(Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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French construction materials group Compagnie de Saint-Gobain said it will buy US-based GCP Applied Technologies to consolidate its position on the global construction chemicals market. Saint-Gobain said in a statement it would acquire all of the outstanding shares in GCP in a transaction valued at around EUR2 billion. "This acquisition is a decisive step in establishing Saint-Gobain's leading position worldwide in construction chemicals with total sales of more than EUR4 billion (up from EUR3 billion)", the statement said. In May Saint-Gobain bought the French-based Chryso, which also specialises in construction chemicals, for EUR1.2 billion.
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London Stock Exchange Group has agreed to acquire portfolio, margin and capital optimisation services provider Quantile Group. LSEG said it has agreed to pay up to GBP274 million for London-based Quantile. The deal will enable the stock exchange to expand its range of post-trade risk management solutions to its customers, it said. Quantile will remain a standalone entity within LSEG's Post Trade division, with LSEG and Quantile's services available on an open-access basis to offer customers the choice of where to clear. The deal is LSEG's first significant acquisition since completing its USD27 billion takeover of financial data firm Refinitiv at the beginning of the year.
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WPP has acquired a majority stake in branding and design agency Made Thought for an undisclosed sum. The ad agency said the acquisition is aligned with its growth strategy and M&A approach to strengthen its creative capabilities in marketing, communications and design. The deal follows acquisitions of Universal Design Studio and Map Project Office, which both joined WPP in 2018. The three outfits will be integrated into WPP's AKQA to form a collective called 'The New Standard'.
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Anheuser-Busch InBev said it is aiming for annual growth in organic earnings before interest, tax, depreciation and amortisation of 4% to 8% over the medium-term. Normalised Ebitda fell 2.4% on an organic basis in 2020 after growth of 2.7% in 2019. However the Leuven, Belgium-based brewer, ahead of investor seminar being hosted on Monday, cautioned: "This outlook reflects AB InBev's current assessment of future business performance and market conditions (including the scale and magnitude of the Covid-19 pandemic), which is subject to change."
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The European Banking Authority on Friday called for restraint when it comes to dividends. "Although supervisory recommendations on capital distribution have expired, banks should not pursue overly generous dividend and share buy-back policies," the regulator said in a statement. Looking ahead, it warned lenders to be prepared for "a deterioration in the economic outlook" or for inflationary pressure to translate into further rising rates.
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American digital media company BuzzFeed, known for its viral content and journalism, goes public on Monday after it initially raised less money than expected. In a press release Friday, BuzzFeed said it had finalized a merger with 890 5th Avenue Partners, a special purpose acquisition company, which aims to raise funds through an initial public offering to acquire an existing company. Buzzfeed's shares are expected to start trading on the Nasdaq on Monday under the ticker symbol BZFD. BuzzFeed aimed to be valued on Wall Street at USD1.5 billion but it raised just USD16 million from the SPAC deal, which was announced in June.
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MARKETS
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Stock markets in Europe shook off a negative session in Asia to trade higher at the start of the new week, with travel stocks boosted by comments from a US government advisor that the Omicron variant has not so far produced severe cases of Covid-19. The Dow and S&P 500 were pointed to open higher on Monday, but the Nasdaq Composite - full of lockdown winners - was indicated sharply lower.
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CAC 40: up 0.4% at 6,789.99
DAX 40: up 0.2% at 15,192.51
FTSE 100: up 0.7% at 7,175.08
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Hang Seng: closed down 1.8% at 23,349.38
Nikkei 225: closed down 0.4% at 27,927.37
S&P/ASX 200: closed up 0.1% at 7,245.10
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DJIA: called up 0.3%
S&P 500: called up 0.2%
Nasdaq Composite: called down 1.8%
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EUR: up at USD1.1302 (USD1.1291)
GBP: up at USD1.3259 (USD1.3223)
USD: up at JPY113.21 (JPY113.06)
GOLD: up at USD1,780.56 per ounce (USD1,775.82)
OIL (Brent): up at USD71.56 a barrel (USD71.43)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Early indications of the severity of the Omicron Covid-19 variant are "a bit encouraging," top US pandemic advisor Anthony Fauci said Sunday, while cautioning more information was still needed. "Omicron has a transmission advantage" in South Africa, where the variant was first reported, Fauci said in a CNN interview, noting the country had a low level of cases before it saw "almost a vertical spike upwards, which is almost exclusively Omicron." "Though it's too early to really make any definitive statements about it, thus far, it does not look like there's a great degree of severity to it," he said. "Thus far, the signals are a bit encouraging." Medical experts have in recent days underscored that the South African population skews young and that more severe cases could emerge in the coming weeks. "I think that there's a real risk that we're going to see a decrease in effectiveness of the vaccines," Stephen Hoge, president of vaccine producer Moderna, told ABC.
