5th Oct 2022 11:09
(Alliance News) - The following is a summary of top news stories Wednesday.
----------
COMPANIES
----------
Tesco reported steady growth in interim trading, but profit was stung by a hefty impairment charge, which is the cost of some price reductions due to increased competition from low-budget grocers Aldi and Lidl. For the 26 weeks ended August 27, the supermarket said revenue rose 6.7% to GBP32.46 billion from GBP30.42 billion the year before. Fuel sales surged 39% to GBP4.28 billion from GBP3.09 billion. Excluding fuel sales and VAT, revenue rose 3.1%. Pretax profit, however, shrunk 64% to just GBP413 million from GBP1.14 billion. It recognised a GBP626 million non-cash non-current asset impairment charge "related to an increase in discount rates this year", it explained.
----------
Anglo American's rough diamond sales inched up on an annual basis, but fell sharply compared to the previous sales cycle as the temporary closure of polishing factories for the Diwali holidays in India started to bite. Provisional rough diamond sales value for the eighth sales cycle was up slightly by 1.6% to USD500 million from USD492 million in the same cycle last year. But sales in the latest cycle dropped by 22% from USD638 million in the seventh cycle. The rough diamond sales for cycle eight represents the expected sales value for September 19 to October 4. Cycle seven actual sales value represents sales between August 15 and August 30.
----------
Elon Musk has offered to push through with his buyout of Twitter at the original agreed price, reports said Tuesday, just weeks before the opening of a bitter court case over his effort to withdraw from the deal. US media said the world's richest man had sent a letter to Twitter vowing to honour the takeover price of USD54.20 a share – prompting a surge in the share value of the social network that triggered a suspension of trading. The latest twist in the long-running buyout saga comes less than two weeks before the start of the high-stakes trial instigated by Twitter in an effort to hold the Tesla Inc chief to the USD44 billion deal he signed in April. Musk was slated to be deposed by Twitter attorneys later this week in preparation for the trial.
----------
GSK said its drug for metastatic non-squamous non-small cell lung cancer Jemperli, or dostarlimab, is advancing to a phase 3 trial following positive results. Jemperli is an antibody approved for the treatment of endometrial cancer in the US and EU. Non-squamous means flat cells do not look like a fish scale under a microscope. Citing its phase 2 Perla study, the Brentford, west London-based pharmaceuticals firm said that the safety and tolerability profile of dostarlimab was consistent with previous clinical trials of similar regimens. Further, in its Costar phase 2/3 trial, now advancing to phase 3, GSK stated that the trial met its pre-specified expansion criteria per protocol.
----------
MARKETS
----------
European stocks were hurting on Wednesday, with Wall Street also pointed to a disappointing start, following a series of poor PMI readings. Investors are also keeping an eye on the OPEC+ meeting later today.
"The bullish enthusiasm sparked at the beginning of the week, after the Reserve Bank of Australia brought hopes of a peak in monetary tightening, is slowly fading and investors now need to witness confirmation from other central banks to fuel the rally further," Pierre Veyret, technical analyst at ActivTrades, said.
"That said, the situation isn't really threatening yet from a technical point of view as stock indices remain above key support levels so far, highlighting the 'wait and see' trading stance today."
----------
CAC 40: down 0.6% at 6,002.54
DAX 40: down 0.7% at 12,585.12
FTSE 100: down 1.4% at 6,989.90
----------
Hang Seng: closed up 5.9% at 18,087.97
Nikkei 225: closed up 0.5% at 27,120.53
S&P/ASX 200: closed up 1.7% at 6,815.70
----------
DJIA: called down 0.8%
S&P 500: called down 0.8%
Nasdaq Composite: called down 0.8%
----------
EUR: down at USD0.9934 (USD0.9970)
GBP: down at USD1.1408 (USD1.1438)
USD: down at JPY144.38 (JPY144.40)
Gold: down at USD1,712.31 per ounce (USD1,725.92)
Oil (Brent): down at USD91.41 a barrel (USD91.77)
(currency and commodities changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Major oil producers led by Saudi Arabia and Russia were set to meet Wednesday as reports said they were mulling an output cut of up to two million barrels per day in a bid to prop up slumping prices. If implemented, it would be the first such major cut since a landmark curb on production at the start of the Covid pandemic. Energy prices soared after Russia invaded Ukraine earlier this year, pushing inflation to decades-high levels that have put pressure on economies across the world. But they have fallen in recent months on concerns over dwindling demand and a slowdown in the global economy. The 13 members of the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and their 10 allies headed by Russia will hold their first in-person meeting since March 2020 at the group's headquarters in Vienna.
----------
The UK's private sector suffered its fastest decline in output since the start of 2021 in September. The seasonally adjusted S&P Global/CIPS UK composite purchasing managers' index slipped to 49.1 in September from 49.6 in August. Market consensus, according to FXStreet, had predicted a reading of 48.4. September's print marks the second straight month of contraction. Any figure below 50.0 denotes contraction, and a number above shows growth. "Both manufacturers and service providers indicated lower volumes of incoming new work in September, with the seasonally adjusted index measuring new business volumes across the private sector as a whole the lowest for 20 months," S&P Global explained. The headline seasonally adjusted S&P Global/CIPS UK services PMI business activity index inched lower to 50.0 in September from 50.9 in August.
----------
The World Trade Organization dramatically lowered its global trade forecast for 2023, as Russia's war in Ukraine and other shocks take their toll on the world economy. WTO economists said they now expect to see global merchandise trade volume grow 3.5% this year – slightly higher than previously expected – and then grow by only 1% in 2023, dramatically down from the 3.4% forecast in April. They now expect global GDP to swell by just 2.3% next year, down from the previous forecast of 3.2%.
