TOP NEWS SUMMARY: China export growth slows as Covid curbs tighten

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The following is a summary of top news stories Monday.

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COMPANIES

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Westpac Banking said its first half profit fell, citing impairment charges as the reason behind the drop. The Sydney-based bank reported a net profit of A$3.28 billion in the six months ended March 31, down 4.7% from A$3.45 billion the previous year. Westpac said this decline was mostly due to a A$511 million turnaround in impairment charges. It continued that excluding impairment charges and income tax, profit was 4% higher over the first half of 2021. Net interest income fell 0.7% to A$8.29 billion from A$8.35 billion while fee income rose 21% to A$845 million from A$700 million the previous year. Wealth management & insurance income fell sharply to A$401 million from A$598 million, representing a 33% decline year-on-year. Return on equity stood at 8.7% and its CET1 ratio was 11.3%.

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London West End property firms Shaftesbury and Capital & Counties Properties confirmed they are in advanced talks over a potential all-share merger. The merger would create a real estate investment trust with a combined portfolio of 2.9 million square feet of lettable space located in Covent Garden and Chinatown in central London. The merger is expected to be structured as an acquisition of Shaftesbury by Capco; however the final terms have not been finalised, and a firm offer has not yet been made. Under the merger's terms, shareholders in Shaftesbury excluding Capco would own 53% of the combined firm, while Capco's own shareholders would have a 47% interest. Capco currently holds a 25% stake in Shaftesbury. Shaftesbury has a market capitalisation of £2.2 billion, while Capco's equity is valued at £1.41 billion.

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Rightmove Chief Executive Officer Peter Brooks-Johnson will leave the UK property portal after the announcement of full-year results in February of next year. Brooks-Johnson has been with Rightmove for 16 years. The company will start a search for his successor. Rightmove said trading in the year to date has been as expected and its expectations for all of 2022 are unchanged.

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MARKETS

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Concern about an economic slowdown in China was added to continued adjustment to tightening monetary policy in the US for stock markets on Monday, sending prices lower globally. ‘Tackling inflation risks is now front and centre for central banks, even at the risk of hurting growth,’ said Barclays Research.

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CAC 40: down 1.1% at 6,188.46

DAX 40: down 0.8% at 13,561.39

FTSE 100: down 1.0% at 7,313.13

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Hang Seng: Hong Kong market closed for holiday.

Nikkei 225: closed down 2.5% at 26,319.34

S&P/ASX 200: closed down 1.2% at 7,120.70

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DJIA: called down 1.1%

S&P 500: called down 1.3%

Nasdaq Composite: called down 1.6%

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EUR: down at $1.0514 ($1.0576)

GBP: down at $1.2288 ($1.2355)

USD: up at JP¥131.12 (JP¥130.34)

GOLD: down at $1,867.10 per ounce ($1,886.77)

OIL (Brent): down at $111.24 a barrel ($112.74)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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China's export growth slowed in April to its lowest level in almost two years, customs data showed, as a Covid resurgence shuttered factories, sparked transport curbs and caused congestion at key ports. Export growth plunged to 3.9% on-year last month, the Customs Administration said. While this was above analysts' expectations of 2.7% growth according to a Bloomberg poll, it marked the lowest rate since June 2020. Import growth was flat in April, an improvement from a 0.1% contraction in March, as Chinese consumers remain hesitant under a welter of restrictions across the country.

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Millions of people in Beijing stayed home on Monday as China's capital tries to fend off a Covid-19 outbreak with creeping restrictions on movement. Beijing residents fear they may soon find themselves in the grip of the same draconian measures that have trapped most of Shanghai's 25 million people at home for several weeks. Officials there have said the eastern powerhouse city is winning its battle against China's worst outbreak since the pandemic began. Yet the Shanghai lockdown has intensified, causing outrage and rare protest in the last major economy still glued to a zero-Covid policy. In Beijing, subway stations and offices were empty during rush hour Monday morning across Chaoyang – the city's most populous district – after officials stepped up a work-from-home order on Sunday over rising Covid cases.

