(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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The US and China are near to agreement on measures that would resolve the deadlock over auditing for Chinese companies listed on US stock exchanges, the Financial Times reported. Citing "people familiar with the matter", the FT said Hong Kong bankers were told of a possible deal this week. The Nasdaq Gold Dragon China Index of large Chinese technology companies listed in New York closed Thursday up 6.3%. A law passed by US Congress back in 2020 put Chinese companies under scrutiny, by mandating that the Public Company Accounting Oversight Board should have the ability to inspect audits of US-listed foreign firms every three years. The US set a deadline of 2024 to comply or be kicked off US exchanges, putting over 200 of Chinese firms at the risk of delisting in the US, including one of the world's largest online retailers Alibaba. The PCAOB said any deal would grant the US full access to Chinese auditors.
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Micro Focus International said it agreed with Canada's OpenText on the terms of a recommended cash acquisition that values the UK software firm, including its debt, at around GBP5.1 billion. Under the terms of the acquisition, each of Micro Focus' shareholders will receive 532 pence per share. Shares in Micro Focus closed at 267.80 pence per share on Thursday in London. The FTSE 250 stock was up 92% at 515.20p early Friday. Shares in OpenText closed at USD37.27 in New York on Thursday and lost 4.8% in after-hours trade. The offer values the equity of the Newbury, Berkshire-based enterprise software maker at GBP1.8 billion. OpenText is a Ontario, Canada-headquartered software firm. It is one of the biggest software companies in the country with a market capitalisation of USD10.06 billion. The deal comes five years after Micro Focus acquired Hewlett Packard Enterprise's software arm in 2017 as part of a reverse takeover for USD8.8 billion.
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Workday said it swung to loss in the second quarter of its financial year, but nonetheless maintained a bright outlook for the year as a whole. In the three months ended July 31, the California-based enterprise software firm swung to a net loss of USD64.2 million from a profit of USD105.7 million the previous year. Revenue climbed by 22% to USD1.54 billion from USD1.26 billion. However, total costs and expenses rose by 24% year-on-year to USD1.57 billion from USD1.26 billion. Looking forward, Workday maintained its revenue guidance for financial 2023, anticipating subscription revenue in the range of USD5.54 billion to USD5.56 billion. If achieved, this would represent 22% growth against the previous year.
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Marvell Technology said second quarter revenue landed in line with guidance and surged to a new record. In the three months ended July 30, revenue jumped 41% year-on-year to USD1.52 billion from USD1.08 billion. The top-line figure hit the midpoint of guidance and was a new second quarter record, Marvell said. The Santa Clara-based firm develops and produces semiconductors and related technology. Marvell swung to a pretax profit of USD3.8 million from a USD302.0 million loss a year earlier. "This was the 9th straight quarter of sequential revenue growth, and we are guiding for growth to continue in the third quarter, as we expand our leadership in data infrastructure," Chief Executive Matt Murphy said.
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A US judge told Twitter to surrender more data to Elon Musk on fake accounts, a key issue the billionaire is using to try to cancel his buyout bid. While Judge Kathaleen McCormick allowed the Tesla boss's team an opening to bolster its argument that Musk was misled, she chastised them for "absurdly broad" requests for "trillions upon trillions of data points." The judge ordered Twitter to hand over data on 9,000 accounts the firm audited at the end of 2021, which opens the door for that information to be used in Musk's effort to quit the USD44 billion deal. "Some additional data from plaintiff (Twitter) seems warranted," McCormick wrote, without elaborating, in her four-page ruling.
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MARKETS
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Stock markets were effectively on hold in Europe, ahead of a speech by US Federal Reserve Chair Jerome Powell. Despite positive days in Asia on Friday and in New York on Thursday, European investors were unwilling to take on risk. Powell will deliver the keynote address on Friday at 1400 GMT to the annual gathering of top central bankers in Jackson Hole, Wyoming.
"Last year, Fed Chair Powell said that inflationary pressures were temporary - a comment that he later had cause to regret," commented Lloyds Bank. "This time markets will be looking for signals on the size of the probable US rate hike in September, indications of whether he thinks inflation has now peaked and what evidence he and his colleagues will want to see before ending monetary tightening."
