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Markets News Afternoon: Shares fall in Europe and US; Bank of Ireland jumps 24% in Dublin; US business activity expands in March but at slower pace
By Finfacts Team
Mar 31, 2010 - 4:47:34 PM
US business activity growth rose in March for a sixth straight month, according to a report issued today but the pace of expansion slowed.
The Institute for Supply Management-Chicago said today that its business barometer fell to 58.8, lower than expected from a February reading of 62.6 that was the highest since April 2005. Figures greater than 50 indicate expansion. Orders placed with US factories rose in February, while inventories and backlogs climbed by the most in more than a year, a Commerce Department report showed today.
Nonfarm US private employment decreased 23,000 from February to March on a seasonally adjusted basis, according to the ADP National Employment Report. The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.
The report says since employment as measured by the ADP Report was not restrained in February by the effects of bad weather, today’s figure does not incorporate a weather-related rebound that could be present in this month’s Department of Labor data, due to be published Friday. In addition, today’s figure does not include any federal hiring in March for the 2010 Census. For both these reasons, ADP says it is reasonable to expect that Friday’s official employment figures will be stronger than today’s estimate in the ADP National Employment Report.
Annual Irish Manufacturing Prices down 2.6% in February: Monthly factory gate prices increased by 1.0% in February 2010. This compares to an increase of 0.9% recorded for February 2009. As a result, the annual percentage change showed a decrease of 2.6% in February 2010, compared with an annual decrease of 2.8% in January 2010, according to the Central Statistics Office.
In the month, the price index for export sales increased by 1.0% while the index for home sales increased by 0.6%. In the year there was an decrease in the price index for export sales of 3.2% (this can be influenced by currency fluctuations) and a decrease of 0.7% in respect of the price index for home sales.
Ireland's "bad bank", the National Asset Management Agency, said it would buy a first batch of loans with a nominal value of $21.61 billion for a discount. "The Irish banks are massively undercapitalized. There is absolutely no choice for the Irish government other than to step in," Arturo De Frias from Evolution Securities said Wednesday:
Quinn Group: Quinn Group Limited said today that the actions of the Financial Regulator yesterday to appoint provisional administrators to Quinn Insurance Limited (QIL), were pre-emptive, aggressive and unnecessary. As a preliminary matter, it said it wishes to confirm that the Quinn Group and QIL are fully able to meet all of their payment obligations, and (except as disrupted by the Regulator’s Actions) its business continues as normal. Quinn said policyholders of Quinn-Direct, Quinn Life and Quinn Healthcare, and staff, customers and suppliers of the entire Quinn Group, should continue to deal with the group as usual.
Quinn says the Financial Regulator has justified his actions on the grounds of “certain matters within QIL that have very recently come to light.”
"We understand that he is referring to guarantees provided by certain subsidiaries of QIL, some dating back to 2005, supporting the general indebtedness of the Quinn Group. These guarantees are entirely lawful, do not breach any insurance regulations, and were fully disclosed in the statutory accounts of the relevant companies," Quinn said in a statement.
In October 2008, the Financial Regulator announced that it had agreed a settlement with Quinn Insurances and Seán Quinn, chairman, who paid penalties of €3.4 million in respect of breaches of regulatory requirements.
The Financial Regulator said it had reasonable cause to suspect that breaches of regulatory requirements occurred in relation to QIL.
These breaches related to contraventions by QIL of obligations under the Insurance Acts and Regulations, including failure to notify the Financial Regulator prior to providing loans to related companies.
The Financial Regulator required QIL to pay a monetary penalty of €3,250,000. The Financial Regulator also required Seán Quinn to pay a monetary penalty of €200,000. Quinn agreed to resign as chairman and as a director.
CNBC's Nicole Lapin took $100 and the UK equivalent, £66, and went to London and New York to find out where she got more for her money as a tourist:
US markets
On Wednesday, the Dow has dipped 36 points or 0.33% to 10,871.
The S&P 500 has fallen 0.23% and the Nasdaq Composite has declined 0.04%.
"The rumours of imminent recovery were greatly exaggerated,"Ralph Silva from SRN told CNBC Wednesday when discussing the outlook for Europe's economy. Europe faces a stagnant year, he added.
On the New York Mercantile Exchange, oil for May 2010 delivery is trading at $82.64 up 27 cents from Tuesday's close. In London, Brent crude for May delivery is trading at $81.59 a barrel.
Currencies
The euro is trading at $1.3531 and at £0.8923.
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.
The UK's "would-be chancellors all agreed that the first priority must be to cut the deficit. I think that's wrong. The first priority must be to get economic growth again," Lord Skidelsky, economic historian and biographer of Keynes, said Wednesday. "I know of no theory at all that tells you that you must cut public spending when the private sector isn't spending":
