30th Sep 2021 11:00
(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Shares in life sciences business Oxford Nanopore Technologies soared in conditional dealings, following its float on the Main Market of the London Stock Exchange. Oxford Nanopore priced its initial public offering at 425 pence per share, giving a market capitalisation of around GBP3.4 billion. Conditional trading began on Thursday, and the shares were up 43% from the issue price at 608.70p, growing the market cap to about GBP4.84 billion. Unconditional dealings begin on October 5. Oxford Nanopore issued 82.4 million new shares, raising about GBP350 million for the company. Another GBP524 million was made by selling shareholders such as IP Group. The Oxford University spin-out is a technology commercialisation specialist focused on DNA and RNA strand sequencing.
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Guinness brewer Diageo said it has made a strong start to financial 2022, with organic net sales momentum across all regions. The spirits and beer company said this reflected "excellent execution" as it benefited from resilience in off-trade and continued recovery in the on-trade. However, Diageo said it expects near-term volatility to remain, including the potential future waves of Covid-19. Diageo said its North American business was performing strongly, despite some supply chain constraints, reflecting resilient consumer demand. Its business in Europe was recovering ahead of expectations.
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Prudential said it expects to receive about GBP1.77 billion from Hong Kong public offer and international placing. The London-based insurer and asset manager on Monday last week said it is planning to issue shares worth 5% of its share capital. The money will be used to redeem USD2.25 billion high-coupon bonds, which Prudential said will improve its financial flexibility to invest in Asia and Africa following the sale of the US business this year. At the same time, it said it wanted to widen its Asian shareholder base. The new shares were priced at HKD143.80 each, equivalent to GBP13.52. The 6.5 million shares initially available under the public offer have been over-subscribed, Prudential said.
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3i Group said Chair Simon Thompson will not seek re-election at the company's 2022 annual general meeting. 3i Group said David Hutchison, currently senior independent director and chair of 3i's valuations committee, will become non-executive chair following the announcement of its half-year results, which is expected to take place on November 11.
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boohoo shares slumped 11% as the UK-based online fashion retailer not only warned that Covid-19 is still hitting consumer demand, but it also cautioned on rising costs as inflationary pressures accelerate. Profit in the six months to the end of August dropped by almost two-thirds, despite revenue climbing as sales reaped the rewards of market share gains in the US and UK. Revenue during the period rose 20% year-on-year to GBP975.9 million from GBP816.5 million. Compared to two years earlier, so before the onset of the pandemic, the fast fashion firm's revenue was up 73% from GBP564.9 million.
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Regeneron Pharmaceuticals and Roche Holding said a drug cocktail the pair have developed "significantly" lowers viral load in some hospitalised Covid-19 patients. The study, part of the UK's 'Recovery' trial, met its primary endpoint. Covid-19 sufferers receiving both casirivimab and imdevimab saw "significantly reduced viral load within 7 days of treatment". The study was conducted on hospitalised patients who did not need mechanical ventilation In addition, those taking the drug cocktail had a reduced risk of death by day 29. In the general population, the risk of death fell by 36% while in those that were seronegative at baseline, meaning they registered a negative Covid test, the reduced risk of death was 56%. The US Food & Drug Administration is mulling whether to add hospital treatment to its authorisation for the drug cocktail, Regeneron explained.
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Walgreens Boots Alliance is considering an acquisition of Evolent Health, an Arlington, Virginia-based pharmaceutical firm which is apparently under investor pressure to consider a sale, Bloomberg reported on Wednesday. Evolent runs a platform which helps providers such as hospitals and doctors manage their costs, as well as improve and simplify administration. Shares in Evolent Health closed up 7.2% at USD28.94 on Wednesday in New York, giving the company a market capitalisation of USD2.53 billion. According to people familiar with the matter, the pharmaceutical retailer has been in talks with Evolent concerning a potential takeover, however there is no certainty that any deal will be formed. In August 2020, activist investor Engaged Capital LLC revealed a near 10% interest in Evolent, and had pushed the company to explore new ways to create value, including a partial or full sale.
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MARKETS
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European shares were rising on Thursday after a mostly positive Asian session, though both Hong Kong and Tokyo ended lower. Wall Street was called higher. Investor concerns about the debt problems of China's Evergrande and a looming US government shutdown were receding. "While the potential collapse of Chinese property firm Evergrande matters, it doesn't signal a 'Lehman moment' that might spark global financial turmoil," commented Oxford Economics. "Its main effects are likely to be contained within China, with any global spillovers more likely to spread through the real economy than financial channels."
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CAC 40: up 0.6% at 6,598.44
DAX 40: up 0.2% at 15,396.91
FTSE 100: up 0.5% at 7,143.82
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Hang Seng: closed down 0.4% at 24,575.64
Nikkei 225: closed down 0.3% at 29,452.66
S&P/ASX 200: closed up 1.9% at 7,332.20; Orica rises 15%
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DJIA: called up 0.7%
S&P 500: called up 0.7%
Nasdaq Composite: called up 0.7%
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EUR: soft at USD1.1605 (USD1.1618)
GBP: flat at USD1.3438 (USD1.3434)
USD: up at JPY111.95 (JPY111.85)
Gold: flat at USD1,732.68 per ounce (USD1,732.75)
Oil (Brent): steady at USD79.02 a barrel (USD79.09)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China has urged banks to steady the housing market and avoid speculation as fears mount that Evergrande's debt crisis could spill over into the property sector. Saddled with more than USD300 billion in liabilities that it is struggling to repay, the Chinese property developer's potential collapse poses systemic risks for the national and global economy. At a Wednesday meeting, the People's Bank of China said the country's financial sector must meet the goals of "stabilising land and housing prices" and "insist on not using real estate as a short-term economic stimulus," according to an online statement. The central bank also stressed that "houses are used for living, not speculation". The readout of the meeting with the banking and insurance regulatory commission did not specifically mention Shenzhen-based Evergrande.
