This has been a good week for World Stock markets with the UK’s FTSE 100 rising by 13.4% this week and the US Dow Jones climbed by 9.7%.

In the same week Sterling has strengthened slightly against the US Dollar and Euro and the price of a barrel of oil rose by around $5 representing a 10% gain on the week. Although in a meeting in Egypt this Week Opec President Chakib Khelil left oil production unchanged, leaving any decision for a reduction to be made at their next meeting in December.

Bad news on the high street

One of Britain’s iconic high street chains has gone into liquidation, but there is some light at the end of the tunnel for Woolworths with a rescue bid by Dragons Den entrepreneur Theo Paphitis, who is known for taking over troubled chains and turning them around. Mr Paphitis has turned Rymans and La Senza’s fortunes around in the past so it is no surprise that he is in talks with receivers on this one. The government has also announced this week that is preparing to draw up a list of industries that it is prepared to help through this financial down turn.

Short-term tax reductions with higher taxes in the future

Next week the UK will see a lower VAT rate of 15%, with some shops bringing in the reduction early to entice shoppers to spend more. However, the country will have to pay for these tax reductions and extra spending in the future and in particular the higher rate income earners will be targeted with the introduction of a 45% tax band! Some good news though from across the pond with the US holiday season shopping getting off to a good start, rising 3% over the same time last year.

House prices in England and Wales fall by over 10%

In the year to October fell by just over 10%, with the average house price falling to 2006 levels at £165,529. One of the main causes for the fall is that house sales between May and August this year have dropped by more than 50% as a result of the financial crisis. However, the fall in November has slowed according to the Nationwide to just 0.4% over the fall of 1.3% in October.

Unrest in the world as the slowdown hits

China has already seen unrest amongst redundant workers as the world slowdown has hit China in a big way, with over 50% of toy manufacturers going in to liquidation and as recession bights things are expected to get worse. This week saw 500 workers over turn police cars outside of a toy manufacturer over a pay dispute.

End of the week saw:
Stock exchanges:
FTSE 100: 4,288
DOW: 8,829
S&P: 896
Nikkei: 8,512

Currencies
UK Sterling £ to US Dollar $ 1.53836
UK Sterling £ to Euro € 1.21130
UK Sterling £ to Aus $ 2.34940
US Dollar $ to Euro € 0.78740

Commodities
Nymex Crude oil – $55.00
Gold – $819.00

The Royal Bank of Scotland Group (RBS) has just come to the market for more cash and the offer was only taken up by a small percentage of shareholders.

The shares in RBS have been trading around the 54-55p mark, but the share issue was at 65.5p, so it is no wonder the take up was under 1% of the total.

The small take-up had been expected as the offer price of 65.5p was about 10p higher than the price at which the shares were trading. The Royal Bank of Scotland, which owns Natwest Bank, needed to raise £20 billion and now that the offer has all but failed, the government will need to bail the bank out and will end up owing just under 58% of the shares.

To think that back in 2007 shares in RBS were trading at over £7 per share and as a result of being affected badly by the sub-prime loans, the bank has had to be bailed out!

An icon of the British high street is now in receivership and 30,000 jobs are at risk!

Woolworths was first established in 1909 and with first half year losses running to just over £90 million and debts of some £386 million the company had to be put into receivership last week. The Prime Minister, Gordon Brown, is working with the receivers to ensure that Woolworths stores remain open over the Christmas period, which is the period where the company has said that it makes around 90% of its sales.

So if you fancy buying a company for just £1 then you can, but you will have to take on the huge debt mountain and 30,000 employees!

With the UK’s Chancellor pumping £20 billion into the UK economy with a VAT rate cut of 2.5% and the US Treasury bailing out Citibank in America with a $20 billion share investment in the troubled bank, world stock markets have soared.

The Uk’s FTSE 100 jupmed by 9.84%, which is the highest jump it has seen in its history, European shares rallied too with the German Dax rising by 10.34% and the French Cac 40 posting a 10.09% gain. The Dow has risen by just under 5% today, but had posted a large gain of over 5% on Friday of last week on the news of the Citibank investment, after European markets had closed.

If you are a high earner then it could be down to you to pay for the mess that the UK economy is in right now.

The Chancellor Alistair Darling is looking at reducing the VAT rate from the present 17.5% to 15% to give an immediate stimulus into the UK economy. However, moves like this along with extra government spending will need to be paid for and this is suggested to be from high income earners.

