UK pension still giving cause for concern

April 15th, 2009 by admin | Filed under Daily News, Money Management, Pensions, Recession, Savings Accounts, UK Bank Accounts, UK Banks.

Recent figures have shown that the aggregate deficit of corporate UK pension funds has now soared past the benchmark figure of £250 billion. This record breaking shortfall which was arrived at in March was attributed to, drop in gilt yields, apparently caused by the Bank of England’s policy of quantitative easing. According to a spokesman from the Pension Protection Fund, the aggregate gap between the values of assets of liabilities it raised to £253.1bn, reflecting 90% of all the UK’s 7,400 current pension plans. The deficit is now more than 10 times higher than the level it was in the corresponding month of last year.

On the FTSE yesterday the carry forward of disappointing economic data coming out of Wall Street, seemed to curtail gains across the board although banking stocks did continue to move forward after strong 1st quarter results from Goldman Sachs gave the sector a boost. This piece of positive news was dampened by the news of an unexpected drop in US retail sales

Lloyds Banking Group rose by 11% (8.4p to 87.9p)and Barclays already on a role buoyed by last week’s iShares deal struck with CVC announced that it could still sell its entire asset management arm also jumped by 10.5% (18p to 195.5p)

The insurance sector saw some price adjustment after analyst comments that recent share price falls were overdone. Legal and general rose by more than 13% (5.7 pence to 54.5) with Friend Provident rising 3.7p to 68.6p and Standard Life up 9.7 pence at 183.1p.

The mining community on the Stock Exchange also had smiles on their faces with Vedanta Resources humping 15% (134.5 pence to 1008) Trailing in their wake, but not by a distance were Kazakhmys who rose 47.5pence to 513.5and Xstrata whose shares moved forward by 41pence to close at 613.5 .

It was a much stormier ride for British Telecom investors yesterday, with shares dropping by 6% on early trading on news that the group’s annual results next month may include a £1.5bn write down. Later trading saw their shares make a rally closing 0.1p higher at 81.1p

BP didn’t enjoy the same relative fortune, with the petroleum giant’s shares losing 7.5 pence to close the day on 438.5. Reasons given were the decrease in crude oil prices and expectations of falling demand

To prove the point that if people won’t buy crude oil but will still buy fruit drinks was the news that Britvic, the Robinsons and Fruit Shoot company enjoyed a sugar intake of 4% on their shares for the day. They raised 9.75p to 255.25p, after the company announced that they had successfully arranged new banking facilities, which will run through to 2012.

Over the day, the FTSE 100 peaked at 4039.67 points during early trade, and then closed up just 5.28 points, or 0.1 per cent, at 3988.99 points. The FTSE 250 closed the day on 7152.16, up nearly 175 points on the day.

The pound hit a five-week high against the euro and rose against the dollar on Tuesday as well as rising slightly against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4879

Pound/Euro 1.11268

Pound/Japanese Yen 147.80

Pound/Swiss Franc 1.7057

Uncertain corporate outlooks and data showing the U.S. economy is still suffering weighed on global stocks on Wednesday, despite claims from U.S. President Barack Obama that his remedies were starting to work. The Dow Jones Average dropped 137.63 to close at 7920.18. NASDAQ fell 27.59 points to close at 1625.72.

Europe was in shock Wednesday on the news that Swiss banking group UBS were about to announce a very heart loss for the first quarter of this year, during their annual meeting to be held in Zurich. Investors’ worst fears will be confirmed along with the news that the Swiss banking group will be dispensing with the services of more than ten per cent of their global workforce.

In Asia, early trading saw stocks values dropping back from the six-month highs achieved on Wednesday after the drops on Wall Street. Later hopes for increase Chinese stimulus spending helping offset these early losses. The feeling was that investors were cashing in on gains after many equity markets have jumped between 20 percent and 30 percent since early March.