(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Deliveroo Holdings plunged on its first day of dealings after pricing its initial public offering at GBP3.90 per share, the bottom of a previously marketed range. With conditional dealings in Deliveroo shares starting on Wednesday, the stock was trading at just 295.45 pence in London, down 24% from the IPO price. It hit a low of 271p, down 31%. Last week, Deliveroo set a price range of GBP3.90 to GBP4.60 per share, which would have valued the company at as much as GBP8.8 billion. Since then, institutional investors including Aviva PLC, Standard Life Aberdeen and Legal & General Group said publicly that they won't take part in the IPO, citing concerns including shareholder voting rights and working conditions for couriers. The London-based food delivery company will still raise about GBP1 billion from new shares in the IPO, which it said it will invest in growth opportunities and innovation. The IPO price of GBP3.90 gave the company a valuation of GBP7.59 billion on admission.
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Insurance and reinsurance market Lloyd's of London reported a sharp loss for 2020 but noted it made an underwriting profit when excluding Covid-19 losses. Lloyd's made an aggregated market loss of GBP0.9 billion for 2020, swung from a GBP2.5 billion profit in 2019. Lloyd's said it incurred a net GBP3.4 billion in losses from Covid-19 related claims after reinsurance recoveries, pushing its combined ratio up to 110.3% in 2020 from 102.1% in 2019. Any ratio above 100% means a loss on underwriting. Lloyd's said Covid-19 claims added 13.3 percentage points to its combined ratio. It said it expects Covid-19 claims to total GBP6.2 billion. Gross written premiums were down 1.2% to GBP35.5 billion from GBP35.9 billion in 2019. Lloyd's net investment income slipped to GBP2.3 billion from GBP3.5 billion. "Excluding Covid-19 losses, the market delivered an underwriting profit of GBP800 million, demonstrating a significant improvement in Lloyd's underlying performance. This is supported by 7.8 percentage point improvement of the underlying combined ratio which has dropped to 87.3%," the venerable insurance market explained.
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Wells Fargo said it did not incur any losses as a result of its relationship with troubled fund Archegos Capital. Concerning the situation surrounding Archegos, Wells Fargo stated: "We had a prime brokerage relationship with Archegos. We were well collateralized at all times over the last week and no longer have any exposure. We did not experience losses related to closing out our exposure."
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Julius Baer noted that Switzerland's financial services regulator has lifted a ban on acquisitions which was imposed on the financial services firm in the wake of a money laundering probe. Julius Baer is now free to make acquisitions which could "lead to a significant increase in operating risks and in organisational complexity". Switzerland's FINMA watchdog imposted the ban in February of last year after it found that Julius Baer "fell significantly short in combating money laundering between 2009 and early 2018". The shortcomings were related to the role the company played in corruption cases involving oil and gas company Petroleos de Venezuela SA and football's governing body FIFA.
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New York state lawmakers passed a bill Tuesday legalizing recreational marijuana, with Governor Andrew Cuomo saying he will sign it into law. New York will join 14 other US states and the District of Columbia in permitting cannabis use after the bill was backed by both state chambers, where Cuomo's Democratic Party holds strong majorities. The law will allow adults 21 and over to purchase cannabis and grow plants for personal consumption at home, with a plan to divert some funds to drug treatment and education. New York will automatically clear records of people with past convictions of marijuana-related offences that would no longer be criminalized. The law also will eliminate penalties for possession of up to three ounces of the drug, about 85 grams, the new personal possession limit. The state plans to tax marijuana sales at 9%, with revenue from an additional 4% tax divided between local and county government.
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MARKETS
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Equities were mostly lower globally ahead of the announcement by US President Joe Biden of the details of his infrastructure investment programme and offsetting tax plan.
Commented Stephen Innes, chief global markets strategist at axi: "The USD, which has recently capitalised on weaker equities and risk aversion, is now capitalising on rising bond yields and thoughts of US exceptionalism. The topic of an outsized US economic recovery is in particular focus given President Biden is set to outline his spending plans in a speech tonight is fanning bond desk fires, sending US yields higher, and supporting the dollar big time. In fact, it looks like it's 'open season' on vulnerable low-yielders like the EUR and JPY."