It has been suggested that UK Government borrowing could hit £100 billion and this will need to be repaid at some stage. The tax increases will likely be delayed until after the next election and the higher rate tax increase will not in itself be enough to recoup the “Tax Hole” caused by the proposed cuts.

This week saw Citibank announce 52,000 job losses after reporting a £13.3 billion loss and 10,000 of those will be in London.

The world stock markets saw another turbulent week with the London FTSE 100 down by 10.6% this week and the Dow Jones by 5.3%, although the Dow was saved at the end of the week by a rally on Friday of 6.5% on the news of Barack Obama appointing his treasury secretary Timothy Geithner.

Do you fancy buying a household name for just £1!

This is the price that restructuring specialists Hilco were prepared to pay for Woolworths this week, as we see another household name in trouble. Woolworths is in discussion with its banks to avoid going into receivership after suffering huge losses with first quarter losses extending to over £90 million. Woolworths has been struggling for some time, but with recent economic events and a further downturn on the high street the company has arrived at a tipping point!

Tax cuts now for tax rises in the future!

The UK’s Chancellor, Alistair Darling, is about to announce his tax cutting and public spending increasing budget in order to boost the UK economy. Mr Darling is looking at spending his way out of economic gloom, but the tax cuts will be short-lived and with Government borrowing at extremely high levels and having risen by a further £1.4 billion in October.

Bucking the high street trend

There are two companies that have bucked the trend this week with Mothercare reporting a doubling on profits this week to £9.5 million over the same period last year and GAP have increased net income to $246 million, up from $238 million last year. GAP’s sales were down by 8% though and the net position was improved due to a cost cutting exercise.

Oil remains volatile

The barrel price of oil remains turbulent this week with the price dropping below $50 a barrel this week for the first time since 2005. Opec are looking to make further cuts in oil production in order to shore up the barrel price, as Opec member oil producers are feeling the pinch after seeing the price of oil fall by nearly 66%.

Inflation on its way down

This week saw some good news on the inflation front from the UK after it fell by more than expected to 4.5% from a high of 5.2%. The Bank of England have hinted at further interest rate cuts to the UK’s base rate though and Treasury Select Committee chairman, John McFall has said that banks must start lending or face nationalisation.

End of the week saw:
Stock exchanges:
FTSE 100: 3,781
DOW: 8,046
S&P: 800
Nikkei: 7,911

Currencies
UK Sterling £ to US Dollar $ 1.48129
UK Sterling £ to Euro € 1.18366
UK Sterling £ to Aus $ 2.36933
US Dollar $ to Euro € 0.799070

Commodities
Nymex Crude oil – $50.29
Gold – $801.80

The price of Nymex crude has fallen to below $50 per barrel today finishing at $49.62.

Opec is considering cutting production by another 1.5 million barrels a day in order to prop up the price. But with the stocks of oil in the US piling up and increasing by more than expected the dollar price of oil is not looking to go up for some time.

With world economies shrinking and many reporting to be in recession the demand for fuel is reducing and therefore putting further downward pressure on the price of oil. Also, with China facing possible unrest, as unemployment increases due to weak demand for their products due to the world slowdown, where no so long ago China was one of the driving forces behind the oil price rise.

It’s official, UK inflation is falling and in October the rate fell to 4.5% having hit 5.2% in October.

We have seen that oil prices have been falling dramatically, with Nymex Crude sitting at just over $52 a barrel despite Opec reducing production to try to keep the price high. The fall in oil price has been filtering through to the economy lowering transport costs and with food prices falling too inflation has fallen.

There is however talk about the possibility of “deflation”, however, this is probably a bit premature with inflation still about 4%. The Bank of England has hinted at further interest rate cuts and there is a possibility that rates could fall to 2% by early next year.

The UK is not the only country with falling inflation and lower consumer confidence, the US has seen record falls in consumer prices when it dropped by 1% in October. This compares to a lower than expected fall in the UK where retail sales fell by just 0.1% in October, which is lower than the expected 1%. Retailers are having a hard time and are competing by discounting their prices!

The latest slow-down figures have again hit world stock markets with the Dow Jones falling by just over 5% and Japan’s Nikkei falling by just under 6.9%! The London FTSE is presently trading with a fall of just over 2%.

