THE NEWS WRAP: IMF warning over US debt stand-off

The International Monetary Fund has issued a stark warning to the US in its half-yearly World Economic Outlook, pointing out a default on US Treasury bonds would have potentially devastating consequences for the world economy.

“Reassessment of US sovereign risk could reduce global output by several percentage points of GDP,” the IMF states.

“The biggest policy priority is to adopt a comprehensive fiscal consolidation plan to place public debt on a sustainable path over the medium term, while supporting near-term growth.

“A longer [than expected] shutdown could have sizeable adverse growth implications. A failure to promptly raise the debt ceiling could also adversely affect financial markets and economic activity, with spillovers to the rest of the world.”

Business calls on Abbott to raise Chinese investment threshold

A number of leading business groups are calling on the federal government to increase the Foreign Investment Review Board threshold for Chinese investments to $1 billion.

“The Business Council encourages this by supporting an increase in the threshold for FIRB approval of private foreign investment to the same level already enjoyed by the US and New Zealand, recognising that foreign investment underpins a stronger Australian economy,” BCA chief executive Jennifer Westacott says.

“It is difficult to say, ‘We want all of your trade but we are not going to give you the same treatment as New Zealand or the United States’,” says Australia China Business Council national chairman Frank Tudor.

Warrnambool Cheese and Butter recommends Canadian bid

Warrnambool Cheese and Butter is recommending its shareholders accept a $390 million takeover bid from Canadian food giant Saputo over a rival bid from Australian dairy company Bega.

“Saputo’s offer underscores the strategic value of WCB’s assets and vindicates the board’s decision to reject Bega’s inadequate, highly conditional offer,” he said in the statement.

“Saputo’s all cash offer provides greater certainty to WCB shareholders and substantial premium for their WCB shares.”

Overnight

The Dow Jones Industrial Average is down 1.07% to 14776.53. The Aussie dollar is at US94.28 cents.