Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More
Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

Overnight: G-7 sees downturn through 2009

While you were sleeping: G-7 sees downturn through 2009

Feb. 16 – Group of Seven finance ministers and central bankers said a severe economic downturn could persist through 2009 as the pledged to work together to end the recession while maintaining free trade.

U.S. Treasury Secretary Timothy Geithner said the U.S. will comply with the edicts of the World Trade Organisation in implementing its US$787 billion economic stimulus package which includes requirements to ‘Buy American’ in federal projects.

The U.S. Senate approved the plan by 60 votes to 38 on Friday in Washington.

The world faces “a broader and deeper slowdown than has been experienced in decades,” Geithner told delegates at the meeting in Rome.

G-7 finance ministers and central bankers said in a statement at the conclusion of the meeting that they will “act together using the full range of policy tools to support growth and employment and strengthen the financial sector.”

Shares on Wall Street ended the week lower, with the Dow Jones Industrial Average on Friday shedding 1% to 7850.41, the lowest since Nov. 20, and the Standard & Poor’s 500 Index declining 1% to 826.84. The Nasdaq Composite fell 0.5%. Banks were among the biggest decliners on the Dow amid persistent concern about their ability to expunge toxic assets under the government bailout.

JPMorgan Chase fell 5.7% to UIS$24.69, Bank of America declined 5.1% to US$5.57 and Citigroup dropped 3.3% to US$3.49. General Motors fell 5.7% to US$2.50, Home Depot fell 3.5% to US$21.33 and Wal-Mart Stores dropped 3.3% to US$46.53.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

U.S markets are closed on Monday for the Presidents Day Holiday.

Regulators in Florida, Oregon, Nebraska and Illinois seized banks with over US$1 billion in assets, with the plan to rebrand and relaunch their brances with help from the Federal Deposit Insurance Corp. The action brings to seven the number of financial institutions seized so far in February in the U.S.

In the U.K., Lloyds Banking Group said its HBOS unit had a pretax loss of 8.5 billion pounds last year, stoking concern the bank will need further government assistance to survive. Its shares were the biggest decliners on the FTSE 100 Index, slumping 32%. Royal Bank of Scotland fell 9% and Barclays fell 4%.

Chancellor of the Exchequer Alistair Darling doused speculation the U.K. government would take a larger stake in Lloyds, telling reporters in Rome that “banks are best run on a commercial basis in the private sector, properly supervised and regulated.”

Legal & General fell 9.5% after the second-largest shareholder in Rio Tinto said it favoured an alternative to the plan where Chinalco injects US$19.5 billion into the mining company buy buying convertible bonds and stakes in its units. Rio rose 2.6%.

The Dow Jones Stoxx 600 Index climbed 0.3% to 191.27, led by a 10% gain for wind turbine maker Vestas Wind. Pernod Ricard rose 6%. Germany’s DAX 30 edged up 0.1% to 4413.39, led by a 4.5% gain for BMW. Commerzbank fell 8.5%.

Hypo Real Estate tumbled 12.5% after German Finance Minister Peer Steinbrueck said there is still a prospect the firm will be nationalized after initial talks with shareholder J.C. Flowers failed.

France’s CAC 40 rose 1.1% to 2997.86. ArcelorMittal climbed 4.6%.

The U.S. dollar strengthened against the yen and weakened against the euro on disappointment the G-& statement didn’t contain more detail of how nations would coordinate to fight the downturn. The U.S. dollar climbed 1.2% to 91.93 yen and was at $1.2681 per euro.

Interbank three-month euro funding costs fell to the lowest since the common currency was introduced in 1999, reflecting money markets awash with cash and the prospect of more central bank interest rate cuts.

London offered rates for three-month euros slid to just 1.935%, according to the British Bankers Association.

In commodity markets, some traders were optimistic about the stimulus measures. Crude oil for March delivery rose $3.53 to $37.51 a barrel on the New York Mercantile Exchange.

The price of gold eased back on Friday, amid reports traders were short-selling the precious metal ahead of the U.S. public holiday on Monday.

Gold for April delivery fell US$7 to US$942.20 an ounce on the New York Mercantile Exchange.

(Businesswire)

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Top Scoops Headlines

 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.