(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Goldman Sachs, Wells Fargo and Citigroup joined US banking peers in releasing shareholder payout plans after the Federal Reserve's annual stress test. Last week, the Fed said the largest banks operating in the US have sufficient resources to withstand a severe economic downturn and continue providing financing to American families and firms. With the results in hand, banks could announce plans for dividend payments and share buybacks starting Monday at 2030 GMT, an official said at the time of the stress test release. As a result, Goldman upped its quarterly dividend to USD2.50 per share from USD2.00 and Well Fargo to USD0.30 from USD0.25. Citi maintained its quarterly dividend unchanged at USD0.51. Bank of America earlier had said it plans to increase its quarterly dividend by 5% to USD0.22. Morgan Stanley, meanwhile, said it will raise its dividend to USD0.775 from USD0.70 per quarter. JPMorgan Chase & Co said it will maintain its current quarterly dividend of USD1.00.
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Algerian state energy firm Sonatrach announced the discovery of an "important" deposit of gas condensate in the Hassi R'mel field in the Sahara desert. "Sonatrach announced today that it has identified a significant potential of hydrocarbons...at the level of the Hassi R'mel exploitation perimeter," a statement by the firm said. The deposit is estimated to have between 100 and 340 billion cubic metres of gas condensate, the statement said. "These volumes constitute one of the largest revaluations of reserves in the last 20 years," it added. Sonatrach plans to start operating the field in November, with production expected to reach 10 million cubic metres per day. Algeria has proven natural gas reserves of about 2.4 trillion cubic metres and supplies Europe with about 11% of its gas imports. Sonatrach said in February that it was prepared to increase supplies to Europe in the wake of Russia's invasion of Ukraine. In May, the Algerian firm signed a memorandum of understanding with Italy's Eni to boost gas exploration in the North African country.
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Power utility SSE said its thermal power generation subsidiary SSE Thermal, together with Equinor, have entered into an agreement to acquire Triton Power Holdings from Energy Capital Partners for a total of GBP341 million, shared equally between the two partners. SSE said the joint venture is intended to drive decarbonisation of the UK's power system whilst contributing to security of supply and grid stability through "flexible power generation in the shorter term". Following completion, SSE Thermal and Equinor will jointly own and run Triton Power on a 50:50 basis. Triton Power operates the Saltend power station, which is a 1.2 gigawatt combined cycle gas turbine and combined heat and power station located on the north of the Humber Estuary in East Yorkshire.
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Pennon's South West Water arm became the latest to be targeted in the UK Water Services Regulation Authority's investigation into the environmental performance of water companies. Pennon acknowledged that South West Water is now part of an ongoing probe into how water and wastewater companies manage their wastewater treatment works. The Exeter-based utility said it will work "openly and constructively" with Ofwat. Five earlier enforcement cases were opened in March against other UK-based water companies.
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The Irish government confirmed it has reduced its stake in AIB Group, though it still retains a majority holding following the taxpayer bailout of the Dublin-based bank during the financial crisis over a decade ago. The Irish Department of Finance said it sold 133.9 million AIB shares, or a 5% stake, at a price of EUR2.28 per share,worth EUR304.8 million in total. The placing was run by Goldman Sachs and Goodbody Stockbrokers as joint bookrunners. AIB shares were down 6.4% at 198.50 pence per share in London on Tuesday. This brings the Irish state's shareholding down to 63.5%.
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Jupiter Fund Management said Chief Executive Officer Andrew Formica is to retire from his role and the board on October 1. Formica will be succeeded by Chief Investment Officer Matthew Beesley at that time. Jupiter said Beesley will be appointed to the board and promoted to deputy CEO with immediate effect and will retain his CIO responsibilities during the transition.
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Heathrow Airport must reduce its passenger charges amid a surge in demand for flights, the aviation regulator announced. The Civil Aviation Authority said the cap on the west London airport's average charge per passenger will fall to GBP26.31 in 2026 from GBP30.19 currently. This is equivalent to nearly a 6% reduction each year when the effects of inflation are removed, the CAA noted. The decision follows a bitter dispute between the west London airport and airlines about what the cap should be. Charges are paid by airlines, such as International Consolidated Airlines Group's British Airways, but are generally passed on to passengers in air fares.
