Here we go
By
Julia Newbould
Mon 13 Oct 2008
Here we go again. Unlike this time last week, we have little to focus on happening overseas to propel us out of these financial doldrums.
Here we go again. Unlike this time last week, we have little to focus on happening overseas to propel us out of these financial doldrums.
Instead we have had the extraordinary bill being passed by the US Government.
Advisers are recommending a lot of biding time and not making any quick decisions as markets change, but the markets themselves are reacting quickly to news and monetary policy.
The Reserve Bank of Australia made global headlines when it dropped official interest rates by 100 basis points on Tuesday.
The first bank off the rank to lower its interest rates was Commonwealth Bank of Australia (CBA), which dropped its variable home loan interest rate by 80 basis points.
There is little time to waste for companies that do not have the financial strength to go it alone through a protracted downturn.
Instead, we have seen CBA agree to buy BankWest from its troubled parent, HBOS.
We have also seen Suncorp Metway announce the divestment of its wealth management business, and it is currently talking to CBA. Perhaps CBA is feeling under pressure from the imminent merger of St George and Westpac (due to be voted on by St George employees in mid-November). The merger would have ousted CBA from its number one position, however, the BankWest deal will allow it to maintain pole position.
In wealth management, BT and Asgard would also have been a strength to reckon with, however, the acquisition of the Suncorp wealth management business would bolster the bank in this area too.
A lot more corporate action is expected soon, and perhaps this will give the stock market something to be positive about.
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