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(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Sherborne Investors Management, the investment vehicle of activist investor Edward Bramson, said it has sold its entire 6.0% stake in Barclays. It ends a three-year battle between Sherborne and the London-based bank, during which the activist tried to force cutbacks and oust Chief Executive Jes Staley. Sherborne had called for Staley to be removed in April 2020 over his links to Jeffrey Epstein. Based on the bank's share price on Friday, the stake is worth around GBP1.81 billion. Sherborne said it has started investing in a new target that offers a better return than Barclays. It did not identify the new target. Barclays shares were up 2.5% in London.
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Shares rose in St Modwen Properties after receiving a potential takeover offer worth GBP1.2 billion from Blackstone. The US alternative asset investment firm has offered to acquire St Modwen for 542 pence per share in cash per share, reflecting a 21% premium to the company's closing price of 448p on Thursday, and a 24% premium to its net tangible assets per share of 437.7p as at November 30 last year. Shares in the Birmingham-based property developer were 19% higher at 531.53 pence on Friday in London, the best performer on the FTSE 250 index. St Modwen said it has considered the offer, and that it would be willing to recommend the offer unanimously to its shareholders should Blackstone make a firm offer.
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International Consolidated Airlines Group posted a narrowed loss for the first quarter, but it still topped EUR1 billion. It said its first quarter was badly hurt by the Covid-19 pandemic, as government restrictions and quarantine requirements grounded the travel sector. For the three months to March 31, IAG posted a pretax loss EUR1.22 billion, narrowed from EUR1.88 billion in the first quarter of 2020, as total revenue dropped 79% to EUR968 million from EUR4.59 billion. First-quarter passenger revenue was EUR459 million, down 88% from EUR3.95 billion a year ago. IAG said it generated EUR350 million in revenue from cargo-only flights, which is a first-quarter record. Looking ahead, IAG said it won't be issuing profit guidance for 2021 due to uncertainty over travel restrictions. It noted it has EUR10.5 billion in liquidity and good access to capital markets. The carrier also called on government action for flights to be able to return to the skies, pointing to four measures required. These include, travel corridors without restrictions between countries with successful vaccination rollouts and effective testing such as the UK and the US.
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Fellow travel firm InterContinental Hotels Group said trading continued to improve during the first quarter of 2021 and that it was seeing a strong performance in openings and signings. For the three month to March 31, revenue per available room, a key metric in the hotel industry - was down 50.6% from 2019 and down 33.7% versus 2020. IHG noted there was a notable pick-up in demand in March, particularly in the US and China, which continued into April. In Greater China, after temporary domestic travel restrictions were lifted, demand recovered quickly in March towards levels seen in the second half of 2020, IHG added.
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Siemens raised its financial 2021 guidance for the second time after a rise in sales and profit in the most recent quarter. The company reported revenue of EUR14.67 billion in the second quarter of the financial year ending September 30, up 6.4% year-on-year from EUR13.78 billion. Pretax income from continuing operations jumped 53% to EUR1.52 billion from EUR992 million. Siemens again lifted its forecast for the financial year, saying it now expects revenue growth in a range between 9% and 11%. At its first-quarter earnings, the company lifted its guidance to "mid- to high-single-digit" growth from "moderate" growth.
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BMW said higher sales volume in the first quarter of 2021 resulted in increases in revenue and profit. The Munich, Germany-based vehicles and motorcycles producer said revenue grew by 15% in the first three months of 2021 to EUR26.78 billion. When adjusted for currency factors, revenue was up 19% year-on-year. BMW said its research & development expenditure totalled EUR1.29 billion, down 2.8% on a year prior, with costs arising in the first quarter of 2021 primarily for electrification and digitisation as well as for preparing the production ramp-up of the BMW iX, an all-electric sport utility vehicle. Pretax profit, meanwhile, improved to EUR3.76 billion in the quarter from just EUR798 million. Earnings before tax margin improved to 14.0% from 3.4% a year before.
