(Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Royal Dutch Shell said Andrew Mackenzie will be its next board chair, succeeding Chad Holliday at the annual general meeting on May 18. Mackenzie joined the Shell board back in October, having been chief executive officer of miner BHP Group PLC from 2013 until 2019. Prior to BHP, Mckenzie was head of Industrial Minerals & Diamonds at BHP peer Rio Tinto PLC and also spent 22 years at Shell peer BP PLC. Shell said Mackenzie was born in 1956 and is a British national. Holliday has been chair for six years and had joined the board in 2010.
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HSBC Holdings proposed to phase out all coal power financing by 2040 and affirmed its aim of committing up to USD1 trillion in green financing and investments. It comes after the lender faced pressure from investors and campaign group ShareAction who back in January filed a climate change resolution for HSBC's upcoming annual general meeting. ShareAction was acting on behalf of investors including French asset manager Amundi Asset Management and London-listed Man Group. HSBC noted this resolution for the May 28 annual general meeting has since been withdrawn.
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GlaxoSmithKline and partner Vir Biotechnology said their VIR-7831 Covid-19 antibody reduces hospitalisation and the risk of death in adults. Data from the phase 3 COMET-ICE trial showed the medication reduced hospitalisation and death by 85% compared to a placebo. The duo now plan to "immediately" seek emergency use authorisation in the US and approvals elsewhere.
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Danish health authorities said they are temporarily suspending the use of AstraZeneca's Covid-19 vaccine as a precaution after some patients developed blood clots since receiving the jab. The move comes "following reports of serious cases of blood clots among people vaccinated with AstraZeneca's Covid-19 vaccine", the Danish Health Authority said in a statement. But it cautiously added that "it has not been determined, at the time being, that there is a link between the vaccine and the blood clots".
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BMW said it had a profitable second half of 2020, though the carmaker's earnings for the Covid-19-battered year were still lower. Revenue in the fourth quarter ended December was 0.4% higher at EUR29.48 billion from EUR29.37 billion a year earlier. Quarterly pretax profit jumped 10% annually to EUR2.26 billion from EUR2.06 billion. BMW noted that second half pretax profit was 9.8% higher year-on-year. Its the annual figure which demonstrates how badly carmakers were hurt by the virus. BMW's revenue for 2020 was 5.0% lower at EUR98.99 billion from EUR104.21 billion. Pretax profit dropped 27% to EUR5.22 billion from EUR7.12 billion.
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Rolls-Royce burned through GBP4.2 billion in cash in 2020, a year which grounded its airline customers, and swung to a deeper-than-expected loss. It expects another GBP2 billion in cash outflow in 2021. The jet engine maker reported revenue of GBP11.82 billion for 2020, down 29% from GBP16.59 billion the year before. Its reported pretax loss deepened to GBP2.91 billion from GBP891 million, while it swung to an underlying pretax loss of GBP3.96 billion from profit of GBP583 million. The underlying pretax loss had been seen by consensus coming in at GBP3.14 billion. "Our financial performance in 2020 was significantly affected by the Covid-19 pandemic. The global spread of the virus from March resulted in a sudden deterioration of some of our end markets. A positive albeit reduced contribution from Power Systems and growth in Defence were important to the group's overall performance, partly offsetting the severe impact to our Civil Aerospace business," said Rolls-Royce. It expects to become cash flow positive "at some point" during the second half of this year. Engine flying hours for 2021 are forecast at around 55% of 2019 levels, but the company said things could be worse. "Our severe but plausible downside scenario assumes approximately 45% EFH in 2021 and 70% in 2022, both compared to the 2019 level."
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Advertising and marketing firm WPP said its performance was resilient in 2020, even as revenue fell and it swung to loss. Revenue for 2020 fell 9.3% to GBP12.00 billion, with revenue less pass-through costs down 10% at GBP9.76 billion. The firm swung to a pretax loss of GBP2.79 billion from a GBP1.21 billion profit in 2019 due to impairments of GBP3.1 billion. WPP noted that full-year like-for-like revenue less pass-through costs fell 8.2%, with a sequential recovery from initial lockdowns as the second quarter saw a 15% fall, the third quarter a 7.6% decline and the fourth quarter a 6.5% slip. WPP proposed a final dividend of 14.0p for 2020, bringing the total for the year to 24p versus 22.7p in 2019. The firm added that it is recommencing its share buyback, funded by the proceeds of the Kantar transaction, immediately, planning to purchase up to GBP300 million by June. WPP sold a 60% stake in brand and marketing research firm Kantar to private equity firm Bain Capital in 2019 for USD3.1 billion.
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Wm Morrison Supermarkets reported strong like-for-like growth in its recently-ended financial year, boosted by the closure of restaurants and pubs during virus lockdowns, though profit slipped as it repaid business rates relief. Total revenue for the financial year to January 31 rose 0.4% to GBP17.6 billion, with like-for-like sales, excluding fuel and VAT, up 8.6% compared to a fall of 0.8% the year before. Pretax profit fell 62% to GBP165 million. Profit before tax and exceptional items fell 51% to GBP201 million, including GBP290 million in direct Covid-19 costs. Profit would have been up 5.6% to GBP431 million before the payment of GBP230 million waived government business rates relief, Morrisons noted, and it expects to achieve that same figure in financial 2022.
