Markets tumble over credit concerns
Global stock markets fell as countries battled the effects of a worsening recession. In New York, the S&P 500 fell 4.25 per cent to its lowest level since 1996 after Moody's Investors Service said it might cut JP Morgan Chase's credit rating. In Asia, the MSCI Asia Pacific Index fell to a fourth weekly decline as the recession hit profits at companies ranging from BHP Billiton to Toyota. The Nikkei 225 Stock Average dropped 3.5% as Japan’s Central Bank Deputy Governor said the bank may need to expand its purchases of corporate debt. The FTSE 100 opened down 0.28 per cent at 3,519.90.
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UK Gilts soar on BoE move
UK Gilts had their biggest rise "in living memory" after the Bank of England embarked on a radical strategy to pump money into the beleaguered UK economy, reported the Daily Telegraph. While both the rate cut to just 0.5 per cent and the new money creating strategy were expected, the sheer scale and speed of the plan took bond traders by surprise. The BoE will spend £150bn of newly created central bank money on corporate and government bonds. It hopes the cash injection will find its way into the hands of consumers and businesses, thereby boosting demand.
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Taxpayer to own 70% of Lloyds
The extent of Lloyds' "ill-fated" takeover of HBOS will be revealed today, reported the Financial Times. The bank’s board will consider joining the British Government's toxic asset scheme in exchange for UK government taking a stake of about 70 per cent of the merged bank. ChancellorAlistair Darling has agreed a deal that would see the government insure £258bn worth of toxic assets. Lloyds has been forced to go to the Government for support because of the heavy losses run up by HBOS, which it took over to prevent its collapse. Shares in Lloyds fell more than 15 percent on Thursday.
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Aviva shares plunge on losses fear
Aviva's move to hold its full year dividend at 33 per cent didn't stop investors from shedding shares of the UK's biggest insurer, reported theIndependent. The company announced pre-tax operating profits for 2008 were up 3.7 per cent at £2.3bn. But investors are increasingly scared that tumbling share prices and rising corporate defaults will hit capital buffers, forcing insurers to raise new equity in the market. Shares in the company hit an all-time low, leading big falls across the financial sector. Legal & General, which has also been beset by worries about its capital position, fell 29 per cent.
Last call for Punch Tavern pubs
Some of Punch Tavern's 8,400 pubs will be up for sale to "whittle down" its £4.5 billion debt, reported the Times. Britain’s biggest pub company will approach family brewers, including Fuller's, Young's, Charles Wells andShepherd Neame to ask them which properties they'd be interested in buying. The pub and brewing industry has suffered eighteen months of woes from the effects of the smoking ban, a drop in consumer spending, the credit crunch, cheap beer prices in supermarkets and hefty rises in duty. About 39 pubs a week currently shut their doors permanently in the UK.
GM ‘could go under in 30 days’
US carmaker General Motors warned it'll go bust within a month unless the US Treasury gives it another multi-billion dollar bailout, reported theGuardian. The company has already received $15bn (£10.6bn) in loans but said it might default on these current loan payments unless the Obama administration meets its request for a further $5.8bn (£4.1bn) between now and 2014. The desperate plea from America's biggest car group came after its auditor Deloitte raised "substantial doubts" about its ability to continue operations. Once the world's biggest carmaker, GE plans to cut 47,000 jobs – 26,000 outside the US.
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...in brief..................
BA, Five and Freemans cut jobs
British Airways is predicting a second year of £150m losses in the current year and warns that further job cuts are on the way, reported theIndependent. BA's poor finances and groaning pension deficit are both "sticking points" in negotiations over the company's merger with Spanish airline Iberia.......
Channel Five will cut 25 per cent of its staff as part of its restructuring plan, reported the Daily Telegraph. 87 jobs will go as the television company integrates departments and slims down management structures. The company is suffering from an enormous slump in advertising revenue, perhaps as much as 17 per cent in the first quarter........
British home shopping retailer Freemans Grattan confirmed it would cut 1,000 jobs in the UK when it shut three of its UK-based sites. The company said it couldn't rule out further job losses and would shut operations in Bradford, Peterborough and London........
Private equity house Candover may close for new business and cut its investment staff to a bare minimum, reported the Times. As shares in Candover plummeted 42 per cent, the company prepared a plan in which a remaining 10 staff would manage existing businesses until they could be sold........
Citigroup's shares fell 10 per cent to close below $1, bringing its market value to just $5.6bn, reported the Financial Times. Investors concerns are growing over the US government's decision to bail out the bank. Shares peaked at $56 in 2006........
The US Payroll report will likely show that more Americans have lost their jobs in February than any time since 1949, reported Bloomberg.com. Economists estimate the report will show that 650,000 of jobs were lost and that the unemployment rate rose to a 25-year high of 7.9 per cent........
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