(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Philip Morris International said it has agreed a deal to buy London-listed asthma treatment firm Vectura Group, as the Marlboro cigarette maker looks to expand beyond tobacco and nicotine. Philip Morris will pay 150 pence per share in cash for Vectura, a Wiltshire, England-based inhaled drug delivery devices maker. Adding a 19p interim dividend, the deal values the FTSE 250 constituent at GBP1.04 billion. Shares in Vectura closed at 135.6p on Thursday, giving the company a market capitalisation of GBP805 million. The stock was up 13% on Friday before midday to 153.40p. Following the PMI offer, Vectura's directors withdrew their recommendation for a GBP958 million takeover by funds managed by private equity firm Carlyle Group. PMI's offer is a 10% premium to Carlyle's 136p per share bid.
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London-based commercial property developer Land Securities said it made good progress with rent collection in the June quarter. As at July 7, 81% of net rent due on June 24 had been paid. Of the GBP18 million of rent outstanding, GBP6 million relates to customers who have withheld payment pending documentation of agreed concessions. Landsec also confirmed that the first quarter dividend for the current financial year will be 7.0p per share, paid in October.
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Pfizer and BioNTech announced they would seek authorization for a third dose of their Covid-19 vaccine to boost its efficacy, as the Delta variant drove devastating outbreaks in Asia and Africa and cases rose again in Europe and the US. Pfizer and BioNTech said they expect that a third dose will perform well against the Delta strain, and that they will be seeking authorization in the US, Europe and other regions in coming weeks. Initial data from an ongoing trial showed a third shot pushed antibody levels five to 10 times higher against the original coronavirus strain and the Beta variant, first found in South Africa, compared to the first two doses alone, according to a statement. The companies said they expected similar results for Delta – but added they are also developing a Delta-specific vaccine against the strain.
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SoftBank Group plans to invest a further USD5 billion in Latin American companies, bringing its total investment in the region to USD10 billion, Bloomberg reported. SoftBank is "close to approving the new capital allocation" for investments in the region, ranging from seed funding to startup rounds, Bloomberg reported. It said SoftBank may extend its existing USD5 billion fund in the region or create a SoftBank Latin America Fund 2, still fronted by the group's Chief Operating Officer Marcelo Claure. Bloomberg added that a SoftBank spokesperson said discussions are underway, but no decision has been made yet.
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MARKETS
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European stock markets shrugged off negative sessions in the US and Asia to trade higher on Friday, in a positive end to a poor week for equities. Wall Street also was called to partially rebound at the open. "While we think that the stellar performance of many 'risky assets' over the past year will not be replicated over the next few, we also doubt today's generalised sell-off will continue," commented Franziska Palmas, markets economist at Capital Economics. "The shift to a broad-based sell-off in risky assets today adds to other signs that investor sentiment is souring, perhaps owing to growing evidence that shortages are holding back economic growth in the US; further signs that growth in China is slowing; and the continued spread of the delta variant." She added: "We still expect equities generally to make some more ground between now and the end of 2023, but suspect that gains will be much smaller than over the past year or so."
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CAC 40: up 1.9% at 6,517.96
DAX 30: up 1.0% at 15,570.90
FTSE 100: up 0.8% at 7,090.02
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Hang Seng: closed up 0.7% at 27,344.54
Nikkei 225: closed down 0.6% at 27,940.42
S&P/ASX 200: closed down 0.9% at 7,273.30
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DJIA: called up 0.6%
S&P 500: called up 0.4%
Nasdaq Composite: called up 0.1%
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EUR: soft at USD1.1838 (USD1.1842)
GBP: up at USD1.3786 (USD1.3763)
USD: up at JPY110.07 (JPY109.79)
GOLD: up at USD1,802.95 per ounce (USD1,796.50)
OIL (Brent): up at USD74.69 a barrel (USD73.70)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's consumer inflation eased in June on the back of falling pork prices, official data showed Friday, although factory gate costs remained elevated after a recent surge in commodity prices. The world's second-largest economy has largely bounced back from the coronavirus hit, and factory gate inflation began to ease last month after surging at the highest rate in more than a decade earlier in the year as commodity prices spiked. China's consumer price index, a key gauge of retail inflation, rose 1.1% on-year in June – lower than analysts expected, and down from the month before. The producer price index, which measures the cost of goods at the factory gate, rose 8.8% on-year – edging down from the 9.0% surge in May.
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The US will add more than 10 more Chinese firms to an economic blacklist due to alleged human rights abuses against Muslim minority groups in Xinjiang, Reuters reported. An announcement from Joe Biden's administration could be made as early as Friday, Reuters added, citing two sources. The identities of the companies were not immediately known, though some firms from other nations could also be added to the list. One of the news agency's sources said 14 Chinese companies could be added to the list.
