(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Vectura noted Philip Morris International's increased offer, which values the asthma treatment firm at over GBP1 billion, and subsequently withdrew its backing for Carlyle's bid made on Friday. However, Vectura decided not to back Philip Morris's new offer and instead an auction was set by the UK Takeover Panel, the regulatory body which deals with takeovers and mergers. This will start on Wednesday and run for five days, ending on Tuesday next week. Vectura, Philip Morris and Carlyle have all agreed to the auction, the Takeover Panel said. Earlier Monday, Philip Morris confirmed that it had upped its bid for Vectura to 165 pence per share, as the Marlboro cigarette maker goes head-to-head in a bidding war with private equity firm Carlyle. New York-based Philip Morris was bested on Friday by Carlyle after the private equity firm increased its offer for Vectura to 155p per share, beating Philip Morris's 150p a share offer made in July. Carlyle itself had previously offered 136p per Vectura share in May. Philip Morris's new offer of 165p per Vectura share values the company at GBP1.02 billion.
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Hargreaves Lansdown shares dropped 10% after posting an annual performance which fell short of expectations, despite adding a record number of new clients over the year. In addition, the Bristol-based fund supermarket warned that its enlarged customer base, together with planned investments, will result in additional costs for its current financial year. For the financial year that ended June 30, revenue rose 15% to GBP631.0 million from GBP550.9 million the year before, but pretax profit was GBP366.0 million, down 3.0% from GBP378.3 million. The revenue and profit figures missed consensus estimates from Jefferies of GBP636.7 billion in revenue and GBP383.0 million in pretax profit. HL declared a total dividend of 50.5 pence per share, down 8.1% from 54.9p paid out in financial 2020. HL also declared a special dividend of 12.0p.
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BT is set to poach ASOS Chair Adam Crozier to be its own chair, the Sunday Times reported. According to the newspaper, Crozier will resign from the online fashion retailer to focus on the telecoms firm, although he will stay on as chair of Whitbread and private data analytics business Kantar. Crozier beat three other candidates for the BT role, the newspaper reported, without saying where it got the information from. The 57-year-old was formerly chief executive of Royal Mail, ITV and the Football Association. At BT, he will be expected to stabilise the board after the resignation of previous chair Jan du Plessis, whose relationship with Chief Executive Philip Jansen broke down.
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Virgin Atlantic Airways is planning to list in London to take advantage of investors expectations of a quick economic recovery in international travel, the Financial Times reported on Sunday. The Crawley, West Sussex-based long-haul carrier has been talking to fund managers about a listing as early as this autumn, the newspaper reported, citing "a person familiar with the matter". The initial public offering will be led by bankers from Citigroup and Barclays, the FT said, noting this was first reported by Sky News. Virgin boss Richard Branson would likely lose his majority stake, it noted.
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Deliveroo said German rival Delivery Hero has bought a 5.1% stake in the company. Berlin-based Delivery Hero, like London-based Deliveroo, uses a network of restaurants and gig-economy couriers to provide food delivery. Deliveroo has a market capitalisation of about GBP6.50 billion. Delivery Hero has a market cap of EUR32.36 billion, about GBP27.50 billion, making it four times larger than Deliveroo, which also counts Amazon.com among its investors
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China Telecom could raise more than USD8 billion in a Shanghai initial public offering that would be the biggest this year, months after it was delisted in the US amid Washington's stand-off with Beijing. The firm said it had priced its offer at 4.53 yuan per share, which would be worth CNY47.1 billion, about USD7.3 billion, according to a filing with the Shanghai Stock Exchange on Friday. However, if an over-allotment option was exercised that would jump to CNY54 billion, or USD8.4 billion, Bloomberg News said. China Telecom was delisted by the New York Stock Exchange in January along with fellow state-owned telecoms firms China Mobile and China Unicom following an executive order by former president Donald Trump.
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Saudi Arabian Oil said Sunday its second quarter profits for 2021 nearly quadrupled compared to the same period last year on the back of higher oil prices. The company's success comes after its debts climbed last year, when Saudi Arabia was hammered by the double whammy of low prices and sharp cuts in production triggered by the coronavirus pandemic. Aramco said its net profit rose to USD25.5 billion in the second quarter of the year, compared to USD6.6 billion in the same quarter of 2020, owing to a stronger oil market and higher refining and chemicals margins, and with the easing of Covid-19 restrictions. "Our second quarter results reflect a strong rebound in worldwide energy demand, and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum," Aramco chief executive Amin Nasser said in a statement.
