Tuesday's announcement that Swiss giant UBS is due to write off £5.1 billion dollars worth of risky investments came as confirmation of the prolonged and penetrating nature of the credit crunch throughout the finance industry. Posting a net loss of £173 million pounds in the second quarter of this year and with negative growth for the fourth consecutive quarter, UBS also announced a raft of changes to the banks' infrastructure including the appointment of John Cryan, a 48 year old Briton, as Chief Financial Officer. In response to the news, UBS shares fell 3% in early trading yesterday and financiers faced the fact that the credit crunch could remain a fixture of the financial landscape well into 2009.
Producer Price Inflation Index
The Producer Price Inflation Index, released yesterday by the Office of National Statistics jumped to 10.2% from last July, the largest annual rise since 1986. This jump is in keeping with expectations that inflation rates could hit 5% by the end of the year, despite government targets. Some relief may be in sight though as falling commodity prices could provide a light at the end of the tunnel for global consumers
The Bank of England quarterly inflation report due on Wednesday is sure to shed more light on this situation.
Housing sales continue to fall
Housing sales continue to fall as banks enforce conservative lending schemes in response to tough times in the market. Latest statistics show 40% fewer home sales than a year ago as strict financing conditions prevent many first time buyers getting into the housing markets.
In terms of the major currencies, overnight the US Dollar continued to strengthen, perhaps as activity on behalf of the Federal and Treasury designed to stimulate the economy comes to fruition. This morning it was trading at $1.4894 against the Euro. The Euro-Pound exchange was at 0.7822, a gain of 0.25% while the Australian and Canadian currencies sat at 2.172 and 2.038 respectively.