Morning business news - September 19Thursday 19 September 2013 10.30
MARKETS CHEER BERNANKE'S DECISION TO KEEP US STIMULUS PROGRAMME - Wall Street recorded record highs in New York last night and equities across Asia Pacific also jumped higher after the Federal Reserve did a huge favour to global investors by saying it would continue to pump money into the US bond market at an $85 billion a month pace. Markets that had been hardest hit by fears the US Fed could scale back its stimulus programme climbed the most. Last night the Fed's chairman Ben Bernanke said the committee wanted to wait for more evidence of economic progress before adjusting the pace of its purchases. This surprised the markets, which had been poised for a reduction in the Fed's economic stimulus.
Describing the US Federal Reserve's decision not to start tapering its stimulus programme as incredible, Paul Sommerville, of Sommerville Advisory Markets, said the bank's chief Ben Bernanke has confused world markets. Mr Bernanke said last night that the US economy is not performing as well as he would like it to, rowing back on comments he made some months ago. The analyst says the Fed chief has given his successor - who will probably be Janet Yellen - an unbelievably difficult task when he leaves the bank next January. He says that while the markets are thrilled that the ''heroin of QE is continuing'', Europe would prefer if the euro was not as strong as it currently is.
Back home, the long awaited Oireachtas Banking Inquiry has been announced. It will look at the bank guarantee and events leading up to it, the role of banks and auditors and the role of State institutions. Mr Sommerville said that while he does not mean to be cynical, he believes the banking inquiry will be an exercise in futility no matter which Oireachtas committee carries it out. The timing of the inquiry may see it being held just before the general election, and the analyst said that politicians will just use it as a platform for themselves. Any start date may also prejudice the Anglo Irish Bank trial and the bank may be left out of the inquiry. ''It should be left to the guards at this stage,'' he stated. Mr Sommerville also said he believes that people will not find out anything new from the inquiry as the people facing the questions will have had five years to come up with their answers.
MORNING BRIEFS - Danske Bank's acquisition of foreign banks, including its expansion into Ireland, put the stability of the entire Danish economy at risk, according to a report commissioned by the Danish government. The report, investigating the causes and effects of the Danish financial crisis, singles out Denmark's biggest bank for criticism, arguing Danske's foreign purchases contributed to a deposit deficit of €47 billion in 2008 - almost half of the deposit deficit of the entire banking sector. The report in particular criticises Danske for its investments in the Republic and Northern Ireland which cost the bank €4 billion between 2008 and 2012. Responding to the report yesterday, Danske chief financial officer Henrik Ramlau-Hansen said "the acquisition of the Irish banks was something we would do differently if we had known then what we know now."
*** BlackBerry plans to cut thousands of jobs by the end of the year, just as the company launched a flagship smartphone intended to revive its fortunes. Reports say that BlackBerry could cut up to 40% of its staff. Blackberry, which once dominated the corporate smartphone arena, has struggled in recent years to stop loss of market share to rivals like Apple and Samsung. The company, which previously warned that job cuts were likely, employs nearly 13,000 people. It once had almost 20,000 employees.