India revises repo rate down as expected

India’s central bank has cut its key interest rate for the first time this year, moving it downwards by 0.25 basis points to 6.5 percent.

The move came after the first bi-monthly monetary policy review for the 2016-17 fiscal, which began on April 1st, in which Royal Bank of India’s governor Raghuram Rajan said that “a reduction in the policy rate by 0.25 percent will help strengthen growth.”

He also added that, “retail inflation measured by the consumer price index (CPI) dropped sharply in February after rising for six consecutive months.”

Interest rates in the country are now at their lowest for five years. The RBI also retained its GDP growth forecast at 7.6 per cent. Oil lower, bringing down Asia US Crude fell 3 percent in trading on Monday, after hopes of an output curb at a meeting in Qatar later this month begin to fade. Japan’s Nikkei 225 closed down 2.4 percent, marking the sixth negative session in a row, with South Korea’s Kospi also down 0.8 percent. Oil prices also forced down US stocks yesterday. Supply has outstripped demand for months, causing oil prices to plummet 70 percent to record lows. A meeting between OPEC and non-OPEC producers on April 17th had hoped to reach an output agreement, but investors are seeming to be losing hope of a productive outcome. Lagard warns of loss of growth in advanced economies International Monetary Fund director Christine Lagarde has urged governments to prepare for increasing threats to the global economy in a speech at Goethe University in Frankfurt. Lagarde said, “the good news is that the recovery continues. We have growth. We are not in a crisis. The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing.” “We are on alert, not alarm. There has been a loss of growth momentum. However, if policymakers can confront the challenges and act together, the positive effects on global confidence, and the global economy, will be substantial.” Lagarde also called for governments to take their own actions to encourage economic growth, rather than relying on central banks to keep interest rates low and print electronic money. Several factors have caused a weak start to the economic year, including a slowdown in China and the continuing rock bottom oil prices. UK Chancellor George Osborne has also given similar warnings, citing January’s turbulence in the markets to encourage investors not to be complacent.  

05/04/2016

Anbang withdraw offer for Starwood Hotels

Chinese insurance firm Anbang has dropped its takeover offer for Starwood Hotels in a surprise statement this morning, allowing Marriott hotel group to become the leading bidder.

The statement from Starwood said the offer was withdrawn due to “market considerations”, and Anbang “does not intend to make another proposal.” Starwood’s Board of Directors reiterated that it would continue to unanimously support the merger with Marriott International. Bruce Duncan, Chairman of Starwood’s Board, commented: “Throughout this process, we have been focused on maximizing stockholder value now and in the future. Our Board is confident this transaction offers superior value for Starwood’s stockholders, can close quickly, and provides value-creation potential that will enable both sets of stockholders to benefit from future financial performance.” Sainsbury’s bid backed by Argos owner British supermarket Sainsbury’s has become the leading bidder in the battle for Home Retail Group, the owner of Argos and Homebase. Its £1.4 billion pounds offer for Home Retail has been recommended by the Argos board, making the takeover by Sainsbury’s look ever more likely. Their main competitor, South African company Steinhoff International, withdrew last month. National Living Wage comes into force in the UK

The new National Living Wage comes into force today, requiring employers to pay workers aged 25 and over at least £7.20 an hour.

Announced in George Osborne’s budget last summer, it is expected to raise the wages of 1.3 million workers. However, there are fears that jobs will be lost if businesses – especially smaller ones – cannot afford to pay the workers the new wage, making the move counter productive.

01/04/2016

Britain’s current account deficit has hit a record high, prompting chancellor George Osborne to speak out against Britain leaving the EU. The deficit widened to 32.7 billion pounds in the fourth quarter of 2015, according to the Office for National Stastics, standing at the equivalent of 7.0 percent of gross domestic product. For the third quarter, the deficit was only at 4.3 percent of GDP, pushing the total for 2015 up to £96.2 billion and 5.2 percent of GDP – the highest since records began in 1948. The figures demonstrate Osborne’s gloomy approach to the economy in 2016 he gave during the Budget earlier this month. In a statement today, he said: “Today’s figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU.”   However, the ONS figures also showed the UK economy grew 0.6 percent in the fourth quarter of 2015, higher than previous estimates of 0.5 percent.

