Tidal wave of bad financial news swamps markets
What former U.S. Fed chair Alan Greenspan called a "once in a century credit tsunami" hit markets with full force on Friday as corporate earnings warnings and tumbling economic indicators outweighed positive government actions.
Greenspan used the term in testimony before the U.S. Congress this week regarding the current global financial crisis and his description appeared apt as companies and economies began warning about gloomy times ahead.
The car sector led this parade of bad news, with General Motors Corp. and Chrysler LLC closing plants faster than expected and cutting jobs Thursday.
GM said it would meet a previous target of a 20 per cent workforce reduction, but might need to cut further as the company's sales outlook darkens.
Chrysler, which reportedly is speaking with GM about a possible merger, closed a plant in Delaware and another facility in Toledo, Ohio, with layoffs totalling 1,825 jobs.
In Europe, France's PSA Peugeot Citroen is promising "massive" production cuts in the fourth quarter after sales in the previous three-month period fell 5.2 per cent.
Fiat and Renault also essentially cut their profit guidance for upcoming quarters.
The bad news was not limited to automakers.
Three-month stock chart for Sony Corp.Sony's shares are bouncing along at a 13-year low after the electronics giant sliced its forecast for sales of cameras and flat-screen televisions by 50 per cent.
Europe's largest airline, Air France-KLM, said it would miss its earlier profit prediction and plans to cut costs by $1.6 billion over the next five years.
The United Kingdom saw its gross domestic product contract for the first time in 16 years as the economy shrank 0.5 per cent in the third quarter. The weak three-month period followed an April-to-June period when the U.K. economy posted flat growth.
Worse still, a relatively obscure — but well-followed — index, the Eurozone purchasing manager's index, showed businesses in that area shrinking at the fastest pace since the fallout from the Sept. 11, 2001, attacks.
The number indicates whether corporate purchasers plan to buy more or fewer goods and services in the coming month.
Finally, the International Monetary Fund this week said it is talking to a number of countries about extending emergency loans and other forms of financial assistance. Included in this group are Iceland, Pakistan, Ukraine and Belarus.
0 comments:
Post a Comment