----------
The eurozone's private sector deteriorated further in September, with a decline seen across manufacturing and services sectors. The S&P Global eurozone composite PMI fell to a 20-month low of 48.1 in September, from 48.9 in August. This was broadly in line with a previous flash estimate of 48.1. Any figure above 50.0 denotes growth, and a number below suggests decline. Thus, the contraction in the eurozone's private sector worsened. "Business activity has now deteriorated for three successive months, indicating falling [gross domestic product], with the rate of decline gathering momentum over the third quarter. A worsening of business expectations for the months ahead and a worryingly steep loss of orders currently point to an even sharper decline in GDP in the fourth quarter," said Chris Williamson, chief business economist at S&P Global Market Intelligence
----------
German exports rebounded in August thanks to strong demand from the US, but analysts warned that the outlook for Europe's top economy remained gloomy. Germany exported EUR133.1 billion worth of goods in August, up 1.6% month-on-month, according to seasonally-adjusted figures from federal statistics agency Destatis. In July, exports had plunged by 2.1%. The increase beat analyst expectations and was mainly driven by a 12% jump in US demand for "made in Germany" goods. But shipments to fellow EU countries fell, as the continent grapples with soaring inflation and skyrocketing energy prices in the wake of Russia's war in Ukraine. Higher global prices and a weaker euro pushed up the cost of German imports in August, which rose by 3.4% to EUR131.9 billion, narrowing the country's trade surplus to EUR1.2 billion.
----------
Temporarily capping the price of gas - along with price negotiations with gas suppliers and joint purchases - should bring down energy prices in the EU, European Commission President Ursula von der Leyen said. "Introducing a cap on gas overall is a temporary solution" and should be "designed properly to ensure security of supply," von der Leyen said at the European Parliament in Strasbourg, France. As a first step, gas used to generate electricity could be capped, von der Leyen said. "But I think we also have to have a look at gas prices beyond the electricity market." Limiting gas prices should help reduce price volatility, she noted, without providing additional details on the design of the proposed price caps.
----------
Growth in the Australian private sector sped up slightly in September. The S&P Global composite PMI inched up to 50.9 points in September, rising from 50.2 in August. It was the eighth consecutive month of improving operating conditions. Any figure above 50.0 denotes growth and a number below, suggests decline. "Firms in both the service and manufacturing sector registered stronger expansions in activity. Similarly, composite demand increased in September and at an accelerated pace. Private sector firms mentioned that the sustained easing in Covid-19 related disruptions supported strengthening underlying demand conditions," S&P Global said.
----------
Japan's private sector returned to growth in September, as stronger service sector growth offset a slowdown in manufacturing. The S&P Global au Jibun Bank composite PMI rose to 51.0 points in September from 49.4 in August, back above the 50.0 mark that separates growth from contraction. This was slightly above the previous flash estimate of 50.9 in September. "The increase in business activity was driven by the service sector as goods production declined for a third straight month. Overall, the pace of growth was modest despite being the quickest in three months," S&P Global said. Services activity also improved, with the services PMI rising to 52.2 in September from 49.5 in August.
----------
IMF chief Kristalina Georgieva said the Bank of England correctly moved swiftly in reaction to Britain's budget proposal late last month – a plan which included a now-scrapped tax cut for the wealthy and send the pound dramatically lower. She said it is important to avoid a contradiction between government and central bank policies. "We cannot have fiscal policy working against monetary policy by providing untargeted policy support. It has to go to the most vulnerable segments of society," she said in an interview with Al Arabiya.
----------
UK Home Secretary Suella Braverman broke with government policy to call for the UK to leave the European Convention on Human Rights as she urged a crackdown on illegal migration. She said it was her personal view and acknowledged government policy was to work within the boundaries of the convention, which is interpreted by the European Court of Human Rights. But it is another sign of indiscipline within Liz Truss' administration at the Tory conference in Birmingham. A senior government source told the PA news agency: "As Suella acknowledged, her personal views are contrary to government policy and if she wishes to make those views known within government she should do so in a more appropriate setting."
----------
Kwasi Kwarteng has stressed his attachment to "compassionate conservatism" while refusing to comment on the row over raising benefits in line with inflation. The chancellor also told a Conservative Party conference fringe event that things were going "very well" since he took on the job, and suggested his party could win the next general election despite Labour's massive lead in the polls. Amid bitter infighting at the annual gathering, members of the Cabinet were publicly urging Liz Truss to raise benefits in line with inflation rather than the lower measure of wages. In a possible hint of his opinion on the matter, Kwarteng said: "Compassionate conservatism I thought was a good phrase and it's something that I always think about in terms of policy and I think we do have a duty to look after very vulnerable people."
----------
Moscow's much-criticised move to annex four Ukrainian provinces cleared its final domestic hurdle on Wednesday, as Russian President Vladimir Putin signed a law passed this week by lawmakers. The legislation finalises - under Russian law - the annexation of Donetsk, Kherson, Luhansk and Zaporizhzhia. However, Ukraine opposes the move and much of the international community has condemned the takeover as illegal. Ukrainian forces are in the midst of a counteroffensive that is reclaiming parts of the territory the Kremlin just claimed. Putin's signature finalises the annexation, reported news agency TASS. Although Russia does not physically control all of the territory, the move makes the regions Russian territory in the eyes of Moscow and raises the risks that it could interpret Ukraine's counteroffensive as an attack on Russian territory.
----------
By Paul McGowan; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.