Week ended 31 January 2009 – More rescue packages and job cuts

Posted by admin on 1 February, 2009 under Weekly business news summary | 3 Comments to Read

The end of this week has seen Japan announce a rescue package pf 1.5 trillion Yen (£11.4 billion) to help Asian Countries threw the economic slow down.

The Prime Minister of Japan Taro Aso has decided on this rescue package and will be spent on promoting trade within the region and on infrastructure over the next three years.

The Japanese Prime Minister has called upon other wealthy nations to help smaller countries in the same way and has warned against protectionism. We are already seeing signs of protectionism in the UK, with workforces showing their growing resentment or foreign workers.

Japan has been hit hard by the slowdown and only this week NEC has announced 20,000 job cuts over the next 14 months and Hitachi has announce 7,000 job losses due to a drop in sales and is predicting a 700 billion Yen (£5.3 billion) loss for the year.

In contrast to this bad news Subway announce that it intends to open 600 new stores across the UK creating around 7,000 new jobs. Also, good news for Amazon as they saw their profits increase by 9% for the final quarter to December 2008 making a final annual profit of $1 billion (£685 million), so there is good news around despite the gloom.

A tough time for the air industry yet again, after getting through the high oil prices over the last several months we have now seen a huge fall in freight traffic and even more that the drop after 9/11. Freight traffic has falling by 22.6% in December of 2008 over the same month last year. The International Air Transport Association (Iata) is warning of a tough time for both passenger and freight airlines alike.

With the G20 summit coming up in April in the UK the UK’s Prime Minister Gordon Brown has urged a global confidence, saying that world leaders must have the “confidence to act” to tackle the global recession. Mr Brown was speaking at the Economic Forum in Davos where there were many world business entrepreneurs speaking and included Sir Stelios Haji-Ioannou the founder of Easyjet, who was trying to talk up the opportunities that exist in a down-turn.

Turning to commodities, gold has seen a further rise this week ending the week at $929 having risen 3.7% over the end of last week. The price of gold will remain high and might go even higher with the prospect of a continuation of a weak US dollar. Oil is still flirting around the $40 mark having dropped back again this week ending at $41.75, representing a drop of over 10%.

The first oil company to show signs over the affect of falling oil prices is the worlds largest oil giant Exxon Mobil. The company has reported a big 33% fall in profits for the last quarter of 2008 over the same quarter for 2007, falling to $7.8 billion (£5.3 billion).

End of the week saw:
Stock exchanges:
FTSE 100: 4,150
DOW: 8,001
S&P: 825.88
Nikkei: 7,994

Currencies
UK Sterling £ to US Dollar $ 1.45905
UK Sterling £ to Euro € 1.13592
UK Sterling £ to Japanese Yen 131.282
UK Sterling £ to Aus $ 2.28796
US Dollar $ to Euro € 0.778240
US Dollar $ to Japanese Yen 89.9350

Commodities
Nymex Crude oil – $41.75
Gold – $929.00