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The following is a summary of top news stories Tuesday.
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COMPANIES
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Sony reported a fall in annual profit, even as revenue rose on the strength of its Music, Pictures and Electronics & Solutions divisions. The Tokyo-based media and consumer electronics conglomerate reported net income of JP¥888.41 billion, around $6.81 billion, in the financial year that ended March 31. This represented a 15% drop against the previous year's figure of JP¥1.043 trillion. Sony recorded a JP¥84.8 billion financial expense in the recent year, compared to financial income of JP¥42.7 billion the previous year. This was primarily due to the recording of unrealized losses on its shares in music streaming app Spotify Technology. Sales, however, climbed 14% to JP¥8.397 trillion from JP¥7.334 trillion. Sony explained this was mainly due to significant increases in sales in the Pictures, Electronics & Solutions, and Music segments. Music sales increased 19% against the previous year, and Electronics & Solutions recorded 13% growth. Pictures saw the steepest growth, revenue rising 65%.
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Nintendo reported a slight dip in annual earnings and sales, leading to a cautious annual outlook as the video game maker eyes semiconductor shortages and Covid-19 concerns. Kyoto-based Nintento reported profit of JP¥477.71 billion, around $3.67 billion, in the financial year that ended March 31. This represented a 0.6% decline against the previous year's figure of JP¥480.42 billion. Sales dipped in the year, falling 3.6% to JP¥1.695 trillion from JP¥1.759 trillion the previous year. The drop was driven by hardware sales being hobbled by semiconductor shortages as well as other parts. Hardware sales fell 20% against the previous year. Software sales, however, posted their highest annual figure to-date as they rose 1.8% against the previous year on the strength of 39 titles selling over one million units during the year.
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Mitsubishi reported a sharp rise in annual earnings on the back of improved market conditions and increased production in several of its business segments. The Tokyo-based conglomerate reported a profit of JP¥937.53 billion in the financial year that ended March 31, or around $7.19 billion. This was up sharply against the previous year, when profit totalled JP¥172.55 billion. Mitsubishi explained that profit had benefited from improved market conditions in the Australian metallurgical coal business and the Salmon farming business. Revenue rose 34% to JP¥17.265 trillion from JP¥12.885 trillion, mainly due to rising prices and increased transaction volumes as a result of improved market conditions.
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Bayer reported growth in sales and earnings in the first quarter of 2022, and has confirmed its full-year guidance on the strength of the period. The Leverkusen, Germany-based pharmaceutical company reported net income of €3.29 billion in the three months ended March 31. This represented a 58% increase against the previous year's figure of €2.09 billion. Sales grew 19% to €14.64 billion from €12.33 billion. The company added that sales were not hurt by Russia's invasion of Ukraine, saying that the two countries only make up around 3% of total sales. Crop Science sales rose 22% and Consumer Health sales rose 21% while Pharmaceutical sales rose more modestly, increasing 5.9% year-on-year.
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Philip Morris International confirmed that talks are ongoing over a potential offer for Swedish Match. ‘The discussions are in progress and it is uncertain whether an offer will be made. PMI intends to make no further comment regarding the discussions unless and until it is appropriate to do so,’ the tobacco firm said. The Wall Street Journal on Monday reported that Philip Morris was in talks to buy Stockholm, Sweden-headquartered Swedish Match in a deal worth around $15 billion or more to bolster its slice of the smoke-free market. Swedish Match makes a range of smoke-free products, including snus, nicotine pouches and chewing tobacco. Its largest markets for smoke-free products are the US and Scandinavia.
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Heathrow reported a strong April for travel, but the west London airport warned that it still expects to remain loss-making in 2022, complaining that the regulator will not allow it to raise charges even as airlines increase their own fares. Heathrow said 5 million passengers travelled through the airport last month, partly thanks to British holidaymakers cashing in airline travel vouchers issued as flights were cancelled during the pandemic. The airport raised its 2022 forecast to nearly 53 million passengers, up from 45.5 million previously expected. Still, this is short of potential. Heathrow noted that British Airways, its largest carrier, is expecting to return to only 74% of pre-pandemic capacity this year.
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Tinder parent Match Group has filed a lawsuit in a federal court in San Francisco accusing Google of abusing monopoly power at its Play Store that sells digital content for Android-powered phones. The litigation comes as part of an ongoing battle by Match, Epic Games and others to force Google-parent Alphabet and iPhone maker Apple to loosen their grips on their respective app stores. Match's filing came after Google modified Play Store rules to require its family of apps to use the internet giant's payment system, which collects fees of up to 30% on transactions, court paperwork explained.
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MARKETS
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Market focus was back on company results on Tuesday, though inflation and monetary policy were not far back-of-mind as investors await the latest US consumer price index print on Wednesday. After tumbling on Monday, Wall Street was pointed to rebound at the open on Tuesday. In Tokyo, Sony closed down 3.1% but Nintendo up 0.3%.
