Week ended 25 January 2009 – A new American president

Posted by admin on 26 January, 2009 under Weekly business news summary | 3 Comments to Read

The highlight of this week was a new president being sworn-in in America as the 44th American President Barack Obama, takes centre stage.

There is nothing like a change in power to make people feel better which is a bit like having a shot in the arm. Barack Obama has plenty to do in his new role having followed the office of probably one of the worst presidencies in history. They say that major depressions come every 75 years or so and this one has come at about the right time according to history, helped along with bad management of the largest economy in the world!.

UK is officially in recession

Back over in the UK where we are still stuck with our government we are now officially in recession due to having two consecutive negative growth quarters ending December 2008. Sterling came under more pressure too this week with most currencies falling away again. The Sterling to US dollar rate closed at just over $1.37, which represents a fall of over 7% this week and has fallen by just under 35% since the rate hit $2.11 back in August of 2007. The US Dollar is back to the rates we were seeing back in December of 2001.

The other currency that has fallen sharply is the Sterling Euro rate closing the week at just under €1.06, having recovered a small amount last week.

Oil price recovers

Despite gloomy news around the globe the oil price has recovered this week with Opec cutting production and as much as 1.55 million barrels per day in January. The priced closed up at $46.47, which is a rise of 27% in one week. So it will be interesting to see where the price of oil moves this week with cold weather on its way on the one hand and on the other hand “peace” is restored in the Middles East for the time being.

Rising job losses

This has also been another week of job losses and warnings of job cut-backs, with Microsoft announcing 5,000 cuts in its work force which is the first ever in its history of trading! Over in Germany chip-maker Qimonda has filed fro bankruptcy with the loss of 12,000 jobs around the world. Corus, the Anglo-Dutch steel maker owned by Tata is to cut around 3,500 jobs with up to 2,500 of hose in the UK alone! But it is Spain that seems to be worst hit with their unemployment rate hitting 13.9% or 3.2 million jobless in the last quarter of 2008.

More trouble on the tech front!

Another first in this economic gloom as Samsung the South Korean chip-maker records its first ever quarterly loss. Samsung Electronics is the world’s biggest chip-maker and made a loss of 22.2 billion Won (£11.6 million), which is as a result of falling global demand as well as prices in memory chips and liquid crystal displays (LCDs). Japan’s electronics company Sony has also given out a profits warning along with other tech firms including Microsoft and Nokia.

If you want to read some good news for business in all this gloom the BBC have a great article on Why recession can be good time to start business

End of the week saw:
Stock exchanges:
FTSE 100: 4,052
DOW: 8,078
S&P: 831.95
Nikkei: 7,745

Currencies
UK Sterling £ to US Dollar $ 1.37210
UK Sterling £ to Euro € 1.05837
UK Sterling £ to Japanese Yen 121.637
UK Sterling £ to Aus $ 2.09337
US Dollar $ to Euro € 0.771464
US Dollar $ to Japanese Yen 88.6288

Commodities
Nymex Crude oil – $46.47
Gold – $895.80