Stocks drop on economic woes
Stocks fell in the US, with the Standard & Poor's 500 Index dropping 3.3 per cent on weak employment figures and home sales. And in Asia the falls continued as the MSCI Asia Pacific Index lost 2.1 per cent for its first fall in four days. Lower profit forecasts in the region meant banks and technology companies led the declines. The Asian benchmark index has fallen in eight out of the last nine months on the global credit crisis. In London the FTSE 100 Index opened 0.20 per cent lower after a 2.45 per cent fall yesterday.
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Obama slams Wall St bonuses
President Barack Obama "lashed out" at "shameful" Wall Street bonuses on Thursday, reported the Financial Times. He criticized financial executives for claiming bonuses even as their companies asked for taxpayer support. Obama was responding to a report showing that employees in the finance sector received $18.4bn in bonuses last year, the sixth largest payout in history. He emphasised that further government support for the industry would be "subject to tough conditions on pay and other perks" as he readies the second tranche of rescue funds.
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Japan heads for severe recession
Japan is in line for its worst post-war recession as numbers showed the economic situation was worsening, reported Bloomberg.com. Factory output slumped an "unprecedented" 9.6 per cent in December, while unemployment "surged" to 4.4 per cent and household spending declined. The previous record drop in production was 8.5 per cent, set the month before, as recessions in the US and Europe, together with slower conditions in China, depressed demand for Japanese goods. The Nikkei 225 Stock Average fell 3.5 per cent after the announcement.
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Ford draws from credit lines
Ford Motor announced on Thursday that it is to draw down $10.1bn from its banking credit lines because of concern over the capital markets, said the Financial Times. America’s second-largest automaker reported a record $14.6bn full-year loss at the same time, but said the need for the cash was not down to "immediate" needs. The move to tap the funds, raised in 2006 as part of a $23.4bn financing package, illustrates the "anxiety" in the US over the "strained" capital markets. The company still has "no plans" to call on government support.
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Darling and Miliband miss summit
Chancellor Alistair Darling and Foreign Secretary David Miliband have "pulled out" of visits to the World Economic Forum in Davos, reported the Independent. The Treasury said the Chancellor had cancelled his trip because a number of "senior figures" from foreign governments and banks decided not to attend themselves. The Foreign Office said Miliband did not go because the event was focusing "entirely" on the global economic crisis. Gordon Brown was still due to hold a "series of meetings" with world leaders.
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Quantitative easing moves closer
Mervyn King, the Bank of England governor, has been given the go-ahead to spend £50bn of taxpayer money buying corporate debt and other assets, said the Guardian. The move is the "clearest signal yet" that the UK is moving towards "quantitative easing". The chancellor exchanged "open letters" with King setting the rules for the plan, and made it clear that the same approach could be used to "turn on the cash taps" once interest rates approach zero, which could mean buying "billions of pounds" of bonds.
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...in brief..................
Return of Merrill bonuses sought and Dollond name to disappear
The New York attorney general may require the return of $4bn in bonuses paid by Merrill Lynch ahead of its takeover by Bank of America, reported Bloomberg.com. Andrew Cuomo is also seeking to learn what BoA Chief Executive Kenneth Lewis knew about the accelerated bonuses…………
Amazon, the biggest online retailer in the world, announced better than expected quarterly sales and its shares leapt 10 per cent, reported the Financial Times. Total sales in North America rose 18 per cent and international sales gained 19 per cent, outperforming the competition…………
The President of the European Commission has "hinted" that sterling should join the eurozone, said the Independent. Jose Manuel Barroso is "keen" to see the pound in the European single currency but did not repeat earlier comments that the UK was close to joining the euro…………
Say adios to the cheap European holiday
Lloyds is set to offload car leaser Lex, reported the Daily Telegraph. The management of the company, the UK’s biggest, has approached private equity concerns to fund a "multi-billion pound buy-out" of the business, which would go some way to improving Lloyds Banking Group’s balance sheet…………
Shell has "slumped" to its first quarterly loss in 10 years as oil prices have plummeted, reported the Guardian. However the oil giant was still able to report the "biggest annual profit in UK corporate history" of $31.4bn, or £2.5m per hour, leading to calls for a windfall tax…………
Optician Dollond & Aitchison is "to disappear", after merging with chemist group Alliance Boots, reported the Times. The combined entity will leapfrog Specsavers to become the UK's largest optical chain, employing 5,000 people and with 690 outlets, branded Boots Opticians…………
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