30 - May 06 , 2001
IMF sees slow U.S. growth
The U.S. economy is expected to turn in its most sluggish
performance in a decade this year and may require more interest-rate cuts to
spur growth, the International Monetary Fund said on Thursday.
Its twice-yearly World Economic Outlook painted a much
bleaker picture of the world's No. 1 economy than just six months ago, and said
"more than the usual amount of uncertainty" clouded prospects.
The IMF revised its estimate for growth in gross domestic
product down by 1.7 per cent per centage points to 1.5 per cent — just a
quarter of 2000's growth pace of 5 per cent. Most of the slowdown should occur
in the first half as companies work off bloated inventories and spend less on
Looking ahead to next year, the IMF said the U.S. economy
should expand by a stronger, yet still-modest 2.5 per cent. It noted the United
States has endured "a series of shocks" including higher energy prices
and a sharp slump in stock markets late last year that caused "a marked
slowdown" in demand and in consumer and business confidence.
The revised U.S. gross domestic product projections were
released as the IMF and World Bank prepared for their spring meeting, and come
against a backdrop of a global slowdown likely to figure largely at Saturday's
gathering of Group of Seven (G-7) finance ministers and central bank governors.
The G-7 comprises the United States, Britain, Canada, France,
Germany, Italy and Japan.
The IMF praised the U.S. Federal Reserve for its "timely
and significant" cuts in interest rates so far this year. The central bank
has aggressively slashed U.S. short-term rates by two full per centage points
since the start of the year, in four half per centage point moves, to try to
counter the slowdown.
Japan says GDP growth weaker
Japan's government on Wednesday dropped its figure for
economic growth for the three months through December.
The figures illustrate the significant challenge ahead of
newly elected Liberal Democratic Party president Junichiro Koizumi.
Koizumi, 59, is expected to take over as prime minister
Thursday after formal parliamentary approval.
Japan's gross domestic product grew at 0.7 per cent for the
quarter, not the 0.8 per cent originally announced in March.
Net exports and capital spending were slightly weaker, the
government's Cabinet office said.
Despite the revision, Japan should still hit its 1.2 per cent
growth target for the fiscal year through March 31, the office said.
James Malcolm, senior economist at J.P. Morgan, agreed the
target is "eminently achievable." But it signals that Japan's already
moribund economy is slowing rapidly this year.
GDP grew at 1.7 per cent in calendar 2000, the government
reiterated Tuesday. Economists' forecasts for this calendar year point to a
significant dropoff in growth.
Malcolm expects growth to slump to 0.7 per cent, "with
risks still remaining on the downside." Few experts expect much beyond 1
per cent growth.
Economists say they are unsure how the government's GDP
figures are compiled and fault them for being too volatile and coming out late.
But other recent data also show a downward drift.
Consumer confidence has eroded significantly. That suggests
an impending crash in Japanese consumer spending, which accounts for 55 per cent
of the economy and has held up relatively well.
The U.S. slowdown has already hurt demand for Japanese
products. Business confidence is low, which has led to slower commercial and
Reformer Koizumi elected Japan PM
Junichiro Koizumi, a reformer with a nationalist tinge, was
elected Japan's prime minister on Thursday, as the nation pondered whether he
would keep his pledge to fix a stagnant economy and shake up his hidebound
Parlaying his reputation as an eccentric into a powerful
image as a popular reformer, Koizumi rose to the top post on a platform of
change that won resounding support from local members of his ruling Liberal
Democratic Party (LDP) deeply afraid of losing a July national election.
Koizumi received 287 votes out of the 478 ballots cast, while
opposition Democratic Party chief Yukio Hatoyama got 127 votes.
Koizumi, once dubbed an eccentric but now seen as a
potentially bold reformer, then named his new cabinet line-up, keeping a highly
regarded financial regulator in his post and tapping a veteran lawmaker as
'IMF predicts British growth at 2.6% in 2001'
Britain is set to weather the global economic slowdown this
year to become one of the fastest-growing economies in Europe, leaked IMF
figures published in the Financial Times showed on Tuesday.
British economic growth would slow this year to 2.6 per cent
from 3.0 per cent in 2000, a draft copy of the International Monetary Fund's
biannual World Economic Outlook said, the FT reported.
Growth would accelerate to 2.8 per cent in 2002, it added.
Only Spain was poised to enjoy faster growth, the newspaper
said, warning that the forecast could yet be revised.
The reported IMF forecast supports the predictions of British
finance minister Gordon Brown that the British economy will grow at a rate of
between 2.25 and 2.75 per cent this year, a view which Brown defended in an
interview with The Times on Tuesday.
Indonesia targets higher taxes
The Indonesian government is targeting $422 million in
additional revenue mostly from higher taxes to contain the budget deficit,
senior economics minister Rizal Ramli said on Tuesday.
