(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Allianz has agreed to sell a majority stake in its Russian operations to Interholding, which owns Russian property-casualty insurance firm Zetta Insurance. The Munich, Germany-based insurer did not disclose the price, but said it will take a EUR400 million hit to its profit and loss account, mostly due to a negative currency effect from shareholders' equity. The deal follows Allianz's decision to reduce its operations in Russia following the war in Ukraine. Should the deal take place, Allianz will keep a 49.9% stake in the Russian business, which it explained will ensure continuity for clients and staff.
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CompuGroup Medical said Chief Executive Officer Dirk Wossner will leave the company on June 30 by mutual agreement "due to differing views regarding the long-term strategy of the company". CompuGroup promoted Chief Financial Officer Michael Rauch to spokesman of the managing directors, also taking a seat on the Administrative Board. "The Administrative Board is convinced that the chosen path of consistent digitization and platform growth is the right one," said Frank Gotthardt, company founder and chair of the Administrative Board.
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Microsoft lowered its guidance for the fourth quarter of its financial year, which the software and technology group attributed to an unfavourable foreign exchange rate movement, namely strength in the dollar. For the three months ending June 30, Redmond, Washington-based Microsoft revised its guidance range for net income to between USD16.85 billion and USD17.43 billion, from the previous range of USD17.10 billion and USD17.67, with Microsoft noting a USD250 million currency hit to net income. The guidance for diluted earnings per share was lowered to between USD2.24 and USD2.32 from USD2.28 and USD2.35 previously, while the guidance for revenue was reduced to between USD51.94 billion from USD52.74 billion, from the prior range of USD52.40 billion to USD53.20 billion. Revenue is expected to take a USD460 million foreign exchange hit.
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US regulators said they are suing the Gemini Trust cryptocurrency exchange, which is run by Cameron and Tyler Winklevoss, for giving misleading answers in 2017 about a bitcoin project. The Commodity Futures Trading Commission lawsuit filed in federal court in New York accuses Gemini of not being upfront about how easy it would be to manipulate a bitcoin futures project proposed at the time, the agency said in a statement. The futures contract launched at the end of 2017 and stopped trading two years later, according to blog posts from Gemini and a partner company. Making false or misleading statements to the commission undermines its work to protect market participants, prevent price manipulation, and promote fair competition, acting director of enforcement Gretchen Lowe said in the statement.
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Sanofi said it has agreed to assign worldwide exclusive rights to cancer drug Libtayo to partner Regeneron Pharmaceuticals. Paris-based Sanofi said its Tarrytown, New York-based peer will give it an upfront payment of USD900 million, plus an 11% royalty on worldwide net sales of Libtayo. Sanofi also will received a USD100 million regulatory milestone payment, as well as sales-related milestone payments of up to USD100 million over the next two years. Sanofi and Regeneron had collaborated to develop Libtayo, whose generic name is cemiplimab. Previously, the two companies split the drug's worldwide operating profits equally and co-commercialised it in the US, with Sanofi solely responsible for sales in the rest of the world. The new arrangement is expected to start from the third quarter. Libtayo is a PD-1 inhibitor that is approved for the treatment of multiple forms of cancer, including non-melanoma skin cancers.
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Moderna said it has amended its delivery schedules with the European Commission for its Covid-19 vaccine booster, with deliveries now being delayed. "The amendment allows participating member states to have Moderna Covid-19 vaccine booster doses scheduled for delivery in the second quarter of 2022 to be delivered later in calendar year 2022 or early calendar year 2023," Cambridge, Massachusetts-based Moderna said. The pharmaceutical firm noted its Omicron booster vaccine candidate is currently being evaluated in Phase 2/3 studies, with initial data expected in June.
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MARKETS
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European stock prices were higher near midday but tailing off after starting Friday with larger gains, while Wall Street was called to open lower. The New York market had a good day on Thursday, following employment figures that suggested weaker inflationary labour demand. The Nasdaq Composite closed up 2.7%. The focus now is on the May nonfarm payroll report, due at 1330 BST.
A poor set of economic indicators was damping investor spirits in Europe. Retail sales in the eurozone fell by 1.3% in April from the month before. "While this decline may overstate total consumption developments, it does provide further evidence of a serious eurozone slowdown," said Dutch bank ING.
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CAC 40: up 0.2% at 6,513.18
DAX 40: up 0.3% at 14,531.11
FTSE 100: London market closed for holiday.
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Hang Seng: Hong Kong market closed for holiday.
