(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Legal & General has maintained positive momentum from the first half into the second, "despite market volatility", which has had a "limited economic impact" on the firm. The financial services firm said it expects to deliver annual operating profit growth in line with the 8% seen in the first half. It said recent "extraordinary" interest rate hikes have been challenging for its pension fund clients and counterparties of its Investment Management liability-driven investment business. However, recent purchases of long-dated gilts by the Bank of England have helped to alleviate the pressure. Its annuity portfolio continues to perform well, and "has not experienced any difficulty in meeting collateral calls and we have not been forced sellers of gilts or bonds", it said. Further, it expects its UK annuity portfolio to be self-sustaining again in 2022.
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Greggs reported higher sales, citing "staycations" as it bet on a new autumn menu and more vegan options for further growth. The Newcastle-based food-to-go seller said total sales were up 15% for the 13 weeks to October 1, as it backed its full year expectations. Greggs continued to expect around 150 net shop openings in 2022. It said: "As expected, year-on-year growth moderated in August given the particularly strong 'staycation' effect seen in 2021, however, momentum returned in September." It acknowledged "considerable" economic uncertainty but expects full-year results to be in line with previous expectations. Looking ahead, Greggs expects cost inflation for 2022 to remain at around 9% on a like-for-like level.
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Anglo American has partnered with EDF Renewables to form a new jointly owned company, Envusa Energy, in its strive towards renewable energy. EDF Renewables is the SA subsidiary of French utility EDF Group. London-based mining company Anglo said newly formed Envusa plans to develop "a regional renewable energy ecosystem" in South Africa. In March this year, the two companies signed a memorandum of understanding to explore the ecosystem's development, which is expected to generate between 3 gigawatts and 5 GW of renewable electricity by 2030. This renewable energy will support Anglo's operational power requirements, as well as local electricity supply systems. As part of the agreement, Envusa will launch a pipeline of more than 600 megawatts of wind and solar projects in SA. Anglo American said this will be the first "major step" towards the development of an ecosystem.
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European budget airlines Ryanair and Wizz Air said that passenger numbers have begun to slow after the summer season, but year-on-year growth remains strong. Ryanair carried 15.9 million passengers in September, up 49% from 10.6 million last year. Load factor was 94% up from 81% year-on-year. However, this is down from August, when the Irish airline recorded 16.9 million passengers and a load factor of 96%. The company also said it operated over 88,850 flights in September, down from 92,800 flights in August. For Wizz Air, passengers in September totalled 4.6 million, up 52% from 3.0 million a year earlier. Load factor was up to 87% from 79% year-on-year. This is down from August, when the Budapest-based airline carried 5.0 million passengers and had a load factor of 91%.
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Twitter said a feature to edit tweets is being rolled out to those subscribing to its Blue service in Australia, Canada and New Zealand. The long-awaited editing tool test "went well," so it is being made more widely available, the San Francisco-based tech firm said in a tweet, adding that it is "coming soon" to the US. The tool will let users edit a tweet up to five times within 30 minutes of initially posting, Twitter said. An icon looking like a slanted pen or pencil will indicate that a tweet has been edited, and a "version history" will be available to show what was changed, Twitter said. Twitter Blue subscriptions are priced at USD5 monthly, according to the company's website.
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MARKETS
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Equities in Europe raced higher on Tuesday, with weak data coming from the US giving rise to hopes that the Federal Reserve may cool off on its determination to continue to hike interest rates. The dollar was being dragged lower, allowing metal prices to rise.
"The key question for investors in any of these markets is whether the moves will last. After all, it is not the first time we have seen such a squeeze this year, only for the selling pressure to then resume and more profoundly than the rally. Fundamentally, not a lot has changed but there's quite a bit of 'hopium' in these markets," Fawad Razaqzada, market analyst at City Index, said.
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CAC 40: up 3.0% at 5,965.49
DAX 40: up 2.7% at 12,535.60
FTSE 100: up 1.9% at 7,039.94
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Hang Seng: financial markets closed for National Day Golden Week
Nikkei 225: closed up 3.0% at 26,990.14
S&P/ASX 200: closed up 3.8% at 6,699.30
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DJIA: called up 1.3%
S&P 500: called up 1.6%
Nasdaq Composite: called up 2.0%
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EUR: higher at USD0.9882 (USD0.9834)
GBP: higher at USD1.1363 (USD1.1309)
USD: higher at JPY144.73 (JPY144.35)
GOLD: sharply higher at USD1,707.82 per ounce (USD1,690.38)
OIL (Brent): higher at USD89.59 a barrel (USD88.30)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Factory gate inflation in the eurozone picked up the pace in August, according to new figures from the EU's statistical office. Eurostat said producer price inflation hit 43.3% in the eurozone on an annual basis, compared to 38% in July. This came in line with FXStreet-cited consensus of 43.2%. On a monthly basis, producer prices rose 5.0% in August from July, as expected. The reading shows an acceleration from the monthly rise of 4.0% seen in July. On a monthly basis, energy prices rose 12%. Excluding energy, monthly prices rose by 0.3%.
