.the main BUSINESS headlines.
Markets rally on earnings reports
Stocks rose around the world as earnings announcements beat expectations in the US and Japan. In New York the Standard & Poor’s 500 Index rose 1.6 per cent after JPMorgan, America’s second-biggest bank, reported better earnings than estimated. And in Tokyo Toshiba shares gained after it posted a smaller than expected loss. The move helped push the MSCI Asia Pacific Index ahead 0.8 per cent, pushing the measure into positive territory for the year. In London the FTSE 100 was 0.60 per cent higher in early trade.
900,000 in negative equity
“Plunging” house prices have pushed 900,000 mortgage borrowers into negative equity, reported the Times. The figure was released by the Council of Mortgage Lenders yesterday and is equivalent to 13 per cent of those who took out a mortgage between April 2005 and December 2008. Three quarters have an average shortfall of £6,000 to £8,000, and the rest, “nearly a quarter of a million” borrowers, have negative equity of nearly £20,000. A further 13,000 homeowners have a shortfall to the tune of £37,000.
IMF warns on Depression parallels
The International Monetary Fund has warned of “worrisome parallels” between the global economic crisis and the Great Depression, reported theDaily Telegraph. It also cautioned that in spite of the “unprecedented” measures already taken by central banks and governments worldwide the recession was likely to be “unusually long and severe”. The IMF said that the US was at the heart of the crisis, as it was in the Depression, but suggested that the risks were “even greater” this time around as the boom was global.
New BoE member thinks worst over
The UK could already be “through the worst” of the recession, according to he newest recruit to the Bank of England, reported the Guardian. David Miles, a City economist and the replacement for David Blanchflower on the monetary policy committee, said he was “guardedly optimistic” on the outlook. Saying measures already taken by the government may have a “substantial impact” on the economy he said it might mean that the “worst of the recession” had passed. His optimism was in “stark contrast” to the earlier IMF study.
Fed figure queries Lehman failure
Federal Reserve Bank of San Francisco President Janet Yellen made a speech in which she suggested that the collapse of Lehman Brothers was a mistake, reported Bloomberg.com. She said the company was “too big to fail” and the impact of its collapse was “devastating” after the Federal Reserve decided not to offer it a loan. Yellen disagreed with Fed officials who thought a bail-out would encourage “excessive risk-taking” among investors. She is the second major Fed figure to question the “hands-off” approach to bubbles.
Google sees profits rise
Google’s profits rose by nine per cent in the first quarter of the year as the company “reaped the benefits” of a move to online advertising, reported the Times. The shift from traditional media allowed it to improve its profitability as did a “cost-cutting drive”. However sales growth fell to its “slowest pace” since the company listed its shares nearly five years ago, in an illustration of just how much the recession is affecting “even the strongest” of international groups. Chief executive Eric Schmidt praised his company’s “resilience”.
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Drug companies team up against Aids and Duke loses half a billion
The UK’s biggest pharmaceutical company, GlaxoSmithKline, is to join forces with US rival Pfizer to develop HIV/Aids drugs, reported theGuardian. The move is a bid to “reinvigorate financial returns” from the global epidemic and will see the creation of a new company, based in London…………
Cathay Pacific Airways, the largest Hong Kong carrier, is to cut capacity and offer unpaid leave to staff as demand for flights plunges, reportedBloomberg.com. It will reduce capacity by eight per cent from May at its main unit and employees will be offered up to four weeks unpaid holiday…………
Saab, the brand owned by beleaguered US auto company General Motors, has started to show potential buyers round its operations, reported the Financial Times. According to its managing director 10 groups are to get the tour and he hopes the Swedish unit will be sold “by mid-year”…………
A Lincolnshire financial advisor has been jailed for six years after he admitted losing £1.2m of investors’ money through “fraudulent” trades, reported the Times. Alan Richardson’s company MFC Finance was marketed as a “high-yield” vehicle but he diverted funds elsewhere…………
It will take “at least five years” to find the funds lost by investors in the alleged $8bn Ponzi scheme run by Sir Allen Stanford, reported the Financial Times. Officials appointed in the group’s liquidation said Stanford International Bank had assets of only hundreds of millions of dollars…………
The Duke of Westminster’s property company Grosvenor, made a pre-tax loss of £593.9m last year as the economy “slumped”, reported the Daily Telegraph. The Duke is the UK’s “richest landowner” and the loss, his company’s worst for 16 years, compares to a £524m profit in 2008…………
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