Global markets maintained their momentum ahead of the weekend, with the Standard & Poor’s 500 Index climbing 2.3 per cent in New York. Investors were reacting to better then expected earnings from retailersBest Buy and ConAgra Foods and the optimism spilled over into Asia, with the MSCI Asia Pacific Index gaining 0.1 per cent, for a weekly gain of 7.6 per cent. The measure is 21 per cent higher than its March 9th low, and technically in a bull market, defined as a move of more than 20 per cent. In London the FTSE 100 Index was 0.3 per cent higher in early trade. The Obama’s administration’s plan to “rewrite the rules of the game” for the financial industry is meeting strong opposition, reported theIndependent. Treasury Secretary Tim Geithner outlined the proposals to clamp down on trading and regulate hedge funds yesterday, “tightening” the government’s grip on the financial industry. But Wall Street lobbyists and Republicans alike began the process of “massing their forces for a battle” over the plan. Bank shares saw early gains reversed on fears over the new regulations. Bank of England Governor Mervyn King started the week with a football joke but has ended it as a “political football”, said Bloomberg.com. Conservatives George Osborne and William Hague are “seizing” on King’s warning over the UK’s fiscal situation, while investors are using it to explain the week’s failed bond auction. King’s rare foray into the “political spotlight” has added to the pressure felt by the authorities on monetary policy and raises important issues for the independence of central banks as they are forced to work more closely with governments. Retailers in the UK suffered both from the recession and the poor weather in February, with sales falling 1.9 per cent during the month, reported theDaily Telegraph. The drop was “almost five times” the amount expected and official figures from the Office of National Statistics showed that between January and February sales volumes declined by the biggest margin since June 2008. The figures brought to an abrupt end a period of “surprisingly robust data” during which, despite customers’ concerns, sales had remained firm. The Bank of England has “ruled out” helping the car industry by providing billions of pounds of financial aid, reported the Guardian. The decision is another potential flashpoint for the Bank’s relationship with the government as it deals “a blow” to its promise to support the struggling industry. The Bank of England told the industry’s trade body that loans were not “commercially viable”, and the decision leaves car manufacturers yet to receive “significant” government funds. It is also a “huge blow” to business secretary Lord Mandelson. A top Russian banker has warned that “hundreds” of Russian banks are likely to fail by the end of the year, reported the Financial Times. Pyotr Aven, president of Alfa Bank, one of the country’s largest private banks, has cautioned that surging bad loans could hit “as much as 20 per cent” of credit portfolios, and has urged the government to recapitalise the top 30 banks urgently. Aven, who was minister for foreign economic trade in the early 1990s, expects the 20-30 biggest banks to receive aid, but believes the future for small banks is in question. Ireland’s status as the “hardest hit” economy in Europe was confirmed yesterday with the release of “exceptionally depressed data”, reported theIndependent. It was reported that GDP shrank by 7.5 per cent in the fourth-quarter of 2008, meaning a decline of 2.3 per cent for the year………… Barclays Banks is to “avoid a rights issue” to boost its financial strength, reported the Daily Telegraph. The lender was given a “clean bill of health” by the Financial Services Authority, which has been conducting a detailed series of financial tests on its balance sheet………… The owner of Canary Wharf reported a £1.8bn loss after suffering from “plunging property values”, reported the Guardian. The fall in values could leave Songbird Estates “unable to repay its loans” and has led to it appointing advisors to renegotiate a £880m loan due next year………… Mortgage brokers were yesterday “calling the bottom” of the fixed-rate home loan market, said the Times. They are pointing to the fact that the next move will be upwards, with the money market rate - on which fixed-rate loans are based - up from 2.96 per to 3.15 per cent as of yesterday............ Monte dei Paschi di Siena, Italy’s third-biggest bank, is to apply for €1.9bn in government support after posting a 47 per cent drop in fourth-quarter profit, reported Bloomberg.com. The bank is following rival Italian banks in applying for aid and will sell convertible bonds to the government………… Switzerland’s private banks have begun to ban their top executives from travelling abroad, due to fears they will be “detained” on bank secrecy grounds, reported the Financial Times. The “growing determination” of the US and Germany to tackle tax evasion is behind the measures…………business headlines..
Stocks close week with gains
Geithner toxic asset plan sends stocks soaring 
Wall St confronts regulatory reform
Geithner is a very convenient fall-guy for Obama King becomes ‘political football’
Mervyn King at odds with Brown over recession rescue Retail sales in surprise fall
Agent Provocateur defies the credit crunch BoE refuses to bail out car industry
Support urged for Russian banks
People: Lebedev lays down a new challenge to Putin ...in brief..................
Irish GDP collapses 7.5 per cent and Swiss banks ban business trips
Friday, 27 March 2009
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