19th Jun 2020 11:20
(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Miner Rio Tinto launched a high-level review of its operations in Western Australia after the company blew up a 46,000-year-old Aboriginal heritage site to expand an iron ore mine. In announcing the move, Rio Tinto Chair Simon Thompson issued a formal apology to indigenous communities for the destruction on May 24 of ancient rock shelters in the Juukan Gorge in Western Australia's Pilbara region. "The decision to conduct a board-led review of events at Juukan Gorge reflects our determination to learn lessons from what happened and to make any necessary improvements to our heritage processes and governance," he said in a statement.
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John Wood Group remains focused on protecting margins after predicting a drop in first half revenue and adjusted earnings due to the "unique and unparalleled challenges" faced by the oil market from the Covid-19 pandemic. The Aberdeen, Scotland-based company expects to report revenue for the six months to June 30 of USD4.1 billion, down 14% from USD4.79 billion a year ago. Adjusted earnings before interest, tax, depreciation and amortisation is estimated between USD295 million and USD305 million, with operating profit before exceptional items to be around USD80 million to USD90 million. Adjusted Ebitda in the first half of 2019 totalled USD314 million and operating profit before exceptional items amounted to USD160 million. On a like-for-like basis, the FTSE 250-listed company expects first half revenue to be down around 11% and adjusted Ebitda 19% lower, with margins down 70 basis points. Net debt at June 30 is anticipated to reduce from USD1.43 billion at 2019-end following disposals in the first quarter of 2020.
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Hyve Group plans to run all its events scheduled in Shanghai from the end of July, as it also received its first insurance payment for cancelled events. The events organiser said that while events in Shanghai are currently set to run as planned, a lack of clarity in other markets outside China regarding restrictions on large gatherings has resulted in it cancelling of events previously just postponed. Hyve Group said that to date, it has submitted insurance claims for 17 events that have been cancelled, saying that it has now received a GBP7.4 million payment to cover some of the claims. It noted that the insurance cover for all events to the end of October is capped at GBP62 million. Hyve's financial year ends on September 30.
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Ferrexpo said a district court in Kiev, Ukraine, has prohibited the transfer of the company's 50% stake in Ferrexpo Poltava Mining. The Kiev court has placed the restriction on Ferrexpo AG Switzerland, the sole shareholder in Ferrexpo Poltava Mining. Ferrexpo AG intends to appeal against the court order. The Baar, Switzerland-based commodity trader and iron ore mining company clarified that it has no intention, and never has had any intention, to transfer its shareholding in Ferrexpo Poltava Mining, the company's iron ore unit in Ukraine. Ferrexpo's operations remain unaffected as the share freeze does not affect ownership of the shares but prohibits their transfer. The company believes the restriction is in connection with ongoing matters in Ukraine involving former chief executive Kostyantin Zhevago and Bank Finance & Credit, a commercial bank he owned until 2015.
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MARKETS
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London stocks are set to end the week on an upbeat note, climbing into the green after Asia ended the day on the front foot - shaking off concerns of a second virus wave.
"Strong crude prices and improved retail sales data is helping drive the FTSE 100 higher today, with tentative gains playing out despite fears over rising US Covid cases," IG Senior Markets Analyst Joshua Mahony said.
He continued: "European markets are hoping to end the week in a more positive fashion, with fears over the growth in US Covid-19 cases taking a back seat for the time being. A record rise in Californian cases sparked a decision to bring in a ruling to enforce face coverings in public places, but for the most part markets are only really likely to respond if combative measures come at the cost of business activity."
US futures were pointed higher.
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FTSE 100: up 68.07 points, or 1.1%, at 6,292.14
FTSE 250: up 112.81 points, or 0.6%, at 17,631.07
AIM ALL-SHARE: up 0.3% at 890.46
GBP: soft at USD1.2418 (USD1.2421)
EUR: soft at USD1.1217 (USD1.1220)
Gold: up at USD1,728.80 per ounce (USD1,721.16)
Oil (Brent): up at USD42.62 a barrel (USD41.20)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Retail sales in the UK partly rebounded in May from the record fall seen in April, the Office for National Statistics said. The volume of retail sales in May jumped 12% versus the previous month, when sales volume plunged 18%. In value terms, retail sales were 12% higher in May. Market consensus, according to FXStreet, was for a 5.7% volume rise on April. Despite May's strong rise, the ONS noted sales were still down 13% compared to February, before the coronavirus pandemic hit the UK. "The monthly growth rate in May 2020 is strong because of a combination of recent increasingly rapid growth in non-store retailing and a pick-up for non-food stores from the lowest levels ever experienced," the ONS said.
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UK public borrowing was larger than the country's entire economy in May. This is the first time this has happened, the ONS noted, since the financial year ending March 1963. The UK ended May with public sector borrowing at 100.9% of gross domestic product. Public sector debt ended May at GBP1.950 trillion, GBP173.2 billion higher than a year before. The 21% rise was the highest year-on-year jump recorded by the ONS since it started keeping records in 1993. "The coronavirus pandemic has had an unprecedented impact on borrowing. The GBP55.2 billion borrowed by the public sector in May is the highest monthly total on record," the ONS added. May's borrowing was about nine times higher than a year before, ONS said.
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Former Tory MP Andrew Tyrie has resigned as chair of the UK's competition watchdog, saying the job was limiting his efforts to push for reform. Tyrie, who has previously complained that the UK's competition law is not fit for the modern age, plans to leave the job at the Competition & Markets Authority in September this year after only two years in the role. He steps down after the CMA asked the government for greater powers, including the right to fine companies without going to court. Tyrie said: "The government asked me to take this work forward at great pace. I have done so. "I now want to make the case more forcefully for legislative and other reform – in Parliament and beyond – than is possible within the inherent limits of my position as CMA chairman." The former chairman of the powerful Commons Treasury Select Committee has been a strong proponent of changing the rules so that the CMA can go after technology companies who rip off customers.
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President Donald Trump warned that "complete decoupling" between the deeply intertwined US and Chinese economies remains a potential policy. "The US certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!" Trump tweeted. He wrote that he was responding to comments by his trade representative Robert Lighthizer, who has been at the forefront of trade war negotiations with Beijing.
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The US questioned China's credibility on reporting fresh coronavirus cases in Beijing and called for neutral observers to assess the extent of the outbreak. China has locked down the capital as it seeks to prevent a second wave of Covid-19, reporting 158 cases since a fresh cluster was detected last week. Secretary of State Mike Pompeo, an outspoken critic of China, urged greater transparency during talks Wednesday in Hawaii with senior Chinese official Yang Jiechi. "I would hope that their numbers and their reporting are more accurate than what we saw in the case of Wuhan and other places in the PRC," said David Stilwell, the top US diplomat for East Asia who accompanied Pompeo.
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China's top law-making body tabled a draft of a national security law critics fear will undermine the freedoms and autonomy promised to Hong Kong under the 'One Country, Two Systems' framework. The draft, currently in its first reading at the National People's Congress Standing Committee's 19th session in Beijing, will target acts of subversion, secession, terrorism, and "collusion with foreign powers," state media reported. The law is expected to pass in time for the Hong Kong Special Administrative Region Establishment on 1 July. The holiday marking Hong Kong's handover to China in 1997 has seen pro-democracy protests every year since the government's last attempt to introduce a national security law in 2003. Provisions in the draft allow for Chinese state security agencies to officially operate in Hong Kong.
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The euro area's current account surplus narrowed in April, data from the European Central Bank showed. The surplus in April was EUR14.41 billion, down by 47% from EUR27.37 billion in March. "Amid the coronavirus pandemic and the measures implemented to contain its spread, exports and imports of goods and services continued to decrease compared with the previous month and stood at significantly lower levels than in April 2019," the ECB said. In the 12 months to April, the current account surplus was EUR334 billion, compared with EUR329 billion in the year ended April 2019. Balance of goods fell by more than half to EUR13 billion from EUR32 billion recorded in March, ECB's numbers showed. Exports were down 22% month-to-month at EUR146 billion, with imports falling 14% to EUR133 billion. For the 12 months to April, the goods surplus was EUR329 billion, up 13%. Exports were 1.0% lower at EUR2.351 trillion, and imports down 3.0% to EUR2.022 trillion.
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The European Central Bank on Friday said it, and other major central banks, will reduce their US dollar swap operations owing to improving market conditions. The ECB, Bank of England, Bank of Japan and the Swiss National Bank will reduce the frequency of their US dollar operations to three times per week, rather than daily. The changes, made in consultation with the US Federal Reserve, will be effective from July 1. The move has been made "in view of the improvements in US dollar funding conditions and the low demand at recent 7-day maturity US dollar liquidity-providing operations".
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Germany's producer prices for industrial producers suffered in May, dragged down by energy prices, numbers from official statistics agency Destatis showed. Producer prices fell 2.2% annually in May, stretched from April's 1.9% year-on-year decline. Month-to-month, the decline slowed to 0.4% however, from April's 0.7% fall. The performance in May was slightly worse than forecast, consensus estimates, according to FXStreet, were for a 0.3% monthly decline and a 2.1% annual fall. The producer price index read 103.0 in May, from 103.4 in April. The index has declined every month since the January print of 105.3. Energy prices dropped 7.9%, a steeper plunge than April's 1.2% fall, with petroleum products falling 28% annually.
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Consumer prices in Japan declined 0.2% from a year earlier in May, a second successive fall due to plunging oil prices amid the Covid-19 pandemic, a government report showed. The reading was almost in line with the median forecast of a 0.1% decline by analysts surveyed by the Nikkei Business Daily newspaper. The core consumer price index, excluding fresh food, stood at 101.6 in May against a base of 100 for 2015, according to the Ministry of Internal Affairs and Communications. In April, consumer prices were also down 0.2%, the first fall in 40 months. The fall in inflation is a setback as the Bank of Japan started to introduce monetary easing measures seven years ago to pull the Japanese economy out of a deflationary spiral and achieve a 2% inflation goal within two years.
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