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The following is a summary of top news stories Wednesday.
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COMPANIES
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Prudential has hired Manulife Financial Corp executive Anil Wadhwani as its new chief executive following the retirement of Mike Wells. Wadhwani currently serves at Toronto-headquartered Manulife as CEO of Manulife Asia. Manulife operates in Canada and Asia as Manulife and in the US primarily through its John Hancock Financial unit. Prior to Manulife, Wadhwani spent over two decades at Citigroup. He will take up the Prudential role on February 25 next year. Wadhwani is stepping into the role after Mike Wells retired earlier this year, with Mark FitzPatrick currently serving as interim CEO.
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US pharmaceutical firm Pfizer said it will sell its patented drugs at a not-for-profit basis to the world's poorest countries, as part of a new initiative announced at the World Economic Forum in Davos. 'An Accord for a Healthier World' focuses on five areas: infectious diseases, cancer, inflammation, rare diseases and women's health where Pfizer currently holds 23 patents, including the likes of Comirnaty and Paxlovid, its Covid vaccine and oral treatment. ‘This transformational commitment will increase access to Pfizer- patented medicines and vaccines available in the US and the EU to nearly 1.2 billion people,’ Angela Hwang, group president of Pfizer Biopharmaceuticals Group told AFP.
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Ocado Group said it now expects just ‘low single digit’ annual sales growth from its UK retail joint-venture, as grocery buying behaviour normalises and consumer confidence weakens. The Hatfield, Hertfordshire-based online grocer warned the Ocado Retail joint-venture, operated alongside Marks & Spencer, has suffered in recent weeks as its trading environment has ‘deteriorated’. Annual growth at the JV will now be ‘in the low single digits’, the forecast lowered from a 10% climb. Ocado ends its financial year in late November. There will be a ‘low single digit’ earnings before interest, tax, depreciation and amortisation margin.
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UK power utility SSE reported rising earnings and lifted its payout. In the financial year that ended March 31, revenue climbed 42% to £16.91 billion from £11.87 billion. Pretax profit rose 44% to £3.48 billion from £2.42 billion. Adjusted earnings per share grew by 22% to 95.4 pence, within guidance, from 78.4p. The adjusted EPS figure has been tipped to rise to ‘at least’ 120p for the new year. For the five-year period to financial 2026, it expects compound annual adjusted EPS growth of between 7% and 10%. SSE hiked its payout by 5.8% to 85.7p from 81.0p. SSE recently kicked off plans for a sales process for its SSEN Transmission arm. This is expected to formally begin in the summer. SSE plans to sell a 25% stake in the electricity transmission network unit.
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Glencore said on Tuesday it reached resolutions with the US, UK and Brazilian authorities in relation to their investigations into past bribery and market manipulation activities by the company. The Anglo-Swiss commodity trading and mining company said that the Swiss and Dutch investigations, however, remain ongoing. The timing and outcomes of these investigations remain uncertain. Payments for these resolutions were not expected to differ materially from existing provision of $1.50 billion which was set aside in February, Glencore said. Under the terms of the US resolutions, Glencore will pay penalties amounting to $700.7 million to resolve bribery investigations and $485.6 million to resolve market manipulation investigations by the US Department of Justice and the Commodity Futures Trading Commission. This bring the total US penalty figure to $1.02 billion. Of this amount, up to $165.9 million will be credited against other matters, including claims in the UK.
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Intuit delivered a strong third-quarter performance prompting the US financial software company to raise its full-year guidance as a result. Intuit reported net income of $1.79 billion in the three months ended April 30. This represented a 23% increase against the previous year's figure of $1.46 billion. Basic earnings per share rose 18% to $6.35 from $5.36. Revenue climbed to $5.63 billion in the third quarter from $4.17 billion the year before. Looking ahead for financial 2022, the Mountain View, California-based firm expects revenue of $12.63 billion to $12.67 billion. This represents growth of around 31% to 32%, including Mailchimp as of November 1 and a full year of Credit Karma, up from previous guidance for growth of 26% to 28%.
