(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Oil major Shell confirmed the combination of its A and B stock has occurred, meaning it will trade under a single share line from Monday. It was a move the company announced back in December in a bid to simplify its share structure. The company also recently dropped 'Royal Dutch' from its name.
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BHP said its corporate structure unification has become effective with its new shares beginning trading in London and Johannesburg on Monday, following its sanction by the UK court on Tuesday last week. With effect from the Johannesburg equities open, BHP Group Ltd shares were admitted to trading. As a result, the miner's PLC shares were suspended and will be cancelled at the open on Friday. In London, the Ltd shares were admitted to trading at the open, while the PLC shares were cancelled at the same time. PLC shareholders will receive one Ltd share for each PLC share held at 2100 GMT on Friday last week.
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Vodafone and Cevian Capital have discussed how to boost the telecommunications company's performance, with the activist investor snapping up a stake in the firm, Bloomberg reported on Friday. The financial news agency, citing people familiar with the matter, said the Swedish investment firm has been in talks with officials at Vodafone for several months, in a bid to improve the FTSE 100 company's fortunes. Measures could include selling some operations, making stock buybacks, and boosting its presence in key markets, Bloomberg reported.
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Russian miner and steel maker Evraz said total crude steel output fell 0.6% to 3.38 million tonnes in the fourth quarter of 2021 from 3.40 million in the third quarter. There was, however, a 7.0% quarter-on-quarter hike in iron-ore products output and a 34% rise in total raw coking coal mined. For the whole of 2021, crude steel output was 0.4% lower, while iron ore production and raw coking coal mined were 1.4% and 13% higher, respectively. Export duty in Russia hurt steel output, Evraz noted. It also hit sales, the company explained. Total steel product sales were 4.5% lower at 12.5 million tonnes in 2021, despite a 7.0% rise to 3.2 million tonnes in the fourth quarter from the third.
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Education materials publisher Pearson said it has taken sole ownership of its Credly investee, which provides workforce digital credentials and certifications. Pearson previously had a 20% stake in Credly. "It further expands Pearson's digital footprint and accelerates Pearson's focus on growth," the company said. "The acquisition comes at a time of increasing demand for digital credentials to recognise skills and certifications in a global talent market valued at around USD400 billion. Over the last year, Credly has added nearly 1,000 new organisations to its network, expanded its density of skill coverage in key segments of the labour market and maintained net renewal rates of well over 100%." Including Pearson's existing stake, the deal to buy Credly values the company at USD200 million.
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Ryanair said the Omicron outbreak badly damaged its peak Christmas and New Year bookings, as it reported a quarterly loss. The Dublin-based airline suffered a net loss of EUR96 million for the three months that ended December 31, its financial third quarter. Though this was narrowed from EUR321 million a year before, it was double the net loss Ryanair reported for the entire first half of its financial year of EUR48 million. Revenue totalled EUR1.47 billion in the recent quarter, up from the Covid-depressed level of EUR340 million a year before. Ryanair carried 31.1 million passengers in the final three months of calendar 2021, up from just 8.1 million a year before, with an 84% load factor, up from 70%. But it said December traffic of 9.5 million passengers was well behind its expectations of 11 million. Looking ahead, Ryanair said that, following the easing of government travel restrictions, bookings have improved but remain "very late and close-in". What's more, the budget carrier has had to resort to "significant price stimulation at lower prices" to recover load factors.
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Walgreens Boots Alliance has launched the sales process for its Boots retail pharmacy unit, Bloomberg reported on Saturday. Walgreens is sending out preliminary information on the business to possible acquirers ahead of first-round bids due in the coming weeks, Bloomberg reported citing people with knowledge of the matter. The UK chain could be valued at GBP7 billion in a sale, Bloomberg added. Sycamore has joined a small group of other buyout firms exploring bids, the people said. Sycamore joins the likes of Bain Capital and CVC Capital Partners, who are said to have teamed up on a bid, while Advent International and KKR also have been reported as mulling approaches. Bloomberg said Walgreens is also considering a possible initial public offering of Boots if buyout interest is lacklustre.