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The Omicron variant has been detected in 38 countries but no deaths have yet been reported, the World Health Organization said, as authorities worldwide rushed to stem the heavily mutated Covid-19 strain's spread amid warnings that it could damage the global economic recovery. WHO has warned it could take weeks to determine how infectious the variant is, whether it causes more severe illness and how effective treatments and vaccines are against it. WHO said on Friday it had still not seen any reports of deaths related to Omicron, but the new variant's spread has led to warnings that it could cause more than half of Europe's Covid cases in the next few months.
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The travel industry has reacted with fury after it was announced all passengers arriving in the UK will have to take a Covid pre-departure test amid fears about the spread of the Omicron variant. Ministers said it was intended to be a temporary measure following new data showing an increase in the number of cases of the new strain linked to foreign travel. The move, which will be introduced on Tuesday, was welcomed by the opposition Labour party, which has been pressing for the return of pre-departure tests since the variant was first identified in South Africa. It came as the latest figures from the UK Health Security Agency showed as of Saturday, a further 26 cases of the Omicron variant had been reported across the UK – taking the total so far to 160.
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Eurozone construction activity grew at the fastest rate for nearly four years in November, survey results from IHS Markit showed, but inflationary and supply chain pressures are clouding the outlook. Rising to 53.3 points in November from 51.2 in October, the latest eurozone construction total activity index pointed to a further acceleration in activity that was the sharpest since February 2018. Any reading over the no-change mark of 50.0 signals expansion.
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UK construction sector activity saw its fastest rate of expansion since July aided by recovering economic conditions, IHS Markit said. The IHS Markit-CIPS UK construction purchasing managers' index registered 55.5 points in November, up from 54.6 in October. The latest reading beat the market forecast, cited by FXStreet, of 52.0 points. Markit said UK construction companies indicated a sharp increase in business activity during November, led by the fastest upturn in commercial work since July as clients continued to boost spending in response to the reopening of the economy.
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UK business is approaching a "cliff edge" as it deals with long-term challenges such as persistently poor productivity, according to a new report. The CBI said the foundations for economic recovery remained firm despite global supply issues affecting growth in the near-term. But the business lobby's latest UK economic forecast warned that short-term problems such as rising costs and shortages have worsened since the summer. Longer-term challenges, notably persistently poor productivity, underlined the need for a "booster" for business investment to support sustainable growth, said the report. The CBI is forecasting 6.9% growth in gross domestic product in 2021 and 5.1% in 2022, revised down from 8.2% and 6.1% respectively. The business group said it expects supply chain frictions to largely dissipate by the middle of next year
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Another Chinese property developer said it had defaulted on a major bond repayment, citing liquidity problems amid a government crackdown on the debt-laden sector. China's real estate industry – a key growth driver in the world's second-largest economy – has cooled in recent months after Beijing tightened home buying rules and launched a regulatory assault on speculation. The moves have created headaches for several major developers, notably China Evergrande, the country's second-largest by volume that is weighed down by billions of dollars in debt. On Monday, Hong Kong-listed Sunshine 100 China Holdings said it had missed a Sunday deadline to make USD179 million in principal and interest payments on a 10.5% bond.
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A meeting between Russian President Vladimir Putin and US President Joe Biden is set for Tuesday, with both sides now confirming the meeting. Kremlin press secretary Dmitry Peskov confirmed the date for the summit to the Interfax news agency. It was confirmed later on Saturday by White House spokesperson Jen Psaki. The meeting comes amid heightened tensions in Ukraine, as Washington and Moscow have traded accusations of military provocations in the region. Russia has confirmed that this will be an area of discussion. According to reports, Russia has accumulated vast numbers of troops in areas not far from the border with Ukraine. The Kremlin has not denied those reports.
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Germany's Greens are to announce on Monday the result of a members' vote on whether to go ahead with a three-way coalition with the Social Democrats and the Free Democrats. A 'yes' vote would pave the way for the first government in 16 years without Angela Merkel at the helm. There is little doubt that the coalition agreement will be approved, despite some dispute about the allocation of government posts in the run-up to the vote. The centre-left SPD and the pro-business FDP already gave the deal their blessing at party conferences over the weekend. The new German Cabinet is set to have nine men and eight women after Olaf Scholz, - the Social Democrat on course to beMerkel's successor as chancellor - named his party's seven ministers.
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By Tom Waite; thomaslwaite@alliancenews.com
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