(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Saudi Aramco is mulling floating its trading arm, as oil prices surge, Bloomberg reported. Citing people familiar with the matter, Bloomberg said the oil company is working with Goldman Sachs, JPMorgan and Morgan Stanley in connection to a potential initial public offering of Aramco Trading Co. The trading arm could potentially be worth more than USD30 billion, Bloomberg reported. Two of the people familiar with the matter said Saudi Aramco could sell a 30% stake in the unit.
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Luxury fashion retailer Burberry reported annual results in line with market expectations and has maintained its outlook for the year ahead. In the financial year that ended April 2, operating profit rose 4% to GBP543 million from GBP521 million. Adjusted operating profit jumped 32% year on year to GBP523 million from GBP396 million, matching company-compiled consensus. Revenue was up 21% to GBP2.83 billion from GBP2.34 billion, which was again in line with company-compiled consensus. Retail comparable store sales were up 18%, with full-price comparable store sales up 24%. Burberry declared an annual dividend of 47.0 pence, lifted 11% from 42.5p the prior year. Looking ahead, the fashion retailer maintained its guidance of high single-digit revenue growth.
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British Land posted a swing to profit in its recent financial year, as the commercial property market recovered from the hit of the pandemic. At the conclusion of the year that ended March 31, the London-based property development and investment company said EPRA net tangible assets per share stood at 727 pence, up 12% year-on-year from 648p. Net asset value per share grew 13% to 722p from 641p, as the value of its portfolio rose 6.8% to GBP6.73 billion. The property firm swung to a pretax profit of GBP958 million from a loss of GBP1.05 billion the year before. Revenue fell by 12% to GBP410 million from GBP468 million.
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Credit checking firm Experian said it had a "very good year" in the 12 months that ended March 31, as revenue rose by 17% to USD6.29 billion from USD5.37 billion, improving pretax profit by 34% to USD1.45 billion from USD1.08 billion. Experian raised its total dividend by 10% to 51.75 US cents from 47.00 cents. "For the year ahead, we expect organic revenue growth in the range of 7% to 9%, with modest margin improvement at constant exchange rates, supported by continuing investment behind the execution of our strategy," Chief Executive Officer Brian Cassin said.
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Allianz will pay USD6 billion in restitution and fines over a multi-billion fraudulent scheme that hit American teachers, clergy and other investors, US regulators announced Tuesday. Allianz Global Investors US, a US unit of the German financial firm, admitted to violating US securities laws with its "Structured Alpha" scheme which dates to at least January 2016 and was exposed to the stock market downturn in March 2020, said the US Securities & Exchange Commission. Allianz Global, as well as two of three portfolio managers named in the complaint, also agreed to plead guilty in a parallel criminal case, the SEC said. The agency said Allianz and the three portfolio managers doctored key financial figures to make losses look smaller than they were.
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Eni said it has started the process of opening two 'K' current accounts at Gazprombank on a "precautionary basis". The Italian energy firm will open one in euros and the other in Russian rubles. This follows a "unilateral request" from Gazprom Export to amend existing contracts between the two in line with the new gas payment procedure established by the Russian government. Eni noted that deadlines for the payment of gas supplies are scheduled for the next few days.
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Netflix said it laid off about 2% of staff in a belt-tightening move after growth slowed at the once-booming streaming television service. "These changes are primarily driven by business needs rather than individual performance, which makes them especially tough, as none of us want to say goodbye to such great colleagues," a spokesperson told AFP. About 150 employees have been laid off, most of them in the US, the spokesperson said, adding that Netflix also cut spending on contractors. The moves came just weeks after Netflix reported that it lost subscribers for the first time in more than a decade."Our slowing revenue growth means we are also having to slow our cost growth as a company," the spokesperson said.
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Sony said it has brought forward its deadline for reaching carbon neutrality by a decade, saying it is now targeting net-zero emissions across its business by 2040. The Tokyo-based electronics and entertainment firm said the decision was taken "as climate change risks become more apparent and serious worldwide, and the transition to a decarbonised society has become an urgent issue". Sony said it wants its own factories to be carbon neutral by 2030, also a decade earlier than its previous goal, and plans to reach that by increasing use of renewable power and energy-saving. Eliminating emissions from areas "such as products, supply chains, and logistics", however, is to be achieved in part by investing in start-ups focused on carbon removal and projects that encourage carbon absorption with so-called augmented ecosystems, technology over which climate campaigners have raised doubts.
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MARKETS
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Stock prices and currency rates were adjusting to two inflation reports out on Wednesday. While Asia-Pacific equities had a positive day, European markets were narrowly mixed, and the US was called to open lower. The pound was suffering after data showing that consumer prices are rising faster in the UK than elsewhere in Europe. "The UK now has the sharpest CPI inflation rate in the G7. Core inflation at 6.2% is now substantially above the euro area at 3.5%," commented Davy Research. "Brexit has no doubt contributed to the exceptional cost pressures and labour shortages hitting the economy. The May consensus forecast is for just 1% UK GDP growth in 2023, accompanied by 4.3% CPI inflation - the clear under-performer amongst the G7."