Better news for the property market

According to the Council of Mortgage Lenders (CML) mortgages in October picked up slightly, up by 7% over September.

“CML data shows that gross mortgage lending totalled an estimated £18.7 billion in October, almost 7% higher than what was an admittedly weak £17.5 billion lent in September. The monthly total was 44% lower than gross mortgage lending of £33.4 billion in October 2007″ Per the CML

This week saw the Eurozone slip into recession for the first time since its inception back in 1999.

This week also saw Hong Kong go into recession, with the UK heading for a long and painful recession too. The Pound too a hammering this week against the Dollar falling to a low of just below $1.48 this week. The UK government needs to be careful about how it tackles the present situation and it is not careful, too much borrowing to afford tax cuts and more government spending will cause further falls in the Sterling/Dollar rate. The shadow chancellor, George Osborne, has been criticising the Government and in particular Gordon Brown over his handling of the present situation, which has lead to a warning from Gordon Brown Gordon warning that his actions could lead to a sterling collapse.

So what do we have to look forward to? We have already seen world-wide interest rate cuts and we are to see government spending and tax cuts to help stimulate world economies. This weeks G20 summit has seen world leaders speaking about working together to solve the world financial crisis. The Brazilian President, Luiz Inacio Lula da Silva has voiced his views on the validity of G8 and has said that G20 is much more relevant to the world.

The world leaders at the G20 summit held in Washington have pledged to work together to restore global growth.

We have seen that the G20 leaders have been agreeing on banking reforms to change the financial system to help get the world through this present crisis and to put safety measures in place to prevent the same thing happening again in the future. One way that will help prevent such a situation is to put incentives in place to prevent banks from taking excessive risk.

Mortgage deals low on the ground

The type of deal that used to help first time buyers and others to move home are disappearing fast. Mortgage deals offering a 5% deposit are almost gone altogether and 10% deals are falling fast to around 66 on the market right now, whereas back in February this year were close to 1,200 deals. The other problem that mortgagees face is not having the 1.5% cut being passed on, which is more down to LIBOR being a high rate than base rates.

Pension payment reductions on the cards

AXA have warned about the consequences of people stopping or reducing their pension payments in the face of economic problems, their press release on 15th of November highlights:

“Urgent action needed to prevent £35 billion pension hole”

There are around 1.5 million people planning to stop pension contributions as recession bites and that a two-year pension payment break would cost a 35 year-old man £28,700 from his retirement fund!

The press release comments – “Around half (53%) of those planning a pension break said they were doing so to offset the increased cost of living or to clear debts, with a further 13% blaming increased mortgage payments.”

To see the whole press release click here.

Oil prices down to a low

Oil prices dipped again this week with Brent Crude falling to just over $50 a barrel. Opec are looking to reduce production yet again as we see Iran calling for reduced output as the price of oil drops amid the world economic slowdown. The dramatic falls in the oil barrel price has have major effects on the Russian economy where their economy has become accustomed to high oil prices and with the reduced income has put pressure on their financial systems.

Government support for the car industry

This week also saw the US government in discussion and looking to vote on a bill to pledge $25 billion ($17 billion) to the three major car manufacturers, Ford, Chrysler and General Motors. I am not quite sure whether this is quite what represents a free capital market, but unions of the major car-makers have warned of the dire consequences if any one of the big three went bust.

End of the week saw:
Stock exchanges:
FTSE 100: 4,233
DOW: 8,497
S&P: 873
Nikkei: 8,462

Currencies
UK Sterling £ to US Dollar $ 1.4854
UK Sterling £ to Euro € 1.17167
UK Sterling £ to Aus $ 2.29331
US Dollar $ to Euro € 0.788795

Commodities
Nymex Crude oil – $56.43
Gold – $742.90

Oil prices are continuing their turbulent ride with Brent Crude falling to just over $50 a barrel earlier this week.

Nymex crude fell to just under the $55 a barrel mark, which represents a fall of 62.5% from the high of $147 a barrel in July 2008! The Nymex barrel price has recovered slightly today by around 2.42% to $57.52. With oil inventories on the rise in the US because of the economic down-turn and with the demand from China being weaker than originally predicted by investors, the price per barrel is expected to remain low for a while.

US Energy Department oil reserves for November 2008 – Oil reserves