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The following is a summary of top news stories Thursday.
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COMPANIES
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BHP said it will continue to run its coal business in New South Wales, Australia, as it could not find any buyers for the business. BHP will keep New South Wales Energy Coal and is seeking approval to continue mining beyond its current mining consent that expires in 2026. BHP did say, however, that it will look to wind down the asset by the end of 2030. BHP stressed it sought to find a seller for New South Wales Energy Coal but did not receive a ‘viable offer’. BHP recently hived off its petroleum business to Perth, Australia-based oil and gas firm Woodside Energy.
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Halma, a Buckinghamshire, England-based company that provides hazard detection and life-saving technology, on Thursday said it has promoted Chief Financial Officer Marc Ronchetti to chief executive designate, replacing Andrew Williams when he retires next year after 18 years at the helm and 29 years with the company. Ronchetti joined Halma in 2016 and became CFO in 2019, previously having been finance director of the UK operations of Wolseley, which is now Ferguson. He will become only the fourth Halma chief executive in 50 years. Halma also reported results for the financial year that ended March 31. Pretax profit rose by 20% to £304.4 million from £252.9 million on a 16% increase in revenue to £1.53 billion from £1.32 billion. Halma raised its total annual dividend by 7.0% to 18.88 pence per share from 17.65p.
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Informa more than doubled the scope of its share buyback programme following ‘robust’ trading. It has scaled up its buyback programme to £725 million from £300 million, saying this is expected to see the company maintain the current level of buybacks through to year-end. The move on shareholder returns came as the events organiser and business information publisher said trading through the first five months of 2022 has been ‘robust’, with underlying revenue growth of more than 40%. Informa is on track to deliver at the upper end of full-year guidance for both revenue and adjusted operating profit, it said.
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Capital & Counties Properties and Shaftesbury have agreed the final terms of their all-share merger to create a central London-focused property investor with a combined portfolio value of £5.0 billion. Shaftesbury shareholders will receive 3.356 new Capco shares for each Shaftesbury share held, giving Shaftesbury shareholders a 53% stake in the combined company and Capco shareholders 47%. The pair had first confirmed they were in merger talks back in May, and those percentages haven't changed. Capco itself already holds a 25% stake in Shaftesbury. The combined company will be called Shaftesbury Capital PLC and will own property in the West End of London, including in Covent Garden, Carnaby Street and Chinatown.
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FTSE Russell said it expects Haleon, the Consumer Healthcare arm of GSK, to be added to the same indices as GSK, including the FTSE 100 index, when it starts commence trading on the London Stock Exchange on July 18.
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Elon Musk will reiterate his desire to acquire Twitter when he meets employees at the microblogging firm on Thursday, the Wall Street Journal reported. Citing a person familiar with the matter, the WSJ said Musk will talk about Twitter's strategy, including the role of advertising as well as a subscription-based offering. He also will comment on remote work, the newspaper added. Musk, also chief executive of Tesla, has told employees at the electric car maker to come back to the office for a minimum of 40 hours per week.
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Danish toy company Lego said it will build a $1 billion carbon-neutral run factory in the US state of Virginia. The toy company said the facility, which is slated to commence production in late 2025, ‘will be a highly energy efficient site and 100% of its energy needs will be matched by on-site renewable sources.’ Lego said that it will invest $1 billion over 10 years in its seventh factory, which will be located in Chesterfield County some 180 kilometres south of the US capital Washington.
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MARKETS
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Stock markets were sharply lower on Thursday in a reassessment of the US's 75-basis-point interest rate hike, with European indices down more than 2% and New York seen opening the same way. Wall Street had closed sharply higher after the Fed decision, with the Nasdaq Composite adding 2.5%, but the tech-heavy indicator was seen giving all that back and more on Thursday.
Switzerland followed the US in raising interest rates, and the Bank of England's latest decision is due at midday in London. ‘After the excitement of yesterday's ECB emergency meeting and 75bp hike by the US Fed, the SNB kept its end up by unexpectedly raising its policy rates by 50bps this morning its first rate hike since 2007. Given its history of making unscheduled policy announcements, we think it more likely than not that the bank will raise interest rates again, to zero over even into positive territory, before the next scheduled meeting, in September,’ commented David Oxley at Capital Economics.