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The US Senate said it will vote on a stopgap funding bill Thursday to prevent a government shutdown with just hours to spare, as lawmakers stare down a number of deadlines with massive stakes for the economy and President Joe Biden's sweeping domestic agenda. The coming days are expected to be the most critical yet of Biden's presidency, as he negotiates the tricky passage of two giant spending bills and a fix to lift the debt ceiling without the support of Republicans. But the most urgent priority is funding for federal agencies, and Senate Democrats say they will pass temporary legislation early Thursday, hours before the money runs out, to keep the lights on until December 3. The bill, which includes USD6.3 billion to help Afghan refugees and USD28.6 billion in disaster aid, is expected to have broad cross-party support and should advance from the House of Representatives to Biden's desk soon after the Senate gives its green light.
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The eurozone's unemployment rate edged lower in August, according to figures from Eurostat. The jobless rate for the single currency area declined to 7.5% from 7.6% in July. This was a marked improvement from 8.6% a year earlier. At 7.5%, August's figure was in line with consensus cited by FXStreet. Unemployment numbers dropped by 224,000 in the eurozone, Eurostat figures showed.
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Germany's unemployment rate was unchanged in September, according to figures from the nation's federal agency for work. Numbers from the Bundesagentur fur Arbeit showed the seasonally-adjusted unemployment rate was steady at 5.5% in September, exactly where it stood in August.
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France's inflation rate accelerated though at a slower pace than expected in September. According to estimates from INSEE, France's inflation rate quickened to 2.1% yearly in September, from 1.9% in August. Consensus, cited by Trading Economics, had forecast an acceleration to 2.2% in September, however. On a monthly basis, consumer prices declined 0.2% in September, having risen 0.6% in August. A lesser monthly decline of 0.1% was predicted.
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The UK economy posted robust growth in the second quarter of 2021 following the easing of coronavirus restrictions, the Office for National Statistics said. In the three months to June, UK gross domestic product grew 24% year-on-year, reversing a 6.1% annual contraction in the first quarter. The latest reading beat market consensus, cited by FXStreet, of 22% economic growth. On a quarterly basis, UK GDP expanded 5.5% in the second quarter, which was revised up from a preliminary reading of 4.8%. The UK economy rebounded from a 1.4% quarterly contraction in the previous three-month period.
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UK house price growth slowed in August as the government's stamp duty holiday draws to a close, according to mortgage lender Nationwide. On an annual basis, the Nationwide UK house price index rose 10% in September, slowing from a rise of 11% in August. The September reading missed market consensus, cited by FXStreet, for a rise of 10.7%. Prices rose 0.1% in September month-on-month, slowing sharply from a 2.1% increase in August from July, and missed the forecast of 0.6%. The average price of a UK house was GBP248,742 in September, marginally lower from GBP248,857.
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China's manufacturing activity was steady in September, according to the latest Caixin purchasing managers' index figures on Thursday. The manufacturing PMI registered 50.0 points in September, improved from 49.2 points in August. The 50 point threshold is what separates growth from decline, so the latest figure suggests operating conditions in the Chinese manufacturing sector were stable in September. The September reading was the second-lowest over the past 17 months, Caixin added. Inflationary pressures gathered pace, with input costs accelerating. It was the quickest rate of inflation seen in four months, the survey said.
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Chinese factory activity contracted in September to the lowest level since February 2020, when coronavirus lockdowns crippled the economy, according to a separate indicator on Thursday, as the country faces waves of power outages and fears over instability in the real estate sector. The PMI slipped to 49.6 from 50.1 in August, the National Bureau of Statistics said. It is the first time China's PMI has contracted since February last year, when the domestic economy was battered by prolonged factory shutdowns caused by the coronavirus pandemic. Factory suspensions and power blackouts have already affected at least 17 provinces in recent months – a situation further exacerbated by tight coal supply, leading to sky-high prices.
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Retail sales figures in Japan came in well-below forecasts in August, figures on Thursday showed. According to the Ministry of Economy, Trade & Industry, retail sales fell 4.1% monthly in August, massively undershooting forecasts of 1.3% growth. In July, retail sales had increased 1.0%. Annually, retail sales in Japan slumped 3.2% in August, following growth of 2.4% in July. August's annual decline was steeper than the 1% fall that was forecast, according to consensus cited by FXStreet.
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Japan's industrial production fell for the second-month running in August, as the sector struggles with component shortages, particularly in semiconductors, which has hit car makers. The Ministry of Economy, Trade & Industry said industrial output in August was 3.2% lower monthly, following a 1.5% fall in July. The monthly decline fell short of expectations of a smaller 0.5% fall. Year-on-year, however, industrial output was 9.3% higher in August, topping forecasts of 4.3% growth and following a 12% hike in July.
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US and EU officials on Wednesday pledged to join forces to deal with a host of technology and trade issues to secure semiconductor supplies and counter China's dominance. The inaugural meeting of the Trade and Technology Council laid out a lengthy to-do list, but perhaps the most significant achievement was the symbolic restoration of good relations after the damage suffered under the administration of former president Donald Trump. The high-level meetings were held as industries worldwide grapple with shortages of crucial semiconductors that are harming manufacturing, including of automobiles, and pushing prices higher. But the summit also set its sights on forced labour, artificial intelligence, digital privacy and protecting human rights activists online, as well as monitoring foreign investment in key sectors and controlling exports of sensitive products.
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By Tom Waite; [email protected]
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