(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Unilever said Chief Executive Alan Jope will step down at the end of next year, after five years in the post. The consumer goods company will kick off a formal search for Jope's replacement. "As I approach my fifth year as CEO, and after more than 35 years in Unilever, I believe now is the right time for the board to begin the formal search for my successor. Growth remains our top priority, and in the quarters ahead I will remain fully focused on disciplined execution of our strategy, and leveraging the full benefits of our new organisation," Jope said. The Dove soap maker added prominent shareholder Nelson Peltz to its board in May, raising expectations of a shake-up at the company. Jope came under pressure earlier in 2022 after Unilever's failed takeover of GSK's consumer health business.
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GSK said Chief Financial Officer Iain Mackay will step down at the start of May 2023. GSK has named Julie Brown, Burberry Group PLC's chief operating & financial officer, to succeed Mackay. Brown has "extensive experience in the biopharma and medtech sectors", having had stints at AstraZeneca and Smith & Nephew. "Julie will join GSK in April 2023 and will work with Iain to transition responsibilities," GSK added.
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Credit Suisse said its strategic review is "well on track", with more details to be announced upon release of third-quarter results on October 27. The Zurich-based lender noted "heightened level" of media and market reports about potential outcomes. It confirmed it is pursuing measures to transform its Investment Bank into a "capital-light, advisory-led" banking business, and looking at options for Securitized Products business - which could include third-party capital - and reducing the firm's absolute cost base to "below CHF15.5 billion in the medium term", around USD15.7 billion. Credit Suisse said it is currently putting into effect strategic initiatives "including potential divestitures and asset sales". "The board of directors and the executive board are considering alternatives that go beyond the conclusions of last year's strategic review. The aim is to create a more focused, agile group with a significantly lower absolute cost base, capable of delivering sustainable returns for all stakeholders and first-class service to clients," it said.
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Anglo American announced it has started commercial copper operations at its Quellaveco project in Peru, following final regulatory clearance. Quellaveco is expected to produce 300,000 tonnes per year of copper equivalent volume on average over its first ten years. It is expected to lift the group's total global output by 10% in copper equivalent terms and take total copper output close to 1 million tonnes per year. Anglo American expects Quellaveco to ramp-up production fully over the next 9 to 12 months.
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RWE has signed a deal for an initial delivery of 137,000 cubic metres of liquefied natural gas from the UAE. The delivery, in December, is set to be the first to reach a new LNG terminal in Brunsbuttel, near Hamburg. According to RWE, a memorandum has been signed for deliveries over several years from 2023.
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A New York federal judge has set June 5 for the start of a class action lawsuit against Goldman Sachs, accused by more than 1,400 current and former employees of gender bias and sexual harassment. Lawyers for the plaintiffs, who held positions as partners or vice presidents at the bank, filed court documents Thursday containing damning testimony, including references to multiple sexual assaults. The charges in the suit, launched in 2010, also include at least 75 cases of misconduct in the workplace – such as touching, inappropriate comments and requests for sex – as well as wage discrimination or denial of promotion to women employees on the basis of gender. The plaintiffs' lawyers have denounced a corporate culture that breeds sexist and misogynistic behaviour.
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LXi REIT said it will not proceed with the purchase of 18 stores owned by J Sainsbury, citing "current stock-market volatility". Part of the funding for the GBP500 million purchase would have come from LXi issuing new shares. However, LXi's stock price has fallen 13% in the past five days.
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Professional services firm RPS Group backed a GBP636 million takeover offer from Tetra Tech and withdrew its recommendation for a bid by Toronto-listed consultancy firm WSP Global. Nasdaq-listed consultancy and engineering services firm Tetra will pay 222 pence in cash for each RPS share, a 7.8% premium to the 206p offered by WSP. The WSP deal valued RPS at GBP591.1 million. "In light of the superior proposal per RPS share from Tetra Tech as compared to the WSP offer, the RPS directors, who have been so advised by Gleacher Shacklock and AEC Advisors as to the financial terms of the acquisition, consider the terms of the acquisition to be fair and reasonable," RPS said. WSP urged RPS shareholders to take no action.