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CAC 40: marginally higher, up 2.91 points at 6,384.47
DAX 40: marginally lower, down 6.21 points at 13,265.75
FTSE 100: marginally lower, down 2.70 points at 7,477.04
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Hang Seng: closed up 1.0% at 20,170.04
Nikkei 225: closed up 0.6% at 28,641.38
S&P/ASX 200: closed up 0.8% at 7,104.10
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DJIA: called down 0.2%
S&P 500: called down 0.3%
Nasdaq Composite: called down 0.4%
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EUR: up at USD0.9991 (USD0.9975)
GBP: down at USD1.1804 (USD1.1815)
USD: up at JPY136.93 (JPY136.72)
Gold: up at USD1,750.95 per ounce (USD1,756.33)
Oil (Brent): down at USD100.10 a barrel (USD100.48)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK energy regulator Ofgem announced it will increase the annual energy price cap on default tariffs by 80%. From October 1, energy suppliers in Britain can charge up to GBP3,549 per year for energy bills from the previous cap of GBP1,971. The cap for households on prepayment meter bills will rise by 79% to GBP3,608 from GBP2,017. Ofgem said the increase reflects the "continued rise in global wholesale gas prices", which began to surge as the restrictions across the world eased from the Covid pandemic and have been driven higher to record levels by Russia "slowly switching off gas supplies to Europe". Ofgem regulates energy prices for England, Scotland and Wales, while Utility Regulator sets the price cap in Northern Ireland. Ofgem CEO Jonathan Brearley said: "The government support package is delivering help right now, but it's clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year. We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action. The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this."
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UK Foreign Secretary Liz Truss has pledged "immediate support" to ease the sting of spiralling energy bills in the UK as the Tory leadership contest enters its final stretch. Truss, the favourite to become UK prime minister next month, acknowledged the strain is "clear" at the checkout and the petrol pump, but insisted that Britain will "get through these tough times" – vowing to ensure help is "on its way". Truss previously signalled she could help firms and households with soaring energy bills with direct support this winter. She was looking at assistance "across the board" despite in the past insisting she was focused on slashing taxes, rather than what she termed "giving out handouts".
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Truss said "the jury's out" on whether French President Emmanuel Macron is a "friend or foe" to Britain. "If I become prime minister, I would judge him on deeds not words," Truss told a hustings event of applauding Conservative party members, when asked the question by the host. "The jury's out," she added. Asked the same question earlier at the evening event, rival leadership contender Rishi Sunak had promptly replied "friend". Truss, 47, leads the former finance minister by wide margins in polls of the Tory grassroots set to chose their next leader, who will then become prime minister. The winner will be announced on September 5.
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German consumer confidence is at rock-bottom as Europe's biggest economy faces the prospect of huge energy bills heading into the winter, a key survey showed. Pollster GfK's forward-looking barometer fell to minus 36.5 points for September, the lowest level since its records began in 1991, following a revised August reading of minus 30.9 points. "The sharp rise in the propensity to save this month is causing the consumer mood to continue its steep decline," said GfK consumer expert Rolf Buerkl. "The fear of significantly higher energy costs in the coming months is forcing many households to take precautions and put money aside for future energy bills."
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Household confidence in France saw a slight rebound in August, survey figures from Insee showed. The monthly consumer confidence survey indicator increased in August to 82 points from 80 points in July. It came in better than FXStreet-cited market consensus, which was expecting the eighth consecutive month of decline at 79 points. The reading is still well below the long-term average of 100, however. The number of French households who think living standards have improved over the past year increased, with the indicator gaining seven points. Households were more hopeful of an improvement in living standards going forward.
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Sentiment among consumers in Italy improved in August, but business confidence worsened, according to survey results released by Italian national statistics office Istat. The consumer confidence index rose to 98.3 points in August from 94.8 in July. However, the business confidence index decreased to 109.4 points from 110.7, as confidence in both manufacturing and services deteriorated. The index for confidence in manufacturing worsened to 104.3 points from 106.4. The services confidence index slipped to 103.3 points from 103.9.
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Spain's parliament approved the minority government's energy-saving rules which include limits on air-conditioning use as part of an EU-wide effort to reduce reliance on Russian gas. Lawmakers voted 187 to 161 in favour of the decree, which came into effect on August 10 but needed the green light of the assembly to remain in force. Socialist Prime Minister Pedro Sanchez's minority coalition government lacks a working majority in parliament but it managed to pass the rules with the support of smaller regional parties. Under the government decree, air conditioning must be turned down and set at no lower than 27 degrees Celsius (80.6 degrees Fahrenheit) during the warmest months of the year, in rules affecting everything from public transport to shops, offices, theatres and cinemas. The new rules do not apply to home air conditioning, although people are encouraged to consume less energy domestically.
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By Tom Waite; thomaslwaite@alliancenews.com
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