Markets rose as investors put their faith in government stimulus plans eventually succeeding. In New York yesterday the Standard & Poor’s 500 Index rose 1.3 per cent after an improvement in bad loans at American Express. In Asia the gains continued, with the MSCI Asia Pacific Index moving 0.6 per cent higher, to almost erase its losses for the year. Buyers in the region selected commodity and technology stocks on hopes the financial crisis may be easing. In London the FTSE 100 Index was 0.70 per cent higher in early trading. The pound has rallied to $1.50 for the first time in three months as the financial markets warm to Prime Minister Gordon Brown, reportedBloomberg.com. Although Brown “has yet to benefit” in the polls from the same kind of approval, as the UK undergoes the worst recession for 25 years, the currency has “rebounded” versus both the dollar and euro. The pound has now gained 2.6 per cent against the dollar this year and 8.7 per cent against the euro, with investors betting the UK will be “among the first” to recover from the global recession. Annual public borrowing is set to “rocket” to nearly £175bn over the next two years as a result of lower growth and inflation, reported the Financial Times. The figures are expected to be announced by chancellor Alistair Darling in next week’s budget and at “more than 12 per cent” of estimated national income next financial year it would mean the worst deficit since the second world war. As a result public spending is likely to hit around 48 per cent of national income next year, a figure “not seen for 27 years”. Deflation has returned to the US for the first time in “more than half a century”, reported the Independent. Consumer prices fell 0.4 per cent last month year on year, for the first annual drop since August 1955, as the collapse in oil prices fed through into consumer costs. The “spectre of deflation” has hung over policymakers since the beginning of the financial crisis, as it threatens an “intractable recession” and raises the stakes in the Obama administration’s battle to re-stoke economic growth, even while consumers benefit. BAA is facing “increasing pressure” over airport sales and expansion plans after it revealed a drop in passengers last month, reported the Guardian. The airport operator said the number of passengers flying from the UK’s airports fell “more than 11 per cent” last month and the decline is accelerating. The owner of Heathrow, Gatwick and Stansted saw the numbers decline for the 11th month in a row. Worst hit were budget airline bases Gatwick and Stansted. An “ongoing dispute” with Ryanairand easyJet over lending fees is also hitting the company. The Chinese economy grew 6.1 per cent in the first quarter from the year before, as the government “struggled” to maintain growth, reported theFinancial Times. The increase was a deterioration from the level of 6.8 per cent in the fourth quarter and nine per cent for 2008 as a whole. The “rapid cooling” comes as a result of collapsing exports and private investment, but aggressive government measures have kept things in “positive territory”. The Chinese government expressed relief that growth has not deteriorated further. Nine building societies have been downgraded by Moody’s over concerns about their exposure to house prices and mortgages, reported the Financial Times. The downgrades include Nationwide and follow “stress testing” against the background of a 40 per cent fall in house prices………… The recent recovery in world stock markets, may mark the beginning of a “new bull market for equities”, reported the Independent. The comments were made yesterday by Crispin Odey, the founder of Odey Asset Management, one of the UK’s best-known hedge fund managers………… The crisis at Tiscali, Britain’s fifth biggest internet group, “deepened” yesterday when its auditors refused to sign off its accounts, reported theTimes. Ernst & Young cited “fundamental” uncertainties and said the company’s future depended on successful negotiations with its banks………… EBay has offered $1.2bn in cash for South Korea’s Gmarket as it seeks to expand in Asia, reported Bloomberg.com. It will combine the company with its Seoul-based Internet Auction Group, doubling its sales in the country, and comes after it made its first quarterly loss in the fourth quarter………… BP chief Tony Hayward has demanded “low-key” 100th birthday celebrations for his company, reported the Guardian. The call came as part of its “austerity drive” and is calculated to distinguish his approach from that of his predecessor Lord Browne, dubbed the “Sun King”………… Veteran investor John Duffield has bounced back with his third investment group, following the “near-collapse” of his previous venture, reported theIndependent. He has launched Hyde Park Asset Management in the offices of fund manager Henderson, which bought New Star in February…………..the main headlines..........
Markets gain on stimulus plans
Pound rises as markets warm to PM
UK public borrowing rockets
US deflation returns after 54 years
Passenger numbers drop at airports
China’s GDP growth slows to 6.1%
...in brief..................Building societies downgraded and Duffield rises from New Star ashes
Thursday, 16 April 2009
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