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Markets News Afternoon: Irish banks rise in Dublin; US data mixed -- weekly jobless claims down; pending second-hand home sales dip in January; retail sales rise in February
By Finfacts Team
Mar 4, 2010 - 4:15:01 PM
President Barack Obama speaks about health care reform in the East Room of the White House, March 3, 2010.
European Central Bank (ECB) President Jean-Claude Trichet said today that the ECB would continue to provide liquidity at "very favorable conditions." Heconfirmed that the central bank will continue to provide Eurozone banks with as much liquidity as needed through its main refinancing operations.
Eurostat, the EU statistics office, confirmed today that GDP increased by 0.1% in both the Eurozone (EA16) and the EU27 during the fourth quarter of 2009, compared with the previous quarter. In the third quarter of 2009, growth rates were +0.4% in the Eurozone and +0.3% in the EU27. Compared with the fourth quarter of 2008, seasonally adjusted GDP declined by 2.1% in the Eurozone and by 2.3% in the EU27, after -4.1% and -4.3% respectively for the previous quarter. Corporate investment declined 0.8% from the third quarter, when it fell 0.9%, while household spending was flat. Exports gained 1.7% and imports rose 0.9%. Gross domestic product rose 0.1% from the third quarter, when it increased 0.4%. Over the whole year 2009, GDP decreased by 4.1% in the Eurozone and by 4.2% in the EU27, compared with +0.6% and +0.8% respectively for 2008. Over the whole year 2009, GDP decreased by 2.4% in the US (+0.4% in 2008) and by 5.0% in Japan (-1.2% in 2008).
US Economic Data: The number of contracts to buy second-hand US homes dipped in January, indicating that the extension of a home buyers tax credit had little impact; the Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6% to 90.4 from an upwardly revised 97.8 in December, but remains 12.3% higher than January 2009 when it was 80.5.
Lawrence Yun, National Association of Realtors, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.
Data from the US Labor Department shows the the productivity of US workers rose sharply in the fourth quarter as companies used slimmed down workforces to boost earnings.
A measure of employee output per hour rose at a 6.9% annual rate - - the biggest one-year rise since 2002, revised figures from the Labor Department showed today. Labour costs dipped a 5.9% rate, more than anticipated, and fell 1.7% for all of 2009, the biggest decline since records began six decades ago.
President Obama is pushing for a single, winner take all, one time up or down vote on health care reform. CNBC's John Harwood has the details:
Productivity grew as companies raised profits by cutting payrolls even as demand stabilised.
In the retail sector, despite bad weather, comparable-store sales rose 4% for the 28 retailers tracked by Thomson Reuters. The next best month was January, at 3.3%. The positive showing marks half a year of straight rises after 12 monthly declines.
The US Labor Department said in its weekly report Thursday that initial claims for jobless benefits dropped by 29,000 to 469,000 in the week ended Feb. 27th. The previous week's level was revised upward to 498,000 from 496,000. Total claims lasting more than one week, meanwhile, dropped to a level not seen since January 2009.
The four-week moving average, which seeks to smooth volatility in the data, fell for the week ending Feb. 27th. The Labor Department said the four-week moving average decreased by 3,500 to 470,750 from the previous week's revised average of 474,250. The number of continuing claims fell by 134,000 to 4,500,000 from the preceding week's revised level of 4,634,000 - - the lowest level for continuing claims since Jan. 3, 2009.
The CNBC news team parses today's economic data, including initial jobless claims and productivity data. Jim Iuorio, of TJM Institutional Services, and Josh Feinman, of DB Advisors, share their insight:
Eason to operate previously run Hughes & Hughes outlets at Irish airports: the Dublin Airport Authority (DAA) has signed a licence with Irish bookseller Eason & Son for the operation of the seven outlets at Dublin and Cork airports that were previously part of the Hughes & Hughes chain.
As part of the agreement, Eason & Son, which is one of Ireland’s leading book and stationery retailers, is likely to retain about 120 former Hughes & Hughes employees. Eason & Son will add the seven airport outlets to its existing portfolio of 54 Irish stores.
Hughes & Hughes was placed in receivership late last week, but the stores at Dublin and Cork airports continued to trade under an agreement between the DAA and the receiver, David Carson of Deloitte.
