| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : International Last Updated: Mar 24, 2011 - 3:48 PM


Markets News Thursday: EU summit begins as Portugal rejects fourth austerity plan; Prospect of 'grand bargain' recedes
By Finfacts Team
Mar 24, 2011 - 8:51 AM

Email this article
 Printer friendly page
Taoiseach Enda Kenny, arriving for the last EU summit in Brussels, on March 11, 2011.

EU Summit: José Sócrates, Portugal’s prime minister, offered his resignation on Wednesday night after his government's latest package of austerity measures was rejected in parliament and it's likely that early elections will be held.

The EU summit was billed as a final part of the decision making process to implement a permanent bailout mechanism from 2013 but there are other signals that this will not be the case.

The Irish Government has deferred discussions on a cut in the interest rate on the EU-IMF bailout loans, which had sparked an argument with Nicholas Sarkozy, the French president, on Ireland's corporation tax system.

It's reported from Berlin that Chancellor Merkel plans to propose that Germany €22bn contributions to the new €500bn rescue fund be stretched over five years rather than four as  agreed two weeks ago.

Meanwhile Finland has dissolved its parliament and will hold a general election on April 17 and is unable to make any decisions on the bailout fund. The right-wing True Finns party, which opposes measures to help embattles countries of the single currency area is expected to do well.

Irish GDP to expand in Q4: Davy economist, Conall Mac Coille, comments  -- "Today's release of Irish GDP in is expected to indicate that the economy continued expanding in the final quarter of 2010. Monthly trade data suggest that exports continued to drive growth in Q4 and the purchasing manager indices for both manufacturing and services indicate that those sectors saw positive growth. Domestic demand is likely to remain weak given the 0.9% decline in employment in Q4. Overall GDP growth will be driven by labour productivity rather than employment.

Although today's GDP data should indicate that the recovery is on a firmer footing, the success of today's meeting of EU leaders to agree a package to address the European sovereign debt crisis could have larger ramifications for the outlook for the Irish economy. As argued in a series for Davy research notes published this week, a medium-term funding solution for the Irish banks needs to be found. Short-term support from the Irish Central Bank and ECB accounts for 33% of the six Irish banks covered by the government guarantee.

Uncertainty surrounding this support creates a barrier for foreign investors in funding the Irish banks. But a commitment from the ECB or European Financial Stability Fund to maintain funding for the foreseeable future would do little to change the reality that public support of the Irish banks cannot be withdrawn in the absence of alternative private sector funding. By reinforcing investors' expectations such a commitment would be more likely to achieve the desired outcome of gradually weaning the Irish banks away from public sector support.

The impetus for a successful outcome of the EU meetings has risen following the news that the Portuguese prime minister, Jose Socrates, has tendered his resignation after budgetary plans were rejected by parliament. The government planned to implement additional expenditure cuts and tax rises to reduce the fiscal deficit to 4.6% in 2011 and to within the EU 3% limit in 2012. The rejection of the budgetary package comes before today's meetings of EU leaders in Brussels to agree measures to address the sovereign debt crisis. Some commentators now expect Portugal to need a financial aid package from the EU within the next week."

WPP is mulling moving its tax base back to the UK after proposed changes announced in the UK budget on Wednesday, CEO Sir Martin Sorrell confirmed to CNBC:

Economic View 1: Euro crisis resolution hits more stumbling blocks; Goodbody chief economist, Dermot O’Leary. comments  -- "Plans for a 'grand bargain' at the EU leaders’ summit, starting today, have been scuppered before the meeting has even begun. The political difficulties experienced by Ireland in the run up to its application for international aid were exceeded by Portugal last night, as its government's fiscal plan failed to pass in its parliament.

As a result, Portuguese Prime Minister Socrates resigned, thus putting the country close to the same fate as Greece and Ireland in accepting aid from the EU/IMF. As if that is not enough, it appears there will be delays on final approval of the changes to the EFSF, due to political difficulties in Finland and Germany, while agreement to reduce the interest rate on Irish aid will also be put on the back burner. So, after perceived progress since the start of 2011, markets will once again be left disappointed and the European fiscal crisis looks set to rumble on. Should we be overly surprised? Not really.

From an Irish perspective, we will get Q4 2010 GDP at 11am this morning."

Rainer Guntermann, euro zone economist at Commerzbank, discusses what PM Jose Socrates' resignation means for Portugal and the euro zone:

Economic View 2: UK Budget sees 2011 growth rate forecast cut to 1.7% ; Goodbody economist, Juliet Tennent, comments - - "As expected the Chancellor of the Exchequer, George Osborne, pared back growth forecasts for the UK economy in yesterday’s budget. The Office for Budget Responsibility (OBR), the independent body charged with economic forecasting, lowered 2011 GDP growth to 1.7%, from 2.1% last November, in line with consensus. Its forecast for 2012 was tweaked down to 2.5% from 2.6%, with subsequent years also left broadly unchanged.

