2nd Sep 2022 10:59
(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Starbucks named outgoing Reckitt Benckiser Chief Executive Officer Laxman Narasimhan as the successor to longtime boss Howard Schultz. Earlier Thursday, Reckitt announced Narasimhan was stepping down to relocate back to the US and named former British American Tobacco chief Nicandro Durante to step into the role on an interim basis. Starbucks was able to clear up where Narasimhan was heading, confirming he will join the firm on October 1. He will work with Starbucks interim CEO Schultz through April 1, 2023, when he will assume the CEO role and join the company's board. Starbucks noted Schultz "will remain closely involved with the company" after he steps back from interim CEO duties, and will remain on the company's board. Having stepped down in 2018, Schultz had returned in April to serve as interim CEO during the search for a new leader. Schultz, who first joined the company in 1982, grew Starbucks from a small Seattle coffee chain into a global juggernaut. Reckitt had announced Narasimhan's surprise departure earlier on Thursday, citing "personal and family reasons".
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Microsoft responded to news that the UK Competition & Markets Authority may progress its probe into its purchase of Activision Blizzard into a phase two investigation. Microsoft said it will continue to engage with regulators with "a spirit of transparency and openness" as they review its acquisition. It argued that a "thorough review" will show that its acquisition of Activision will "benefit the industry and players." "We've heard that this deal might take franchises like Call of Duty away from the places where people currently play them. That's why, as we've said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere. We will continue to enable people to play with each other across platforms and across devices," the firm said.
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The Competition & Markets Authority confirmed it has cleared NortonLifeLock's acquisition of its London-listed cybersecurity peer, following an in-depth merger investigation. Tempe, Arizona-based NortonLifeLock had agreed, back in August 2021, to buy Prague-based Avast in a cash-and-shares deal worth USD8.6 billion at the time. Avast currently has a market capitalisation of GBP7.44 billion, about USD8.61 billion. In March 2022, the UK's CMA referred the merger to a phase 2 investigation, after identifying competition concerns during an initial phase 1 investigation. Both companies offer cyber safety software to consumers under a variety of different brands. Products include antivirus software, privacy software and identity protection software. In early August, the the CMA said it had provisionally cleared the deal, finding that the enlarged firm still faces stiff competition from McAfee, Microsoft and others. On Friday, the CMA confirmed this view and gave the deal the green light.
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IKAV, a Germany-based energy asset manager, said it will buy Californian oil producer Aera Energy from Shell and Exxon Mobil. Aera is a joint venture which is 52% owned by Shell and 48% by Exxon. Both energy firms confirmed they will sell their Aera interest to IKAV. Shell is selling its 52% stake for USD2 billion in cash, with additional contingent payments based on future oil prices. Financial details of Exxon's share to Ikav were undisclosed. Both Shell and Exxon expect the sale to close in the fourth quarter of 2022. California-based Aera Energy produced 95,000 barrels of oil equivalent per day in 2021.
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Shell Chief Executive Ben van Beurden is set to leave his role next year after almost 10 years leading the oil major, according to Reuters. According to two company sources, plans for Beurden's replacement are underway, with a succession committee, led by Chair Andrew Mackenzie, having met "several times in recent months", Reuters reported. Among the potential candidates are Wael Sawan, Shell's head of integrated gas & renewables, and Huibert Vigeveno, the head of its downstream refining operations. Chief Financial Officer Sinead Gorman, who was promoted to the role in the spring, and Zoe Yujnovich, head of upstream are also in the running, the sources said.
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Emerging markets investment manager Ashmore said assets under management were hit by "widespread risk aversion" in the second half of its financial year. Assets under management fell to USD64.0 billion as at June 30 from USD94.4 billion a year before. This 32% decline was due to negative investment performance of USD16.6 billion and net outflows of USD13.5 billion. "The combination of geopolitical tension, high inflation figures and central banks tightening monetary policy, including the Fed in the second half of the year, with the consequent negative impact on market levels, meant that investor risk appetite was markedly lower as the period developed," it said, adding that mood was further soured by the war in Ukraine. Full-year pretax profit tumbled to GBP118.4 million from GBP282.5 million, as management fees fell to GBP247.0 million from GBP276.4 million. "Second-half market weakness resulted in GBP49.9 million unrealised mark-to-market loss on seed capital investments," it said, leading to the drop in profit. Still, Ashmore maintained the year's dividend at 16.90 pence, having declared an unchanged final payout of 12.10p.
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Deutsche Lufthansa has cancelled almost all of its scheduled flights for Friday as its pilots carry out industrial action. Around 130,000 passengers on more than 800 flights from the airline's hubs in Frankfurt and Munich have been affected. Passengers were asked not to travel to the airport, but to switch instead to the train or rebook flights on another day. Lufthansa subsidiaries such as Swiss, Austrian, Brussels and Eurowings are not affected by the strike and will be operating as scheduled, the company said. Lufthansa flights departing from outside Germany will take place, provided the aircraft and crews are already abroad.
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Ryanair said passenger numbers in August were up 52% on a year before, rising to 16.9 million from 11.1 million. Load factor also showed a significant improvement, growing to 96% from 82%. August's traffic figure was slightly higher than the July number of 16.8 million.
