Stocks move ahead around globe
Stocks in the US and Asia rose as US President-elect Barack Obama indicated stimulus spending would continue on a long-term basis, increasing hopes of a global recovery. The closely-watched Standard & Poor’s 500 Index rose 0.78 per cent in New York last night, helping Asian markets register gains this morning. The MSCI Asia Pacific Index moved ahead 1.8 per cent, with Japan’s Nikkei 225 Stock Average adding 1.7 per cent. Among Japan’s better performers was Subaru-maker Fuji Heavy, which jumped 21 per cent. In London the FTSE 100 Index opened half a per cent lower on profit-taking.
New worries over UK recession
Chancellor Alistair Darling warned yesterday that the UK was “far from through” the recession, in a “clear signal” that the recovery may not start in the second half of the year as the government has claimed, reported the Financial Times. In an interview with the newspaper the chancellor described the outlook as “difficult”, suggesting revisions in the Spring budget. He also described the government’s £20bn fiscal stimulus plan as the “right way” to help a recovery, while calling the Conservatives’ spending-cut plans “utter madness”.
UK car sales slump 20 per cent
The UK car industry is set to suffer a “fresh blow” today with the release of new figures which are expected to show that sales fell by “more than 20 per cent last month”, reported the Times. The decline underlines the urgency of a government aid package for the industry amid worries that many components makers will be hit badly by the situation. Fears are growing that the Treasury may block a rescue package for the industry over concerns that there could be calls from other hard-pressed industries for similar bail-outs.
M&S sees quarterly sales fall
Marks & Spencer reported its “worst quarterly sales performance for a decade” this morning and said it would cut 1,230 jobs, reported the Financial Times. The high-street giant said that UK like-for-like sales fell 7.1 per cent in the third quarter ending at Christmas, coming in at the middle of the range of analysts’ forecast. The news will “add to the gloom” surrounding the economy and add to calls for lower interest rates this Thursday. M&S said it would be closing 27 stores, including 25 “Simply Food” outlets as a result.
Fears over UK gilts going unsold
Investors overwhelmed by record UK gilt sales may refrain from purchases, leading to the first “failed” auctions since 2002, said Bloomberg.com. Robert Stheeman, chief executive officer of the UK Debt Management Office said recently that the increased sales, needed to fund the government’s stimulus plans, were a “challenge” and that he couldn’t rule out auction failures. There have been only two failed auctions in the last ten years, but fears are growing as the first of 20 sales planned for the first quarter takes place today, that more are possible.
UK PLC presses for a 1% rate cut
Bodies representing UK businesses are “demanding” a one percentage point cut in interest rates from the Bank of England on Thursday, reported the Guardian. Steve Radley, chief economist at manufacturers’ organisation EEF said that the downturn is “gathering pace” and a “decisive cut” in rates is required. The calls came as the Cips monthly index measuring services activity in the economy came in at 40.2 in December, well below the 50 mark that indicates the difference between growth and contraction.
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Iceland re-ignites UK hostilities and Apple to introduce variable pricing
Iceland “risked re-igniting a simmering diplomatic row” with the UK yesterday, by indicating it will take legal measures to reverse the seizure by Britain of its banks’ UK assets last year, reported the Independent. It said it will “bankroll” proceedings by Kaupthing’s administrators to sue…………
Asian economic growth will “rebound” next year, after slowing this year, due to increased government spending and interest rate cuts, reported Bloomberg.com. BNP Paribas economist Richard Iley wrote in a report that the recovery in the region would be “more V than U-shaped”…………
Cattles, the sub-prime lender, has announced plans to cut 1,000 jobs, or 20 per cent of its total workforce, reported the Times. It will “dramatically scale back lending” by 75 per cent, as it struggles with a funding crisis ahead of securing a banking licence…………
Och-Ziff Capital Management, one of the world’s largest hedge funds, lost 25 per cent of its funds in December, reported the Daily Telegraph. The losses come as a result of investors withdrawing their money and the weakness in global markets, but their scale shows the “severity” of the current situation…………
A US court has ruled that convicted Enron executive Jeffrey Skilling’s 24-year prison sentence is “too harsh”, said the Guardian. Although the appeals court rejected his arguments to overturn his guilty sentence, it did find that a technicality meant that his sentence was too long…………
iPod-maker Apple has agreed to “variable pricing” on its iTunes digital music, reported the Financial Times. In return record labels have agreed to drop restrictions preventing tracks from being copied. The agreement will mean “more songs will be sold at 69 cents than $1.29” Apple said…………
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