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Car maker Stellantis will invest over $2.5 billion, along with Samsung SDI Co, in a joint venture for a lithium-ion battery production plant in the US. The plant is targeted to start in 2025 and will have an initial annual production capacity of 23 gigawatt hours, Stellantis says. Samsung SDI is a battery and electronic materials manufacturer operating under the Energy Solutions & Electronic Materials segment of Samsung Electronics. Stellantis added that the investment could increase to $3.1 billion. The facility will supply battery modules for a range of vehicles produced at Stellantis's North American assembly plants.
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British Gas-owner Centrica and chemical firm Johnson Matthey are set to return to the FTSE 100 index next month, replacing television broadcaster ITV and postal operator Royal Mail, according to indicative changes released by FTSE Russell on Tuesday. All four companies have been in and out of London's blue-chip list in recent years. Meanwhile, online fashion retailer Asos will join the FTSE 250, following its move to the London Main Market from AIM. JLEN Environmental Assets Group replaced Clipper Logistics in the FTSE 250 on Tuesday, after GXO Logistics completed its acquisition of Clipper.
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MARKETS
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Stock markets were flat and the dollar firm on Wednesday, ahead of the release at 1800 GMT of the minutes of the most recent meeting of US monetary policy setting Federal Open Market Committee.
‘Today's release of the May's FOMC minutes will provide more clues on how policy makers stand in relation to the issue of fighting inflation versus supporting economic growth and while still unlikely, should any significant signs of dovishness emerge from the FOMC minutes, the dollar could give up more of the gains accumulated since the beginning of the year,’ said Ricardo Evangelista, senior analyst at ActivTrades.
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CAC 40: down 0.1% at 6,247.50
DAX 40: down 0.1% at 13,912.17
FTSE 100: up 0.4% at 13,907.85
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Hang Seng: closed up 0.3% at 20,171.27
Nikkei 225: closed down 0.3% at 26,677.80
S&P/ASX 200: closed up 0.4% at 7,155.20
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DJIA: called down 0.2%
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.1%
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EUR: down at $1.0665 ($1.0725)
GBP: down at $1.2506 ($1.2518)
USD: up at JP¥127.05 (JP¥126.67)
Gold: down at $1,857.82 per ounce ($1,866.09)
Oil (Brent): up at $114.50 a barrel ($113.97)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russia's invasion of Ukraine has put financial markets under renewed stress by driving up prices and impeding growth, the European Central Bank said in a report. The war has ‘increased financial stability risks through its impact on virtually all aspects of economic activity’, ECB vice-president Luis de Guindos said. Inflation in the eurozone has accelerated as costs for energy, agricultural goods and raw materials have risen sharply. Consumer prices rose at a 7.4% pace in April, an all-time high for the currency club and well above central banks' target of 2%. At the same time, economic prospects in the bloc have diminished, with the ECB's most recent forecasts predicting a ‘severe’ scenario could shave over a percentage point off growth this year. The reaction to the outbreak of the conflict and the levelling of sanctions against Russia have so far been ‘orderly’, the ECB said in its biannual financial stability report.
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The German economy expanded 0.2% quarter-on-quarter in the first quarter of 2022, in line with a prior estimate, figures from Destatis showed. In the fourth quarter of 2021, Germany's economy had shrunk by 0.3%. Adjusting for price and calendar effects, German GDP was 4.0% higher year-on-year in the first quarter, quickening from a 1.8% hike in the fourth quarter of 2021. First-quarter GDP was 0.9% lower than three years earlier, before the onset of the pandemic. ‘War in Ukraine and the continuing Covid-19 pandemic have intensified existing distortions, including interruptions in supply chains and rising prices,’ Destatis analyst Georg Thiel said. ‘Despite difficult framework conditions in the global economy, the German economy started 2022 with a slight growth.’