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Warren Buffett's Berkshire Hathaway on Saturday reported a rise in earnings in the second quarter, despite investment income dropping by a third, as the insurance and utilities holding company avoided the mammoth impairment set aside last year. In the three months to June 30, Berkshire recorded net attributable earnings of USD28.09 billion, up 6.8% from USD26.30 billion a year before. Revenue surged 22% year on year to USD69.11 billion from USD56.84 billion, but investment and derivative gains fell by 32% to USD27.39 billion from USD40.09 billion. The conglomerate holding company was able to avoid the USD10.86 billion intangible asset impairments booked a year earlier, helping boost profit in the quarter.
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MARKETS
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Stock prices were generally lower to start the new week, with markets in Japan on holiday and amid conflicting market influences. Merger and acquisition activity was creating interest among individual stocks and sectors, but concerns about the persistence of the Covid-19 pandemic were damping investor enthusiasm. "European stocks started the week without a clear direction as investors struggle to assess the global near-term outlook," commented Pierre Veyret, technical analyst at ActivTrades. "While last week's strong US jobs report has confirmed the recovery is well on its way, it also sparked concerns of a stimulus withdrawal, with tapering expected to be announced by the Fed no later than next month."
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CAC 40: down 0.1% at 6,812.13
DAX 30: down 0.2% at 15,727.96
FTSE 100: down 0.3% at 7,099.33
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Hang Seng: closed up 0.4% at 26,283.40
Nikkei 225: Tokyo market closed for holiday.
S&P/ASX 200: closed flat at 7,538.40
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DJIA: called down 0.3%
S&P 500: called down 0.2%
Nasdaq Composite: called up 0.1%
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EUR: soft at USD1.1755 (USD1.1760)
GBP: flat at USD1.3860 (USD1.3862)
USD: down at JPY110.18 (JPY110.30)
GOLD: down at USD1,746.25 per ounce (USD1,764.55)
OIL (Brent): down at USD68.08 a barrel (USD70.92)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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A bombshell climate science report "must sound a death knell" for coal, oil and gas, United Nations Secretary-General Antonio Guterres said, warning that fossil fuels were destroying the planet. The Intergovernmental Panel on Climate Change concluded that the 1.5 degrees Celsius temperature goal of the Paris Agreement would likely be breached around 2030 – a decade earlier than it itself projected just three years ago. Guterres called the IPCC's assessment – the most detailed review of climate science ever conducted – "code red for humanity". "This report must sound a death knell for coal and fossil fuels, before they destroy our planet," he said in a statement. "Countries should also end all new fossil fuel exploration and production, and shift fossil fuel subsidies into renewable energy." In its first major scientific assessment since 2014, the IPCC said that Earth's average surface temperature is projected to hit 1.5 or 1.6 degrees Celsius above preindustrial levels at around 2030, no matter what trajectory greenhouse gas emissions take in the meantime.
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A big investment plan aimed at modernizing America's infrastructure overcame a key legislative hurdle in the US Senate on Sunday, with legislation described as "historic" by President Joe Biden now almost certain to become law. The bill, months in the making, calls for USD550 billion in new federal spending on the nation's ageing infrastructure, including funds to slow the effects of climate change. The total USD1.2 trillion price tag includes some funds previously approved but not yet spent. Sunday evening saw the bill largely overcome several procedural votes in the Senate, with the slim Democratic majority bolstered by support from over a third of Republicans. It now goes to a final vote, with lawmakers primed to approve it as early as Monday if an agreement can be reached. But while there is now little doubt that the Senate will approve the almost 2,700-page text, its future is less certain in the House of Representatives, where left-wing and centrist factions have clashed over the size of the spending.
