Jul 31 - Aug 06, 2000
UK economy bounces back
Britain's economy expanded by a stronger-than-expected 0.9 per cent in
the second quarter from the first, preliminary data showed Friday, a figure that
re-ignited fears of a further rise in interest rates.
U.K. gross domestic product rose an annualized 3.1 per cent compared to
a year earlier, the Office of National Statistics reported, slightly higher than the 3 per
cent in the first quarter. It marked the highest annual rate in two years.
The quarterly figure was the best since the third quarter of last year
and compares to an unusually weak 0.5 per cent in the first quarter.
Peter Osler at GNI said the numbers were at the high end of
expectations, which hovered around 0.8 per cent, with strength coming in the service
"It raises the chances of a rate hike but I would not say that is
The Bank of England has raised interest rates from 5 per cent to 6 per
cent between last September and February this year, in a bid to cool the steamy economy.
Many economists have said rates are now at or close to their peak in the cycle.
The pound firmed a quarter of a cent against the dollar on the news to
nearly $1.52 while gilts (government bonds) and interest rate futures dipped on concerns
rates may have to rise again, especially as the figures come after strong retail sales
numbers earlier this year.
Jeremy Stretch at Royal Bank of Scotland said there had been a strong
rebound from the slowdown of the first quarter.
"But I don't think this categorically points towards the necessity
for further tightening from the Monetary Policy Committee. But certainly from this sort of
level of activity you can't rule it out."
Within manufacturing, there was a return to strong growth in electrical
and optical equipment, including mobile phones. There was also recovery in the output of
computers. Energy output was high because of unseasonably low temperatures in April and
May, but wet weather lowered construction output.
U.S. House votes to lift ban on U.S. food
In a setback for GOP leaders, the House of Representatives has voted to
ease the 38-year-old U.S. trade embargo against Cuba, by voting to lift limits against
U.S. food and drug sales and allowing Americans to travel freely there.
It was a major victory for farm, business and other groups trying to
ease the sanctions and a blow to Republican leaders, who oppose easing the embargo.
After supporters argued that increased contacts would help weaken
Castro's hold over the Communist nation, Congress voted 232-186 to stop enforcing rules
that limit the ability of Americans to travel to Cuba.
It then voted 301-116 to halt enforcement of rules banning exports of
U.S. food and rules limiting sales of American medicines.
But the House voted 241-174 to reject a broader proposal from Rep.
Charles Ranger, D-New York, that would have ended almost all embargoes against trade with
These votes seem certain to strengthen the position of Rep. George
Nethercutt, R-Washington, leader of the farm-state lawmakers who earlier this year tried
to lift the food and medicine embargo against Cuba, but hit opposition from GOP leaders.
Both sides agreed to a compromise last month that Republican leaders
promised to try making into law. The Thursday votes seem to have increased pressure on
leaders to make sure that, at the very least, the compromise finds its way into law.
Anti-Castro legislators said his regime would be propped up by allowing
Cuba to get more trade and tourists.
Re. Ileana Ros-Lehtinen, R, Florida, said the revenue Cuba would gain
from easing restrictions would help "the worst violator of human rights in all of the
Europe hit by Nokia gloom
A profit warning from Finnish mobile phone maker Nokia rained on
Europe's earnings parade Thursday.
Frankfurt's Xetra Dax index led the top losers, falling 118.68 points,
or 1.6 per cent, to 7,183.44.
London's FTSE 100 fell 35 points, or 0.55 per cent, to close at
6,352.1, with cable company Telewest Communications (TWT) down 7.3 per cent and mobile
phone service provider Vodafone AirTouch (VOD) off 4.1 per cent.
The CAC 40 blue chip index closed up 18.53 points, or 0.3 per cent, to
6,511.53, with Alcatel (PGCE) gaining 3.9 per cent.
Zurich's benchmark SMI index fell 0.2 per cent.
The pan-European FTSE Eurotop 300, a broad index of the region's
largest stocks, was down 1.1 per cent to 1,609.06, with its electronics equipment
component down 3.1 per cent and its information technology sub-index plunging 8.3 per cent
after Finland's Nokia sank 15.5 per cent.