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CAC 40: down 2.2% at 5,900.09
DAX 40: down 2.8% at 13,111.67
FTSE 100: down 2.1% at 7,118.65
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Hang Seng: closed down 2.2% at 20,845.43
Nikkei 225: closed up 0.4% at 26,431.20
S&P/ASX 200: closed down 0.2% at 6,591.10
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DJIA: called down 1.9%
S&P 500: called down 2.4%
Nasdaq Composite: called down 2.8%
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EUR: firm at $1.0401 ($1.0395)
GBP: up at $1.2117 ($1.2050)
USD: down at JP¥133.37 (JP¥134.60)
GOLD: up at $1,832.32 per ounce ($1,821.35)
OIL (Brent): down at $118.81 a barrel ($120.95)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US Federal Reserve on Wednesday ended days of speculation as the central bank enacted its most aggressive interest rate hike in almost 30 years, in a bid to tame rampant inflation. The Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5% to 1.75%, the highest since just before the Covid pandemic began in March 2020. It was the first 75-basis-points increase since November 1994. The Fed said that overall, economic activity appeared to have picked up after edging down in the first quarter, with job gains robust in recent months, and the unemployment rate low. Inflation remains ‘elevated’, which the central bank said reflected ‘supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures’.
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The Swiss National Bank followed on Thursday, becoming the latest central bank to hike interest rates by a chunky 50 basis points in order to tame soaring inflation. The SNB raised the policy rate and the interest rate on sight deposits by half a percentage point to minus 0.25%. ‘The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term,’ the central bank said. The SNB noted that the annual inflation rate hit 2.9% in May and is likely to remain elevated ‘for the time being’.
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The annual rate of price increases in Italy was revised slightly downwards in May, but inflation still was higher than in April, national statistics office Istat said. Consumer prices in Italy rose by 6.8% in May from a year before, after increasing by 6.0% in April. Preliminary data had shown a 6.9% inflation rate in May.
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US President Joe Biden announced $1 billion worth of new arms for Ukraine Wednesday as Pentagon officials defended the pace and quality of supplies as meeting Kyiv's battlefield needs. Ukrainian troops shelled Russian targets on the frontlines in the eastern Donbas region with newly-arrived French Caesar howitzers, as Ukraine officials met in Brussels with Western allies, hoping to obtain more ammunition and more lethal weapons to turn the tables on the invaders. The newest US arms package features 18 more 155mm howitzers and 36,000 rounds of ammunition for them; two land-based Harpoon anti-ship missile systems; and additional rockets for four Himars precision rocket artillery systems that Ukraine is soon to put in the field.
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German Chancellor Olaf Scholz, French President Emmanuel Macron and Italian Prime Minister Mario Draghi arrived in Kiev on Thursday morning for their first visit since the Russian invasion. They will speak with President Volodymyr Zelensky about further support for the country and Ukraine's desire to be admitted to the EU. The trio's overnight train trip had been planned for days. But it was not officially confirmed until shortly before arrival in the Ukrainian capital for security reasons, despite media reports. Scholz flew to southern Poland on Wednesday evening. From the border town of Przemysl, the nine-wagon train carrying the leaders left shortly before midnight for Kiev.
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Russian energy firm Gazprom began reducing the volume of gas it supplies to Germany via the Nord Stream 1 pipeline to a daily maximum of 67 million cubic metres early on Thursday. The further reduction in gas supplies came after the firm's Tuesday announcement that it would reduce the maximum delivery volume to 100 million cubic metres of gas per day, down from 167 million cubic metres. Overall, the latest cut represents an approximately 60% reduction in gas supplies to Germany within just two days. Siemens Energy said on Tuesday that one of the Nord Stream 1 gas turbines that had recently undergone repairs in Canada could not currently be shipped back from Montreal due to sanctions on Russia. The Nord Stream 1 pipeline is Germany's main pipeline for the delivery of Russian gas. Gazprom, which is majority owned by the Russian state, cited the delays caused by the repair of the gas compressor unit as the reason for the reduced gas delivery volumes, though Germany's Federal Network Agency disputed the claim.
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Japan's trade deficit widened in May, figures from the Ministry of Finance showed. Japan's trade deficit stretched to JP¥2.385 trillion in May, from JP¥212.93 billion a year earlier. Exports climbed by 16% to JP¥7.252 trillion in May from JP¥6.260 trillion a year prior. However, this was outpaced by rising imports, which grew 49% annually to JP¥9.637 trillion from JP¥6.473 trillion a year prior.
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Australia's unemployment rate was steady in May, falling just short of market expectations, figures showed. According to the Australian Bureau of Statistics, the nation's jobless rate was unchanged at 3.9% in May. The figure was just below an FXStreet cited forecast of 3.8%. The number of those out of work inched up 1.4% monthly to 548,100 in May from 540,300 in April. The figure is down 22% annually, however. The participation rate increased to just under 67% from just over 66%.
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