31/03/2016

Argentina lawmakers pass landmark payback deal

Argentina lawmakers have passed a repayment deal which will see the country’s access to international credit reinstated, after a 15 year battle with creditors.

The deal was central to President Mauricio Macri’s election win in November and should improve business conditions in the country. Argentina defaulted on a $100 billion loan in 2001, which left them unable to borrow at the standard rate of about 5 percent – instead forcing Argentina to pay at least double, restricting the country’s access to financial help.

The deal has been made with creditors in New York, and Argentina now have until the 14th April to pay holdout creditors. South Korea’s industrial output rebounds

South Korea saw industrial output figures rebound in February, according to official figures published today.

Industrial production rose 3.3 percent on a month earlier – the biggest monthly increase since 2014 – after a 2.1 percent fall in January. Weaker demand from China in recent months has impacted on South Korea’s economy, but the latest set of figures are an encouraging sign, beating expectations. Travel group TUI see growing demand, despite terrorism threat

TUI Group, who own travel giants First Choice and Thomson, have reported higher than expected bookings for summer holidays this year.

TUI said the demand was coming especially from Spanish and long-haul destinations, despite reporting a 40 percent slump in bookings to Turkey last month due to events in the Middle East. TUI makes all of its profit from summer bookings, making them a key indicator for the group. Summer holiday bookings have risen 2 percent, with average selling prices up 1 percent. Chief Executive of TUI Group, Friedrich Joussen, commented: “The Group has again demonstrated the flexibility of its business model and the ability to remix destination capacities to match demand and as a result demand and pricing has remained resilient overall despite the impact of geopolitical events. “We therefore remain well positioned to deliver underlying EBITA growth of at least 10% in financial year 2015/16 ^,“

31/03/2016

 

Indian-owned steelmaker Tata Steel has announced that it will put its entire UK business up for sale, after failing to turn the failing Port Talbot plant around. After a major board meeting in Mumbai, the company announced plans to exit Britain’s steel-making industry in order to stem heavy losses. Despite being one of the largest companies in Wales and employing over 4,000 people, the plant at Port Talbot is thought to be losing over £1 million per day, failing to compete with cheaper exports from China. “Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe Board will be advised to evaluate and implement the most feasible option in a time-bound manner”, Tata said in a statement. Unions welcomed the decision not to close down the plants but called on Tata to be a “responsible seller” and on the government to play its role. The UK and Welsh governments have issued a joint statement, saying that they are “committed to working with Tata and the unions on a long-term sustainable future for British steel-making”. However, Roy Rickhuss, general secretary of steelworkers’ trade union Community, responded: “We don’t want just want more warm words, we want a detailed plan of action to find buyers and build confidence in potential investors in UK steel. It is understood there have been extensive talks between the government and ministers, and the state are keen to intervene. Labour leader Jeremy Corbyn has already called for ministers to act to protect the steel industry and “the core of manufacturing in Britain”.

30/03/2016

Yellen gives insight into rate rises

Chair of the Federal Reserve Janet Yellen said the Fed would be cautious when raising interest rates over the next year, in a speech at the Economic Club of New York yesterday.

According to Yellen, global risks are not expected to have a deep impact on the US, but due to volatile oil and slowing growth in China US rates will be risen slower than expected.

Boeing to cut over 4,000 jobs The world’s largest plane manufacturer Boeing has announced plans to cut over 4,500 jobs by the middle of the year to reduce costs, after losing market share to Airbus over recent years. Spokesman Doug Alder said: “While there is no employment reduction target, the more we can control costs as a whole the less impact there will be to employment.” The group plans to cut most through voluntary layoffs and will include hundreds of executives and managers. The cuts account for almost 3 percent of Boeing’s workforce, which comprised 161,000 people at the end of last year. McCormick raises offer for Kipling company Australian producer McCormick have raised their offer for Premier Foods, after being told previous bids “significantly undervalued” the company. On Wednesday, McCormick proposed an offer of 65 pence per Premier share, valuing Premier at £1.5 billion including debt and pension liabilities. Its further offer is said to be little over double the stocks close late last week. McCormick, primarily known in the UK for its Schwartz spices, has already had two bids rejected by Premier, the maker of Mr Kipling cakes and Bisto gravy.

30/03/2016