Ramli said the government needed three trillion rupiah more
in taxes and two trillion rupiah more from the Indonesian Bank Restructuring
Agency (IBRA) to keep the budget deficit down at 3.7 per cent of gross domestic
Turkey aid talks by EU ministers
As Turkey waits nervously, the European Union finance
ministers continue the debate on the merits of providing extra funds for the
But the discussion, which began at the G7 deputy finance
ministers meeting earlier this week and continues at a gathering of EU finance
ministers this weekend in Malmo, Sweden, has been far from harmonious.
The United States, Britain and Canada are said by sources
close to the International Monetary Fund, to be "less than
enthusiastic" about the idea. The Europeans, led by Germany, are keener but
some still have reservations, the sources said.
Wall St. ends mixed
The Nasdaq composite index fell for the fourth time in five
sessions Thursday amid continued worries about the profit outlook for technology
The Nasdaq shed 24.92 points, or 1.2 per cent, to 2,034.88,
bringing its five-session loss to 7 per cent. The Dow industrials rose 67.15
points to 10,692.35. At its session high, the Dow came within 21 points of
wiping out its losses for the year.
The Standard & Poor's 500 added 5.77 to 1,234.52.
More stocks rose than fell. Advancing issues on the New York
Stock Exchange topped declining ones 1,957 to 1,122 as 1.2 billion shares
changed hands. Nasdaq winners beat losers 2,127 to 1,733 as 1.9 billion shares
In other markets, the dollar fell against the euro but rose
versus the yen.
Asian tech stocks down in morning trade
Asian stocks were lower Friday, with technology shares in
particular weighed down by Thursday's drop on the U.S. Nasdaq market.
Tokyo stocks were mixed at the midday close; The tech-heavy
Nikkei average closed the morning down 0.7 per cent at 13,879.22. Hong Kong
stocks also opened lower on Friday. The benchmark Hang Seng index was down 1.2
per cent to 13,140.21 shortly after 10 a.m. Seoul's benchmark Kospi index was
down 0.8 per cent at 556.99. The Taiex index in Taiwan was off 0.8 per cent at
5,476.32. In Singapore, the Straits Times index was up 0.6 per cent at 1,680.40.
Gas prices approach highs
U.S. gasoline futures neared all-time highs Thursday on tight
supplies ahead of peak summer driving demand and signals that OPEC will maintain
curbs on crude oil production.
Gasoline for May delivery shot up to $1.1135 a gallon in
after-hours electronic trade on the New York Mercantile Exchange (NYMEX),
surpassing the previous record high set in August 1990. It settled at $1.1042
per gallon in regular hours, up 2.39 cents for the day.
Gasoline skyrocketed as NYMEX crude for June delivery settled
$1.15 higher at $28.44 per barrel, while May heating oil futures gained 2.32
cents to 77.62 cents per gallon.
Mergers & Acquisitions
Microsoft—Qwest: Microsoft Corp.'s MSN Internet service
division and telecommunications provider Qwest Communications Inc. unveiled a
new partnership Thursday that will allow MSN to once again offer high-speed, or
broadband, Internet access to its clients.
Shell—Barrett: Shell Oil Co., a unit of Royal
Dutch/Shell Group, raised its hostile takeover price Thursday for Barrett
Resources to $2 billion, or $60 a share.
Old Mutual—F&G: South African financial services
company Old Mutual announced on Thursday it would acquire U.S. life assurance
firm F&G Life for $635 million.
IBM—Informix: International Business Machines Corp.
said Tuesday it will pay $1 billion cash to buy Informix Corp.'s database
software business, bolstering the software maker in its battle with rival Oracle
Seat—Eniro: Italy's Seat Pagine Gialle has agreed to
buy Eniro, the Swedish yellow pages unit, for $2.7 billion to expand its
Hilton—Scandic: The British company, the operator of
Hilton hotels outside the U.S., said it was offering 108 Swedish crowns ($10.70)
and 1.1238 new Hilton shares for each Scandic share, valuing the firm at £612
million ($881 million).
Treasurys up on job data
U.S. Treasurys rose on Thursday, reversing three days of
losses, after a report showed weekly jobless claims jumped to their highest
level in five years, supporting the case for more Federal Reserve interest rate
cuts in the weeks ahead.
Two-year notes were up 3/32 at 99-23/32, yielding 4.14 per
cent. Five-year notes were up 10/32 at 104-7/32, yielding 4.70 per cent.
Benchmark 10-year notes were up 16/32 at 98-18/32, yielding 5.19 per cent.
30-year notes were up 31/32 at 95-10/32, yielding 5.70 per cent.
Techs boost Europe
Europe's main market bourses ended higher on Thursday, led by
gains in computer software, information technology hardware, and oil shares.
London's benchmark FTSE 100 rose 0.7 per cent to close at
5,868.3, as software maker Logica (LOG) climbed after an upbeat outlook and
business telecom provider COLT Telecom (CTM) jumped.
In Paris, the CAC 40 blue chip index climbed 1.4 per cent to
finish at 5,481.73, with Thomson Multimedia (PTMM) and Cap Gemini Ernst &
Young (PCAP) leading gainers.
Frankfurt's electronically traded Xetra Dax edged up 0.3 per
cent to touch 6,134.54 in late trade, with sportswear maker Adidas-Salomon
(FADS) and chipmaker Infineon Technologies (FIFX) among the top gainers.