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Car dealer Pendragon said it has received a takeover approach from vehicle showrooms operator Hedin Mobility Group. Hedin has offered 29p per Pendragon share, giving it an equity valuation of around GBP405 million. The bid is a 28% premium to Pendragon's 22.7p closing price on Friday. Pendragon has a market capitalisation of GBP317.1 million. "The board of Pendragon is currently considering the proposal together with its financial and legal advisers. Shareholders are urged to take no action at this time. There can be no certainty that any firm offer will be made," Pendragon added. Hedin has a 'put up or shut up' deadline of October 24. In March, Sky News reported that Pendragon had rejected a GBP400 million takeover approach from Hedin. In August, Pendragon said a "large international corporate" bidder for the car dealership chain decided against pursuing takeover talks, following due diligence.
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MARKETS
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The pound slumped to its lowest level against the dollar since decimalisation in 1971, after the UK chancellor hinted more tax cuts would follow those he announced last week. Sterling fell by more than 4% to just USD1.0327 in early Asia trade, before it regained some ground to about USD1.08, when the euro also hit a fresh 20-year low amid recession and energy security fears. Kwasi Kwarteng brushed off questions about the markets' reaction to his mini-budget – which outlined the biggest programme of tax cuts for 50 years – after it was announced on Friday using more than GBP70 billion of increased borrowing.
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CAC 40: down 0.7% at 5,744.09
DAX 40: down 0.5% at 12,219.14
FTSE 100: down 0.8% at 6,962.27
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Hang Seng: closed down 0.4% at 17,855.14
Nikkei 225: closed down 2.7% at 26,431.55
S&P/ASX 200: down 1.6% at 6,469.40
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DJIA: called down 0.9%
S&P 500: called down 0.9%
Nasdaq Composite: called down 0.7%
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EUR: soft at USD0.9684 (USD0.9691)
GBP: down at USD1.0786 (USD1.0869)
USD: up at JPY143.79 (JPY143.28)
GOLD: up at USD1,645.83 per ounce (USD1,643.77)
OIL (Brent): down at USD85.89 a barrel (USD86.34)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The world economy will take a bigger hit next year than previously forecast due to the impact of Russia's war in Ukraine, the OECD said. The organisation slashed its 2023 global growth forecast to 2.2%, down from 2.8% in its previous estimate in June. The outlook for nearly all nations in the Group of 20 top economies was cut, except for Turkey, Indonesia and the UK, though the latter is forecast to have zero growth. Growth in the US – the world's biggest economy – is forecast to slow to 0.5% in 2023. The growth forecast for China, whose economy has been hit by strict Covid lockdowns, was cut sharply for this year to 3.2% while it was slightly lower to 4.7% for 2023. Germany is now expected to go into recession next year with Europe's biggest economy now seen shrinking by 0.7% – a 2.4-percentage-point drop from the previous forecast.
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Italy took a sharp turn to the right after Giorgia Meloni's Eurosceptic populist party swept to victory in general elections, putting a one-time Mussolini admirer on course to become the first woman to lead the country. Meloni's Brothers of Italy party, which has neo-fascist roots, won 26% in Sunday's election, according to partial results. It leads a coalition set to win a majority in parliament and install the most right-wing government since World War II. Her success represents a seismic change in Italy – a founding member of the EU and the eurozone's third largest economy – and for the EU, just weeks after the far-right outperformed in elections in Sweden. Her coalition allies, Matteo Salvini's far-right League and former premier Silvio Berlusconi's Forza Italia, lagged behind her in the polls. But all together they were forecast to win around 44%, enough to secure a majority in both houses of parliament.
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Business sentiment in Germany took a hit this month, as Europe's largest economy treads closer to recession, figures from a survey showed. The latest Ifo business climate index fell to 84.3 points in September, from 88.6 in August. The index slumped to its lowest level since May 2020, which was soon after the Covid-19 pandemic began. The business climate index fell in each of the manufacturing, services, trade and construction sectors.