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Speciality chemicals firm Croda International said it has entered into an agreement with the US government. The agreement will see Washington provide up to USD75 million to expand Croda's US manufacturing capacity of ingredients for lipid systems used in novel therapeutic drugs, such as mRNA vaccines. Croda said it will invest up to USD58 million itself, bringing the total project investment to up to USD133 million. This spend is included within the company's existing capital expenditure programme, outlined in the 2021 annual results, it noted. The award was by the US Biomedical Advanced Research & Development Authority, which sits within the US Department of Health & Human Services. Lipid systems offer potential as the delivery system for a wide range of nucleic acid applications, including novel mRNA-based therapeutics, such as flu vaccines and cancer treatments.
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Nike on Monday posted annual growth, thanks to a strong performance at Nike Direct and improved margins, despite a weaker fourth quarter. For the year ended May 31, the sports apparel maker said revenue grew 5% year-on-year to USD46.71 billion from USD44.54 billion. This was driven by double-digit growth in Nike Direct, partially offset by a slight decline in wholesale revenue. Net profit grew 6% to USD6.05 billion from USD5.73 billion, as diluted earnings per share increased to USD3.75 from USD3.56. Annual gross margin improved to 46.0% from 44.8%. This was due to margin expansion at Nike Direct, with a higher mix of full-price sales and favourable effects from currency exchange rates. The improvement was partially offset by elevated freight and logistics costs, as well as higher inventory obsolescence reserves in China in the fourth quarter. In the final quarter of the year, revenue slipped 1% to USD12.23 billion from USD12.34 billion a year prior. On a currency-neutral basis, revenue was up 3%. Net profit for the period fell 5% to USD1.44 billion from USD1.51 billion, as diluted EPS dropped to USD0.90 from USD0.93.
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MARKETS
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Equity investors remained in a buoyant mood on Tuesday, despite a slightly lower close in New York on Monday. Oil stocks were benefiting from a rebound in crude prices on renewed concern about supply constraints. In Paris, TotalEnergies was up 2.3%. In Milan, Eni was up 1.9%. In London, Shell was up 2.8% and BP up 3.0%. Ecuador and Libya flagged potential output cuts due to political unrest, SP Angel Energy noted. Meanwhile, the UAE said it is pumping at full capacity. This comes as G7 nations meeting in Germany discussed further further restrictions on Russian oil exports.
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CAC 40: up 1.5% at 6,138.69
DAX 40: up 1.0% at 13,323.24
FTSE 100: up 1.1% at 7,336.65
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Hang Seng: closed up 0.9% at 22,418.97
Nikkei 225: closed up 0.7% at 27,049.47
S&P/ASX 200: closed up 0.9% at 6,763.60
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DJIA: called up 0.7%
S&P 500: called up 0.6%
Nasdaq Composite: called up 0.7%
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EUR: down at USD1.0595 (USD1.0608)
GBP: down at USD1.2280 (USD1.2303)
USD: up at JPY135.72 (JPY135.19)
Gold: up at USD1,826.60 per ounce (USD1,822.51)
Oil (Brent): up at USD116.65 a barrel (USD114.74)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The European Central bank will go "as far as necessary" to fight inflation that is set to remain "undesirably high" for "some time to come", the bank's president said. Soaring inflation is "a great challenge", ECB President Christine Lagarde said in a speech at the bank's annual conference in Sintra, Portugal on monetary policy. "We will go as far as necessary to ensure that inflation stabilises at our 2.0% target over the medium term," Lagarde said.
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G7 leaders have agreed to work on a price cap for Russian oil, a US official said, as part of efforts to cut the Kremlin's revenues. Group of Seven leaders will "task ministers to work urgently towards developing, consulting with third countries and the private sector in an effort to develop a price cap around oil", the senior official told reporters. The official announcement is expected to come in the final communique later as a three-day G7 summit in the Bavarian Alps draws to a close. The US has led the push for an oil price cap at the gathering of the club of rich nations – which also includes Britain, Canada, France, Germany, Italy and Japan.