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A former security chief who oversaw the crackdown on Hong Kong's democracy movement was anointed the business hub's new leader on Sunday by a small committee of Beijing loyalists. John Lee, 64, was the only candidate in the Beijing-backed race to succeed outgoing leader Carrie Lam. The elevation of Lee, subject of US sanctions, places a security official in the top job for the first time after a tumultuous few years for a city battered by political unrest and debilitating pandemic controls. Beijing hailed the near-unanimous result, saying it showed ‘Hong Kong society has a high level of recognition and approval’ for Lee.

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Japan's services sector posted a return to expansion territory in April, figures from Jibun Bank and S&P Global showed, allowing the wider private sector to edge upwards to a five-month high. The au Jibun Bank services purchasing managers' index rose to 50.7 points in April, from 49.4 in March, rising above the 50.0 no change mark, indicating that the sector has moved barely into expansion territory. Data indicated a recovery in business activity due to the lifting of pandemic related restrictions still remaining, and a rise in export sales through growth in markets outside of China. Figures from Monday last week showed that the headline manufacturing PMI dipped to 53.5 in April from 54.1 in March, indicating slower growth. As a result, the composite PMI rose to 51.1 in April from 50.3 in March, as a stagnation of new orders eased pressure on the private sector's capacity and allowed for work on outstanding business to take place.

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Russian forces have pushed forward in their assault on Ukraine, seeking to capture the crucial southern port city of Mariupol as Moscow celebrates its national Victory Day holiday. Determined to show a success in a war now in its eleventh week, Russian troops have targeted a sprawling seaside steel mill where an estimated 2,000 Ukrainian fighters were making what appeared to be their last stand to save Mariupol from falling. The mill is the only part of the city not overtaken by the invaders, and its defeat would deprive Ukraine of a vital port and allow Russia to establish a land corridor to the Crimean Peninsula, which it seized from Ukraine in 2014. Ukrainian President Volodymyr Zelensky has warned that worsening attacks could be linked to Victory Day, which marks Russia's greatest triumph, over Nazi Germany in 1945. Though fighting continues on multiple fronts, Russia is closest to victory in Mariupol.

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The G7 club of wealthy nations committed to phasing out its dependency on Russian oil and issued a scathing statement accusing President Vladimir Putin of bringing ‘shame’ on Russia with his invasion of Ukraine. The statement from the Group of Seven – France, Canada, Germany, Italy, Japan, Britain and the US – did not specify exactly what commitments each country will make to move away from Russian energy. But it was an important development in the ongoing campaign to pressure Putin by crippling Russia's economy, and underscores the unity of the international community against Moscow's actions. ‘We commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil. We will ensure that we do so in a timely and orderly fashion, and in ways that provide time for the world to secure alternative supplies,’ the joint statement said.

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The UK is slapping fresh sanctions on Russia and Belarus over Moscow's invasion of Ukraine, including import tariffs on precious metals and export bans. The import tariffs, including on platinum and palladium, target trade worth £1.4 billion, while export bans worth £250 million target Russia's manufacturing and heavy industry, said a statement from the Department for International Trade.

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UK Prime Minister Boris Johnson is promising to deliver a ‘super seven’ of Brexit bills which will cut red tape and ‘unnecessary barriers inherited from the EU’. Johnson is planning to announce the new laws which will ‘deliver on the promise of Brexit’ in the Queen's Speech, the prime minister told the Sunday Express. The ‘super seven’ set of Brexit bills will allow Britain to ‘thrive as a modern, dynamic and independent country’ by ‘changing old EU rules that don't work for the UK’, he told the newspaper.

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The Irish premier has said that the Democratic Unionist Party is wrong to place conditions on the return to power-sharing in Northern Ireland. The unionist party, led by Jeffrey Donaldson, has insisted that it will not form an executive until issues with the Northern Ireland Protocol are resolved. Taoiseach Micheal Martin said that the Northern Ireland Protocol, a post-Brexit arrangement to avoid checks on the island of Ireland, was not the dominant issue in the assembly election. The election was won by Sinn Fein in a historic victory, with the party overtaking the DUP to become the first nationalist or republican party to emerge on top at Stormont. This means the Sinn Fein Stormont leader Michelle O'Neill is in line to become the first nationalist or republican first minister.

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