Obama talks up recovery, shares gain ground: Economy roundup

US President Barack Obama has said that the country’s economy will recover from its recession, but that it will take “time…and patience”.

In the new President’s second televised news conference, Obama fielded questions about his Administration’s stimulus package and the budget, which will see the country’s deficit grow to $US1.75 trillion.

“We will recover from this recession,” he said.

“But it will take time, it will take patience, and it will take an understanding that when we all work together, when each of us looks beyond our own short-term interests to the wider set of obligations we have toward each other – that’s when we succeed.”

He also claimed the US Government’s spending plan to help boost the economy is working, saying that “we are beginning to see signs of progress”.

Obama also answered questions about the Administration’s budget, which he claims will help shield the country from another financial crisis. But the $US1.75 trillion budget has been critcised by both sides of Congress for its size.

“The budget I submitted to Congress will build our economic recovery on a stronger foundation, so that we don’t face another crisis like this 10 or 20 years from now,” he said.

Obama has also discussed the Government’s plan to shore up financial institutions with billions of toxic debts on their balance sheets, which was announced earlier this week.

Treasury Secretary Timothy Geithner has said the plan is the best alternative to seeing financial institutions collapse, and will prevent a “longer, deeper recession”.

But while overseas stocks rose nearly 7% yesterday after the plan was revealed, the Australian sharemarket has today opened lower after pessimism about the plan crept across Wall Street.

The benchmark S&P/ASX200 has since rallied, and is now up 27.3 points or 0.76% to 3607.3 at noon AESDT. The Australian dollar is also holding steady at $US70 cents.

Westpac shares have gained 2.5% to $19.61, while NAB has grown 2.6% to $20.34. Commonwealth Bank shares have risen 1.9% to $35.05 as ANZ has gained 1.2% to $15.68.

Overnight the Dow Jones Industrial Average closed down 115.65 points or 1.49% to 7660.21.

Meanwhile, OZ Minerals lenders are now likely to extend a 31 March debt deadline following the Foreign Investment Review Board’s decision to take more time on the Minmetals $US1.8 billion rescue offer.

“OZ Minerals lenders will extend the deadline. Most of the banks are currently in the midst of getting their internal approvals,” an unnamed lender told Reuters.

ANZ says it will shift 100 jobs to Wellington as part of a scheme that will share call-centre loads between countries, but emphasises no jobs in Australia will be made redundant.

“Over time there will be 100 fewer roles in our Melbourne call centres and an equivalent increase in Wellington,” head of Australian operations Brian Hartzer told AAP.

“However this will be managed through natural attrition, which runs at around 30% annually in the call centre, rather than through redundancies.

“We know times are difficult, and we think this is a responsible way to make this change.”

Back overseas, inflation in Britain has grown more than one full percentage point above the Bank of England’s 2% target, but Governor Mervyn King says he expects it to fall.

“With a 28% fall in the exchange rate over 18 months, we clearly expected a good part of that to feed through the domestic price level,” King told a Parliamentary committee.

“But of course the big picture offsetting, the big downward pressure on inflation, is the degree of spare capacity that has built up.”