...the main business headlines..........
BoE cuts rates and hints at more
Borrowing costs came down again yesterday as the Bank of England cut UK interest rates by another half a point to a new 315-year low of one per cent, reported the Financial Times. But economists believe that it is not the end of the reductions, after the Bank’s monetary policy committee said the economy was “in the throes of a severe and synchronised downturn”. ECB president Jean Claude Trichet added to the downward momentum, hinting that investors could expect a cut in European rates in March, although they were kept unchanged yesterday.
Stocks rebound on bail-out talk
Markets rose around the world as investors bet that government stimulus measures will improve the financial crisis. In New York yesterday the Standard & Poor’s 500 Index gained 1.64 per cent and Asia’s markets moved ahead too, with the MSCI Asia Pacific Index gaining 0.8 per cent. In Australia Westpac Banking Corp added three per cent after the central bank cut its inflation forecast and Mizuho Financial Group gained 2.3 per cent in Tokyo on hopes of recovery stemming from the US. In London this morning the FTSE 100 Index opened 0.23 per cent up.
House prices rise 1.9% in January
UK homeowners were offered a “glimmer of hope” yesterday by the latest monthly Halifaxhouse price survey, said the Times. The report showed that average prices rose by 1.9 per cent in January, more than offsetting December’s fall of 1.6 per cent. While the lender’s economist talked of early signs of market stability returning, Halifax, now part of the Lloyds Banking Group, “cautioned against paying too much attention” to the figure out of context. House prices are now down 17.2 per cent over the course of the past 12 months.
Warning of backlash on bonuses
Royal Bank of Scotland and Lloyds are risking a “public backlash” over their bonus awards, according to business secretary Lord Mandelson, reported the Daily Telegraph. Banks must be aware that bonuses will look “exorbitant”, taking into account losses and government assistance, he said. RBS is now 70 per cent government-owned after reporting a £28bn annual loss, but is now reported to be paying “six-figure bonuses” to staff despite its near collapse. The government is under pressure at least to set a cap for the payments.
News Corp reports $6.4bn loss
News Corp forecast a worse-than-expected 30 per cent decline in operating income this year and reported a $6.4bn quarterly loss, reported the Financial Times. The size of the loss is the “starkest sign yet” of the deepening downturn in consumer spending and advertising, which is “shaking the media sector’s biggest names”. The Murdoch-run group took an $8.4bn writedown on worsening conditions for its television channels and Dow Jones, publisher of the Wall Street Journal, and cut its forecast for the second time in three months.
Toyota increases loss estimate
Toyota Motor’s loss this year might be as much as three times previous estimates as sales around the world “plunge”, reported Bloomberg.com. The world’s biggest auto-maker also lost its top credit rating from agency Moody’s, after it said its operating loss for the year ending March would come in at Y450bn. Its sales have been “crippled” by the global slump and new president and family scion Akio Toyoda plans to restructure the company’s management. Moody’s cut Toyota’s rating from Aaa to Aa1, increasing borrowing costs.
...in brief..................
Royal Mail to shed thousands of jobs and Japanese Ponzi arrests
Royal Mail is looking to shed 16,000 jobs in a renewed cost-cutting drive, reported theTimes. The cuts would “unleash further industrial unrest” as the proposed losses amount to nearly one-in-ten of the company’s total workforce. The group aims to reduce its wage bill by £470m…………
Scottish and Southern Energy has become the second power company to cut its prices, reported the Guardian. Its nine million residential customers will benefit from a cut in electricity prices of 9 per cent and a 4 per cent reduction in gas prices from 30 march…………
“Open warfare” between the lenders to failed Icelandic investment group Baugur is set to break out today, with Glitnir set to appoint receivers to part of the group, reported the Daily Telegraph. The move would see it “muscle into” the queue alongside rival bankLandsbanki…………
Top executives at Goldman Sachs and JPMorgan Chase, together with “hundreds” of financial institutions who have received state aid will not be subject to President Obama’s pay cap, said Bloomberg.com. The rules only apply to companies that require “exceptional” aid in the future…………
Actor John Malkovich has been revealed as the latest victim of Bernard Madoff’s alleged Ponzi scheme, said the Independent. The actor is one of “thousands” of names released by a New York court, including John Denver, Kevin Bacon, Steven Spielberg and Larry King…………
Japanese police have arrested the 75-year-old head of a bedding company over an alleged fraud with echoes of the Madoff affair, reported the Financial Times. Kazutsugi Nami and 21 other executives of the company are suspected of running a $2.5bn Ponzi scheme…………
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