(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Rio Tinto's deal to acquire Turquoise Hill Resources could be hit by legal opposition, a top investor in the Canadian miner threatened. Pentwater Capital Management, which has recently topped up its stake in Turquoise to 12%, said it will explore an "exercise of dissent rights or other legal action" in a bid to block Rio's buyout. Rio Tinto reached an agreement with Turquoise Hill on an improved CAD43-per-share, around USD33.00, takeover offer. Pentwater on Friday hit out at that sum. It said the CAD43 per share figure implies an equity value of CAD8.65 billion, about USD6.64 billion. This is a "fraction" of the free cash flow Pentwater expects Turquoise Hill to generate over the next 10 years.
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Miner Antofagasta said severe sea swells in August overturned a construction platform working on the marine works of the Los Pelambres desalination plant project. These have continued, impeding further recovery work. As a precautionary measure, the Chilean environmental authority has instructed that marine works should be placed on hold "until the clean-up of the remaining sunk equipment carrying fuel or lubricants is progressed such that any risk of environmental impact is removed". Antofagasta added: "The recovery of the lost equipment and materials is underway and is expected to be completed once weather conditions improve. To date, there has been no material impact to the expected completion date of the overall desalination plant project."
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Ladbrokes owner Entain is under investigation in Australia for its compliance with the country's anti-money laundering laws. "The investigation will focus on whether Entain has complied with its obligations under the [Anti-Money Laundering and Counter-Terrorism Financing Act]," the Australian Transaction Reports & Analysis Centre said. This follows an "extensive" supervisory campaign assessing the corporate bookmakers sector, it said, which may lead to other areas of focus in this industry. The Australian probe comes a month after the UK Gambling Commission fined the Ladbrokes and Coral owner GBP17 million for its failures in social responsibility and anti-money laundering.
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Serco said Chief Executive Rupert Soames intends to retire from the firm in September next year, at which point he will have served the outsourcer for over nine years. He will step down as CEO at the end of 2022 and will be succeeded by Mark Irwin, who is currently the CEO of Serco's UK & Europe division. "It has been the privilege of my working life to lead Serco for the last eight years, but it is now time for me to outsource myself," said Soames.
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MARKETS
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Stock markets were rising on Monday, as market participants positioned themselves ahead of a key inflation reading in the US, due on Tuesday. The pound and euro also were rising ahead of the data, which is expected to influence the next policy move by the US Federal Reserve. The Fed issues its next interest rate decision on Wednesday next week. The Bank of England's own policy decision was due to take place this Thursday, but has been delayed by one week following the death of Queen Elizabeth II.
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CAC 40: up 1.3% at 6,295.61
DAX 40: up 1.7% at 13,316.47
FTSE 100: up 1.3% at 7,449.87
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Financial markets closed in China for Mid-Autumn Festival.
Nikkei 225: closed up 1.2% at 28,542.11
S&P/ASX 200: closed up 1.0% at 6,964.50
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DJIA: called up 0.5%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.7%
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EUR: up at USD1.0174 (USD1.0003)
GBP: up at USD1.1683 (USD1.1580)
USD: up at JPY142.72 (JPY142.53)
Gold: up at USD1,726.89 per ounce (USD1,715.81)
Oil (Brent): up at USD93.75 a barrel (USD91.75)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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King Charles III paid tribute to the reign of the late Queen, "unequalled in its duration, its dedication and its devotion", as he was formally declared the UK's new monarch. During a poignant and sombre meeting of the Accession Council, the King spoke movingly about his mother and the grief his family is experiencing, but said the "sympathy expressed by so many to my sister and brothers" had been the "greatest consolation". A number of procedural matters were completed including the King approving the day of the late Queen's funeral, to take place on Monday, September 19, to be a bank holiday.
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US President Joe Biden will attend the Queen's funeral, officials have confirmed, amid reports that foreign heads of state will be asked to catch a coach to the service. Dignitaries will travel to Westminster Abbey in escorted coaches and "because of tight security and road restrictions" they will be required to leave their private state vehicles behind, according to leaked documents, seen by Politico. It reported that only heads of state and their spouses or partners will be invited to the event on September 19, due to limited space within the historic building. It comes as the White House confirmed that Biden will attend the funeral, along with his wife Jill.