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Adidas said its performance improved in the first quarter of 2021 despite prolonged lockdowns in Europe and industry-wide supply-chain challenges. The Herzogenaurach, Germany-based shoes, clothing and accessories manufacturer reported net income from continuing operations of EUR502 million for the three months to the end of March, up dramatically from just EUR26 million posted a year earlier, while basic earnings per share from continuing operations reached EUR2.60 from EUR0.16 year-on-year. The company's revenue grew 20% in the first quarter to EUR5.27 billion from EUR4.38 billion.
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Credit Agricole said profit surged in the first quarter of 2021 as customer numbers continued to grow. The Montrouge, France-based bank reported group revenue for the three months to the end of March of EUR9.05 billion, an increase of 8.2% on a year earlier, thanks to "sustained activity" across all businesses, despite the pandemic. In some businesses, activity returned to pre-crisis levels, Credit Agricole noted. Gross customer capture was very strong, Credit Agricole said, with 469,000 new customers in first quarter of 2021. The increase over a year ago also was significant, with 1.6 million new customers added. Net income, meanwhile, jumped by 92% year-on-year to EUR1.75 billion, as operating expenses remained broadly flat.
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The state of Massachusetts sued a subsidiary of French public relations firm Publicis on Thursday for its role promoting opioids in what became a major US health crisis. That subsidiary, Publicis Health, is accused of helping Purdue Pharma urge doctors to prescribe its highly addictive painkiller OxyContin. The lawsuit alleges that Publicis "engaged in myriad unfair and deceptive strategies that influenced OxyContin prescribing across the nation," a statement by Massachusetts Attorney General Maura Healey's office said. Those strategies were carried out through dozens of contracts between 2010 and 2019, worth more than USD50 million, it stated. Tactics included combatting doctors' "hesitancy" to prescribe the medication, and persuading them to prescribe OxyContin over lower-dose, short-acting opioids, thus increasing the risk of addiction. Massachusetts is asking that Publicis Health pay "compensatory damages" of an unspecified amount for having "created a public nuisance."
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MARKETS
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European and Asian markets both rose on Friday, while Wall Street was called higher, ahead of the week's key economic data point: US nonfarm payrolls. Jobs are expected to have risen by 990,000 to 1 million in April, compared to a 926,000 rise in March.
Analyst estimates range widely, according to Fawad Razaqzada, market analyst at ThinkMarkets, from a rise of as little as 700,000 to as much as 2.1 million. "With expectations running quite high, there is scope for disappointment if they are not met," Razaqzada said. "However, a small miss shouldn't derail the rally [in value stocks] as it would keep the goldilocks scenario intact. And if expectations are met or surpassed then growth stocks should be able to rally sharply."
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CAC 40: up 0.2% at 6,366.85
DAX 30: up 1.2% at 15,371.13
FTSE 100: up 0.6% at 7,119.83
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Hang Seng: closed down 0.1% at 28,610.65
Nikkei 225: closed up 0.1% at 29,357.82
S&P/ASX 200: closed up 0.3% at 7,080.80
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DJIA: called up 0.2%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.3%
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EUR: up at USD1.2075 (USD1.2053)
GBP: up at USD1.3915 (USD1.3876)
USD: flat at JPY109.10 (JPY109.09)
Gold: up at USD1,820.51 per ounce (USD1,813.85)
Oil (Brent): down at USD67.87 a barrel (USD68.39)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Hopes of a Labour party revival under Keir Starmer suffered a blow after the Conservative party comfortably won the Hartlepool by-election for the UK Parliament. The Leave-supporting North East constituency went blue for the first time in its 47-year-old history, as UK Prime Minister Boris Johnson demolished another brick in Labour's so-called "red wall". Voters in the town backed Tory candidate Jill Mortimer to be their next member of Parliament over Labour's Paul Williams – an avid Remainer and second-referendum campaigner during his time as MP for Stockton South between 2017-19 – in a rare by-election victory for a party in power for more than a decade. The Conservative, who declared it a "truly historic result", secured a 6,940 majority winning 15,529 votes to Williams's 8,589.
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Following the Hartlepool declaration, attention will turn to results elsewhere as ballots continue to be counted across England, Scotland and Wales in the largest test of political opinion outside a general election. Results from the Holyrood election – where the issue of Scottish independence was a main feature in the campaign – will come through later on Friday and Saturday. Scottish National Party leader Nicola Sturgeon's push for a second independence referendum means the stakes are high in the contest.