Profit warnings hole Asia
Asian markets slumped on Friday amid concern that technology companies
face slowing earnings, after high-profile firms in Europe and the U.S. indicated future
profits would fall short of analysts' expectations.
Japan's Nikkei average of 225 stocks plunged 343.44 points, or 2.1 per
cent, to 15,838.57, led by consumer electronics titan Sony and the country's No.1 computer
In Hong Kong, the Hang Seng dropped 330.47 points, or 1.9 per cent, to
17,119.62. The Straits Times in Singapore lost 17.5 points, or 0.9 per cent, to 2,039.62,
led by banking heavyweight DBS Group and chipmaker Chartered Semiconductor Manufacturing.
Australia's S&P/ASX 200 shed 6.4 points, or 0.2 per cent, to
3,251.8. Natural resources producer Broken Hill fell more than 1.2 per cent even after
posting record full-year profit of A$2.03 billion ($1.2 billion).
The U.S. Nasdaq composite index fell 145.47, or more than 3 per cent,
to 3,842.25 on Thursday, while the Dow Jones Industrial Average gained 69.65 to
Greenspan in the House
Strides in productivity have helped propel the U.S. economy to its
longest expansion on record, and it is crucial to ensure that those advances continue to
keep the economy growing at a sustained, non-inflationary pace, Federal Reserve Chairman
Alan Greenspan said Tuesday.
In a question-and-answer session following testimony on the current
state of the economy to the House Banking Committee, Greenspan said that keeping the
supply of goods and services on the same level as Americans demand for them is critical to
keeping inflation, contained.
Risk supervisory assessors in banks
Indonesia's central bank will deploy permanent on-site supervisory risk
assessors in domestic banks, beginning with four state banks and the five largest private
banks, a report said on Thursday. Bank Indonesia (BI) deputy director for bank
supervision, Idris Kadir, said the personnel, who will start taking up position at the end
of July, will attempt to identify risks faced by the banks.
For example, credit risks, exchange risks and strategic risks, Kadir
said according to the Bisnis Indonesia daily.
These risks are the ones influencing the future health of the banks, he
added according to the Media Indonesia daily. Kadir said the nine banks together accounted
for 75 per cent of country's banking assets.
Japan's auto exports increase
Japan's auto exports rose 2.8 per cent to 2,221,012 units in the first
six months of 2000 from a year earlier, for the first semi-annual rise in two years, the
Japan Automobile Manufacturers Association said on Thursday.
In the first half of the year, exports to Asia surged 48.6 per cent to
196,935 units thanks to strong demand in Southeast Asia such as Thailand, Malaysia and
Indonesia. US-bound exports rose 14.7 per cent to 851,910 units, up for the fourth year in
a row. Exports to Europe fell for the second straight year, down 14.7 per cent to 590,280
units as a result of the stronger yen and weaker euro.
Huge gas discovery in Bangladesh
Independent technical consultants have confirmed that Bibiyana gas
field, discovered jointly by two major US oil companies Occidental and Unocal
three years ago, has about six trillion cubic feet of gas. It is considered a very
big reserve by any standard and this has straightaway raised the quantity of proven gas
reserves by a bout 50% in the country.
Occidental was originally awarded Block 12 by the government and it
entered into a joint venture agreement with Unocal. The two, according to the company
sources, went for a three-dimensional survey for the first time in the country that was
subsequently followed up by drilling of an appraisal well.
147b euro FDI
Foreign direct investment (FDI) by European Union firms outside the EU
totalled 243.2 billion euros in 1999, Eurostat statistics agency said on Thursday.
FDI inflows from outside the bloc amounted to 95.7 billion euros,
meaning net FDI outflows totalled 147.5 billion euros, the data showed.
Mergers & Acquisitions
AOLTWX: America Online Inc. and Time Warner faced their
critics Thursday, defending their planned $120 billion merger to federal regulators in the
face of accusations by competitors and consumers that the massive deal could stifle
Conseco: Conseco Inc. has taken its troubled Conseco Finance
unit off the market, choosing instead to restructure the division and sell off other
assets, Chairman Gary Wendt said Thursday.
CiscoNuSpeed: Cisco Systems Inc. agreed Thursday to
acquire privately held NuSpeed Internet Systems for $450 million in stock, in another move
to expand its footprint in storage area networks.