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UK Home Secretary Priti Patel approved the extradition of a British technology tycoon to the US to answer criminal fraud charges. The decision came after Mike Lynch on Friday lost a multibillion-dollar fraud action over the sale of his software company Autonomy to Hewlett-Packard in 2011. He is accused of deliberately overstating the value of his business before it was acquired by the American technology firm. HP, now Hewlett-Packard Enterprise, sued Lynch and Autonomy's former chief financial officer, Sushovan Hussain, for around USD5 billion, following its purchase of the Cambridge-based company for USD11.1 billion more than a decade ago.
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European aerospace firm Airbus and German metal workers' union IG Metall will meet for a seventh round of negotiations on Monday over the restructuring of civil aircraft production in Germany. If the talks fails to produce a result, the union plans to call on its members to vote for a strike. "January 31 is the deadline," IG Metall said. At the beginning of December, more than 14,000 workers took part in token strikes, some lasting several days, that largely paralysed production in the busy year-end period.
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US aviation officials reported progress Friday on allowing more 5G service near airports following negotiations with telecommunications providers, but airlines said there were still some disruptions. The Federal Aviation Administration praised Verizon Communications Inc and AT&T Inc for providing "more precise data about the exact location of wireless transmitters," the agency said in a statement. The data has permitted the FAA to narrow the territory where it still has safety questions and "enable the wireless providers to safely turn on more towers as they deploy new 5G service in major markets across the US," the regulator said. Telecom firms have spent tens of billions of dollars to obtain 5G licenses, but were forced to delay the launch following an outcry from the aviation industry warning of massive disruptions.
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MARKETS
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Share prices were mostly higher on Monday as markets looked to end a generally negative first month of 2022 on a positive note. Central bank decisions will be in focus for a second week, as the Bank of England and European Central Bank make announcements on Thursday, following US policy statements last week seen as more hawkish than expected. A Fed official at the weekend said a half-point, rather than quarter-point, interest rate hike in March is possible.
The expectation of higher borrowing costs has been hitting highly valued technology stocks in the new year. "The 'fear trading' mood has seen some usually expensive shares become much more attractive, which explains why so many investors have bought the dip. In addition, the fact that the Japanese yen, the US dollar, and global bond markets are trading lower, provides an interesting setup for bull stock traders this week," commented Pierre Veyret, a technical analyst at ActivTrades.
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CAC 40: up 0.6% at 7,005.15
DAX 40: up 1.1% at 15,482.56
FTSE 100: marginally lower, down 2.15 points at 7,463.92
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Hang Seng: closed up 1.1% at 23,802.26
Nikkei 225: closed up 1.1% at 27,001.98
S&P/ASX 200: closed down 0.2% at 6,971.60
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DJIA: called down 0.2%
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.5%
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EUR: firm at USD1.1175 (USD1.1163)
GBP: up at USD1.3437 (USD1.3422)
USD: up at JPY115.47 (JPY115.18)
GOLD: up at USD1,789.69 per ounce (USD1,784.78)
OIL (Brent): down at USD89.20 a barrel (USD90.59)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UN Security Council is set to discuss the latest chapter in the Ukraine conflict for the first time on Monday, as a build-up of Russian troops near the border causes tensions to spiral with the West. The US put the issue on the agenda last week after informal talks with other Security Council members and Ukraine. "This is not a moment to wait and see. The council's full attention is needed now, and we look forward to direct and purposeful discussion on Monday," said US ambassador to the UN Linda Thomas-Greenfield. The deliberations are to be held in public. The US and its Western allies have repeatedly warned of a possible imminent invasion of Ukraine. They are demanding a withdrawal of some 100,000 Russian troops from the border region.
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The latest coronavirus wave weighed on Chinese manufacturing activity at the start of 2022, according to two surveys. The Caixin purchasing managers' index fell to 49.1 points in January from 50.9 December. Any figure above the no-change mark of 50.0 indicates expansion and one below signals contraction, indicating growth slipped into reverse in January after a modest rise in December. The reading signalled the second deterioration in overall business conditions in the past three months, Caixin noted.