Nikkei 225: closed up 1.3% at 27,761.57
S&P/ASX 200: closed up 0.9% at 7,238.80
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DJIA: called down 0.3%
S&P 500: called down 0.4%
Nasdaq Composite: called down 0.6%
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EUR: flat at USD1.0748 (USD1.0745)
GBP: soft at USD1.2567 (USD1.2571)
USD: up at JPY130.08 (JPY129.86)
GOLD: down at USD1,864.40 per ounce (USD1,868.80)
OIL (Brent): down at USD116.61 a barrel (USD118.06)
(changes since previous New York equities close)
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ECONOMICS AND GENERAL
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Services business activity in the eurozone saw growth slow in May, as capacity pressures led to a rise in the backlog of work, survey results showed. For workers, this meant employment was increased at its fastest rate since July 2007. The S&P Global eurozone services purchasing managers' index declined to 56.1 points in May from 57.7 in April. This was still the second highest reading since last September. The May score was revised down from a flash reading of 56.3. The composite PMI, a combination of services and manufacturing activity, fell to a four-month low of 54.8 points last month from 55.8 in April. The manufacturing PMI had been reported on Wednesday at 54.6 points in May, down from 55.5 in April.
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Eurozone retail sales volume declined by 1.3% in April from March, according to figures from Eurostat. However, they were up 3.9% from a year before, compared to a 1.6% annual rise in March.
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In Germany, the composite PMI was revised down by to a five-month low of 53.7 in May from a flash reading of 54.6 and 54.3 in April. The German services PMI business activity index came in at 55.0 in May, down from 57.6 in April. As reported on Wednesday, the manufacturing PMI inched up to 54.8 points in May from 54.6 the month prior.
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New orders for German-made machinery and plant engineering work fell in April by 7% in real terms compared with a year ago, the Mechanical Engineering Industry Association reported. The fall in domestic orders was as high as 17%, while the decline in orders from the euro area was just 1%. The decline from outside the euro area was 3%. The VDMA attributed the decline to "the Russian war in Ukraine, together with continuing serious supply chain problems."
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The French composite PMI score last month was 57.0, revised down from 57.1 and also down from April's 51-month high of 57.6. The services reading was 58.3, down from 58.9 in April. The manufacturing PMI, reported on Wednesday, was 54.6 points in May, down from 55.7 in April and its lowest reading since October 2021.
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Output from manufacturers in France declined in April, continuing the slowdown seen in March, figures from national statistics agency Insee showed. The seasonally and working-day adjusted manufacturing production index declined by 0.4% in April from March, when the index had slipped by 0.2% from February. The index however was up 1.7% in April from a year before. For French industry as a whole - meaning including construction, mining and other activities - output was more stable, the index slipping just 0.1% in April, though March's monthly decline had been 0.4%. The index was up 0.6% from a year before.
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Italy's service sector marked its fourth consecutive month of expansion in May, though at a slower pace. The headline seasonally adjusted Italy services PMI fell to 53.7 points in May from 55.7 in April. The manufacturing PMI, released on Wednesday, fell to 51.9 points in May from April's 54.5 and below the flash figure of 53.6. This meant the composite index - a blend of the services and manufacturing scores - fell to 52.4 in May from 54.5 in April.
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Growth in the service sector in Spain continued last month, though slightly slower than in April, amid continued cost concerns for service providers. However, jobs are being added the highest rate in almost a year and confidence remains high among employers. The services PMI reading for May was 56.5 points, down from 57.1 in April, but still above the non-change 50 mark for the fourth consecutive month. The composite PMI was unchanged in May from April at 55.7 points. On Wednesday, S&P Global had reported the manufacturing PMI at 53.8 points in May, up from 53.3 in April.
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Ireland's private sector remained in expansion territory last month, but the increase in business output was the weakest since January, as demand was hurt by high cost inflation. The AIB services PMI dropped to 60.2 points in May from 61.7 points in April. The May score was the lowest since January, but still represented a robust level of business activity. The headline AIB Ireland manufacturing PMI declined to 56.4 points in May from 59.1 in April, figures had shown on Wednesday. As a result, the composite PMI was at 57.5 points in May, down from 59.6 in April but still firmly in expansion territory.
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Shopper footfall in the UK jumped in May from a year before, but the annual improvement was considerably less than seen in April, data from BRC-Sensormatic IQ showed. Football also continues to lag its pre-pandemic level. Annually, total footfall was up 20% in May, slowing from the 45% rise seen in April. The increase in May was driven by a rise in footfall of 31% on high streets, 11% in retail parks, and 19% in shopping centres. Versus three years ago, however, total footfall was down 13% in May, though this represented a 0.6 percentage point improvement from April.
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Japan's services sector activity increased at its fastest pace in six months, according survey results. The au Jibun Bank Japan services purchasing managers' index rose to 52.6 points in May from 50.7 in April. It was the highest PMI reading in six months. "Firms noted that the easing of pandemic restrictions helped to boost demand, notably in the tourism sector," said compilers S&P Global.
