Global stocks lose momentum
Stocks retreated in New York yesterday, as disappointing earnings figures from the likes of Walt Disney dragged down US indices. The Standard & Poor’s 500 Index fell 0.75 per cent and Asian markets continued the downward trend, generally seeing falls across the region. The MSCI Asia Pacific Index rose just 0.4 per cent, although Japan’s Nikkei 225 Stock Average fell 1.1 per cent after shares in Takeda, Asia’s largest pharmaceutical-maker, fell 3.4 per cent. In London the FTSE 100 Index opened 1.36 per cent lower.
BoE likely to cut rates to 1%
The Bank of England is likely to cut the benchmark interest rate to one per cent later today, the lowest level since 1694, reported Bloomberg.com. The decision will be announced at 12pm in London, but economists believe that a cut is the most probable outcome. And as monetary policies “lose their potency”, the Prime minister has given the central bank permission to spend up to £50bn on the purchase of bonds and commercial paper. The BoE has already lowered its key rate by 3.5 percentage points from its five per cent October level.
Baugur on the brink
Icelandic investment group Baugur, owner of a “large slice” of the British retailing industry, could be about to go into administration, reported the Financial Times. Iceland’s Landsbanki has decided to “call in” the group’s £1bn debt and has asked PwC to run the business as a result. Baugur owns substantial stakes in House of Fraser, Hamleys and US department store Saks, among others. Baugur chairman Jon Asgeir Johannesson attacked the bank for “delivering the company into the hands of British vultures”, believing the group will be sold off to UK investors.
Business failures surge
Business failures “soared” 78 per cent in January, with construction, business services and property companies worst affected, reported the Daily Telegraph. According to information group Experian, 2150 companies became insolvent during the month after 2008 saw a 30 per cent rise to 23,870 companies. This figure means that every day of the year saw 65 firms go to the wall. Experts are expecting an “insolvency epidemic” this year, with most predicting “at least 30,000” companies being forced to close their doors.
Russia caught in credit crunch
The Russian economy, “pummelled” by collapsing oil prices, trade disputes and the departure of investors has moved closer to the “abyss”, reported the Independent. The country’s credit rating was downgraded yesterday to two notches above junk status, the first G8 nation to have seen a downgrade. Booming commodity prices “filled the country’s coffers”, but now with the reverse in resources, Russia expects zero growth this year. However inflation is likely to be as high as thirteen per cent, compounding the country's problems.
Senate passes Buy American plan
The US Senate voted yesterday to approve the “Buy American” plan, albeit in softened form, reported the Financial Times. The stipulation in the $900bn stimulus bill was altered after President Barack Obama expressed concern that the original language used could “trigger a trade war”. Senators approved the amendment on a “voice vote”, after the underlying bill had required all public works projects funded by government money to use only US iron, steel and manufactured goods, potentially a violation of world trade agreements.
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Ford in Volvo sale talks and M&S wins court battle over cake
Ford Motor is in “preliminary talks” to sell its Volvo Car arm to China’s Geely Automobile Holdings, reported Bloomberg.com. Ford is likely to receive less than the $6.4bn it paid for the company in 1999 and first had contact with Geely a year ago…………
Deutsche Bank, Germany’s biggest bank, reported a “record loss” in the fourth quarter, with stock and bond treading “battered” by the financial crisis, said Bloomberg.com. The €4.8bn net loss compares with a €953m the year before. The bank used the quarter for extensive restructuring…………
The losses from Bernard Madoff’s investment business may be closer to half the $50bn he allegedly told investigators, said the Financial Times. Harry Markopolos, a “long-term critic” of Madoff has put forward the figure and says incompetence at the US regulator was “partly to blame” for the affair…………
Investment bank UBS expects the average gold price for 2009 to be $1000 an ounce, after increasing its forecast from $700, said the Daily Telegraph. The precious metal was one of the best performing assets of 2008 and the Swiss bank expects demand to “double” this year…………
Japanese electronics-maker Panasonic is to cut 15,000 jobs worldwide over the next year, reported the Guardian. The company has been forced into the “drastic effort” after it said it would make its first annual loss for six years. Half the redundancies will be outside Japan…………
Marks and Spencer has finally won its 13-year legal battle over whether its chocolate-covered confection should be classed as a cake or a biscuit, said the Times. The retailer is now due a £3.5m refund after it was found it was “mistakenly classified” as a biscuit…………
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