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The Australian prime minister has faced backlash from the business and health care sector following the announcement of a one-off bank holiday to mark a national day of mourning for the late Queen. Anthony Albanese announced on Sunday that Australia will observe a bank holiday on September 22 following the monarch's funeral on September 19. The news quickly drew criticism from healthcare professionals, who say the short-notice nature of the bank holiday will cause huge disruption to their sector where consultations and operations are arranged weeks and sometimes months in advance. On Sunday, King Charles III was officially proclaimed as Australia's new head of state with ceremonies taking place at Government House and Parliament House in Canberra.
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UK gross domestic product rebounded by less than expected in July, official data showed. The UK economy expanded 0.2% month-on-month in July, the Office for National Statistics said. This marked a recovery from June's 0.6% slide, but undershot market forecasts for 0.5% growth. Services grew by 0.4% in July after a fall of 0.5% the month before. This was the main driver behind the rise in GDP. Production fell 0.3%, trimming but extending June's 0.9% fall, and construction declined 0.8% after a fall of 1.4% in June. Annually, GDP rose 2.3% in July, accelerating from June's 1.9% rise. In the three months to July, the UK economy stagnated entirely as a 0.2% decline in services offset growth of 0.6% in production and 1.4% in construction. Separately, the ONS said the UK trade deficit slimmed to GBP19.36 billion in July from GBP22.85 billion in June.
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Joachim Nagel, president of Germany's central bank, said the European Central Bank will need to continue to raise interest rates, Bloomberg reported. The ECB unveiled a record 75 basis point rate hike on Thursday. "Thursday's step was a clear sign and if the inflation picture stays the same, further clear steps must follow," Nagel told Deutschlandfunk in a radio interview on Sunday. Bundesbank President Nagel said inflation could peak at more than 10% in December. "In the course of 2023, the inflation picture is likely to weaken somewhat," he said. Still, the rate "is likely to be at a far-too-high level of over 6%".
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Italy's industrial production rose on a monthly basis in July, reversing a decline the month before, figures from national statistics office Istat showed. Factory output increased by 0.4% on a monthly basis in July after decreasing by 2.1% in June and against market estimates, as cited by FXStreet, of a less-marked increase of 0.3%. On an annual basis, the 1.4% decrease in July followed a 1.2% decrease in June, worst than consensus of a 0.4 decrease.
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Bank of Japan Governor Haruhiko Kuroda said the yen's recent struggles are undesirable, Reuters reported on Friday. Kuroda met with Prime Minister Fumio Kishida to discuss the currency, as it hurtles towards JPY150. The yen is currently priced at levels not seen since 1998, despite its status as a safe-haven currency in the midst of the war in Ukraine. "Sharp currency moves are undesirable as they destabilise corporate business plans and heighten uncertainty," Kuroda told reporters after the meeting. "When the yen is moving 2 to 3 yen per day, that's a rapid move," Kuroda said, when asked about the Japanese currency's recent fluctuations.
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Russian troops were withdrawing from key areas of Ukraine's Kharkiv region, including the strategically important city of Izyum, the Defence Ministry in Moscow said on Saturday, as Kiev's counteroffensive to recapture territory gained momentum. Russian troops were also to withdraw from the city of Balakliya, which the Ukrainians had reported as having liberated last week. The Russian Defence Ministry said the regrouping is intended to strengthen units in the neighbouring Donetsk region. But according to many military experts the pressure of the massive Ukrainian advance in Kharkiv has pushed the Russians to pull back. More than 10,000 Russian soldiers were said to be threatened with encirclement by Ukrainian troops. President Volodymyr Zelensky on Saturday evening said that, since the beginning of the month, the Ukrainian army recaptured around 2,000 square kilometres of territory in areas previously occupied by Russia as part of Kiev's counter-offensive.
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By Tom Waite; thomaslwaite@alliancenews.com
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