SHARES CRASH! – GM down $51bn in 3 years

0
1033

YESTERDAY’S shares collapse across the globe was blamed by economists on record inflation, record oil prices and fears of more banks crashing.

In London the FTSE 100 index fell 2%, down 140.7 points at 5,485.2, with £30 billion lopped off share prices by early afternoon.

Paris and Frankfurt saw similar losses.

As soon as they opened US markets crashed, with the Dow Jones Industrial Average opening down more than 100 points.

Swiss bank UBS, one of the banks up to its neck in the US sub-prime crisis, reshuffled its management yesterday, sparking speculation that already announced plans to cut more than 5,000 jobs, will prove inadequate, and further losses from failed mortgage-backed investments will lead to even more job cuts.

UBS has already announced losses of more than $37 billion.

Bank and airline stocks and shares were particularly weak, with the former hit by rumours of further sub-prime related losses and British Airways leading the retreat for the airlines, down 5% as oil prices rebounded back above $142 a barrel. Air France shares fell 3.4% in Paris.

Asian stock markets were hit by raging inflation fears, stoked by higher prices for oil and raw materials.

In India inflation hit a 13-year high as share prices hit a 16-month low.

In Japan business confidence has fallen to a five-year low.

In the US, GM (General Motors) shares fell to $11.12 yesterday, their lowest level since 1954.

The GM share price has plunged 35% in the past month as the international car giant’s cost-cutting plans fail and there are calls for an emergency issue of new shares to raise cash.

Total sales in GM’s home market fell 30% in May, with truck sales particularly weak. Sales had fallen 22% in April.

GM said soaring petrol prices were ‘changing consumer behaviour’.

GM is reviewing the future of its Hummer sports utility vehicle brand as well as cutting thousands of jobs and closing plants across North America to save money.

GM has lost $51 billion over the past three years and recently said it would not return to profitability, as previously hoped, in 2008.

UK house prices fell by 0.9% on average last month, and are now 6.3% lower than a year ago, the Nationwide said yesterday.

The average home now costs £172,415 and is £13,629 cheaper than at the top of the market in October last year.

The credit crunch and the resulting difficulty in getting a mortgage has led to many potential buyers staying put across the rest of the UK.

It was the eighth consecutive monthly fall in prices.

The year-on-year change across the UK was down 6.3% in June compared with 4.4% in May.

The Bank of England this week said that mortgage approvals in the UK have slumped to 42,000 in May, a 28% fall compared with the previous month and 64% down on a year ago.

Twelve out of 13 areas of the UK witnessed year-on-year drops in house prices during the three months from April.

London, although still the most expensive, has fallen more in line with the rest of the UK owing to tighter controls on lending by banks, a squeeze on household finances and less secure job prospects in the City, according to Nationwide.