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Markets News Afternoon: Ryanair seeks Government answer on Dec 2008 Aer Lingus offer rejection; Trichet in no rush to hike rates
By Finfacts Team
Oct 8, 2009 - 4:33:04 PM
European Central Bank President Jean-Claude Trichet said today that current interest rates are “appropriate,” signaling that the ECB is in new rush to tighten policy yet, as a fragile recovery bumps ahead in the Eurozone economy.
Trichet was speaking in Venice after a meeting of the governing council which kept the benchmark rate unchanged at 1%.
The ECB president said available survey indicators continue to signal an ongoing stabilisation of economic activity. In particular, the Eurozone should benefit from a recovery in exports, the significant macroeconomic stimulus under way and the measures taken to restore the functioning of the financial system. In addition, following the substantial negative contributions in the first half of 2009, the inventory cycle is expected to contribute positively to real GDP growth in the second half of the year.
“The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term,”Trichet tolda press conference.
Analysts do not expect a rate hike until the second half of 2010.
US personal care products company Colgate-Palmolive which is 10 years in Ireland, is to invest €4.6 million in its Support Services Organisation in Dublin. The investment, which is supported by the Government through IDA Ireland, will be used to develop Information Technology for the company’s global finance operations at its Citywest Business Campus.
Colgate’s Support Services Organisation (SSO) employs over 90 people in Dublin and is a key part of Colgate’s global IT strategy. The SSO in Dublin is responsible for IT services in Europe, Middle East and Africa. It was established 10 years ago to assist in the worldwide roll out and implementation of SAP across the business.
Ryanair/Aer Lingus
Ryanair, the Irish low-cost airline, on Thursday called on the Department of Transport, to explain why it rejected Ryanair's December 2008 offer for the former State airline Aer Lingus , which guaranteed to double the size of Aer Lingus' short-haul fleet and create 1,000 new jobs in the airline over a five year period.
Ryanair's Dec 2008 offer document for Aer Lingus guaranteed to double Aer Lingus' short-haul fleet from 30 to over 60 aircraft, create 1,000 new jobs for pilots, cabin crew and engineers over a five year period, while at the same time cutting Aer Lingus' fares, removing its fuel surcharges, securing its brand, Heathrow slots and connectivity.
Ryanair said since the Minister for Transport rejected Ryanair’s Dec 2008 offer, Aer Lingus has:
Announced record losses of over €100m for 2008
Guided increased losses in 2009
Seen its long-haul traffic collapse
Seen its net cash balances fall from over €800m, to less than €400m.
Yesterday announced over 670 jobs losses, and pay and pension cuts.
Ryanair’s Michael O’Leary said: “Ryanair believes there is a bright future for Aer Lingus, but it will never be achieved while it is mismanaged by a bunch of political and trade union hacks on the Aer Lingus Board”.
The US lost its top stop as the global financial center of the world to the UK. Nouriel Roubini (aka Dr. Doom), chairman of RGEMonitor.com and the lead academic on the report, breaks down the results for CNBC:
The number of Americans filing first- time claims for unemployment benefits fell last week to the lowest since January, a signal the labour market slump is easing.
New applications fell by 33,000 to 521,000, lower than forecast, in the week ended Oct. 3rd, from a revised 554,000 the week before, Labor Department data showed today.
Continuing claims dropped by 72,000 to 6.04 million in the week ended Sept. 26th from 6.11 million in the prior week.
The report showed the four-week moving average of initial applications, a less volatile measure, fell to 539,750 last week from 548,750.
The Wall Street Journal reported that retailers posted higher-than-expected September same-store sales, even as analysts raised their estimates as the month came to a close, with the performance potentially enough to end a year-long streak of falling sales.
Victoria's Secret parent Limited Inc. was among the upside surprises, reporting its first same-store-sales increase since August 2007. Target Corp. reported a 1.7% drop, meeting estimates, but the company was among the companies on Thursday projecting fiscal third-quarter earnings at or above expectations. Others included Kohl's Corp. and J.C. Penney Co.
The results and resulting optimism sent shares of many retailers higher in morning trading.
On the markets, the Dow is up 96 points or 0.99% to 9.822.
The Nasdaq is up 1.16%; the S&P 500 rose 1.13%.
After the closing bell on Wednesday, US aluminum giant Alcoa began the third quarter reporting season and gave a spur to the market by posting a profit after three consecutive quarters of losses.
The company reported net earnings of $77m or eight cents a share in the quarter, compared with a net loss of $454m in Q2.
Revenues for the quarter were $4.6 billion compared with $4.2 billion in the second quarter, a 9% increase.
The gold price in New York hit a new record high of $1,057.70.
On the New York Mercantile Exchange, oil for November delivery is trading at $71.54 up $1.97 from Wednesday's close. In London, Brent crude for November delivery is trading at $69.17 a barrel.
Currencies
The euro is trading at $1.4787 and at £0.9179.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
Richard Cookson, global head of asset allocation for HSBC, says equities are not the place for your money right now, but he advises investors to keep an eye on emerging Europe:
