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(Alliance News) - Consumer price inflation in Germany ticked to a new record high in April, as expected, data from the Federal Statistical Office showed on Wednesday.
The annual inflation rate accelerated to 7.4% in April from 7.3% in March.
The rise in the consumer price index was in line with market consensus cited by FXStreet.
"The inflation rate thus reached an all-time high for the second month in a row since German reunification," said Georg Thiel, president of Destatis.
"In March 2022, the inflation rate jumped to 7.3%, the main reason being the development of energy product prices. What stands out in April 2022 is the above-average increases in food prices. This is where the impact of the war in Ukraine is becoming more and more visible."
Versus the previous month, consumer prices were 0.8% higher in April, matching March's 0.8% rise from February.
Destatis said: "Energy prices, in particular, have increased considerably since the war started in Ukraine and have had a substantial impact on the inflation rate. A similarly high inflation rate was last recorded in the former territory of the Federal Republic in autumn 1981 when mineral oil prices had sharply increased, too, as a consequence of the first Gulf war between Iraq and Iran.
"Additional factors are delivery bottlenecks due to interruptions in supply chains caused by the Covid-19 pandemic and the marked price increases at upstream stages in the economic process."
Energy prices were 35% higher year-on-year in April, with food prices rising 8.6%, also blamed on the Ukraine war. Stripping out energy and food costs, the annual inflation rate stood at 3.8% in April, about half the overall inflation rate.
On a harmonised basis, allowing for EU-wide comparison, annual inflation in Germany quickened to 7.8% in April from 7.6% in March.
It is a busy day for consumer price reports on Wednesday, with data already out from China showing consumer inflation rose at its quickest pace in nearly half a year, reflecting the growing costs of the country's zero-Covid curbs and high commodity prices.
April's consumer price index, a key gauge of retail inflation, rose more than expected at 2.1% year-on-year, picking up pace from the month before, said the National Bureau of Statistics.
This was due to "factors like the domestic epidemic and continued rise in international commodity prices", the bureau's senior statistician Dong Lijuan said in a statement.
Later Wednesday, a US inflation print for April is due at 1230 GMT.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,279.90
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Hang Seng: up 1.1% at 19,852.80
Nikkei 225: closed up 0.2% at 26,213.64
S&P/ASX 200: closed up 0.2% at 7,064.70
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DJIA: closed down 84.96 points, or 0.3%, at 32,160.74
S&P 500: closed up 9.81 points, or 0.3%, at 4,001.05
Nasdaq Composite: closed up 114.42 points, or 1.0%, at 11,737.67
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EUR: up at USD1.0559 (USD1.0533)
GBP: up at USD1.2334 (USD1.2300)
USD: down at JPY130.05 (JPY130.38)
Gold: up at USD1,849.20 per ounce (USD1,846.88)
Oil (Brent): flat at USD104.81 a barrel (USD104.75)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's key economic events still to come
0830 EDT US consumer price index
1030 EDT US EIA weekly petroleum status report
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UK Foreign Secretary Liz Truss has said the UK "will not shy away" from taking action on the Northern Ireland protocol after Prime Minister Boris Johnson indicated the situation was "now very serious". Truss said some proposals put forward by the EU during months of discussions on the post-Brexit treaty would "take us backwards" as she argued against introducing "more checks, paperwork and disruption". The Foreign, Commonwealth & Development Office said that, under EU proposals suggested in October, trading arrangements could worsen and everyday items could disappear from shop shelves in Northern Ireland.
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China's censors scrambled to wipe out online debate over its zero-Covid strategy on Wednesday after the World Health Organisation criticised the country's hardline approach to crushing the virus. China is the last major economy glued to a zero-Covid policy and enforces some of the most stringent virus controls anywhere in the world. On Tuesday WHO chief Tedros Adhanom Ghebreyesus urged China to change tack, saying the approach "will not be sustainable" in the face of new fast-spreading variants. The intervention prompted China's army of internet censors to race to snuff out his comments. Searches for the hashtags "#Tedros#" and "#who#" on the popular Weibo social media platform displayed no results, while users of the WeChat app were unable to share an article posted on an official United Nations account.