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CAC 40: down 0.1% at 6,079.79
DAX 30: marginally lower at 15,007.27
FTSE 100: down 0.4% at 6,746.39
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Hang Seng: closed down 0.7% at 28,378.35
Nikkei 225: closed down 0.9% at 29,178.80
S&P/ASX 200: closed up 0.8% at 6,790.70
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DJIA: called down 0.1%
S&P 500: called marginally lower
Nasdaq Composite: called up 0.2%
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EUR: up at USD1.1744 (USD1.1730)
GBP: up at USD1.3785 (USD1.3722)
USD: up at JPY110.58 (JPY110.27)
Gold: flat at USD1,685.40 per ounce (USD1,685.50)
Oil (Brent): flat at USD64.19 a barrel (USD64.21)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US President Biden will on Wednesday propose a USD2 trillion infrastructure plan aimed at modernising the US' crumbling transport network, creating millions of jobs and enabling the country to "out-compete" China. The first phase of Biden's "Build Back Better" program, which he will unveil in a speech in Pittsburgh, will detail massive investment spread over eight years. It plans to inject USD620 billion into transport, including upgrading 20,000 miles of roads and highways, repairing thousands of bridges and doubling federal funding for public transit. The investment will be partly paid for by raising corporate tax from 21% to 28%.
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The UK's economic slump for 2020 was revised to 9.8% from a first estimate of 9.9%, according to figures from the Office for National Statistics, though this is still the largest annual fall in the country's output on record. The ONS made larger revisions to quarterly growth figures. Gross domestic product is estimated to have risen 1.3% quarter-on-quarter in the final three months of 2020, revised up from 1.0%. Year-on-year, the decline was 7.3%, also improved on revision from 7.8%. The UK economy is estimated to have fallen 19.5% in the second quarter of 2020, a downwards revision of 0.5 percentage point from a 19.0% fall previously estimated, while third quarter growth is estimated to have been 16.9%, an upwards revision of 0.8 percentage point.
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UK annual house price growth slowed in March, though should remain "buoyant" over the short-term, Nationwide said. House prices fell a seasonally-adjusted 0.2% month-on-month in March after 0.7% growth in February. Annual growth slowed to 5.7% from 6.9%. Nationwide's chief economist Robert Gardner said the slowdown likely reflects a softening of demand ahead of the original end of the stamp duty holiday, which has now been extended.
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Eurozone consumer prices grew as expected in March, according to preliminary figures from Eurostat, though core inflation slowed. Eurostat's flash estimate showed annual inflation quickened to 1.3% in March, from 0.9% in February. The figure was in-line with consensus cited by FXStreet. Energy prices provided the biggest boost in March, up 4.3% yearly, after declining 1.7% in February. Core inflation, which excludes food, energy, alcohol and tobacco, slowed to 0.9% according to the Eurostat estimate, from 1.1% in February. The flash figure was below consensus estimates of a 1.2% uptick.
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Germany's unemployment rate was unchanged in February, though figures showed the number of those out of jobs fell slightly. According to Destatis, Germany's unemployment rate was unchanged monthly at 4.6%. "According to estimates based on the labour force survey, 2.04 million people were unemployed in February 2021. That was a decrease of 3,000, or 0.1%, on January 2021," Destatis added. Destatis said about 44.3 million people in Germany were in employment in February, down by 26,000, or 0.1%, from the month prior.
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French consumer inflation picked up faster than expected in March, according to official estimates. Consumer prices in France rose 1.4% yearly according to preliminary figures by Insee. According to consensus cited by FXStreet, slower growth of 1.3% was expected. In February, consumer prices had risen by 0.6%. Insee said the February increase was due to a "marked rebound" in energy prices. What's more, the decline in prices of manufactured goods was softer in March, Insee added. On a month-on-month basis, inflation quickened to 0.7%, after being stable in February.
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Factory activity in China picked up in March, official data showed, as the country's economic recovery broadened after the Lunar New Year holiday. The purchasing managers' index, a key gauge of manufacturing activity, grew more than expected to 51.9 – from 50.6 in February – according to the National Bureau of Statistics, with production accelerating after the holiday lull and major economies abroad also recovering from coronavirus slowdowns. Non-manufacturing PMI made a significant rebound to 56.3, higher than the Bloomberg forecast of 52.0 and pointing to better performance in industries like construction and higher expectations for hard-hit service sectors.
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Japan's industrial output fell at a greater pace than expected monthly in February, and a further slump in March is also on the cards, according to figures from the Ministry of Economy, Trade & Industry on Wednesday. Industrial output fell 2.1% on a monthly basis in February, following January's 4.3% growth. According to consensus cited by FXStreet, a month-to-month fall of 1.2% was forecast for February, so the official figure underperformed expectations. Annually, output fell 2.6% in February, having fallen 5.2% in January. According to a survey of manufacturers, another monthly fall of 1.9% is forecast, before a 9.3% bounce in April.
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By Tom Waite; thomaslwaite@alliancenews.com
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