More jobs slashed, shares gain ground as Wall Street bounces back: Economy roundup

The jobs cuts keep coming. On the back of almost 4000 sackings yesterday, the Government is set to shed 3000 jobs as part of departmental cost saving initiatives worth $4 billion.

 

Industrial property investment trust Goodman Group is also preparing to slash 175 jobs as part of a plan to reduce overheads by 20%.

 

Chief executive Greg Goodman says the move will ensure the long term survival of the company. “Making decisions like these, particularly those affecting staff, is never easy but this is the right move for the group given the current economic climate.”

 

And according to new Westpac data, the employment situation isn’t going to get any better. Consumers’ unemployment expectations continued to fall in January to levels not seen since the 1990/91 recession.

 

But Federal Finance Minister Lindsay Tanner has rejected calls for a jobs summit, saying he is focusing on what needs to be done.

 

“I believe in just getting down, rolling the sleeves up and getting to work,” he told ABC Radio. “Doing the things that are necessary.”

 

Tanner also says while the Government is considering options for a second stimulus package, the economic forecast is “very difficult to predict”.

“We’re keeping a very close eye on things, and that the options are under consideration should they be required.”

 

Shares gain some ground

 

Meanwhile, the Australian sharemarket has opened higher today after positive leads from Wall Street overnight, where investors were encouraged by good results from tech companies.

 

The benchmark S&P/ASX200 index was up 2.9 points or 0.08% to 3445.7 at 12.00 AEDST. The dollar also gained ground to US65 cents.

 

The banks recovered some lost ground this morning. NAB shares have jumped 3.1% to $18.15, while Commonwealth Bank gained 2.3% to $26.20. ANZ also gained 3.1% to $13.58, while Woolworths has dropped 0.8% to $25.58.

 

Overseas, Wall Street closed higher after IBM posted positive results, prompting expectations the tech sector may fare better than once thought over the next few months.

 

Apple results also helped push results higher, posting a rise in net profit for the quarter ending 27 December to $US1.61 billion from $US1.58 billion a year ago. Revenue also rose 5.8% to $US10.2 billion, besting Wall Street estimates. Apple shares rose 9.5%.

 

Overall, the Dow Jones Industrial Average gained 279.01 points or 3.51% to 8228.10.

 

Oil prices also closed 6.6% higher at $US43 a barrel.

 

Back home, Wesfarmers has launched a $2.8 billion capital raising and halved its full year dividend. The move comes after significant debt repayment reduction and indications it may not meet dividend forecasts.

 

“Wesfarmers intends to use the proceeds of the equity raising to repay bank debt and has commitments to extend a substantial proportion of facilities maturing in 2009 and 2010,” the company says.

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