With the Chancellor sticking to his deficit reduction plans, risk to growth numbers is likely to the downside as cuts in public spending have yet to feed through. Higher than expected inflation is also exerting downward pressure on real household incomes which may act as a further drag on consumer spending. There were some business friendly announcements in the budget, with a 2% reduction in the 28% corporation tax rate from April 2011 the most noteworthy. This represents an additional 1% cut to the changes announced in the June budget and together with the 1% per annum cuts scheduled over the next three years, will see the corporate tax rate fall to 23% by 2014.

On the fiscal side the OBR’s latest forecasts show that the outlook for the public finances is mostly unchanged since the June 2010 Budget. The deficit is set to decline from 9.8% in 2010-11, to 7.9% by 2011-12 and the structural deficit is to be eliminated altogether by 2014-15, the end of the current Government’s term in office. The Debt to GDP ratio is forecast to peak in 2013-14 at 87% from 79% currently. This compares to 2011 forecasts for Ireland of a deficit of 9.7% and a Debt to GDP level of 103%. Although the UK deficit peaked at a similar level to that of Ireland (UK 11.4%; Ireland 11.8%) inflation and economic growth, not to mention a functioning banking system, are making the fiscal consolidation effort in the UK considerably less painful. "

There could be less than 49 years of oil supplies left, even if demand were to remain flat, according to HSBCs senior global economist Karen Ward:

US Markets

In New York Wednesday, the Dow rose 67 points or 0.56% to 12,086.

The S&P 500 slid 0.29% and the Nasdaq slipped 0.54%.

Asia Markets

The MSCI Asia Pacific Index rose 0.2% Thursday.

Japan's Nikkei 225 dipped 015%; China's Shanghai Composite fell 0.06%; Australia's S&P/ASX 200 Index rose 1.01% and the Bombay Stock Exchange's Sensex index gained 0.45% in Mumbai.

Asia benchmarks

Finfacts Reports

Innovation Ireland: Forfás reports some progress but short on data of use to Irish policymakers
World trade volume and industrial production rose in January
Continuing to offer healthcare to all in Europe will require rationing of medical services according to new research
Sovereign Fiscal Responsibility Index: Australia, New Zealand and Estonia at top; US, Ireland and Greece close to bottom
Markets News Afternoon: Irish lenders expected to offer incentives to tracker mortgage holders to pay down their mortgages faster
Sales of new US homes tumbled in February to new record low; Prices dipped to the lowest in more than seven years
British Chancellor announces cuts in corporation tax in Budget speech; 2011 deficit will be 9.9% of GDP
Eurozone new industrial orders index rose by 0.1% in month of January

In Europe, the Dow Jones Stoxx 600 is down 0.01% in early trading Thursday.

The ISEQ has risen 0.60% in Dublin.

Both CRH has risen by 0.45%; Elan is down 1.52% IL&P is up 5.67%.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies 

The euro is trading at $1.4071 and at £0.8678.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.

On Thursday, July 15, 2010, the index  fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak.

On Wednesday this week, the BDI rose 22 points or 1.43% to 1,565.

The Financial Times reported earlier in January, that Australia’s flooding and fears of ship oversupply has pushed down a gauge of the cost of hiring ships to carry coal, iron ore and other dry bulk by nearly half since October to the lowest level since the aftermath of the financial crisis. The Baltic Dry index, the widely watched measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak reached on October 27, 2010.

Crude oil for April 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $105.65 per barrel, down 10 cents from Tuesday's close. In London, Brent for April delivery is trading on the International Commodities Exchange at $115.57. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is almost $10.

The FT said in early February that a surge in oil inventories in Cushing, Oklahoma, where WTI is delivered into America’s pipeline system, has depressed the value of the benchmark against other yardsticks. The International Energy Agency said on Thursday that with “few relief valves” to cut the stock overhang in Cushing, the price dislocation “may persist for months [or years] to come”.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,437.20, down $1.40 from Tuesday's close.


© Copyright 2011 by Finfacts.com

Top of Page

International
Latest Headlines
Wednesday newspaper review: December 17, 2014
Tuesday newspaper review: December 16, 2014
Monday Newspaper Review - Irish Business News and International Stories - - December 08, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 28, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 27, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 25, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 21, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 20, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - November 19, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 18, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 17, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 14, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 13, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - November 12, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 11, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 10, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 06, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 04, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 03, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 31, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 30, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 29, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 28, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 24, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 22, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 21, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 20, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 17, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 16, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 15, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 13, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 10, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 09, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 08, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 07, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 06, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 02, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 01, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 29, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 26, 2014