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BROKER RATING CHANGES
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RBC raises Ashtead to 'outperform' (sector-perform) - target 4,625 (4,950) pence
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Goldman Sachs raises Watches of Switzerland to 'buy' (neutral) - price target 1,330 (1,265) pence
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UBS cuts Virgin Money UK to 'neutral' (buy) - price target 160 (230) pence
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COMPANIES - FTSE 100
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Television broadcaster and programmer producer ITV said it had a "strong" first quarter, with revenue growing across the business. In the three months to March 31, total external revenue was up 18% to GBP834 million, with ITV Studios revenue up 23% to GBP458 million. Media & Entertainment revenue was up 13% to GBP545 million, aided by total advertising revenue rising 16%. Looking ahead, ITV noted its second and third quarters face tough advertising comparatives as a result of the European Championships last summer. Advertising revenue is expected to fall about 6% in the second quarter from a year prior, with June in particular to see a 9% drop.
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Contract caterer Compass saw a first-half revenue surge, driven by "notable" volume recovery in its Business & Industry and Education businesses. In the six months to March 31, pretax profit jumped to GBP632 million from GBP133 million the year before, as revenue rose 36% to GBP11.5 billion from GBP8.4 billion. Compass noted its underlying revenue in the second quarter was double the year prior and maintained a run rate above its pre-Covid levels. "We continue to recover strongly from the pandemic and have achieved the important milestone of revenue exceeding our pre-Covid level on a run rate basis. We have seen a notable improvement in Business & Industry and Education as employees return to the office and students to in-person learning," Chief Executive Dominic Blakemore said. Due to its strong performance in the first half, Compass is upping its organic growth guidance, which is now expected to grow about 30%, rising from previous expectations of 20% to 25% growth. On the back of the improved results, Compass restored its interim dividend at 9.4 pence per share and launched a GBP500 million share buyback programme for the 2022 calendar year.
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COMPANIES - FTSE 250
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Holiday operator Tui said it expects to return to "significantly positive" underlying earnings before interest and tax in its current financial year, amid a "more normalised" travel environment. Tui reported a pretax loss of EUR871.0 million for the financial half year that ended March 31, halved from EUR1.54 billion a year before. The Anglo-German company said it currently has EUR3.8 billion in available liquidity, even after starting to pay back some of the German state support that it received during the pandemic.
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Property investor LXi REIT has agreed to buy Secure Income REIT, through a share exchange offer. The merger will see Secure Income shareholders receive 3.32 new LXi shares. At LXi's closing price of 142.2 pence on Tuesday - the day before the deal was announced - this values Secure Income at GBP1.5 billion. LXi noted a partial cash alternative will be offered, where Secure Income shareholders can receive 118.88p and 2.488 new LXi shares. The total cash being offered is capped at GBP385 million. Once the deal is completed, LXi shareholders will own about 53% of the new, enlarged company. The boards of both companies have unanimously recommended the deal.
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COMPANIES - GLOBAL
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Philip Morris International said it has made a USD16.0 billion offer for Swedish Match. The tobacco firm made an offer to tender all shares in Swedish Match at a price of SEK106 per share in cash, around USD10.56. This gives the offer a total value of SEK161.2 billion or USD16.0 billion. The price represents a premium of 39% compared to Swedish Match's closing price of SEK76.06 on Monday. Swedish Match makes a range of smoke-free products, including snus, nicotine pouches and chewing tobacco. Its largest markets for smoke-free products are the US and Scandinavia. Directors of the Swedish Match board have recommended for shareholders to accept the offer.
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Toyota Motor posted increased full-year net income, aided by strong sales, but cautioned on supply chain disruption related to Russia's invasion of Ukraine and Covid-19 moving forward. The Japanese auto maker reported a net income of JPY2.874 trillion, around USD22.06 billion, in the year ended March 31. This represented a 26% increase against the previous year's figure of JPY2.282 trillion. Revenue rose 16% to JPY29.073 trillion from JPY25.077 trillion.
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Wednesday's shareholder meetings
abrdn Asian Income Fund Ltd - AGM
Antofagasta PLC - AGM
Capricorn Energy PLC - AGM
Cenkos Securities PLC - AGM
Clarkson PLC - AGM
Conduit Holdings Ltd - AGM
Harbour Energy PLC - AGM and GM re proposed capital reduction
Hostelworld Group PLC - AGM
Impact Healthcare REIT PLC - AGM
Jupiter Fund Management PLC - AGM
LungLife AI Inc - AGM
MC Mining Ltd - EGM re director change
National Express Group PLC - AGM
Rentokil Initial PLC - AGM
Savills PLC - AGM
Schroder Asian Total Return Investment Co PLC - AGM
Spirax-Sarco Engineering PLC - AGM
Spire Healthcare Group PLC - AGM
Tasty PLC - AGM
TClarke PLC - AGM
TP ICAP Group PLC - AGM
TransGlobe Energy Corp - AGM
Tribal Group PLC - AGM
Uniphar PLC - AGM
Windward Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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