In Amsterdam, the AEX index climbed 1.4 per cent, while the
SMI in Zurich dipped 0.1 per cent. Milan's MIB30 fell 0.3 per cent.
ECB to hold rates
Kye interest rates unchanged at 4.75 per cent later Thursday
as inflation shows no sign of slowing.
The ECB is standing firm against calls for an interest rate
cut, in line with other central banks, as the effects of a U.S. economic
slowdown feed through to Europe.
In the 12-nation euro zone consumer prices rose 2.6 per cent
in March year-on-year and inflation in Germany, the European Union's largest
economy, may rise to 2.9 per cent in April from 2.5 per cent in March.
The European Commission, the executive arm of the EU, cut its
growth rate forecast for the euro zone on Wednesday to 2.8 per cent from 3.2 per
cent, fueling calls for a rate cut.
AstraZeneca: AstraZeneca posted a 12 per cent rise in
first-quarter pretax profit on Thursday. The maker of Losec, or Prilosec in the
U.S., said the pretax profit from continuing operations at the drugmaker rose to
$1.11 billion from $1.02 billion. Net profit rose to $782 million from $662
Callaway: Callaway on Wednesday reported first-quarter
earnings of $34.1 million, or 47 cents per share, a 181 per cent increase over
last year's first quarter.
PeopleSoft: PeopleSoft Inc., reported revenue of $503.1
million in the quarter ended March 31, up from $375.4 million in the prior
quarter. The company said its net profit from recurring operations rose to $36.1
million, or 11 cents per diluted share, from $11 million, or 4 cents a share, in
the year-ago period.
Bristol-Myers Squibb: Bristol-Myers Squibb Co., said
earnings from continuing operations gained 10 per cent to $1.2 billion, or 63
cents a share, in the period.
AHP: American Home Products Corp., earned $733.6 million,
or 55 cents a share, in the quarter, up from $634.9 million, or 48 cents a
share, a year earlier.
Daimler: DaimlerChrysler, the German-American carmaker
reported a loss of 373 million, or 0.37 a basic share, which equals $328
million, or 33 cents, excluding special items. The company earned 1.7 billion,
or 1.69 a basic share, on the same basis a year earlier.
BMC: BMC Software Inc. reported fourth-quarter earnings
which fell 47 per cent. BMC, earned $65.8 million, or 26 cents per diluted
share, excluding special charges and amortization of goodwill and intangibles.
DuPont: DuPont Co., the biggest U.S. chemical company,
said earnings before special items fell to $567 million, or 54 cents a share,
from $898 million, or 85 cents a share, a year earlier. Sales fell to $6.9
billion from $7.6 billion.
GSK: GlaxoSmithKline, Europe's largest drugmaker, posted
an 11 per cent rise in pretax profit. The UK company said pretax profit at
constant exchange rates for the three months ended March 31 rose to £1.39
billion ($2 billion) from £1.17 billion in the year-earlier period.
PepisCo: Soft drink maker PepsiCo Inc. posted net income
of $498 million, or 34 cents a diluted share. The maker of Pepsi-Cola earned
$422 million, or 29 cents a share, a year earlier.
IMF chief sees growth
The head of the International Monetary Fund said Tuesday the
global economy was at a critical juncture, but decisive action from the Federal
Reserve and hoped-for interest rate cuts in Europe should prompt a rebound in
economic growth in the second half of this year and into 2002.
In an interview with reporters ahead of the global lender's
spring meetings, IMF Managing Director Horst Koehler said that while there were
elements of "uncertainty" and "unpredictability" to the U.S.
economic outlook, there was a "good degree of probability" that the
U.S. rebound will materialize.
Intel releases Pentium 4
Intel Corp., the world's largest chipmaker, introduced its
much-awaited Pentium 4 processor Monday, at 1.7 GHz the company's
highest-performance microprocessor for desktops, in a move that could ignite a
price war with its competitors.
Intel said the Pentium 4 is available immediately for $325 in
1,000 unit quantities, and the company expects computer makers worldwide to
launch systems based on the new microprocessor.
Leaders of nearly all Western Hemisphere nations endorsed a
framework for a regional free trade pact Sunday after a two-day summit in
The Summit of the Americas closed Sunday with the leaders of
34 countries calling for a free trade zone across the hemisphere by 2005.
Membership would be limited to democratic states, which currently excludes only
communist-ruled Cuba among Western Hemisphere nations.
Who is the richest man?
Microsoft billionaire Bill Gates has been ousted as the
world's richest man by Sam Robson Walton, the chairman of the Wal-Mart retail
empire and eldest son of its founder, a newspaper reported Saturday.
For three years Gates beat all-comers with a fortune that
rose to $76.50 billion in 2000, but the value of his holdings has fallen to $54
billion, the Times said.
Walton is now said to be worth $65.4 billion. His fortune is
based on the retail empire started by his father, Sam Walton, from a single shop
in Rogers, Arkansas, in 1962.