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The US will end an exemption allowing Moscow to pay foreign debt held by American investors with funds held in Russia, the US Treasury said Tuesday, a move that could push Vladimir Putin's country closer to default. The escape clause to the drastic financial sanctions imposed on Moscow after it invaded Ukraine in late February, which allowed US banks to receive and process the payments to creditors, ends as of 0401 GMT Wednesday, two days before Russia's next debt service payment is due. US Treasury Secretary Janet Yellen last week hinted at the move announced Tuesday, saying the exemption was put in place to allow financial institutions to adjust but that it was ‘time-limited.’ Punishing Western sanctions on Russia have largely severed the country from the international financial system, including blocking Moscow's ability to access funds held in US banks to pay its foreign creditors.
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Ukrainian President Volodymyr Zelensky said the West remained divided over the extent of its support for Ukraine in its defence against Russia's months-long invasion. ‘Unity is about weapons. My question is, is there this unity in practice? I can't see it. Our huge advantage over Russia would be when we are truly united,’ Zelensky said during a panel discussion on Ukraine at the World Economic Forum. Washington and European countries have poured billions of dollars' worth of arms into Ukraine to help the country's outgunned forces beat back the better-armed Russian invaders. Kyiv has called for greater support, membership to the US-led NATO military alliance, and for a no-fly zone to be imposed over the country. Zelensky specifically named neighbouring Hungary, which has voiced opposition to a EU-wide embargo on Russian oil, another key Ukrainian demand. He also pointed to a lack of consensus over Sweden and Finland's historic bid to join NATO, which has been called into question by Turkey.
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UK Prime Minister Boris Johnson was braced for a bruising day after receiving Sue Gray's report on lockdown-busting parties in Downing Street and Whitehall. The report, which has not yet been published, is expected to be highly critical of the culture in No 10 which led to the repeated violations of Covid restrictions over the course of 2020 and 2021. The report is also expected to criticise Cabinet Secretary Simon Case, but he has made clear he will not be resigning and the prime minister will not sack him. A Cabinet Office spokesman said: ‘We can confirm that Sue Gray has provided her final report to the prime minister.’ Johnson will make a statement to MPs in the Commons later on Wednesday. He will also hold a press conference in Downing Street and address the 1922 Committee of backbench Tory MPs who will have to decide whether the findings are sufficiently serious to warrant a push to oust him.
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UK Chancellor Rishi Sunak has to tread a ‘very difficult path’ to make sure his forthcoming plan to alleviate the cost-of-living crisis does not further drive up inflation, a Cabinet minister said. Sunak is expected to unveil a multibillion pound plan this week as the UK government seeks to draw a line under the partygate row and focus on the squeeze in living standards caused by soaring inflation. Environment Secretary George Eustice told LBC: ‘We are treading a very difficult path here because if we just borrow lots more money and throw it at the situation we could compound inflation, we could make the situation worse and see prices rise further. So we have got to try to dampen that inflation and that means showing some restraint but, equally, helping people, particularly those on the lowest incomes, who will struggle with some of these price rises.’
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Australia's economy minister called on China to drop punishing trade tariffs if it wants to thaw frozen relations, after Beijing sent a message signalling it is ready to improve ties. China Australia's biggest trading partner imposed tariffs and disrupted more than a dozen key industries, including wine, barley and coal, as relations deteriorated sharply in the past two years. Canberra had irked Beijing by calling for an independent probe into the origins of the coronavirus pandemic and by banning telecoms giant Huawei from building Australia's 5G network. Treasurer Jim Chalmers said Australia felt the pain of the Chinese trade squeeze, calling for the measures to be lifted ‘as soon as possible’. ‘They are damaging our economy. They are making life harder for some of our employers and workers here in Australia,’ he told public broadcaster ABC. ‘Obviously, we would like to see those measures lifted. That would be a really great start, when it comes to how we manage what is a really complex relationship, a relationship that has become more complex over time.’
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