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The US Centers for Disease Control & Prevention recommended Covid-19 booster shots from Pfizer and Moderna targeting the Omicron variant, clearing the way for the administration of the shots. This new generation of anti-Covid vaccines targets both the original strain of coronavirus and the BA.4 and BA.5 lineages, the subvariants of Omicron that are causing the most cases in the US. The Pfizer-BioNTech shot is recommended for people 12 and older and Moderna's for those 18 years and up. "The updated Covid-19 boosters are formulated to better protect against the most recently circulating Covid-19 variant. They can help restore protection that has waned since previous vaccination and were designed to provide broader protection against newer variants," CDC Director Rochelle Walensky said in a statement.
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Broadcom reported a record performance for the third quarter of its financial year, with strong demand across cloud and service providers fostering confidence for the year as a whole. For the three months ended July 31, the San Jose, California-based semiconductor manufacturer posted net income of USD3.07 billion, up 63% from USD1.88 billion the same period a year before. Diluted earnings per share increased 21% to USD7.15 from USD5.93, on revenue which grew 25% year-on-year to USD8.46 billion from USD6.78 billion. For the nine-month period, net income hiked 71% to USD8.14 billion from USD4.75 billion a year prior, on revenue which grew 21% to USD24.27 billion from USD20.04 billion. Looking ahead, Broadcom expects revenue for the fourth quarter ending October 30 to reach USD8.9 billion, reflecting an increase from USD7.41 billion the same period a year prior.
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MARKETS
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The dollar was strong heading into the key US nonfarm payrolls report for August, rising above JPY140. Consensus, according to FXStreet, expects the US economy to have added 300,000 net new jobs in August, slowing from the 528,000 added in July. The US unemployment rate is expected to remain unchanged at 3.5%, according to Lloyds Bank, while it expects annual earning growth to edge up to 5.3% in August from 5.2% in July.
The jobs report is due 1230 GMT, an hour before the Wall Street open, which is currently called flat. Starbucks was up 0.6% in pre-market activity, having closed up 1.6% on Thursday. In London, Reckitt was up 1.9%, having lost 4.8% on Thursday.
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CAC 40: up 0.6% at 6,068.15
DAX 40: up 1.3% at 12,796.67
FTSE 100: up 0.6% at 7,189.41
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Hang Seng: closed down 0.7% at 19,452.09
Nikkei 225: closed marginally lower, down 10.63 points at 27,650.84
S&P/ASX 200: closed down 0.3% at 6,828.70
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DJIA: called marginally higher, up 2.00 points
S&P 500: called marginally higher, up 0.75 point
Nasdaq Composite: called marginally lower, down 5.00 points
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EUR: down at USD0.9975 (USD1.0044)
GBP: up at USD1.1551 (USD1.1534)
USD: up at JPY140.35 (JPY139.94)
Gold: up at USD1,704.81 per ounce (USD1,694.00)
Oil (Brent): up at USD94.90 a barrel (USD92.53)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Eurozone factory gate inflation edged up unexpectedly in July, new data from the EU statistical office showed. According to Eurostat, the producer price index for the eurozone rose by 37.9% in July from a year before. This was higher than FXStreet-cited consensus, which expected the annual inflation reading to come in at 35.8%. PPI inflation in June was upwardly revised to 36.0% from 35.8%. On a monthly basis, producer prices rose 4.0% in July in the Eurozone, picking up pace from the upwardly revised 1.3% rise seen in June. The figure also exceeded consensus estimates of 2.5%.
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Germany's trade surplus narrowed in July as exports fell, data from Destatis showed. The trade balance was EUR5.4 billion in July, down from EUR6.2 billion in June. Exports fell 2.1% month-on-month, outstripping an import decline of 1.5%. Annually, exports rose 14% while imports grew 29%. Destatis highlighted that exports to Russia fell by 15% month-on-month and imports fell by 17%.
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The US said that a new response from Iran on reviving a landmark nuclear deal was "not constructive," a day after European mediators were hopeful at finally crossing the finish line. It is the latest in a back and forth between the adversaries via the EU, which in August broke a deadlock after a year and a half of slow-moving diplomacy. The EU put forward on August 8 what it called a final text to restore the 2015 nuclear accord, which was trashed by former US president Donald Trump. Iran proposed changes to it – largely accepted by the Europeans – to which the US issued a response through the mediators. The US has declined to discuss details publicly but disputes include Iran's insistence on the UN nuclear watchdog closing a probe of three undeclared sites suspected in nuclear work before the 2015 nuclear deal. If President Joe Biden returns to the deal, the US would ease sanctions in return for Iran accepting stringent restrictions on its nuclear program.
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US President Joe Biden took fierce aim at Donald Trump and his "extremist" supporters, labeling them enemies of American democracy in a prime-time address that sought to fire up voters ahead of key midterm elections. Speaking in Philadelphia, the cradle of US democracy, the president launched an extraordinary assault on those Republicans who embrace Trump's "Make America Great Again" ideology – and urged his own supporters to fight back. "Donald Trump and the MAGA Republicans represent an extremism that threatens the very foundations of our republic," thundered Biden, speaking near the spot where the Declaration of Independence and the US Constitution were adopted more than two centuries ago. "They embrace anger. They thrive on chaos. They live not in the light of truth but in the shadow of lies."
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By Tom Waite; thomaslwaite@alliancenews.com
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