TOP NEWS SUMMARY: Bank of Japan goes its own way by standing still

Writer,

The following is a summary of top news stories Friday.

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COMPANIES

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Banco Santander laid out its chief executive succession plans, naming North America head Hector Grisi as its new boss. Grisi will at the start of next year replace Jose Antonio Alvarez, who has been the Madrid-based lender's CEO since January 2015. Grisi is currently CEO of Santander Mexico and also leads the group's North America operations. He joined Santander in 2015. ‘Hector Grisi is a seasoned expert who knows our business and is the right person to lead the bank with [Executive Chair Ana Botin],’ Lead Independent Director Bruce Brown said. Alvarez will remain on the Santander board, taking on the role of non-executive vice chair. He joined Santander in 2002, became finance chief in 2004 before becoming CEO 11 years later.

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Tesco backed annual profit guidance after top-line growth in the first quarter, though sales in the UK alone fell, despite the country's largest supermarket chain eating up more market share. Tesco said overall sales were just shy of 10% above pre-virus levels. However, it warned on inflation and said it has seen signs that consumer behaviour is changing. In the first quarter ended May 28, group retail sales amounted to £13.57 billion, up 2.0% yearly on a like-for-like basis. Sales were up 9.9% like-for-like on three years earlier, before the onset of the pandemic. In the UK alone, sales fell 1.5% yearly on a like-for-like basis to £9.88 billion, but were up 8.1% from pre-virus levels. In the UK, Tesco's market share advanced by 37 basis points during the quarter, the company said, noting Kantar figures. Looking ahead, Tesco noted ‘some early indications’ that consumer behaviour is changing due to inflation. Tesco's yearly guidance was left unchanged.

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Miner and commodities trader Glencore said it expects its Marketing segment's half-year earnings to top $3.2 billion, being the upper end of its long-term adjusted earnings before interest and tax annual guidance range of $2.2 billion to $3.2 billion. ‘Our Marketing segment's financial performance has continued to be supported by periods of heightened-to-extreme levels of market volatility, supply disruption and tight physical market conditions, particularly relating to global energy markets,’ said Glencore, though adding that market conditions should normalise in the second half of the year. Turning to its Industrial coal business, Glencore said it saw ‘unprecedented dislocation’ in coal markets, resulting in record price differentials and soaring costs. Glencore will release first-half production report on July 29 and its interim results on August 4.

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Adobe said it delivered a record second-quarter revenue performance as the graphics and multimedia software company benefitted from strong demand. For the three months to June 3, revenue was up 14% at $4.39 billion from $3.84 billion in the second quarter last year. Second-quarter net income was $1.18 billion, or $2.49 per diluted share, up from $1.12 billion, or $2.32 diluted EPS, the year before. Looking ahead, Adobe reduced its guidance for the financial year. It forecast $13.50 in adjusted earnings per share on $17.65 billion in revenue, down from $13.70 in adjusted earnings per share and $17.90 billion in revenue, previously guided.

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Elon Musk pitched a vision to Twitter staff of a one-billion-user platform, but was hazy on potential layoffs, free speech limits and what's next in his chaotic buyout bid. While fielding questions in his first meeting with wary staffers, the Tesla chief offered no updates on his $44 billion deal that he has thrown into doubt in recent weeks. Yet in comments from the employees-only virtual meeting of less than one hour, Bloomberg and New York Times reports based on leaks relayed his claimed passion for self-expression on the platform. Musk said he wants to have ‘at least a billion people on Twitter’ in what would be massive growth for a platform that has about 229 million presently.

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Musk's electric car maker Tesla has sharply increased prices of all of its cars models, amid ongoing global supply-chain issues and increasing raw material prices. According to Electrek, the Model 3 Long Range price has gone from $54,490 to $57,990, a $2,500 price increase. The price hikes come at a time when costs of raw materials, including aluminium and lithium used in cars and batteries, have surged, while logistic costs have also increased.