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Meanwhile, China's official PMI inched down to 50.1 points. The survey data from the National Bureau of Statistics showed a slight decrease from last month's reading of 50.3 points, when activity was buoyed by an easing of commodity prices. The non-manufacturing business activity index was 51.1 in January, down 1.6 points from the previous month. The decline was due in part to a slowing recovery in the services sector and a seasonal slowdown in construction, the statistics agency said.
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Japan industrial output slowed sharply at the end of 2021, figures from the Ministry of Economy, Trade & Industry showed. Industrial production rose 2.7% year-on-year in December, slowing from growth of 5.1% in November and undershooting market forecasts, according to FXStreet, of 9.7%. Month-on-month, production fell 1.0%, reversing sharply after 7.0% growth in November. However, output is seen soon returning to growth. Production is expected to grow 5.2% month-on-month in January and 2.2% in February.
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Spain's annual inflation rate slowed in January, figures from statistics agency INE showed, as electricity prices eased. Separate figures from INE, meanwhile, showed retail sales declined annually in December. Spain's yearly inflation rate ebbed to 6.0% in January from 6.5% in December, according to a flash estimate. The figure was below FXStreet-cited consensus of 6.7%. On a harmonised basis, allowing for EU-wide comparison, annual inflation eased to 6.1% in January from 6.6% in December. On a monthly basis, consumer prices fell 0.5% in January, following a 1.2% rise in December. By the harmonised measure, consumer prices declined 0.9% monthly, following December's 1.1% increase.
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The US Federal Reserve is not ruling out raising rates by half a percentage point if inflation remains high, Fed official Raphael Bostic said in an interview with the Financial Times. The chair of the US central bank, Jerome Powell, signalled this week the Fed plans to hike interest rates in March, telling reporters the recovery in the world's largest economy is strong enough that it can handle higher borrowing costs. Powell declined to give details on the size of the planned increase, saying only that the Fed would be flexible. It typically raises rates by a quarter of a percentage point; a half-point increase would be uncommon. In an interview with the Financial Times published Saturday night, Bostic, who heads the Federal Reserve Bank of Atlanta, said that "every option is on the table for every meeting." He still expects three quarter-percentage-point hikes by the end of the year.
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Italian deputies re-elected Sergio Mattarella as president, ending a week of quarrelling between the nation's political parties. In the eighth round of voting, Mattarella got the required absolute majority of at least 505 votes from lawmakers and regional representatives, the president of the Chamber of Deputies, Robert Fico, announced. It had been unclear in previous days whether the 80-year-old head of state would stand for a second seven-year term. He had initially pushed back against the idea. But after the seventh round on voting earlier on Saturday delivered another inconclusive result, Mattarella agreed to run for a second term and secured to support of the majority of parties. Mario Draghi, the prime minister, was considered the favourite for the role. However, since he cannot hold both positions, many politicians had wanted Mattarella to stay in office so as not to endanger Draghi's technocratic government, which has been praised for its public health and economic policies during the Covid-19 pandemic.
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UK Prime Minister Boris Johnson has set out plans to capitalise on Brexit and is expected to move forward with the levelling up agenda this week as he awaits the findings of the highly anticipated "partygate" report. Two years to the day since the UK left the EU, the government has launched a new "Brexit Freedoms" Bill as part of a drive it claims will "cut GBP1 billion of red tape" for businesses. The long awaited Levelling Up White Paper is also expected to be published this week – although a policy trailed over the weekend was heavily criticised by the opposition. The announcements will be seen as an attempt by Johnson to steer the narrative away from toxic "partygate" allegations that have dominated the news agenda in recent weeks. But Downing Street was in hot water again overnight on Sunday as a senior official who worked in No 10 during the pandemic lashed out at the government over the scandal.
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By Tom Waite; thomaslwaite@alliancenews.com
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