekom have been looking to the bond markets in their desperation to re-finance, with bank-lending subdued. Corporate debt is now “viewed as cheap” as interest rates drop.
Tory’s firm cost councils £470m
The company run by Conservative Party treasurer Michael Spencer gave investment advice to “almost half the councils” now facing a funding crisis after the Icelandic banking collapse, reported the Independent. Councils who paid Butlers for advice were “almost twice as likely” to have lost money as those advised by different companies. Councils “ploughed millions” into Iceland’s banks, to take advantage of the high interest rates on offer. Butlers funnelled some of the money through its parent, ICAP, which received commission from the Icelandic banks.
Ireland should threaten to exit euro, says economist
A leading Irish economist has warned that the economic situation in Ireland is so dire it should threaten to exit the euro unless it receives aid from the European Union, reported the Daily Telegraph. David McWilliams, a former Irish central bank official has “broken the ultimate taboo” by talking of threats to European Monetary Union, which would risk a “chain reaction” across the southern part of Europe. With yields on state bonds “already flashing warning signs” there are risks that default could spread to Spain, Italy and Greece, he said.
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Ken Clarke back at centre-stage and auctioneer plans redundancies
Ken Clarke is to make a “controversial return” to the political centre-stage today when he is unveiled by David Cameron as his party’s new shadow Business Secretary, said the Independent. Senior conservatives are believed to see his return as a “gamble” because of his divergent views to the party’s leaders…………
The controller of television station Five believes that a merger between his business and Channel 4 would “preserve public-service broadcasting”, reported the Financial Times. Gerhard Zeiler of Five owner RTL said that a tie-up would be government-controlled and provide “more, not less”…………
Aston Martin has warned it could breach its banking covenants later this year, reported the Daily Telegraph. Chairman David Richards admitted in an interview that a breach could happen, although he said the company faced “no immediate problems” and was “better placed” than rivals…………
Richard Sweet, who worked for Marks & Spencer for more than 20 years, is to leave the company after heading its first store opening in China, a launch “beset with problems”, said the Guardian. The outlet had a start that was “far from smooth” after customs hold-ups and poor launch –timing…………
Fashion company Salvatore Ferragamo, which has supplied shoes to the likes of Greta Garbo and Marilyn Monroe, plans to reduce outlet openings by “half” this year, said Bloomberg.com. Demand for luxury goods has hit the company’s sales and it plans a cut in new stores to 20 this year…………
Christie’s, the UK’s oldest auction house, is to let up to a quarter of its 800 London staff go, as the art market “reels” from the effects of the credit crunch, said the Times. The group is expecting a 20-30 per cent drop in sales and as a result is letting 20-25 per cent of its staff go…………
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