Oil slick
Market dumped
The decision by Opec to maintain its production output last week continued to ripple through the oil and wider commodity markets at the beginning of this week, not to mention its effect on currency markets. The price of black gold slumped to its lowest level for five years in intraday trading on Monday, with Brent Crude sliding through the $70 a barrel level before recouping some of its losses. Other raw materials followed suit with copper hitting a four year low although precious metals bucked the trend as a favourable result in a Swiss referendum coupled with the increased volatility in the markets helped gold to drag itself off recent lows with a near-5 per cent rise on Monday.
PIBs win
BB & NRAM relief
Investors who have been campaigning for several years for a fair deal for holders of Permanent Interest Bearing Shares in the now-government owned Bradford & Bingley and Northern Rock Asset Management, welcomed what was described as a ‘fair offer’ from UK Asset Resolution this week to buy up the bonds. Campaigner Mark Taber said the cash payment offer “significantly exceeds both the current market price and the nominal value plus all unpaid interest since payments were stopped in 2009”.
Black mood?
Sales boost mixed
UK shoppers may have been knocking each other over to grab bargains but in the US it appears to be retailers who may have sustained a bloody nose. The ‘Black Friday’ shopping promotion imported from the US to these shores in recent years took on a whole new level this year as major supermarkets and other mass retailers slashed prices and opened their doors at midnight, prompting unseemly scrums amongst shoppers seeking discounts. But in the US, the National Retail Federation reported that sales over the four day Thanksgiving holiday weekend fell by 11 per cent compared to last year to $50.9bn with the average shopper’s bill of $380.95 down 6.4 per cent from 2013.
Construction cools
Data misses
The government’s much trumpeted National Infrastructure Plan may have given the UK construction sector a boost in the arm this week but future projects will not alleviate a short term slowdown in the sector’s growth. The Purchasing Managers Index reading for the sector for November showed a slip to 59.4 from 61.4 in October, undershooting expectations and marking the slowest expansion of the sector for 13 months. Housebuilding remains the driving force but it too slowed, with civil engineering and commercial construction showing more obvious declines. The sector remains comfortably in expansion mode but has yet to reclaim its pre-financial crisis levels and some analysts fear political uncertainty over the next six months could lead to further project deferrals.
Russian roulette
Rouble rumble
It appears as though every spin of the roulette wheel is coming down against Russia at the moment. Economic sanctions imposed for its part in the Ukrainian imbroglio are one thing but the collapse in the oil price has exacted a far higher price from the Russian economy, prompting a run on the rouble which has resurrected bad memories of the Russian debt default of 1998. The Russian central bank was forced into the markets this week to try to prop up its currency as it set new lows against the dollar as fears of accelerated capital flight from its economy grew. Russia also admitted on Tuesday that it now expects its economy to slide into recession in 2015, revising previous forecasts of 1.2 per cent growth down to a 0.8 per cent reversal.
Shutdown fears
Spending stalled
The latest US budget impasse is looming once more. There are less than ten days for US lawmakers to agree some sort of deal over spending or face the prospect of another embarrassing shut down of Federal services early next year such as the one which blighted the early weeks of 2013. Even before the new entrants to Congress enter in January to stack the odds further in favour of the Republican party, President Obama is facing a mini constitutional crisis as hardliners from the right of the political spectrum seek to use budget talks as a way of issuing a stern message to the President over his recent executive action on immigration.
Special delivery
Complaint rejected
Royal Mail was dealt a blow this week when the regulator Ofcom rejected its complaint that the ability of rival mail operators to cherry pick where they operate was threatening its ability to fulfil its obligation to provide a universal service. Royal Mail had called for a full competition enquiry into the postal service after complaining that rival Whistl was picking highly populated urban areas where it could undercut Royal Mail, while leaving the recently privatised business to fend for itself in uneconomic rural areas. Ofcom ruled that there was no competition concern to be answered and merely suggested that such rival services should encourage Royal Mail to sharpen up its own practices.
