These are stories Report on Business is following Tuesday, April 16, 2013.
CEO shares bonus
The chief executive officer of British retailer Next PLC is giving a multimillion-bonus he earned under a share-matching scheme to his staff.
The bonus in question being shared by Lord Wolfson of Aspley Guise is worth £2.4-million, or some $3.8-million, according to reports today.
For each of the company’s 19,400 staff, it means about 1 per cent of their salary to those who have been with the retailer since mid-2010, The Financial Times reports.
His award comes from a long-term plan for Next executives that allowed them to swap part of their bonus for stock, which the retailer matched.
Lord Wolfson, according to the news organization, holds 1.52 million of the company’s shares and, based on another report, still earned £4.6-million without the bonus.
"I remain very grateful for the way in which everyone has helped to navigate our business through this recession,” Lord Wolfson said in an e-mail to the staff, The Telegraph reports.
Chief executive since 2001, he noted that the company’s stock has almost doubled since mid-2010 and that the bonus is now “more valuable than I could possibly have expected."
Markets settle down
Global markets calmed today, but investors remain anxious and cautious after yesterday’s rout and amid a mixed economic outlook.
“It’s like the market’s catching its breath and taking a day or two to re-evaluate,” said chief currency strategist Camilla Sutton.
What happens next is far from clear. But, for now, investors are in a more optimistic mood
Gold prices climbed back after the great two-day plunge, though we're still a far cry from where they stood Friday morning.
Currency markets also settled down, with the Canadian dollar up, while global stock exchanges were mixed.
Tokyo’s Nikkei lost 0.4 per cent, and Hong Kong’s Hang Seng 0.5 per cent. London’s FTSE 100, Germany’s DAX and the Paris CAC 40 slipped by between 0.4 per cent and 0.7 per cent, while North American markets climbed.
“I rather sense that today we're all waiting for some new news while nervously wondering if there is more liquidation to come,” said Kit Juckes, the chief of foreign exchange at Société Générale.
“The majority of the mails I get wonder less about gold and commodities (the damage is done), and more about whether we will see a repeat in equities,” he added in a research note.
“That's not my domain but I am optimistic the U.S. is seeing a temporary slowdown, confident (if that's the right word) that central banks will keep up the mad money-pumping and certain (not in a good way) that low rates and low wage growth will support profits.”
A combination of factors fanned yesterday’s troubles, which began in earnest Friday with a hefty drop in the price of gold, sparked by suggestions that the European bailout deal could force Cyprus to sell at least some of its holdings.
Whether it will do so isn’t clear, however.
That had followed to bleak reports on bullion from two major banks, Goldman Sachs Group Inc. and Société Générale, both projecting a decline.
Weaker-than-expected economic readings from China yesterday then sent all markets plunging – it all “took on a life of its own,” according to Ms. Sutton - with gold ending a two-day collapse down by about $200 and the Canadian dollar losing more than a penny.
Toronto’s S&P/TSX composite lost 2.7 per cent, and the S&P 500 2.3 per cent.
“Despite billions of dollars of financial stimulus from central banks worldwide the global growth story still appears to be no closer to showing signs of moving into a higher gear, and if anything continues to misfire like a clapped-out old motor vehicle,” said senior analyst Michael Hewson of CMC Markets in London.
“These growth concerns combined with a complete lack of any sort of significant inflationary pressure has seen impatient gold holders cash out their chips and with exchanges hiking margins, the sell-off could well get worse.”
What investors don’t want to see is more massive selling today, Ms. Sutton said.
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IMF cuts Canadian forecasts
The International Monetary Fund has some advice for the Bank of Canada: Don't touch interest rates until the economy strengthens.
Not that the central bank was going to, anyway.
As The Globe and Mail's Kevin Carmichael reports, the IMF today trimmed its projections for economic growth in Canada, to 1.5 per cent this year, which would mark the weakest showing since 2008.
Over all, the IMF now projects the global economy will grow by 3.3 per cent this year, down from its earlier projection of 3.5 per cent.
Factory sales rise
Sales among Canada's manufacturers shot up in February, marking their fastest climb since the summer of 2011.
The 2.6-per-cent jump in sales was driven by autos, Statistics Canada said today.
Sales of durable goods shot up 3.7 per cent, others just 1.5 per cent.
The jump was almost four times what economists had expected, said economist Emanuella Enenajor of CIBC World Markets.
"Sales of autos led the charge, with auto shipments up a searing 13.5 per cent," she added.
"Coal shipments were also up, although prices drove gains there," Ms. Enenajor added in a research note.
"Inventories also gained, suggesting the rise in sales likely came out of production, rather than a whittling down of the prior months' inventory build-up."
Toronto housing market weathers storm
Toronto house sales are faring relatively well as the spring market begins in earnest, though the condo market is still hurting.
Home sales in the Toronto area, a flash point for concerns over Canada’s residential real estate market, dipped by less than 1 per cent in the first two weeks of April from a year earlier, to 4,260, though the Toronto Real Estate Board noted there was one extra selling day this year. And that was despite the lousy weather.
The average price rose 4.3 per cent to $527,397, the group said.
The market is being buoyed by single homes outside the city proper.
“April sales to date, which were driven by strong growth in single-detached home sales in the regions surrounding Toronto, represent a positive start to the spring market,” said the group’s president, Ann Hannah.
“Because market conditions have remained tight, we continue to see average price growth well above the rate of inflation for many home types.”
Over all in the Toronto region, sales of detached homes rose 3.9 per cent, but that was driven by a 6.8-per-cent increase in the so-called 905 area, the communities that surround the city denoted by their area codes. In Toronto proper, those sales fell 3.4 per cent.
The condo market remained a trouble spot, in both areas, with sales down 5.8 per cent, led by the outlying region.
In the first quarter, condo sales were down by some 17 per cent in the Toronto area, and prices down 0.5 per cent, while rentals were up by almost 13 per cent.
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Goldman profit climbs
Goldman Sachs Group Inc. posted a jump in first-quarter profit today, topping analysts' estimates and continuing a string of higher earnings among the major U.S. banks.
The Wall Street giant earned $2.26-billion (U.S.) or $4.29 a share, diluted, compared to $2.11-billion or $3.92 a year earlier.
Like other big banks, however, Goldman also cited the mixed economic outlook.
“Our strong client franchise across our businesses drove generally solid results,” said chief executive officer Lloyd Blankfein.
“Still, the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity. We continue to be very focused on controlling our costs and efficiently managing our capital.”
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- Goldman Sachs Group Inc$222.780.00(0.00%)
- Gold Front Month Futures$1,263.50-4.60(-0.36%)
- Canadian Dollar / US Dollar FX Spot Rate0.7427-0.0005(-0.07%)
- Crude Oil Front Month Futures$49.66-0.14(-0.28%)
- Franklin Universal Trust$7.140.00(0.00%)
- S&P/TSX Composite15,421.910.00(0.00%)
- S&P 500 INDEX2,415.82+0.75(+0.03%)
- Dow Jones Industrials21,080.28-2.67(-0.01%)
- Updated May 26 4:00 PM EDT. Delayed by at least 15 minutes.