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CAC 40: down 0.1% at 6,423.69
DAX 40: marginally higher, up 1.87 points at 14,187.81
FTSE 100: up 0.1% at 7,522.59
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Hang Seng: closed up 0.2% at 20,644.28
Nikkei 225: closed up 0.9% at 26,911.20
S&P/ASX 200: closed up 1.0% at 7,182.70
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DJIA: called down 0.2%
S&P 500: called down 0.4%
Nasdaq Composite: called down 0.7%
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EUR: down at USD1.0510 (USD1.0534)
GBP: down at USD1.2380 (USD1.2465)
USD: soft at JPY129.23 (JPY129.29)
Gold: down at USD1,815.50 per ounce (USD1,820.68)
Oil (Brent): down at USD113.11 a barrel (USD115.10)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Annual inflation in the eurozone remained steady in April but quickened in the European Union. Eurostat's harmonised index of consumer prices in the eurozone rose 7.4% in April on an annual basis, unchanged from the annual rise in March. This came in slightly below FXStreet-cited market consensus estimates of 7.5%. In the EU, annual inflation was 8.1%, picking up speed from 7.8% the month prior. On a monthly basis, the HICP rose 0.6% in the eurozone, slowing from the 2.4% rise in March. This was in line with market estimates.
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Consumer prices in the UK shot up in April, setting a record pace of inflation, official data showed, as pressure continues to mount on the Bank of England to rein in spiralling costs. Versus the prior month, consumer prices were up 2.5% in April, accelerating from March's 1.1% rise, but short of market forecasts - according to FXStreet - of a 2.6% month-on-month rise. Annually, consumer prices jumped 9.0%, accelerating from March's 7.0% rise, but again was slightly behind market expectations of 9.1%. It was the fastest measured inflation rate since records began in 1989, and the ONS estimates it was the highest since 1982.
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The average UK house price jumped by GBP24,000 in the year to March, according to official figures. The typical property value was GBP278,000 in March 2022 – following a GBP24,000 annual increase, the Office for National Statistics said. The annual growth rate in March, at 9.8%, was lower than an 11% annual increase in February.
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The EU has threatened to retaliate with "all measures at its disposal" if the UK proceeds with controversial plans to rip up parts of the Northern Ireland protocol. The UK foreign secretary has set out her intention to bring forward legislation within weeks, overwriting parts of the post-Brexit deal, freeing goods destined to stay within the UK from EU-level checks. Liz Truss told the Commons the move was needed to reduce "unnecessary bureaucracy" and to protect the Good Friday agreement, arguing that the EU's proposals "would go backward from the situation we have today". She said the bill would take measures to protect the EU single market by implementing "robust penalties" for those who "seek to abuse the new system". But European Commission Vice-President Maros Sefcovic criticised her plan and warned that Brussels could retaliate. Should the UK proceed with the bill, the EU will respond with "all measures at its disposal", he said.
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Finland and Sweden on Wednesday handed in their bids to join the US-led alliance NATO, after Russia's invasion of Ukraine up-ended decades of military non-alignment. "The applications you have made today are an historic step. Allies will now consider the next steps on your path to NATO," NATO chief Jens Stoltenberg said, after receiving the bids from the Finnish and Swedish ambassadors at the alliance's headquarters. The membership push could represent the most significant expansion of NATO in decades, doubling its border with Russia, and President Vladimir Putin has warned it may trigger a response from Moscow. But the applications face resistance from NATO member Turkey, which has threatened to block them over accusations the Nordic neighbours act as safe havens for armed groups opposed to Ankara.
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Japan's economy shrank slightly in the first quarter of 2022, official data showed Wednesday, hit by Covid-19 restrictions and higher prices. The world's third-largest economy shrank 0.2% quarter-on-quarter in the January-March period, slightly less than the market expectations of a 0.4% contraction. It followed a modest rebound in the final three months of 2021 that proved short-lived after Japan put Covid restrictions in place as an outbreak fuelled by the Omicron coronavirus variant took hold in January. Growth was also hit by the rising cost of imports with energy prices surging and the yen falling to its lowest level against the dollar in 20 years.
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The US central bank wants to see economic growth slowing and "clear" evidence of inflation decelerating before it pulls back on its efforts to tamp the brakes on the economy, Federal Reserve Chair Jerome Powell. The Fed earlier this month announced the biggest interest rate increase since 2000 as it combats the highest US inflation in four decades, and Powell said policymakers agree another aggressive increase is "on the table" in June and July. "What we need is to see... growth moving down from the very high levels that we saw last year, moving down to a level that's still positive" but allows supply to catch up with demand, Powell said at an event with The Wall Street Journal. Central bankers need to see "clear and convincing evidence that inflation pressures are abating and inflation is coming down. And if we don't see that, then we'll have to consider moving more aggressively," he said.
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Kyiv on Tuesday said peace talks to end fighting with Russia in Ukraine had been suspended and blamed Moscow for failing to find areas for compromise. "The negotiation process is on hold," Mykhaylo Podolyak, a presidential aide was cited as saying in a statement issued by the presidency. Podolyak, who is also Kyiv's lead negotiator in talks with Russia's delegation, said Moscow was blind to its "extremely negative" role in the world. "The strategic objective of the Russians is: all or nothing," Podolyak was cited as saying. He said Russian failed to understand that the war is "no longer taking place according to its rules, its timetable, or its plans".
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By Tom Waite; thomaslwaite@alliancenews.com
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