the main headlines..........
Markets mixed as Asia gains ground
Markets around the world moved in different directions, as Asian investors dipped their toes back in the water, narrowing losses for the month. Yesterday in the US the Standard & Poor’s 500 Index fell 1.6 per cent after President Obama’s first budget, while in Asia today the MSCI Asia Pacific Index rose 1.2 per cent, giving it a loss for the month of February of 7.1 per cent. In Tokyo the Nikkei 225 Stock Average recouped some of its recent losses to close 1.3 per cent higher. In London the FTSE 100 Index was 1.6 per cent lower in early trade.
Lloyds reports 80% drop in profits
Lloyds Banking Group saw its profits fall 80 per cent in 2008, while its newly-acquired HBOS division suffered a £10.8bn loss, reported the Daily Telegraph. The lender, now 43 per cent government-owned, confirmed its Lloyds TSB profit slumped to £807m in 2008 and that HBOS lost more than previously thought. Earlier this month HBOS was set to make a £10bn loss, but Lloyds chairman Sir Victor Blank said that all the bad news is “now out in the open”. It is in “advanced” talks to put as much as £250bn into the asset protection scheme.
Governor warns on bank bail-out
Bank of England governor Mervyn King warned yesterday that the UK’s banks might need to “tap the government” for more funds, reported theGuardian. In an address to the Treasury select committee King said that in spite of them “dumping” bullions of pounds of toxic debt into the Exchequer’s insurance scheme it would take “many months” for the true debt poaition to become clear. His comments came after Royal Bank of Scotland said it planned to offload £325bn of toxic assets onto the government.
Barack Obama unveils $4tr budget
President Obama “set up a long battle” with the Republican party yesterday, when he unveiled a $4tr budget, said the Times. The budget puts forward rises in taxes, cuts in military spending and an increase in the national deficit to its “highest level since the Second World War”. Their were immediate protests from Republicans at the $1.75tr deficit planned for this fiscal year, which “makes clear” that Obama is expecting another bank bail-out to take place. Such a move will be unpopular and “strongly opposed” by Republicans.
US jobless claims pass 5 million
The number of people claiming unemployment benefit topped 5m last week in the US, passing a “psychological milestone”, reported theIndependent. America has shed 3.6m jobs since the recession started at the end of 2007, which has had knock-on effects on a number of areas in the economy, including home sales. Demand in the housing sector has “collapsed” as redundancies have increased, with figures in January showing that the number of new home transactions plummeted to its lowest level since records began.
Indian growth slows
The Indian economy grew at the slowest rate since 2003 in the last quarter, “adding pressure” on the authorities to slash rates, reportedBloomberg.com. The third-largest economy in Asia grew 5.3 per cent in the three-month period to the end of December from the year earlier. The previous quarter had seen a 7.6 per cent increase. The deteriorating situation has prompted investors to “step up sales” of Indian shares, which has in turn driven the rupee to a “record low”. Economists expect the Bank of India to reduce rates shortly.
...in brief..................
Sir Fred pension row rumbles on and 02 bucks downturn
Sir Fred Goodwin’s pension was the subject of a “war of words” between the former RBS chief executive and the City minister Lord Myners, reported the Financial Times. The two exchanged “terse” letters in public after details emerged that Sir Fred had started drawing his £693,000 a year pension…………
Centrica’s British Gas unit saw its profits drop 34 per cent last year, putting the lie to accusations that it “milked” high energy prices, reported the Independent. It used the figures as evidence that a “windfall tax” would be unfair, although its gas production division made profits of £1.2bn…………
According to a leading research company nearly four million home owners are “already in negative equity”, reported the Daily Telegraph. The figure is the “most gloomy yet”, with previous estimates suggesting that two million home-owners “at most”were in that position…………
The future of troubled carmaker General Motors is hanging in the balance after it reported a $31bn loss, said the Financial Times. GM revealed a $9.6bn fourth-quarter loss, bringing the 2008 total to $31bn, and the total over the last four years to $86.6bn and putting its position as a “going concern” in doubt…………
Deutsche Telecom, the biggest telephone company in Europe, made a fourth-quarter loss on a charge for its holding in Greek telecoms companyOTE, reported Bloomberg.com. The group announced a plan to restructure its management to cut costs and increase market share…………
Mobile operator O2 has sold “over a million” iPhones in the UK and the deal has helped it buck the difficult economy, reported the Guardian. The company, owned by Spanish operator Telefonica, reported a 10 per cent rise in revenues in the last quarter of 2008…………
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