Capital2's Blog

Recruitment and Career advice for the High Tech and Banking Industries

Will US recession hit hiring in EMEA?

From the BBC – hiring could be hit in mid to late 2008 if these predictions are correct.

European and Asian shares have fallen on continuing fears of a US recession and slowing corporate profit growth.

The UK’s FTSE 100 stock index fell 1.3% to 5946.40, while Germany’s Dax and France’s Cac fell about 1%.

Earlier, Japan’s Nikkei index had fallen to its lowest in more than two years, closing 3.4% lower at 13,504.51.

The slide in share prices was triggered on Tuesday by a quarterly loss at US bank Citigroup and a report showing weak US retail sales over Christmas.

Indexes tumbled on the news, with the UK FTSE 100 index shedding 3% on Tuesday and the negative sentiment seeping into Wednesday.

Analysts warned that more declines may be on the way as concerns about the corporate and economic environment persist.

“The fallout from the Citigroup result is significant,” said Trent Muller of ABN Amro Morgan.

“We will see a bit of panic selling with a lot of investors taking cash off the table today.”

Francis Lun of Fulbright Securities said that problems in the US, where a slump in the housing market and higher interest rates have amplified concerns, would continue to stalk the markets.

“American financial mismanagement has brought us to this economic meltdown,” Mr Lun said.

Mortgage market

Many investors are now predicting that interest rate cuts will be needed to keep the US economy going, and the US dollar fell as a result.

Investors tend to seek out currencies and assets in nations with higher interest rates as that increases their returns.

On Tuesday, Citigroup said that it had made a net loss of almost $10bn (£5bn) for the last three months of 2007 because it had to cut the value of investments that were linked to the US housing market.

The bank, one of the biggest in the world in terms of assets, said the loss had been caused by an $18.1bn exposure to bad mortgage debt.

This reinforced the extent of the housing crisis in the US, while spurring worries that other banks were still harbouring undisclosed losses.

On Wednesday, Germany’s Dax was trading down 0.9% at 7498.20, while France’s Cac shed 1.2% to 5189.99. Hong Kong’s Hang Seng closed almost 4% lower.

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January 16, 2008 - Posted by | Macroeconomic News | , , , , ,

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