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UK construction sector activity continued to expanded in April as easing restrictions led to a rise in new orders. The IHS Markit-CIPS UK construction purchasing managers' index print was 61.6 points in April, little changed from 61.7 in March. The latest reading remained well above the 50.0 mark which separates expansion from contraction but missed the market forecast, cited by FXstreet, of 62.3.
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Job vacancies in the UK have increased at the quickest rate for 23 years as the country continues to emerge from the lockdown, a new study suggests. Despite the increase in jobs on offer, the availability of candidates fell in April amid ongoing pandemic-related uncertainty that is holding people back from seeking new roles, said a report. Skill shortages and improved demand for staff led to increases in starting pay for permanent and temporary staff, according to research among 400 recruitment firms by the Recruitment & Employment Confederation and KPMG.
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Chinese service sector business activity signalled a sharp expansion in April, data from Caixin showed, supported by the strongest rise in overall new work for five months. The headline seasonally adjusted business activity index increased to 56.3 points in April from 54.3 in March. The upturn was the strongest recorded in 2021 to date and quicker than the series average of 54.1 points. The faster upturn in business activity was linked to the successful containment of Covid-19, Caixin noted, and a further improvement in demand conditions. Total new orders expanded at the fastest rate since last November. The composite output index - which measures combined output in the manufacturing and service sectors – rose to 54.7 points in April from 53.1 in March.
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China's General Administration of Customs said the country's total import and export value was CNY11.62 trillion, about USD1.799 trillion, in the first four months of 2021, a year-on-year increase of 29%. Exports were CNY6.32 trillion, a 34% jump on a year earlier, while imports were CNY5.3 trillion, an increase of 23%. The trade surplus was CNY1.02 trillion, more than doubled year-on-year. In April alone, China's total import and export value was CNY3.15 trillion, up 27% on a year ago and up 4.2% month-on-month. Exports in April totalled CNY1.71 trillion, about USD265 billion, up 22% year-on-year and up 10% when compared to March. Imports were CNY1.44 trillion, up 32% year-on-year, but down 2.2% month-on-month. The trade surplus in April was CNY276.5 billion, 12% lower than a year before.
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The Japanese services sector continued to head towards stabilisation in April, according to survey results reported by IHS Markit. The seasonally adjusted Japan services business activity index rose to 49.5 points in April from 48.3 in March. The figure was below the 50.0 threshold that separates growth from decline, but it was the slowest contraction in activity in the current 15-month period of decline. The latest reduction was only modest overall, as firms faced softer restrictions in the first half of April, IHS Markit noted. More positively, demand broadly stabilised. This pushed the seasonally adjusted new business index to the highest level since January 2020.
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Japan will prolong a virus state of emergency in Tokyo and other regions and impose restrictions in more areas on Friday as cases surge less than three months before the Olympics. The emergency measures, less strict than the blanket lockdowns seen in other countries, focus on limiting commercial activity with malls closed and bars and restaurants told to shut or stop serving alcohol. They were imposed in Tokyo, Osaka and two other regions in late April – just weeks after a previous state of emergency was lifted – and had been due to end on May 11. But the government is expected to extend the restrictions until the end of May and also impose them in Fukuoka and Aichi prefectures, where infections are spiking.
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Australia is likely to remain shut to visitors until late 2022, the country's trade and tourism minister said, as another global coronavirus surge smashed hopes of a quick reopening. Minister Dan Tehan said a wave of cases on the Indian sub-continent showed Australia's near blanket ban on arrivals was still essential to keep the country Covid-free. Since March 20, 2020, Australians have been barred from travelling overseas and a hard-to-get individual exemption is needed for foreign visitors to enter the country. It is "very hard to determine" when borders could reopen, Tehan told Sky News, "the best guess would be in the middle to the second half of next year". Before the pandemic, around one million short-term visitors entered the country each month. That figure is now around 7,000.
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By Tom Waite; thomaslwaite@alliancenews.com
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