Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that Australasia's dominant retailer Woolworths has issued a profit warning.
This is another sign that consumers on both sides of the Tasman are wary of spending and are instead eyeing debt reduction.
Woolworths, which runs Countdown and Dick Smith Electronics here in NZ, has warned its profit growth is likely to almost halve this year to between 5 to 8%. See the Woolworths profit warning here.
It blamed the Christchurch earthquake, the Australian floods and much tighter consumer spending. The hardest hit were Dick Smith Electroncis and its Big W chain as Australians and New Zealanders tighten their wallets. House prices have started falling in most Australian cities.
Also here in New Zealand, JB Hi Fi and the Good Guys have been very competitive in New Zealand. The strong Australian and New Zealand dollars have also fueled price deflation for these imported electronics goods.
Half year sales fell 5.3% at Dick Smith in New Zealand and were up only 1% in Australian dollar terms at the New Zealand supermarkets. They did rise 4.1% in NZ dollar terms.
Meanwhile in Ireland, BBC is reporting the government and the opposition have agreed to pass a vital finance bill needed to advance Ireland's financial bailout, but that the election is likely to be bought forward to February 25.
It's worth watching the Irish political situation because it has the potential to upset global financial markets. Ireland's financial bailout is dependent on its government continuing to support a government guarantee for bank debts. But this bailout by Irish taxpayers of European bank lending to Irish banks is wildly unpopular in Ireland and any new government may abandon the deal.
Meanwhile, global financial markets were relatively strong overnight. The Dow rose almost 1% as cashed up companies start using that money for takeovers and to buy back shares from investors.
The problem remains, however, that many of these takeovers lead to job losses and the share buybacks are an admission by companies that they are better returning cash to investors than investing in their own businesses and growing employment.
Meanwhile, Russian stocks slumped after a suicide bomber killed 35 in an attack on Russia's Domodedovo airport earlier this morning.
Also, Thai stocks were down after red-shirted protestors vowed to occupy the main CBD in Bangkok indefinitely.
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3 Comments
Bernard : Share-buybacks by companies are not directly returning cash to shareholders . But they are a nifty way to increase the value of the remaining shares , after the bought-back shares are cancelled .
They are a vote of confidence by the directors that the company's own stock is too cheap .
........... Would you rather that company directors use company funds for an orgy of M&A , as we witnessed in the 1980's ; or on expensive European artworks and a new corporate jet , as we saw in the 2000's ?
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