Markets keep upward momentum
Markets in Asia continued their upward momentum, after the US Standard & Poor’s 500 Index rose 0.8 per cent on Friday, the final flourish on the week’s 11 per cent rise. The MSCI Asia Pacific Index gained 1.4 per cent on Monday, with Tokyo’s Nikkei 225 Stock Average contributing a two per cent rise after Mitsubishi UFJ Financial Group shares moved ahead six per cent. Group of 20 ministers’ vows to combat the global recession helped support markets and in London the FTSE 100 Index was 1.4 per cent higher in early trade.
G-20 targets toxic assets
Finance ministers at the Group of 20 meeting near London at the weekend vowed to “clean up” the toxic assets that triggered the global financial crisis, reported Bloomberg.com. Guidelines were outlined in the talks on how governments could deal with the problem assets, an area with which they have so far “struggled”. The US authorities have hitherto failed to tackle the problem and administrations in Germany and the UK have also had a lack of success. The G-20 put forward “a dozen principles” and pledged a “sustained effort” to end the global recession.
BoE warns over bank tensions
Tension in the banking system are approaching “fever pitch” according the BoE, and are nearing the levels reached before the collapse of Lehman Brothers last October, reported the Daily Telegraph. Investors have cut back the amount they will lend and the banks are “reluctant” to entrust each other with their funds, resulting in ”new peaks” of stress in the system, the Bank's quarterly bulletin says. The report, issued today, reveals that the spread between the Libor and expected rates has “started to widen again” and “most worryingly” credit default swap rates are at renewed highs.
Barclays confirms sale talks
Barclays confirmed this morning that it is in talks to sell iShares, part of its asset management division, in order to improve its capital position, reported the Times. If it succeeds in selling the arm it “could avoid” having to join the government’s bank asset insurance scheme. iShares is an exchange –traded funds (ETF) business and forms part of Barclays Global Investors (BGI), one of the world’s larges fund management groups with £1tr under management. In spite of the talks analysts are “divided” over whether the bank will seek state support.
US firms see first loss since 1935
The biggest US-listed companies saw their first collective quarterly loss since 1935 in the fourth quarter of 2008, reported the Financial Times.Standard & Poor’s data showed that with 98 per cent of results from companies in the S&P 500 Index now reported, there was an overall net loss of $180bn, the first deficit since 1935 when S&P data began. The largest previous slump was in the second quarter of 2001 when reported earnings dropped by 64.2 per cent. This time around, US earnings appear to have fallen by “more than two thirds”.
Summers angry over AIG bonuses
President Barack Obama’s senior economic advisor Lawrence Summers “expressed outrage” on Sunday over AIG’s payment of $165m of bonuses, reported the Financial Times. A spokesman for the insurer said that agreements for the payouts were put in place “well before” the rescued company’s difficulties and Summers admitted the government’s ability to force change was “limited”. At the same time AIG revealed its list of counterparties showing that European banks gained “heavily” from the US rescue.
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Rio Tinto investors try to derail deal and Airmiles hits turbulence
Rio Tinto investors are seeking to “raise the bar” over its proposed deal with Chinese miner Chinalco, reported the Financial Times. Institutional investors are looking at whether the deal can be tabled as a “special resolution”, requiring 75 per cent shareholder approval rather then the current 50…………
Crude oil fell by as much as five per cent in New York after OPEC held back from cutting output, reported Bloomberg.com. There were fears that rising prices would worsen the global recession and OPEC members deferred any reduction “for at least 11 weeks”…………
Unemployment is expected to rise above the “symbolic” 2m mark this week, for the first time in 12 years, reported the Times. The figure was at 1.97m for the period to the end of December, but winter job cuts are expected to have pushed it above 2m in the latest release…………
Dave Whelan’s £70m purchase of the JJB Sports chain was made possible by “Treasury intervention”, said the Observer. The deal should safeguard 12,000 jobs at the company but only went ahead after the government made £50m Whelan had invested with bust Iceland bank Kaupthingavailable…………
“Social lending” website Zopa, which cuts out banks and puts lenders and borrowers in touch via the internet, is profiting from the decline of the banks, said the Independent. The bank lent a “record” £2.5m in February and is gaining new members as the credit crunch makes its offering more attractive…………
Airmiles, the travel rewards scheme owned by British Airways, has “hit turbulence”, after flying into the economic downturn, reported the Daily Telegraph. Revenue “nosedived” 22.5 per cent and it has “grounded” its relationship with NatWest. Collectors are cashing in more miles and real spending is dropping…………
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