Consulting » MARKETS & DATA – US economy and markets go south.

MARKETS & DATA - US economy and markets go south.

Lower US interest rates have helped stop the rot in equity markets - but they have not yet triggered a significant rally.


The UK extended its fourth-quarter outperformance of other world markets – the FTSE All-Share actually rose modestly in December. However, in absolute terms, the full-year return of -5.9% was the worst since 1990. For this year, optimists can point to the prospect of lower interest rates and attractive valuation relative to gilts. More immediately, earnings forecasts in the UK remain under pressure despite a benign economic outlook.


The speed of the deterioration in the US economy brought the brief rally at the start of December to an abrupt halt as investors again reviewed the scale of the likely downturn in corporate earnings. Prior to the cut in interest rates the technology-heavy Nasdaq Composite Index hit its lowest level for two years. Subsequently, the index has rallied, although volatile performance continues to reflect wariness over forthcoming profits reports.


The cut in US interest rates was a surprise in terms of timing, but markets were already anticipating significant reductions this year. Futures markets suggest that further cuts of around 1% are expected by the middle of the year. Despite relatively robust economic forecasts, lower UK and euro rates are also projected, albeit on a smaller scale.


Both sterling and, in particular, the euro have continued to strengthen against the US dollar as the downturn in the US economy intensifies. Meanwhile, the yen has hit its lowest level against the dollar since July 1999. In Japan, too, there are fears over economic growth – in this case that even the recent slow pace of growth will not be sustained. Market data supplied by Britannic Asset Management Ltd. Tel. (0141) 222 8000. Expressions of opinion contained within this document are subject to change. Britannic Asset Management Ltd is the holding company of Britannic Investment Managers Ltd (Regulated by IMRO). SURVEYOR: LIES, DAMN LIES AND STATISTICS


Average wage for an FD in Yorkshire: #58,000

Lowest ditto: #33,000

Highest ditto: #90,000+

Average working week for Yorkshire-based FD: 51hrs

Percentage of Yorkshire-based FDs who believe their role now encompasses more commercial/strategic issues: 46%

Ditto who expect to work weekends: 86%

Ditto who cite job satisfaction as important: 5%

SOURCE: Sewell Moorhouse


Percentage of business leaders who expect growth of B2B to boost GDP: 62%

Ditto who believe their organisation’s survival depends on the adoption of B2B e-business: 62%

Percentage of UK exporters who are planning web-based e-commerce: 53%

Percentage of UK purchasing professionals who believe customers and suppliers will be left behind if they don’t adopt e-procurement: 68%

SOURCES: MORI/Cranfield/Microsoft; TomorrowFirst/Dynamic Markets; IRN Services/Bright Station


Number of mobile phones sold over Christmas: 4.7m

Percentage increase in mobile fraud for 12 months to May 2000: 53%

Level of fraud in e-businesses compared to “bricks and mortar” companies: 30 times

SOURCE: Searchspace


Percentage of respondents who used acronyms but were unable to identify their correct meaning: 54%

Ditto who used the term “DVD”: 47%

Ditto who correctly identified its meaning: 26%

Percentage of respondents who knew what “WAP” stood for: 26%

Percentage of respondents who had used the acronym “VPL”: 7%



Cost to UK firms in lost business due to bad grammar and inattention to detail: #2bn

Percentage of financial institutions that like least to be approached via telephone: 55%

Percentage of clients who don’t renew contracts because of price: 11.9%

Ditto who said it was due to a major error on the part of the supplier: 9.2%

Percentage of suppliers who find it hard to maintain enthusiasm for clients they’ve had for over a year: 15%

Percentage of businesses who like to receive documents by e-mail: 15%

SOURCE: Royal Mail/B&I


Most frequently paid sum by intellectual property and brand owners for a domain name: #15,000-#25,000

Highest figure paid for a domain name: #5m

Percentage of management consultants who recognise the value of domain names and the need to manage them: 79%

Ditto who had no policy in place to manage them or protect names: 40%

SOURCES: Virtual Internet;; NOP/DomainAudit.

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