Ahead of the US CPI reading for April, the dollar backed off recent gains. ‘Markets are expecting an easing in the headline measure of price growth that, if confirmed, would be the first time this has happened since August last year,’ comments Matthew Ryan, senior market analyst at financial services firm Ebury. ‘We think that a surprise to the downside here could be enough to trigger a fairly marked unwinding in some of the recent bullish US dollar bets that have left the currency trading at very elevated levels.’
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CAC 40: up 1.2% at 6,160.49
DAX 40: up 1.7% at 13,601.55
FTSE 100: up 0.8% at 7,277.13
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Hang Seng: closed down 1.8% at 19,633.69
Nikkei 225: closed down 0.6% at 26,167.10
S&P/ASX 200: closed down 1.0% at 7,051.20
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DJIA: called up 1.0%
S&P 500: called up 1.2%
Nasdaq Composite: called up 1.7%
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EUR: up at $1.0571 ($1.0535)
GBP: up at $1.2338 ($1.2320)
USD: down at JP¥130.05 (JP¥130.45)
Gold: up at $1,863.00 per ounce ($1,861.75)
Oil (Brent): down at $106.47 a barrel ($107.50)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK foreign secretary will reportedly move to discard large portions of the Northern Ireland protocol after giving up on Brexit negotiations with the EU. The Times reported officials working for Liz Truss have drawn up draft legislation to unilaterally remove the need for checks on all goods being sent from Britain for use in Northern Ireland. The law would also ensure businesses in Northern Ireland are able to disregard EU rules and regulations and remove the power of the European Court of Justice to rule on issues relating to the region, the paper said. Importantly, the bill would override the protocol agreed by UK Prime Minister Boris Johnson in 2019 and mean the UK had breached its obligations under the Brexit agreement. The Times said Truss is understood to have concluded talks with the EU and has been told the proposed bill could lead to a trade war with the bloc.
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The Queen's Speech on Tuesday will contain new measures to ‘dynamise’ the UK to ensure people can pay the bills, a UK government minister has said. But while policing minister Kit Malthouse acknowledged government ‘alarm’ at predictions of soaring inflation, he downplayed hopes of rapid help being announced. The prince of Wales will read the Queen's Speech for the first time as the monarch misses the State Opening of Parliament for the first time in almost 60 years. The queen, 96, pulled out of the ceremonial occasion when she reads out the government's legislative programme for the forthcoming parliamentary session as she continued to experience ‘episodic mobility problems’. In her absence, Charles will take on the head of state's major constitutional duty, in a move which will be interpreted as a significant shift in his responsibilities as a king-in-waiting.
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The UK opposition Labour party believes it can show leader Keir Starmer did not break lockdown rules after the party leader vowed he would resign if he is fined by police. In a dramatic statement on Monday, Starmer said he would do the ‘right thing’ if he was issued with a fixed penalty notice in relation to a gathering in Labour offices in Durham in April last year. The move was seen a huge gamble, placing his future in the hands of Durham Police after it was announced last week officers would reopen an investigation into the event where Starmer drank beer and ate curry. However, Labour sources are confident they can prove it was a work event and that those present were taking a break to eat while working late on preparations for the Hartlepool by-election.
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UK retail sales declined for the first time since January 2021 in April, new data on Tuesday showed, as the cost of living crisis tanked consumer confidence. According to the latest tracker by British Retail Consortium and KPMG, retail sales decreased 0.3% annually in April, dropping from an enormous 51% rise in April of 2021. The figure is below the three-month average growth of 3.2%, and the 12-month average of 6.4%. When compared to pre-Covid times, sales in April were 3.9% higher than in April of 2019. On a like-for-like basis, sales decreased 1.7% year-on-year.
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Italy industrial output grew at a slower pace on an annual basis in March, while it was flat month-over-month, figures from national statistic office Istat showed. Italy industrial production remained flat on a monthly basis in March after growing by 4.0% in February from January. However, it beat market expectations, as cited by FXStreet, of a 1.9% decline. On an annual basis, industrial output rose by 3.0%, following a 3.4% increase the previous month, while the market expected slower growth of 1.3%.
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Japan's household spending dipped 2.3% in March from a year earlier as the cost of fuel and other items surge, though the fall was smaller than expected. The decline was the first since December and due in part to the comparison with a sharp rise in spending a year earlier. The decline was smaller than the market consensus of a 3.2% drop and comes after a 1.1% rise in February and a 6.9% surge in January. Analysts have warned that the pace of nominal wage increases in Japan is unlikely to track rising prices, dampening spending appetites.
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South Korea's hawkish incoming president Yoon Suk-yeol started work Tuesday in an underground bunker with a security briefing on the nuclear-armed North ahead of his formal inauguration ceremony. Yoon, 61, takes office at a time of high tensions on the Korean peninsula, with an increasingly belligerent Pyongyang conducting a record 15 weapons tests since January, including two launches last week. His conservative administration looks set to usher in a more muscular foreign policy for the world's 10th-largest economy after the dovish approach pursued by outgoing President Moon Jae-in during his five years in office. At midnight Tuesday, Yoon began his five-year term with his first briefing as commander-in-chief from the Joint Chiefs of Staff at an underground bunker set up at his new presidential office.
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