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The Reserve Bank of Australia sought a "sustainable balance", as it raised the cash rate target by 25 basis points to 2.60% on Tuesday. It also increased the interest rate on exchange settlement balances by the same amount to 2.50%. The interest rate increases will help achieve a "more sustainable balance" between supply and demand in Australia's economy. FXStreet-cited consensus had been expecting rates to increase to 2.85%. "As is the case in most countries, inflation in Australia is too high. Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role," Governor Phillip Lowe said. It forecasts the consumer price index to reach around 7.75% over the year, before easing to "a little over 4%" in 2023, and then around 3% in 2024.
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Liz Truss stressed she must take a "responsible" approach to the public finances, as she faces a Cabinet split and a fresh battle with Tory rebels fighting real-terms cuts to benefits. The prime minister is refusing to rule out a return to austerity or say whether welfare payments will be increased in line with soaring inflation. Critics who forced a U-turn over the plan to abolish the 45 pence tax rate for top earners are now stepping up pressure on the government to confirm benefits will be raised. Commons Leader Penny Mordaunt has publicly backed increasing them in line with inflation so that people can pay their bills, warning many Tory colleagues have backed that before. Downing Street has not denied suggestions that Truss could resist rebels' pressure to instead increase benefits in line with earnings, which are expected to be much lower than inflation.
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UK homeowners who end up struggling with their mortgage payments due to a job loss may have to build up significant arrears before help arrives, according to a former pensions minister. Steve Webb said the number of people receiving government help with their mortgage costs has collapsed since a reform to the system in 2018. From April 2018, a system of benefits for mortgaged homeowners who lost their job was replaced with a system of repayable loans, secured against the claimant's property. Former Liberal Democrat MP Webb highlighted figures for May 2022, suggesting around 12,845 loans were in payment, compared with around 90,000 receiving help through the benefit system in March 2018, just before the new regime was introduced, and around 200,000 being helped a decade ago.
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The foreign secretary will declare that the UK has the "strategic endurance" to see Ukraine through to victory over Russian invaders, in his Conservative Party conference speech. James Cleverly will say that Ukraine has Britain's unwavering support in its efforts to push back Vladimir Putin's forces, saying that "we are players on the pitch" and not just "commentators". It comes after Britain ramped up sanctions against Moscow, with new measures targeting vulnerable sectors of the economy, in response to the Russian president's "illegal" annexation of swathes of Ukrainian territory. Cleverly will repeat Prime Minister Liz Truss's vow that the UK will never accept Putin's claim to the regions of Donetsk, Luhansk, Kherson, Zaporizhzhia or Crimea.
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Rail passengers in the UK will suffer fresh travel chaos on Wednesday because of another strike in the long-running dispute over pay, jobs and conditions. Members of the drivers' union Aslef and the Transport Salaried Staffs Association will walk out, causing huge disruption to services. Aslef general secretary Mick Whelan told the PA news agency the dispute would now continue until the government intervened. He urged Transport Secretary Anne-Marie Trevelyan to "lift the shackles" from train companies so they could make a pay offer to workers. The train drivers' strike will affect Avanti West Coast, Chiltern, CrossCountry, East Midlands Trains, Greater Anglia, including Stansted Express, Great Western, Hull Trains, LNER, London Overground, Northern Trains, Southeastern, Transpennine Express and West Midlands Trains.
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North Korea fired an intermediate-range ballistic missile over Japan, prompting Tokyo to activate the country's missile alert system and order people to take shelter. The last time North Korea fired a missile over Japan was in 2017, at the height of a period of "fire and fury" when Pyongyang's leader Kim Jong Un traded insults with then-US president Donald Trump. South Korea's military said it had detected the launch of an IRBM, which flew around 4,500 kilometres, 2,800 miles, at an altitude of about 970 kilometres and a speed of around Mach 17. "Specific details are under close analysis by South Korean and US intelligence," the South's Joint Chiefs of Staff added in a statement. South Korea's President Yoon Suk-yeol called the launch a "provocation" that violated UN regulations.
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South Korean armed forces have dropped two precision bombs from a F-15K fighter jet over the uninhabited island of Jikdo to the west of the Korean peninsula, in response to North Korea's recent missile test, according to Yonhap news agency. The South Korean military was holding joint flight drills with US F-16 fighter jets. Just a few hours before, North Korean forces fired a medium-range missile over the Japanese archipelago. According to initial estimates, the missile reached a distance of 4,500 kilometres, the farthest of any North Korean missile, according to Japan's Defence Minister Yasukazu Hamanda.
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Spain's unemployment rate increased in September, new figures from the country's Spanish Ministry of Labour & Social Economy showed. Unemployment increased by 17,679 persons in September. It is a more moderate increase than the typical figure of 46,307 people for the month, between 2008 and 2019. The total number of unemployed persons stood at 2.94 million. Compared to a year before, there were 315,883 fewer unemployed people.
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By Paul McGowan; paulmcgowan@alliancenews.com
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Legal & General (LGEN)