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a personal view of the week's news from Erithacus
Stock Markets fell on Friday as a profit warning and news of job cuts from microchip giant Intel sent Markets in the U.S plunging. UK indices also dropped quickly on Friday afternoon, but reacted rather less than those in the U.S. with the FTSE100 down 85.9 on the day at 5917.3, once again under the psychologically important 6000 level. The drop was an unexpected one for many, who had believed that Markets has reached the bottom and had regarded the rises during the week as the start of a recovery, although Gordon Brownís Budget had received almost no reaction whatsoever from the City. Even with Fridayís drop, the FTSE100 ended the week 58.7 points higher than the previous Friday when it had closed at 5858.6. Economists point to the relatively strong economy of the UK at present, and suggest that the decline in London shares over recent months is based on adverse sentiment and over-reaction to U.S. data, not on any valid reasons to doubt the performance of most UK companies in the near future.
The fall in the U.S. markets was, perversely, made worse by good economic news. Figures for February's employment report showed the economy created 135,000 new jobs outside the farm sector in the month, a huge increase on the expected figures of 62,000. As a result of this, analysts expect the Federal Reserveís cut in interest rates due to be announced on the 20th of this month to be smaller than had previously been predicted. Optimistic expectations are now for an 0.5% cut rather than 0.75% that Wall Street had assumed would be the most likely level.
Two companies "evicted" from the FTSE100, Excel and Autonomy, both gained during the week as investors took advantage of their low share prices already well down in advance of their expected removal. Other successes during the week were Vodafone, Colt Telecom, Telewest and BT, all of whom showed gains. Banks, however, generally suffered, with two of the worst hit being Abbey National and Bank of Scotland. Data to watch for next week includes results from Taylor Woodrow and much-troubled group Iceland whose profits warning in January had shocked the City. Pay rise data due to be released on Wednesday may show an average increase to 4.5%, the Bank of Englandís "pain threshold", and employment figures may well be heading towards showing there are now less than one million unemployed. If so, this will be the lowest unemployment figure for thirty years and will undoubtedly cause Gordon Brown to be shouting this success from the rooftops. It may also give the Bank of Englandís monetary policy committee good reason to argue against a rate cut.
Other news this week was again dominated by foot-and-mouth. Although it was announced mid-week the number of cases had peaked and the outbreak was under control, an increase of cases over the last two days has raised concerns that the disease is spreading further and faster than was previously thought. In an alarming development, it was suggested that the disease is being spread by birds feeding on the carcasses of slaughtered animals that are piling up faster than they can be burned in some areas. It was also reported that the burning of these animals, effective as it is in destroying foot-and-mouth completely, poses a small risk of releasing both BSE and variant CJD into the air and water supplies, as well as E.coli and salmonella. The Ministry of Agriculture Fisheries and Foods admitted this was a possibility, and that "small numbers" of cattle affected by foot and mouth "may be in the pre-clinical stage of BSE and may harbour some of the BSE agent". Risks are, however, thought to be extremely low.
Peter Madelson has again been in the news this week. Sir Anthony Hammond, the solicitor conducting the inquiry into the matter of the British passport applications for the Hinduja brothers over which Peter Mandelson resigned, has announced that he can find no impropriety by Mr Mandelson or, in fact by anyone else. Despite the persistence of reporters to establish why, if Sir Anthonyís report is correct, Peter Mandelson resigned or was forced to resign, Tony Blair simply repeated that Mandelson was a man of "great integrity and ability" and would not be draw by further questions. "It is over and done with, " he said, "and I'm not commenting on it any more." Peter Mandelson himself was equally reticent, but said, "I do not desire a return to government." This announcement may come as a great relief to many: anyone who is as unbelievably unlucky as Mr Mandelson, to have to resign twice for doing nothing wrong, must be something of a liability to any political party.
Finally for this week, the activities of Peter Tatchell have been of
interest to many people. Having previously included Mr Tatchell in the
list of people in "the public eye" I dislike intensely (it is
a long list!), I found myself warming to him after his attempt to make a
citizenís arrest on Zimbabwe President Robert Mugabe in Brussels on
Monday. President Mugabe has been the subject of much condemnation over
his treatment of white farmers, judges, minority groups, and any
political opponents. Peter Tatchell accuses Mugabe of torture and murder
and says he should be arrested under the 1984 United Nations' Convention
on Torture, and it would seem that many others agree with him. Yet
President Mugabe was given the red carpet treatment by the Belgian
government, as he had been by the British government last year. The
attitude of Mugabe and his administration in Zimbabwe was evident in the
actions of Mugabeís bodyguards, who responded to Peter Tatchellís
non-violent but persistent attempts to arrest President Mugabe, by
grabbing him by the throat, punching and kicking him until he was left
unconscious in the gutter by Mugabeís car. Belgian police stood by and
took no action.
11th March 2001