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The average UK house price tag increased by 0.7% month-on-month in September, according to property website Rightmove. Across Britain, the average asking price of a property coming to market is GBP367,760. Rightmove said the price increase is in line with the average September rise of 0.6% over the last 10 years. Prices had fallen 1.3% in August from July. Rightmove added that price growth this month is being driven predominantly by the middle and high-end market sectors. On an annual basis, growth quickened to 8.7% in September from 8.2% in August.
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Ireland's ambassador to the UK has stressed the need to find a negotiated solution to the problems surrounding Northern Ireland's post-Brexit arrangements. Martin Fraser said he was an optimist about the chances of resolving the issues around the Northern Ireland protocol but the situation was currently in the "words phase" and had to move to the "actions phase". The UK government is legislating to effectively tear up parts of the agreement, which sets out how goods flowing from Great Britain to Northern Ireland are treated. Fraser, speaking at a fringe event at the Labour Party conference in Liverpool, said the protocol was the only way to resolve the problems caused by Brexit.
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Ukrainian President Volodymyr Zelensky said he takes Russia's nuclear threats seriously and does not believe Russian President Vladimir Putin is bluffing. "Maybe yesterday it was a bluff. Now, it could be a reality," Zelensky told US broadcaster CBS News in a Sunday interview. "He wants to scare the whole world. These are the first steps of his nuclear blackmail. I don't think he's bluffing," Zelensky said, pointing to Russian shelling at Ukraine's Zaporizhzhya nuclear power plant.
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The US has warned Russia privately of "catastrophic" consequences if it uses nuclear weapons as part of the Ukraine invasion, top US officials said. Russian President Vladimir Putin made a thinly veiled threat to use nuclear arms in a speech Wednesday in which he announced the mobilization of reservists following Ukrainian gains on the ground. Secretary of State Antony Blinken, in an interview broadcast Sunday, confirmed reports that the US has sent private warnings to Russia to steer clear of nuclear war.
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Voting in internationally criticized referendums for four Russian-occupied Ukrainian territories to become part of Russia continued into its third day on Sunday despite shelling by Ukrainian forces. The hastily convened polls were taking place in the eastern regions of Luhansk and Donetsk as well as in Zaporizhzhya and Kherson in the south, with authorities the Luhansk city of Alchevsk even saying voting could take place in bomb shelters. According to the pro-Russian authorities, two people died in a hotel near Kherson in a missile attack. The voting is scheduled to run until Tuesday, with the population asked to vote "yes" or "no" on whether the territories should join the Russian Federation.
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The United Arab Emirates agreed to supply natural gas and diesel to Germany as part of an "energy security" deal to replace Russian supplies. Emirati industry minister Sultan Ahmed Al Jaber called it a "landmark new agreement" that "reinforces the rapidly growing energy partnership between the UAE and Germany", at a signing attended by German Chancellor Olaf Scholz, the UAE's state news agency WAM reported. Scholz signed the deal while on a Gulf tour that took him to the UAE, Saudi Arabia and Qatar hunting for new energy sources.
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Parts of eastern Canada suffered "immense" devastation after powerful storm Fiona swept houses into the sea and caused major power outages, as the Caribbean and Florida braced for intensifying Tropical Storm Ian. Canadian authorities have now confirmed two deaths caused when Fiona, then a post-tropical cyclone, tore into Nova Scotia and Newfoundland early Saturday. Further south, parts of the Caribbean as well as the US state of Florida were preparing for Tropical Storm Ian, which the US National Hurricane Center said is forecast to become a hurricane on Monday and a major hurricane the following day.
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Japan's private sector returned to growth in September, preliminary figures showed. The au Jibun Bank flash composite purchasing managers' index rose to 50.9 points in September, from August's final tally of 49.4. The flash services PMI rose to 51.9 in September from 49.5 in August. The manufacturing PMI, however, faded to 51.0 in September from 51.5 in August. It was the worst reading of the manufacturing sector since the start of 2021.
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By Tom Waite; thomaslwaite@alliancenews.com
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