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(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Chinese recovery teams on Tuesday picked through the debris of a crashed China Eastern jet after it inexplicably plummeted from the sky into a mountainside with 132 people on board. Hopes of finding any survivors had all but vanished nearly a day after the Boeing 737-800 passenger jet nosedived into the mountain – likely making it China's deadliest air crash in nearly three decades. Questions mounted over the cause of the crash, which saw the stricken jet drop 20,000 feet, or 6096 metres, in just over a minute before ploughing into rugged terrain in southern China on Monday afternoon. Chinese media reported that the airline will now ground all the 737-800 jets. In a statement, Boeing said it was "working with our airline customers and are ready to support them". The US National Transportation Safety Board said it had named a senior investigator as a representative to the probe, and that officials from Boeing, General Electric and the Federal Aviation Administration would be technical advisors.
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Retail Kingfisher said it delivered a strong financial performance in financial 2021 boosted by a lockdown boom in DIY projects that has continued. For the financial year that ended January 31, pretax profit was up 33% to GBP1.01 billion from GBP756 million the year before, as sales rose 6.8% to GBP13.18 billion from GBP12.34 billion. Kingfisher said that financial 2022 was a year of record revenue, profit and that it was gaining market share in the UK and France. It said its B&Q chain had an "outstanding year", with sales passing GBP4 billion. It was also a record year of expansion for Screwfix, with 70 new stores opened in the UK and Ireland, and Screwfix France showing promising early progress. Kingfisher raised its annual payout by 50% to 12.40 pence per share from 8.25p paid out the year before. Kingfisher said first quarter like-for-like sales were down 8.1% from the year before, but up 16% from two years earlier.
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Auto Trader has agreed to acquire UK-based vehicle leasing digital platform Autorama to expand its existing leasing proposition. Auto Trader will pay an initial GBP150 million in cash, with a further GBP50 million of deferred consideration to be settled in shares subject to performance conditions. Auto Trader explained there was a large structural opportunity for a new car leasing marketplace driven by the growth of electric cars, new manufacturers entering the UK market, lower take up of company car schemes, and a shift towards new digital distribution models.
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Shell is reconsidering its decision to pull out of the Cambo oil field in the North Sea, the BBC reported. The oil major, having announced plans to exit the field in December, is yet to sell the assets, the BBC noted. While its position has not completely changed, Shell believes the market environment since it made the decision has, the BBC said. Shell in December said it decided to pull out of its plan to develop the Cambo oilfield. The planned oilfield, which was set to produce around 132 million tonnes of carbon during its lifetime, had drawn a volley of criticism from environmental activists.
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The UK government is considering temporarily taking control of Gazprom's UK arm, should the Russian business cease trading in Britain, Bloomberg reported. Citing a person familiar with the matter, Bloomberg said Gazprom Marketing & Trading Retail could be subject to the UK's special administration scheme, which ensures some critical services continue, despite a company failing. The Gazprom unit has over 30,000 business customers, Bloomberg reported. Consulting firm Teneo has been picked as a candidate to run Gazprom Marketing & Trading Retail, should the special administration scheme be used, Bloomberg said.
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Tesla launched its new car factory outside Berlin on Tuesday, as the US electric innovator shakes up Germany's long-standing automotive landscape. At the opening ceremony, company founder and celebrity entrepreneur Elon Musk is expected to hand over the first Model Y vehicles to customers just over two years after construction began. The so-called Gigafactory, situated in Grünheide in the rural state of Brandenburg that surrounds the German capital, is the electric car manufacturer's first production site in Europe. Tesla had hoped to start production there last summer but the state approvals process dragged on somewhat, partly because the company decided to add a battery factory to the site, which is still under construction.
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Nike on Monday reported a dip in third quarter earnings, though managed to bump up its gross margin despite supply chain disruption in the period. Revenue in the three months to the end of February rose 5% to USD10.87 billion from USD10.36 billion year-on-year. Revenue rose 8% on a currency-neutral basis, led by Nike Direct growth of 17%. However, an increase in selling & administrative expenses, up 13% to USD3.44 billion, pulled net income to USD1.40 billion, down 4% from USD1.45 billion year-on-year. Diluted earnings per share decreased 3% to USD0.87 from USD0.90. This was despite the gross margin rising 100 basis points to 46.6% from 45.6%. This was driven by margin expansion in the Nike Direct business due to lower markdowns, changes in foreign currency exchange rates and a higher mix of full-price sales. Partially offsetting this were lower full-price product margins "largely due to increased freight and logistics costs".
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MARKETS
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Share prices were higher on Tuesday, led by banks, after the US Federal Reserve said interest rate hikes at a faster clip than this month's quarter-point rise are possible to combat "much too high" inflation. In Paris, SocGen was up 2.1% and BNP Paribas up 2.5%. In Frankfurt, Deutsche Bank was 4.1% higher, while Commerzbank was up 3.9%. In London, HSBC was up 3.2% and Barclays up 2.0%. In Milan, Intesa Sanpaolo was up 2.2%. In the New York pre-market, Bank of America was up 1.1%.
Having traded near USD120 a barrel earlier in the day, Brent oil had slipped back below USD114 by midday in Europe.
