Week ended 25 October 2008 – More falls, slumps and bumps around the globe!
Posted by bowraven on 25 October, 2008 under Weekly business news summary | 
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Earlier this week I wrote an article to put a positive spin on things, as it seems right now that all we are hearing is bad news with the rest of the week being no different.
I think the story that made me realise just how bad things are out there is the Volvo story where there order book has plunged by 99.7%, where the truck manufacturer has seen lorry orders drop to 115 over the last three months from 41,970 for the same period last year. When I read this I stood up and made note!
Sterling has taken a pounding this week (no pun intended), as it has seen the biggest falls since 1992 as it has fallen to 1.59129 at the end of the week representing an 8% drop. This will be good news for exporters to the US, as prices of goods leaving the UK will be cheaper and could lead to more sales of British goods, but it is bad news for business and holiday travellers alike.
There is good news on the horizon as we would expect interest rate cuts, I can’t believe the Bank of England has not cut them sooner. It is difficult to understand quite why we still have interest rates at three times that of the US, where the base rate is just 1.5%. Signs are out there that the banks are expecting cuts though, when I received in the post this week an offer from The Bristol & West Building Society of a fixed rate for three years of 5.59% for one of my buy to let mortgages.
Nils Pratley of the Guardian is talking about “deep cuts in interest rates”, let’s hope he is right, especially when we see that retail sales for John Lewis, considered to be the barometer for the state of the high street, have fallen by 7.6%.
Microsoft is bucking the trend, as is The Royal Mail when the US software giant has posted profits and sales figures well above analysts’ expectations. Microsoft made a $4.37 billion profit during the first three months of its financial year, which is up from $4.29bn a year ago and turnover rose 9% to $15.06 billion. The Royal Mail has doubled its operating profits to £177m in the first half of 2008/09 from a year ago, helped by cost cuts and greater efficiency, not bad when the average daily postbag is now 79 million items, which is five million fewer letters than two years ago.
We have another week of big falls in oil prices, this despite the oil cartel Opec cutting output by 1.5 million barrels a day. The price of oil closed at $64.65 per barrel having started the week at $71.75, this is a fall of nearly 10%. Which of course is great news for consumers, petrol prices and provides more downward pressure on inflation. These falls have lead to a price war breaking out between the UK’s top four supermarkets as Asda, Sainsbury’s, Tesco and Morrisons announced cheaper petrol. Asda and Sainsbury’s said they would slash their petrol prices to as low as 94.9p a litre – about time too when you consider this latest fall in oil price represents a fall of nearly 56%.
It’s good to see Brazil doing well, which is one of the BRIC economies (Brazil, Russia, Indian and China, the worlds fastest growing economies). Although the Brazilian stock market, the Bovespa in São Paulo, has recently fallen by around 20%, it is still up by around 5% from the level it was at last year. This compares to the UK’s FTSE 100 which is down around 16.5% over the same period. 10 bourses have bucked the downturn, which is good to see some good news on some of the World Stock markets.
End of the week saw:
Stock exchanges:
FTSE 100: 3,883
DOW: 8,379
S&P: 877
Nikkei: 7,649
Currencies
UK Sterling £ to US Dollar $ 1.59129
UK Sterling £ to Euro € 1.25299
UK Sterling £ to Aus $ 2.56787
US Dollar $ to Euro € 0.787405
Commodities
Crude oil – $64.65
Gold – $736.00