The licence with Eason & Son covers five stores at Dublin Airport and two outlets at Cork Airport. Under the agreement, Eason will pay the DAA a percentage of turnover rather than a fixed annual rent. This system, which also previously applied to Hughes & Hughes, includes a minimum annual payment and means that the DAA and the retailer effectively share the trading risk.
DAA Commercial Director Jack MacGowan said the company was pleased to have signed an agreement with Eason & Son to operate the former Hughes & Hughes airport outlets. “The DAA was deeply saddened to see a receiver appointed to Hughes & Hughes, as we had worked with them for many years at Dublin and Cork airports,” MacGowan said.
“The Hughes & Hughes’ airport business is and was profitable and the agreement with Eason & Son will secure 120 jobs and ensure continuity of service for our customers at Dublin and Cork airports,” MacGowan added.
Hughes & Hughes’ contract with the DAA permitted the airport operator to terminate the licence in the event of the bookseller going into receivership. After Hughes & Hughes entered receivership last week, the DAA went to the market and received bids from a number of other firms for the seven airport shops. An agreement was signed with Eason & Son yesterday evening.
Fleming Construction: the Supreme Court today overturned a decision by the High Court to approve a survival plan for the Cork based building group.
Today's unanimous decision by five judges of the court follows an appeal last year by Dutch owned ACC Bank against the High Court's ruling in relation to John J Fleming Construction, JJ Fleming Holdings and Tivway. They collectively have debts of over €1 billion, including €260m owed to Anglo Irish Bank.
ACC is owed €21.5m by the group, which is controlled by Bandon-based developer John Fleming.
Last July, the companies applied for and received High Court protection, when ACC moved to recover its loans.
Irish Rent Reviews: Retail Ireland, the IBEC group that represents the Irish retail sector, today welcomed the establishment by Dermot Ahern T.D., Minister for Justice, Equality and Law Reform of a working group on rent reviews.
Retail Ireland director Torlach Denihan said: "Retail Ireland has made extensive representations to the Minister for Justice, Equality and Law Reform to urge that he build on his forward-looking decision to abolish upward-only rent review clauses by undertaking a fundamental reform of the law relating to leases. We are delighted that the Minister has listened. We welcome his decision today to implement our recommendation to establish a working group to look at the issue of commercial rent reviews and look forward to participating on it. Lease reform is urgently needed to save jobs and respond to the unprecedented economic crisis affecting retailers.
"Rents are a huge component of the retail cost base, but are almost impossible to reduce. Some landlords have successfully sought or are currently seeking very substantial rent increases under upward-only rent review clauses. Many tenants face rent increases of anything between a third and double at a time when their sales have suffered a huge drop. Retailers have been forced to make staff redundant and use the payroll savings to pay rent increases."
Denihan concluded "Retail Ireland believes the working group set up today should review the scope for:
Arbitrators to be mandated to take account of prevailing economic and commercial conditions when reviewing rents;
mandatory disclosure of all material information to arbitrators by landlords when seeking a comparison-based upward rent review;
inserting break clauses into a lease where a tenant's business has deteriorated due to circumstances outside the tenant's control;
upward-only rent review clauses being replaced in existing leases by more suitable mechanisms such as turnover-related reviews."
US markets
In New York, the Dow has risen 20 points or 0.19% to 10,417.
The S&P 500 is up 0.19% and the Nasdaq has climbed 0.04%.
The European Central Bank began unwinding its stimulus measures Thursday as its held interest rates steady. Ansgar Belke from University of Duisburg-Essen has analysis:
In Europe, the Dow Jones Stoxx 600 has risen 0.09% Thursday.
In Dublin, the ISEQ has added 0.86%.
AIB has jumped 15.5% and BoI has risen 6.61% following the ECB's extension of its emergency liquidity measures.
Grafton Group is up 15% after reporting its 2009 results today.
On the New York Mercantile Exchange, oil for April 2010 delivery is trading at $80.32 down 55 cents from Wednesday's close. In London, Brent crude for April delivery is trading at $78.76 a barrel.
Currencies
The euro is trading at $1.3594 and at £0.9030.
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.
