Every week we round up the biggest stories in business, finance and currency. This week: record stock highs in Europe and Japan, Canada adds jobs, GE streamlines and Shell shells out big time.
Canada adds jobs
The Canadian economy defied analysts’ predictions by adding 28,700 jobs last month, surpassing most estimates. The numbers are not all good news however. The growth was boosted by increasing numbers of part time positions, in total 56,800 part-time jobs were added, while 28,200 full-time jobs were lost. Falling oil prices have continued to take a toll on the Canadian economy and the value of the loonie so any job growth is a positive sign – even if it is part time. The Bank of Canada will likely maintain rates at 0.75% at its policy announcement next week.
Central Banks Offload the Euro
Quantitative easing has helped boost the eurozone economy but the devaluing effect on the euro has caused central banks to lose confidence in the currency. Five years ago the euro constituted 28% of global central bank reserves but the currency has dropped to just 22%. Decreased demand may further boost European manufacturing and exporting competitiveness, but may also further devalue the currency as investors and central banks look elsewhere. The currency dropped over 3% last week and hit 1.0603 against the dollar on Friday.
GE sells off property, scraps finance
General Electric has agreed to sell its $26.5bn property portfolio to Wells Fargo in the largest US property deal since 2007. An additional $4 billion of property will be sold off to other buyers. The deal will allow GE to buy back $2 billion worth of shares and focus its attention on more profitable industrial operations. The company will also offload its financing and lending wing. All told, GE expects to return $90bn to sharehilders through buy-backs and dividens.
Japan’s Nikkei hits all-time high
Japan’s Nikkei 225 Index traded at its highest point in just over 15 years. The Nikkei 225 hit 20,000 before slumping back down to 19,907.63. Overall Japan’s stock market has climbed by a remarkable 15% so far this year.
RBA could cut rates
Currency traders are remaining wary of future rate cuts by the Royal Bank of Australia (RBA). Although the country’s economy is expected to have grown by 15,000 jobs in March, the bank has warned that further easing may be on the horizon. China’s recent economic slowdown will likely have a major impact on Australia’s economy. Keeping careful track of Australia’s economic performance as well that of China will be crucial to gaining some insight into the potential future actions of the RBA. A rate cut would cause the Australian dollar to lose value.
European Stocks Surge
On Friday European stock prices surged to their highest level since 2000. The FTSEurofirst 300 index closed at 1,645.25 – a 20% increase so far this year. Britains FTSE 100 and Germany’s DAX both hit all-time highs and France’s CAC 40 reached its highest level since 2008. The declining value of the euro has boosted manufacturing and exports in Europe and the European Central Bank’s QE program has increased liquidity both of which have contributed to the soaring stock prices.
Shell Acquires BG Group
Shell Oil has acquired BG Group for $70 billion. The merger of the worlds two largest liquefied natural gas (LNG) producers will have to get the green light from anti-trust investigators across the world but the deal is expected to go through. LNG prices are closely linked to oil and have suffered a similar drop in price over the last year. Nevertheless the long-term outlook for the industry is positive and Shell will be able to utilise BG Group’s resources to place itself on the forefront of the industry.
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