Fiber-optic cable maker Corning Inc. said
Thursday it ended talks about buying Nortel Networks Corp.'s optical components business,
a deal that reportedly could have been worth $100 billion.
Computer security provider Symantec Corp.
said Thursday it will acquire Axent Technologies Inc. in a stock swap worth $975 million,
accelerating its move into the market for large security business systems.
Dresdner Bank AGCommerzbank AG: A $40 billion-plus German
banking merger collapsed Wednesday as Dresdner Bank AG and Commerzbank AG failed to agree
on how to value the deal.
BT: British Telecommunications PLC reported pretax profit of
$852 million (or about 10 cents a share), beating analysts' estimates of $684 million.
Deutsche Telekom: Deutsche Telekom AG, said first-half income
from operations fell 26 per cent to 700 billion ($658 billion), depressed by the cost of
expanding its mobile-phone business.
Alcatel, posted a bigger-than-expected 37 per cent jump
in second-quarter operating earnings to 638 million. Analysts polled by Reuters expected
operating profit to be between 530 million to 555 million.
Glaxo Wellcome PLC, said pretax profit in the
first half of 2000 rose 20 per cent to £1.6 billion. Earnings rose by one-fourth to 31.8
pence a share, as sales grew 12 per cent to £4.6 billion.
DaimlerChrysler: German/American automaker DaimlerChrysler AG
earned $1.67 billion, or $1.66 a share, in the second quarter, compared with $1.41
billion, or $1.41 a share, in the year-earlier period.
DuPont: DuPont Co., said second-quarter earnings rose to $949
million, or 90 cents a diluted share, from $886 million, or 78 cents a share, a year
3M: Minnesota Mining & Manufacturing Co., reported
second-quarter earnings of $470 million, or $1.18 a diluted share, up from $421 million,
or $1.17 a share, a year ago.
Sony: Sony posted a group net loss of ¥88.3 billion ($809.6
million) in the three months ended June 30, compared with a profit of ¥18.43 billion a
AT&T: AT&T posted earnings, excluding special items, of
$1.9 billion, or 57 cents a share, for the second quarter. The company earned $1.6
billion, or 49 cents a share, a year earlier.
Texaco: Texaco Inc., posted earnings before special items of
$641 million, or $1.17 a share, just below the $1.18 a share forecast of analysts surveyed
by earnings tracker First Call. The company earned $286 million, or 52 cents a share, in
the year-earlier period before special items.
Dow: Dow Chemical Co., reported earnings of $527 million, or 77
cents a diluted share, up from $410 million, or 61 cents a diluted share, a year earlier.
Halifax: Halifax PLC reported a 21 per cent increase in
six-month profits. Halifax said pretax profit rose to £885 million from £733 million a
Prudential PLC: Prudential PLC, reported a higher-than-expected
14 per cent rise in first-half operating profit. Operating profit rose to £425 million,
or 24.4 pence a share, from £372 million, or 13.9 pence, a year earlier.
Exxon: Exxon Mobil reported second-quarter earnings of $1.18 a
share, more than double its year-earlier results.
Chevron: Chevron Corp. reported a profit of $1.14 billion before
one-time items, or $1.75 a share, up from $350 million, or 53 cents a share, in the
All eyes on Microsoft
Bridging the gap between its separate consumer and corporate PC
operating systems, Microsoft Corp. announced Thursday that it will soon release a test
version of Windows software that will give home users many of the features of Windows NT
Microsoft's Chief Financial Officer John Connors on Thursday said the
company plans to spend $4.4 billion in the next fiscal year to develop Web-related
software, wireless devices, games, the MSN network and consumer services.
Tobacco launches legal assault
U.S. cigarette makers launched their post-trial legal assault on a
record-shattering $145 billion punitive damage award, filing papers to move the landmark
Florida state court case on behalf of sick smokers to federal court, lawyers said Tuesday.
Based on a motion to intervene in the Engle case filed by a union
health care plan, lawyers representing the major tobacco firms filed notice Monday in
Miami U.S. District Court to transfer the entire 6-year-old class-action lawsuit to
"We filed a notice of removal of the case, which actually
transfers the entire case to federal court," Philip Morris attorney Michael York
said. "The case is no longer pending before the circuit court."