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CAC 40: up 0.6% at 6,619.75
DAX 40: up 0.9% at 14,449.58
FTSE 100: up 0.6% at 7,483.55
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Hang Seng: closed up 3.2% at 21,889.28
Nikkei 225: closed up 1.5% at 27,224.11
S&P/ASX 200: closed up 0.9% at 7,341.10
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DJIA: called up 0.5%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.3%
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EUR: down at USD1.0991 (USD1.1033)
GBP: soft at USD1.3185 (USD1.3192)
USD: up at JPY120.85 (JPY119.25)
Gold: down at USD1,927.45 per ounce (USD1,936.69)
Oil (Brent): down at USD113.91 a barrel (USD114.84)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US central bank is prepared to raise interest rates by bigger steps than the quarter-point hike announced last week if needed to contain "much too high" inflation, Federal Reserve Chair Jerome Powell said on Monday. Consumer prices in the world's largest economy have surged to the highest seen in four decades, and the Fed last week raised the benchmark lending rate for the first time since the Covid-19 pandemic began to try to tamp down inflation pressures. "If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," he said in a speech to an economics conference. "There is an obvious need to move expeditiously" to remove the stimulus the Fed provided to the American economy during the pandemic, but Powell said central bankers are prepared to go beyond "neutral" and tighten policy if needed to achieve their goal.
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China locked down an industrial city of nine million people overnight and reported more than 4,000 virus cases on Tuesday, as the nation's "zero-Covid" strategy is confronted by an Omicron wave. Health authorities reported 4,770 new infections across the country, the bulk in the northeastern province of Jilin, as the city of Shenyang in neighbouring Liaoning province was ordered to lock down late Monday. China has moved fast in recent weeks to snuff out virus clusters with a pick-and-mix of hyper-local lockdowns, mass testing and citywide closures. It reported two Covid-19 deaths on Saturday, the first in over a year. Authorities have warned of the risk posed to growth by persistent lockdowns as the country strives to balance the health crisis with the needs of the world's second biggest economy. Shenyang, an industrial base home to factories including carmaker BMW, reported 47 new cases Tuesday as authorities put all housing compounds under "closed management" and barred residents from leaving without a 48-hour negative test result.
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Any deal agreed in peace negotiations with Russia will be submitted to a referendum in Ukraine, President Volodymyr Zelensky told a regional Ukrainian public media outlet Monday. "I explained it to all the negotiating groups: when you speak of all these changes (in a future accord) and they can be historic... we will come back to a referendum," Zelensky told Suspilne, an internet news site. "The people will have to weigh in on certain kinds of compromise," Zelensky said, adding that what the compromises cover are part of the talks with Russia. Zelensky spoke at length about the key question of whether Ukraine should never join NATO, as he recently conceded. "We have all already understood it," Zelensky said, explaining that Ukraine will not be admitted to NATO because its member states "are afraid of Russia".
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Ukrainian counter-intelligence says it has foiled a possible assassination attempt on President Zelensky. A group of Russian saboteurs led by a secret service agent was arrested in the city of Uzhhorod in the border area between Ukraine, Slovakia and Hungary, Ukraine's UNIAN news agency reported. The group of some 25 men was reportedly also tasked with carrying out acts of sabotage in the government quarter in Ukraine and in other parts of the country. The men were reportedly planning to masquerade as members of the Ukrainian armed forces in order to make their way to the Ukrainian capital. The report could not be verified independently.
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The European Commission is moving ahead with plans for mandatory gas reserves to end the EU's dependency on Russian fossil fuels, according to a draft proposal seen by dpa. EU member states are to ensure gas storage facilities are filled to at least 90% every year by November 1, "since interruptions in the supply of pipeline gas" can happen anytime, the draft proposal says. The proposal, expected to be published on Wednesday, comes amid major concerns for the EU's energy supply after Russia's threat to cut gas flows in response to EU sanctions over the invasion of Ukraine.
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The UK government borrowed more than expected in February, figures from the Office for National Statistics showed, ahead of the spring statement on Wednesday. UK public sector net borrowing - excluding public sector banks - was GBP13.1 billion in February. This was an improvement from GBP15.5 billion posted in February of 2021, but the latest figure was higher than the market forecast for a deficit of GBP8.1 billion. The ONS said last month's figure represented the second-highest February borrowing since monthly records began in 1993. Though GBP2.4 billion less than in February last year, it still was GBP12.8 billion more than in February 2020, before the coronavirus pandemic. Borrowing in February 2020 was GBP300 million. The figure comes ahead of UK Chancellor Rishi Sunak's spring statement, as he faces increasing pressure to take action over the country's cost of living crisis. The chancellor will present the latest updates from the Office for Budget Responsibility on the state of the UK economy and public finances.
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The euro area current account surplus was largely unchanged in January, figures from the European Central Bank showed. The eurozone recorded a EUR23 billion surplus in January, widened slightly from EUR22.6 billion in the previous month. The figure was higher than the market forecast, cited by FXStreet, of EUR20.1 billion. For the 12 months to January, the surplus amounted to EUR294 billion, up 2.2% from EUR247 billion a year earlier.
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Eurozone construction output markedly topped market estimates in January. According to Eurostat, construction production rose 3.9% monthly in January, following a 1.5% decline in December. January's growth topped FXStreet-cited estimates of a smaller 0.5% monthly rise in output. On an annual basis, output defied expectations with a 4.1% rise, compared to FXStreet-cited forecasts of a 2.5% decline. In December, production rose 0.2% annually.
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By Tom Waite; thomaslwaite@alliancenews.com
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