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A Russian missile strike on a crowded mall in central Ukraine killed at least 18 people in what G7 leaders branded "a war crime". The leaders vowed that Russian President Vladimir Putin and those responsible would be held to account for Monday's strike in the city of Kremenchuk, carried out during the shopping mall's busiest hours. "Indiscriminate attacks on innocent civilians constitute a war crime," they said in a statement condemning the "abominable attack." Ukraine accused Russia of deliberately targeting civilians, with President Volodymyr Zelensky calling it "one of the most brazen terrorist acts in European history" in his evening broadcast posted on Telegram. British Prime Minister Boris Johnson, speaking from the G7 gathering in the Bavarian Alps, said the Kremenchuk attack demonstrated Putin's "depths of cruelty and barbarism." US Secretary of State Antony Blinken said the world was "horrified".
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Consumer sentiment in Germany hit a new record low, data from the GfK consumer climate study showed. GfK said consumer sentiment for July is forecast to fall 1.2 points to negative 27.4 points from negative 26.2 points in June. "The ongoing war in Ukraine and disruptions in supply chains are causing energy and food prices in particular to skyrocket, resulting in a gloomier consumer climate than ever before," GfK consumer expert Rolf Burkl said.
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Turkish President Recep Tayyip Erdogan is due to meet Swedish Prime Minister Magdalena Andersson and Finnish President Sauli Niinisto in Madrid on Tuesday to discuss the stalled Swedish and Finnish bids to join the NATO alliance. Erdogan, who is currently blocking both bids, has accused the two countries of supporting terrorist groups that are banned in Turkey and showed no readiness to compromise on Turkey's position ahead of the talks. "Tomorrow we will go to the NATO summit in Spain and do everything necessary in accordance with the rights and interests of our country," Erdogan said on Monday, according to government sources.
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UK Prime Minister Boris Johnson's bid to effectively tear up parts of the Northern Ireland Protocol has cleared its first Commons hurdle, with no Tory MPs voting against it despite warnings the plans are illegal. MPs voted 295 to 221, majority 74, to give the Northern Ireland Protocol Bill a second reading, which clears the way for it to undergo detailed scrutiny in the coming weeks. Voting lists showed that dozens of Conservative MPs abstained, joining former prime minister Theresa May, who made clear she would not support the legislation as she warned it would "diminish" the UK's global standing and delivered a withering assessment of its legality and impact. The government is aiming to fast-track the Bill through the Commons before parliament's summer recess. However, some MPs who opted not to block it at second reading appear likely to seek amendments, and the House of Lords is also expected to contest parts of the Bill, setting up a lengthy showdown between the two Houses. The EU has also launched fresh legal action against the UK in retaliation over the government's move.
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France's lower house of parliament reopens Tuesday after an election upset for President Emmanuel Macron whose centrist allies are little closer to building a stable majority, putting Prime Minister Elisabeth Borne's job potentially on the line. After this month's ballot brought surges for the far right and hard left, opposition forces have made clear that they will not be lured into a lasting arrangement to support Macron's government which is 37 seats short of a majority. Borne and other senior Macron backers have been trying to win over individual right-wing and moderate left parliamentarians to bolster their ranks, with one MP telling AFP that "the phones are running hot." But Olivier Marleix, head of the conservative Republicans group seen as most compatible with Macron, said that "we have much better things to do today than selling ourselves piecemeal". "It's about making progress for the French people," he told Europe 1 radio on Monday.
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A US delegation arrived in Venezuela to discuss a "bilateral agenda," extending discussions between Caracas and Washington initiated in March, said Venezuelan President Nicolas Maduro. National Assembly speaker, Jorge Rodriguez, "is receiving a delegation from the government of the US, an important delegation that arrived two hours ago in Venezuela," Maduro announced on national public television VTV at around 8:00 pm local time. Rodriguez is also the Venezuelan government's negotiator in talks with the opposition, which have been at a standstill since last October. Washington had sent a high-level delegation to Caracas in early March, a few days after Russia invaded Ukraine. Several observers said the move was aimed at trying to distance Caracas from one of its main allies, Moscow, and discussing an easing of US sanctions on Venezuelan oil after the invasion caused a spike in global fuel prices. The White House confirmed the meeting but only said the discussions had focused in particular on American "energy security." Before its rupture with Washington, Venezuela exported almost all of its oil production to the US.
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By Tom Waite; thomaslwaite@alliancenews.com
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