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Chinese factory inflation rose more than expected in July, data showed Monday, as surging commodity prices offset government measures to temper costs. The world's second largest economy has largely bounced back from strict coronavirus lockdowns last year but a fresh spike in cases of the highly transmissible Delta variant has raised concerns about the recovery. That has raised concerns that inflation could spike further if lockdowns in parts of the country cause supply problems. The producer price index, which measures the cost of goods at the factory gate, rose to 9.0% on-year, the same as May, which was a 13-year high, according to the National Bureau of Statistics. That came despite moves by the government to temper the price increases by raising export tariffs on certain iron and steel products, temporarily exempting tariffs on pig iron and scrap steel, and canceling export tax rebates for some steel products, to increase supply in the domestic market. While the PPI remains elevated, consumer inflation ticked down to 1.0%, with officials stressing their work to stabilise prices in the wake of recent disasters including floods in central China and with companies appearing to absorb the increases instead of passing them on to consumers.
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China's exports remained robust in July despite losing some steam, customs data showed Saturday, with analysts noting a rebound in port activity but warning that the recent spread of the Delta variant could act as a drag on growth. Trade remained strong in July, with exports growing slightly less than expected at 19.3% from a year ago, said the Customs Administration. A Bloomberg poll of analysts had forecast the rise at 19.9% on-year, after a surprise spike of 32% in June. Imports grew 28% from the same period last year. With the latest figures, China's overall trade surplus came in at USD56.6 billion in July, up from USD51.5 billion in June. Electronic products continued to support export growth in the first seven months of the year even as demand for mask exports eased from last year, official data showed.
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Authorities in the central Chinese city of Wuhan on Sunday said they had completed citywide testing of more than 11 million people for Covid-19 after a resurgence of cases more than a year after the coronavirus first emerged there. The tests – which began on Tuesday – provide "basically full coverage" of all residents in the city except for children under the age of six and students on their summer break, senior Wuhan official Li Tao told a press conference, according to the state-run Xinhua. By Saturday, the city had recorded 37 locally transmitted Covid-19 cases and found 41 local asymptomatic carriers in the latest round of mass testing, Xinhua reported. City officials announced last week that seven locally transmitted infections had been found among migrant workers in Wuhan, breaking a year-long streak without domestic cases after it squashed an initial outbreak with an unprecedented lockdown in early 2020. China brought domestic cases down to virtually zero after the coronavirus first emerged in the city in late 2019, allowing the economy to rebound and life to return largely to normal.
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Australia's third-largest city of Brisbane will lift a lockdown Sunday after containing a virus cluster, while an outbreak that has kept Sydney paralysed for weeks continues to grow. Millions of people in Brisbane and surrounding areas have spent just eight days under stay-at-home orders after an outbreak of more than 100 cases spread among several school communities. Deputy Queensland premier Steven Miles said the region had achieved "something quite incredible" by seemingly bringing the outbreak under control. Restrictions on leaving the city and gatherings will remain in place for at least two weeks. Authorities also announced a snap three-day lockdown for the northern city of Cairns, after a taxi driver spent 10 days infectious in the 150,000-strong community. They will join millions of people in Melbourne and Sydney under stay-at-home orders, with Australia's biggest city about to enter a seventh week of lockdown.
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Exports and imports grew in Germany in June, data from the Federal Statistical Office showed. German exports were up by 1.3% and imports by 0.6% on a calendar and seasonally adjusted basis compared with May. Germany exported EUR118.7 billion of goods and imported EUR102.4 billion of goods in June. Versus a year before, exports increased by 24% and imports by 27%. As a result, Germany's foreign trade balance showed a surplus of EUR16.3 billion in June, growing from EUR15.4 billion a year before.
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People in France will from Monday need to show a health pass to enjoy usually routine activities such as sipping a coffee in a cafe or travelling on an intercity train, in a plan championed by President Emmanuel Macron to squeeze Covid-19 infections and encourage vaccination. The government is pressing ahead with the extension of an already-existing health pass to cafes, restaurants and intercity travel, despite four weekends of angry protests that saw almost a quarter of a million rally nationwide on Saturday. Macron, who has expressed exasperation with the protests, hopes that the plan will help ramp up vaccinations and quell the fourth wave of coronavirus in France in a strategy similar to that of EU neighbours such as Italy and Germany. The health pass is generated in a QR code either by a full course of vaccinations, a recent negative virus test or a recovery from Covid-19. The government expects a one-week grace period for consumers and businesses to get used to the new rules.
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By Tom Waite; thomaslwaite@alliancenews.com
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