Stocks drop on earnings concerns
Shareprices slumped in the US yesterday as concern over the economy and disappointing earnings announcements diminished investors’ appetite. The Standard & Poor’s 500 Index fell 1.52 per cent, with Microsoft and Fifth Third Bancorp dragging down the gauge after announcements of worse earnings than expected. In Asia the MSCI Asia Pacific Index lost 2.2 per cent, Sony leading the declines after forecasting losses and Samsung falling 4.4 per cent after signalling its own loss. The FTSE 100 opened 0.85 per cent lower.
Figures to confirm UK recession
Figures to be announced today are likely to provide “official confirmation” that the UK is in recession for the first time since the 1990s, reported the Daily Telegraph. Analysts expect the economy to have shrunk a “dramatic” 1.2 per cent in the last quarter, after contracting 0.6 per cent the quarter before. The figures are expected to give some indication of the severity of the downturn, and it seems likely that the “relatively shallow and short-lived downturn” previously expected by the government is going to have to be re-assessed.
Gloom for leading tech companies
A day after Sony “plunged deeper into crisis”, warning it would suffer its first full-year operating loss in 14 years, the gloom continued for the technology sector, said the Financial Times. Microsoft announced the first job-cuts in its 34-year history, with plans to eliminate up to 5,000 positions, and Nokia revealed a “sharp fall” in 2008 profits and released a downbeat forecast of a 10 per cent fall in global sales of mobile phones. The only ray of light was provided by Google, which reported a 25 per cent rise in revenues in the fourth quarter.
Homes repossessed every 10 mins
A home was repossessed “every ten minutes” in the third quarter of 2008, with the rate almost doubling from the year before, reported the Times. City regulator the Financial Services Authority released figures yesterday showing that 13,616 homes were repossessed in the three months to Sept last year, a 92 per cent rise on the same peiod in 2007. The figures also showed the number of homeowners in arrears was up 24 per cent over the same period, with 340,000 borrowers behind on their mortgage repayments.
Hedge fund makes millions out of Barclays shareprice fall
Lansdowne Partners, “one of London’s most successful hedge funds”, has made £12m in four days by betting on a fall in the Barclays shareprice, reported the Guardian. The move is set to “heighten the controversy” over short-selling of the banks and focus attention on the row between the government and the Financial Services Authority which lifted a ban on short-selling financials last Friday. As soon as the ban was removed, Lansdowne sold shares in Barclays, buying them back on Wednesday after they had fallen by almost £1.
£30bn equity issuance to hit UK
“Dozens” of UK companies are planning to issue new equity in the coming weeks, with some estimates putting the total amount at £30bn, reported the Financial Times. Wolseley, the building materials distributor, is expected to announce a £400m fund-raising on Monday, with its trading update, and other companies thought to be investigating issuance include Premier Foods, Debenhams, Lloyd’s insurer Chaucer, British Land and Land Securities. Analysts believe British companies are set to raise more equity during the next year than at any time since the year 2000.
...in brief..................
BT shares plunge and Oakdene goes into administration
Shares in BT “plunged” nine per cent yesterday after it issued a profit warning for its Global Services division and said it found a "£340m hole” in its earnings estimates, reported the Daily Telegraph. Earnings at its Global Services arm “collapsed” in the third quarter by 90 per cent…………
Pfizer, the world’s biggest drugs company, is believed to be in talks with Wyeth, with a view to a merger, reported the Times. Pfizer is thought to be prepared to pay $60bn for its rival as companies in the healthcare sector – once considered immune from recession – face “tough times”…………
Morrisons announced “much stronger” sales than its bigger rivals over the Christmas period, reported the Guardian. The chain said like-for-like sales were up 8.2 per cent on 2007 levels in the six weeks to January 4, beating Tesco’s 2.5 per cent and even Asda’s 6.9 per cent…………
Bank of America shares fell 15 per cent yesterday after it “ousted” former Merrill Lynch chief executive John Thain, said Bloomberg.com. The firing came three weeks after the takeover closed and amid controversy over an “unexpectedly large” fourth-quarter loss…………
Fiat painted a “grim outlook” for the car industry this year and said it would not be paying a dividend for 2008, reported the Financial Times. As the Italian government indicated it would look at possible state aid for the sector it announced a 16 per cent drop in profits and saw its shares fall 14.5 per cent…………
Oakdene Homes, the property developer that specialised in the South-east of England, “called in the administrators” yesterday, reported the Independent. The company acted after failing to reach an agreement with its banks over its debt, and its shares were suspended…………
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