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MARKETS
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Stock markets in Asia and Europe were mixed after the US stimulus package was passed by Congress and ahead of a European Central Bank monetary policy decision at 1245 GMT. This will be followed by a press conference with President Christine Lagarde at 1330 GMT. Shell 'A' shares were down 1.1%, while HSBC shares were down 5.0%. US equities were called higher, with the Nasdaq Composite looking brightest, having slipped on Wednesday.
"The ECB meeting will be a key determinant of market direction in the near-term now that the US stimulus bill has been passed," said IG Chief Market Analyst Chris Beauchamp. "Investors will be hoping that the bank will address the rise in bond yields and flag its ability to cope with any sudden rise in inflation, although the lack of any coordinated fiscal stimulus in the eurozone to compare with the US makes these concerns less relevant for European assets."
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CAC 40: up 0.1% at 5,997.64
DAX 30: down 0.1% at 14,531.44
FTSE 100: down 0.2% at 6,712.16
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DJIA: called up 0.3%
S&P 500: called up 0.8%
Nasdaq Composite: called up 1.9%
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S&P/ASX 200: closed down marginally at 6,713.90
Hang Seng: closed up 1.7% at 29,385.61
Nikkei 225: closed up 0.6% at 29,211.64
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EUR: up at USD1.1964 (USD1.1900)
GBP: up at USD1.3962 (USD1.3902)
USD: soft at JPY108.43 (JPY108.65)
Gold: up at USD1,736.16 per ounce (USD1,719.15)
Oil (Brent): up at USD68.63 a barrel (USD67.85)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Congress on Wednesday passed Joe Biden's enormous economic relief package, delivering a resounding victory for the president and a desperately needed injection of cash to millions of families and businesses enduring the coronavirus pandemic. The USD1.9 trillion plan, which funds Covid-19 vaccines and sends stimulus checks of up to USD1,400 to most Americans, passed the House of Representatives with zero support from Republicans, who accused Biden of abandoning his Inauguration Day pledge to unify the nation. The White House said Biden - who made the American Rescue Plan his top legislative priority - planned to sign the measure into law on Friday, days before unemployment benefits were scheduled to expire for millions of people.
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Japan's monthly consumer price growth slowed in February, according to figures released by the Bank of Japan. Producer prices were 0.4% monthly in February, slowing from January's 0.5% climb. Another rise of 0.5% was expected for February, according to consensus cited by FXStreet, so the latest figure fell short of expectations. Annually, producer prices fell 0.7%, slowed from January's 1.5% fall. On a monthly basis, there was a 0.3% rise in petroleum and coal products and a 0.1% hike in chemicals.
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China's rubber-stamp parliament voted Thursday for sweeping changes to Hong Kong's electoral system – including powers to veto candidates – as Beijing moves to ensure only "patriots" run the city following huge pro-democracy rallies. Beijing has acted decisively to dismantle Hong Kong's limited democratic pillars after massive and sometimes violent protests coursed through the financial hub in 2019. At last year's meeting of the National People's Congress, the Communist Party leadership imposed a draconian national security law on the finance hub that has since been weaponised against the democracy movement. Dozens of campaigners have been jailed, smothering protests in a city which had enjoyed greater political freedoms than the authoritarian mainland under the "one country, two systems" arrangement established when Britain handed the territory back to China in 1997.
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Germany on Thursday recorded a sharp rise in coronavirus infections, as disease control agency chief Robert Wieler warned that a third wave of the pandemic has begun in Europe's biggest economy. New infections over the last 24 hours shot up to 14,356, a level not seen since February 4, latest data from disease control agency Robert Koch Institute showed. "In Europe, we should be worried," Wieler told the journalists' association ACANU in Geneva on Wednesday. "If I reflect on Germany, we are at the beginning of the third wave," said Wieler, underlining the importance for the population to keep to rules like mask wearing or social distancing. Germany began very gradually easing a partial lockdown from late February, first allowing the youngest pupils to return to school before this week letting some shops reopen again.
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UK Chancellor Rishi Sunak is to be grilled by members of Parliament over his government budget, as he faces questions over National Health Service spending and the widely criticised 1% pay rise for health workers. Sunak will give evidence to the Commons Treasury Committee on Thursday afternoon, a little over a week after he detailed his second budget. He is likely to be quizzed on his move to raise corporation tax from 19% to 23% from 2023 and freezing income tax thresholds as he seeks to rebuild the public finances following the coronavirus pandemic. Committee Chair Mel Stride has been urged to press the chancellor on a series of "key questions" affecting the health system. Chris Hopson, the chief executive of NHS Providers, which represents health trusts, said Sunak must "make good on his promise to meet all Covid costs" and agree the NHS's 2021/22 budget this week. He also called on the chancellor to "honour at least a 2.1% pay rise for deserving NHS staff" in England.
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The Swiss economy will endure a tough first-quarter before a "rapid" rebound later on this year, according to the State Secretariat for Economic Affairs. SECO cautioned that uncertainty in the wake of the Covid-19 pandemic "remains extremely high". "The tightening of measures to contain the spread of the virus have been heavily impacting the affected sectors since late 2020. This has led to a collapse in business activity in parts of the service sector. The Expert Group therefore assumes that Switzerland's GDP will fall significantly in the first quarter of this year," SECO said, but it ruled out a plunge as large as last spring's. SECO predicted a quick recovery should restrictions be allowed to ease.
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