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The services sector in Australia continued to grow in May but at a slower pace than in recent months, as the easing of Covid-related border restrictions was countered by some of the worst cost inflation on record. Even so, business confidence improved in Australia last month. The S&P Global services PMI slipped back to 53.2 points in May from 56.1 in April, though this still represented the fourth month in a row that the reading was about the neutral 50 mark. The services PMI score, when combined with manufacturing reading released earlier in the week, meant the Australia composite PMI declined to 52.9 points in May from 55.9 in April. On Wednesday, S&P Global had reported the May manufacturing PMI score at 55.7, down from 58.8 in April.
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Oil prices remained firm despite an agreement by major crude producers to boost output more than expected. In Vienna, the OPEC+ group decided to add 648,000 barrels per day to the market in July, up from the 432,000 bpd increases in recent months, and a shift from the cartel's recent stance of sticking to a planned pace of monthly production hikes. "The meeting highlighted the importance of stable and balanced markets for both crude oil and refined products," the group said of the move. The announcement came after EU leaders agreed to ban more than two-thirds of Russian oil imports as part of a sixth package of sanctions on Moscow over the Ukraine war. The jump in prices reflects "doubts the cartel members can deliver on their promises," TD Securities' Bart Melek said in a note.
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Federal Reserve Vice Chair Lael Brainard continued to take a hard line on inflation, suggesting to CNBC that interest rate hikes would continue through September. "Right now, it's very hard to see the case for a pause" during the Fed's meeting in September, she said. "We've still got a lot of work to do to get inflation down to our two percent target."
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The 27 EU member states adopted a sixth package of sanctions on Russia over its invasion of Ukraine on Friday, a statement from the EU's top diplomat said. The sanctions target Russia's "ability to finance the war by imposing further economic sanctions," EU foreign policy chief Josep Borrell said. The package targets Russian oil delivered by sea, and exempts oil that moves via pipeline. This excludes the giant Soviet-era Druzhba pipeline, which connects Russia with several Eastern and Central European countries. The watered-down ban on oil was secured after Hungary and other landlocked countries lobbied heavily against a proposal for a full EU embargo on Russian oil for nearly a month. Hungary also succeeded in pressuring the EU into dropping sanctions on Russian Orthodox Church leader Patriarch Kirill in its latest round of punitive measures.
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Ukraine marked 100 days since Russia's invasion on Friday with fighting raging across the east of the country, where Moscow's forces are tightening their grip on the Donbas. The sombre milestone came as Kyiv announced Moscow was now in control of a fifth of Ukrainian territory, including Crimea and parts of the Donbas seized in 2014. After being repelled from around the capital, President Vladimir Putin's troops have set their sights on capturing eastern Ukraine, prompting warnings the war could drag on. Following White House talks with US President Joe Biden, NATO chief Jens Stoltenberg warned Thursday that Ukraine's allies needed to brace for a gruelling "war of attrition". "We just have to be prepared for the long haul," Stoltenberg said, while reiterating that NATO does not want direct confrontation with Russia. Despite a slower than expected advance, Moscow's forces are making progress – President Volodymyr Zelensky told Luxembourg lawmakers about 20% of Ukrainian territory was now in Russian hands.
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US President Biden pleaded with lawmakers to take action on gun violence plaguing the country, calling for a ban on assault weapons such as those used in recent massacres in Texas and New York state. Biden made the 17-minute address – his latest appeal for tougher firearms laws – with 56 lighted candles arrayed along a long corridor behind him, representing US states and territories suffering from gun violence. "How much more carnage are we willing to accept?" the president asked in the speech, which he delivered with anger in his voice, and at times dipping close to a whisper. At a minimum, Biden said, lawmakers should raise the age at which assault weapons can be purchased from 18 to 21, one measure to help curb rampant violence that has turned schools and hospitals into "killing fields." He also urged them to take steps including strengthening background checks, banning high-capacity magazines, mandating safe storage of firearms, and allowing gun manufacturers to be held liable for crimes committed with their products.
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Biden will visit Saudi Arabia this month, reports said, a stark reversal for a leader who once called for the kingdom to be made a pariah. The reported decision comes hours after Saudi Arabia addressed two of Biden's priorities by agreeing to a production hike in oil and helping extend a truce in war-battered Yemen. The New York Times, The Washington Post and CNN, quoting anonymous sources, said that Biden would go ahead with the long-rumoured Saudi stop on an upcoming trip. CNN said that Biden would meet Saudi Arabia's de facto ruler, 36-year-old Crown Prince Mohammed bin Salman, who was accused by US intelligence of ordering the 2018 murder of dissident journalist Jamal Khashoggi.
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By Tom Waite; thomaslwaite@alliancenews.com
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