| Morning business news |
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| Written by Roberta Murray | |
| Wednesday, 05 November 2008 | |
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Wednesday 5 October: Trying to make sense of the Obama effect and other market news.
Barack Obama is the new US president - and this will undoubtedly dominate the media today as well as influence the markets. The Telegraph confirms that now uncertainty has dissipated markets can take some guidance - this as Asian shares hit a three-week high after Obama became the 44th US president.European shares were set to open slightly lower, with analysts saying a victory for Obama had been largely priced in after recent rises and concerns about the health of the global economy still paramount. U.S. Treasuries fell as investors became bolder in taking risk, but oil succumbed to profit-taking after signs of global production cuts had sent crude prices up 10 percent on Tuesday. Gold fell more than 1 percent on the firmer dollar. Other market news this morning BSkyB (LON:BSY) and Virgin Media (NASDAQ:VMED) have declared an end to their 20-month long public row with an agreement for Sky channels to return to cable television. The new agreement, scheduled to begin on November 13, will see Sky's basic channels, such as Sky One, Sky Two and Sky Sports News, return to cable, writes the Telegraph. Royal Bank of Scotland's (LON:RBS) new bosses are planning to unpick the empire built over the past eight years by outgoing chief executive Sir Fred Goodwin after revealing that the financial crisis will plunge the giant lender into its first full-year loss. Stephen Hester, who takes over on November 25, has launched a strategic review to "focus the group on businesses that have a clear competitive advantage and to reduce risk and balance sheet exposures," writes the Telegraph. The CBI yesterday gave warning that the relationship between businesses and their lenders has deteriorated sharply and that job losses will be acute this winter if the banks fail to lend. The warning came amid heightened tensions over banks’ lending and their apparent failure to supply enough credit to small businesses and to pass rate cuts on to mortgage borrowers, reports the Times. British car sales are likely to show their sharpest fall for 17 years when figures for October are published tomorrow. The Times has learnt that sales of new cars were worse than in September, when they fell by 21%, and could have fallen by as much as 25%. This would be the steepest decline since June 1991. A commercial property fund open to retail investors and managed by Aviva has been forced to suspend trading, raising fears UK property funds could be facing another run on cash almost a year after the last crisis. Aviva blamed a “rapid increase in the level of redemptions over the last few weeks” in the £387m European Property Fund that has caused a lack of immediate liquidity, reports the FT. Analysts at the US investment bank Morgan Stanley are recommending that clients start to buy shares again after more than a year of falling markets. "We have now come full circle: our market timing indicators are giving us a full house buy signal," said the statement. "Each of the four indicators – valuation, capitulation, risk, fundamentals – tells us to buy," its report said, writes the Independent. Calls for the Bank of England to slash interest rates intensified last night as the economic downturn prompted companies to cut recruitment at a record pace. The number of people being hired fell for the seventh month in a row in October, according to the monthly Report on Jobs from the Recruitment and Employment Confederation and KPMG. More than half of companies hired fewer people in October than in September, and only 15% took on more permanent staff, writes the Times. BHP Billiton’s $78bn hostile bid for Rio Tinto came under fire yesterday from competition regulators in Europe and Japan amid concern that the deal would result in higher iron ore, steel and copper prices. The European Commission has given BHP a list of its objections and the company will have to address these before the takeover can be approved. The Times has also learnt that the Japanese are becoming increasingly frustrated by BHP’s refusal to provide detailed information on the proposed Rio takeover. |
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As the economy hits the most significant downward cycle in 50 years, finance directors must take stock of their companies' remuneration and compensation packages.