...the main headlines..........
Markets fall on earnings concerns
Stocks fell worldwide as investors became concerned that earnings are continuing to be hit by the global recession. In New York the Standard & Poor's 500 Index fell 1.2 per cent after Hewlett-Packard cut its earnings forecast and saw its shares decline nearly eight per cent. In Asia, Japan's Broadest measure, the Topix Index, fell a further 1.6 per cent, leaving it at its lowest level since 1984. Asian stocks were weak across the board, with the MSCI Asia Pacific Index closing down 2.3 per cent. In London the FTSE 100 Index was over two per cent lower in early trade.
BoE sees risk of 10 year depression
Bank of England Deputy Governor John Gieve indicated he is fighting the threat of a "decade-long depression", reported Bloomberg.com. In a speech at the London School of Economics he said it was a "serious risk" but that it was being addressed with a "huge amount of policy easing". The Japanese experienced a banking crisis in the 1990s and then many years of deflation in what is known as the "Lost Decade". The BoE is set to begin quantitative easing measures in the next few weeks after starting to buy commercial paper a week ago.
Drop in tax hits public finances
An "alarming" decline in tax revenues has "blown a hole" in public finances, making it very difficult for the chancellor to reach borrowing targets set out three months ago, reported the Independent. The big fall in tax receipts pushed the budget deficit to a "record high", even before the bank bail-out costs are included. Public sector net borrowing was £67.2bn between April 2008 and this January, the "highest on record". The steep falls in City bonuses has contributed to the problems as most banks cut the level of pay-outs by around 50 per cent.
Saab on brink of failure
Swedish car-maker Saab Automobile is on the brink of failure after General Motors "threatened to walk away", reported the Daily Telegraph. After GM made the threats the Swedish government also refused to come to its rescue and after an emergency meeting, the Saab board adjourned without making a decision on whether to seek protection from its creditors. GM has threatened to let Saab go under as part of its negotiations with the Swedish government, over it providing some financial assistance to keep it running.
Anglo American to slash jobs
Mining giant Anglo American is to cut 19,000 jobs and "scrap" its dividend, after announcing lower than expected earnings, reported the Times. The company announced a $2bn cost-cutting programme and will cut staff amounting to about 10 per cent of its total workforce. Anglo has been hard hit by the downturn in the manufacturing industries which use its products and profits before tax fell from $8.8bn to $8.6bn, with group revenues down 7.6 per cent to $33bn for calendar 2008. Net profit "plunged" by 29 per cent to $5.2bn.
McCarthy & Stone faces bankruptcy
McCarthy & Stone, the UK's biggest retirement home builder, is facing "possible administration" because its lenders disagree on how to approach its £900m debt burden, reported the Guardian. Senior creditors are considering putting the company into "pre-pack administration", allowing it to continue with its business, although "junior" creditors, who have lent smaller amounts to the company, would be "wiped out". The move would leave Lloyds Banking Group and other major lenders in control of the company and would take six weeks.
...in brief..................
FBI locates Stanford and Barratts bought out of administration
The FBI found missing Texan billionaire Sir Allen Stanford in Virginia on Thursday, reported the Financial Times. Agents served him with court orders relating to the SEC civil filing against his investment company Stanford Financial Group. The enquiry has widened amid reports of drug-related "money-laundering"............
Land Securities became the most recent property group to tap its shareholders for funds yesterday, reported the Independent. The UK's biggest real estate company "joined the scramble for capital" with a £756m rights issue, the biggest yet in the property sector............
BAE Systems profits "jumped" 92 per cent to £2.37bn last year, boosted by global conflict and the weak pound, reported the Daily Telegraph. The company finished the period with net cash, even after spending £1.4bn on acquisitions and all its units performed "well", generating cash............
Stagecoach has axed the head of its rail business, with founder Brian Souter to take "personal charge" of the group's South West Trains business, reported the Guardian. Ian Dobbs departed SWT yesterday, which is "one of the costliest" franchises on the network but is facing "tough operating conditions"............
Shares in Zimbabwe, "battered" by extreme economic conditions, "may rebound", after the stock exchange re-opened yesterday with stocks denominated in dollars, reported Bloomberg.com. Renaissance Capital says shares will fall initially but "more than double" by the year-end...........
Barratts Shoes and PriceLess Shoes have been bought out of administration by former owner Michael Ziff, "at the cost of half" its workforce, reported the Times. 2,500 employees will be made redundant, with 220 shops set to close, leading to criticism by Ziff of landlords who wouldn't accept new terms............
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