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EU lawmakers called for officials from the bloc to skip the 2022 Beijing Winter Olympics unless China improves on human rights in Hong Kong and for the Uyghur Muslim minority. The European Parliament vote was another sign of souring ties between the EU and China, already hit by a round of tit-for-tat sanctions over the rights issue that effectively blocked the ratification of a long-negotiated investment deal. China's Commissioner's Office in Hong Kong slammed the vote as "political grandstanding and a stumbling block to mutually beneficial cooperation between China and the EU". The non-binding resolution passed with 578 votes in favour, 29 against and 73 abstentions.
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China has hit back at UK calls to boycott the 2022 Beijing Winter Olympics, saying any such practice "is doomed to fail". The Foreign Affairs Committee of Parliament said on Thursday the government should boycott the Games to heap pressure on China over its alleged mass detention of more than one million Uighur Muslims in Xinjiang. Following a similar call from Labour, the committee said ministers should not attend the Beijing Winter Olympics and "should urge others not to do so". However, China's Foreign Ministry spokesman Wang Wenbin dismissed the boycott threat as an "attempt to disrupt, obstruct and sabotage the preparation and convening of the Beijing Winter Olympic Games out of political motivation". UK Prime Minister Boris Johnson said during Prime Minister's Questions on Wednesday he will consider calls for a diplomatic boycott, but is "instinctively against" taking such action.
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The UK economy grew for a fourth straight month in May, the Office for National Statistics said, but by less than expected despite pubs and restaurants in England being able to serve indoors again. UK gross domestic product grew 0.8% in May from April, missing forecasts for a stronger monthly gain of 1.7%, according to FXStreet, and below April's growth of 2.0%, which itself was revised down from 2.3%. The economy remains 3.1% below its pre-virus levels, the ONS said. For the first quarter of 2021, the UK economy is estimated to have shrank by 1.6% from the fourth quarter of 2020, revised from the initial reading of a 1.5% decline. Compared with the same quarter a year ago, the UK economy shrank by an unrevised 6.1%.
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UK Chancellor of the Exchequer Rishi Sunak has stressed the benefits of getting back to the workplace when coronavirus restrictions lift. The order to work from home is expected to be scrapped on July 19 in England and Sunak said he looked forward to the shift back to offices. Sunak told the Daily Telegraph: "I think for young people, especially, that ability to be in your office, be in your workplace and learn from others more directly, is something that's really important and I look forward to us slowly getting back to that." Meanwhile, the NHS Covid-19 app could be tweaked to make it less sensitive to prevent people being "pinged" unnecessarily. The head of the UK Health Security Agency, Jenny Harries, told the Commons Public Accounts Committee on Thursday that work was being done to "tune" the app to work within an increasingly vaccinated population to ensure it was there "for a purpose, not for annoyance".
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Bookings to amber list countries have taken off in the UK following the announcement fully vaccinated passengers will not need to quarantine upon their return, travel firms said. Transport Secretary Grant Shapps told MPs on Thursday that UK holidaymakers who have received two jabs from the NHS will no longer be required to self-isolate for 10 days on their return to England from destinations on the amber list. Travel firm Skyscanner said 30 minutes after the announcement, the agency saw a 53% increase in traffic from the UK compared to the same time on Wednesday.
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The decline in UK retail footfall compared to Covid-free times failed to improve in June, though a rise in staycations boosted smaller towns and cities, numbers on Friday showed. According to the British Retail Consortium, UK retail footfall fell by just under 28% from two years earlier in June. The BRC noted a 0.1 percentage point improvement from May's two-year decline. June's number also compares favourably to the three-month average decline of 31%. In UK high streets, footfall was 33% lower on a two-year basis in June, bettering the three-month average fall of 37%. There 36% fewer visits to shopping centres compared to two years earlier, compared to the three-month average drop of 41%.
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A lockdown in Australia's largest city was tightened Friday, as new Covid-19 infections hit a record and authorities warned an outbreak of the Delta variant was spinning out of control. "Do not leave your home unless you absolutely have to," state premier Gladys Berejiklian told Sydney's five million residents, as the city recorded 44 new cases in 24 hours. Sydney is now in its third week of lockdown, but continues to post record new infections among a population that is overwhelmingly unvaccinated. Berejiklian tried to shock New South Wales residents into compliance, warning they were facing the greatest threat to their safety "since the pandemic started", following a lack of adherence to stay-at-home rules. Sydney has seen 439 new infections since mid-June.
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International Monetary Fund Managing Director Kristalina Georgieva said the lender's executive board has backed increasing its special drawing rights by USD650 billion as it looks to support countries recover from the Covid-19 crisis. The increase would be the biggest ever for SDRs, which are international reserve assets that aid governments in protecting their financial reserves against global currency fluctuations, and also help the IMF calculate loans and interest rates. "The IMF executive board yesterday concurred in my proposal for a new general SDR allocation equivalent to USD650 billion – the largest allocation in the IMF's history - to address the long-term global needs for reserves during the worst crisis since the Great Depression," Georgieva said in a statement.
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By Tom Waite; thomaslwaite@alliancenews.com
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