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MARKETS

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Stock markets were attempting to end an eventful week on a positive note. In Asia, both Hong Kong and Shanghai closed higher. Tokyo, together with Sydney, bucked the positive trend, ending lower, after the Bank of Japan kept in place its ultra loose monetary policy. The yen also continued to suffer, as other central banks raise interest rates, sinking to a 24-year low against the dollar. ‘Despite Governor Haruhiko Kuroda's comments, we expect the market to continue to price in policy change potential as the current policy is not sustainable in the current global economic situation,’ commented Min Joo Kang, senior economist for South Korea and Japan at ING. ‘The rate differential with other economies will keep widening, thus the markets' bet against the Japanese yen is likely to strengthen for a while.’

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CAC 40: up 0.9% at 5,940.95

DAX 40: up 1.1% at 13,183.37

FTSE 100: up 0.9% at 7,109.29

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Hang Seng: closed up 1.1% at 21,075.00

Nikkei 225: closed down 1.8% at 25,963.00

S&P/ASX 200: closed down 1.8% at 6,474.80

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DJIA: called up 0.9%

S&P 500: called up 1.0%

Nasdaq Composite: called up 1.2%

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EUR: up at $1.0521 ($1.0509)

GBP: firm at $1.2318 ($1.2311)

USD: up at JP¥134.42 (JP¥132.22)

GOLD: up at $1,850.39 per ounce ($1,841.77)

OIL (Brent): up at $120.58 a barrel ($118.37)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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The World Trade Organization concluded a landmark bundle of deals covering fishing subsidies, food insecurity and Covid-19 vaccines following hectic round-the-clock talks. WTO director-general Ngozi Okonjo-Iweala said trade ministers had struck an ‘unprecedented package of deliverables’ which would make a difference to people's lives across the planet. The talks at the global trade body's Geneva headquarters began Sunday and were due to wrap up on Wednesday. But instead the WTO's 164 members went through two straight nights before getting the package over the line at around 0300 GMT Friday. The WTO's 12th ministerial conference reeled in a deal to halt harmful fisheries subsidies after more than two decades of negotiations, and also reached agreements on e-commerce, responding to pandemics and reforming the organisation itself.

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The Bank of Japan stuck to its long-held monetary easing policy even as other central banks around the world lift interest rates to tame inflation. But it said it would ‘pay due attention’ to foreign exchange markets, a rare comment that comes after the yen hit a 24-year low against the dollar. In a statement following a two-day policy meeting, the BoJ kept in place its rate of minus 0.1% – part of a decade-old action plan aimed at boosting the world's third-largest economy – bucking pressure to address the impact of a weaker yen. Its decision runs counter to a global tightening trend to tackle sky-high fuel and food prices linked to the war in Ukraine and supply chain snarls.

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The eurozone's annual inflation rate for May was confirmed at a rampant 8.1%, according to Eurostat. The figure was in line with a prior estimate and accelerated from 7.4% in April. May's inflation rate was a record high for the single currency area. Core inflation, excluding energy, good, alcohol and tobacco, accelerated to 3.8% in the eurozone in May from 3.5% in April. On a monthly basis, consumer prices in the eurozone rose 0.8% in May from 0.6% in April.

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The US plans to propose a new initiative to address Pacific island issues next week as it scrambles to offset China's thrust into the region, a top White House official said. Washington is ‘stepping up across the board’ its engagement with Pacific island nations to address their concerns over everything from relations with Washington to illegal fishing, climate change and regional security, said Kurt Campbell, a senior official for Asia in the National Security Council. ‘This is an area of enormous strategic importance. We have historical and moral responsibilities, both from the Second World War and, subsequent, the nuclear age,’ Campbell told a forum held by the Center for a New American Security, a Washington think-tank. The announcement came after China was dealt a setback when 10 Pacific island states in late May rebuffed a proposal for a regional pact that would have pulled them into Beijing's orbit.

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The European Commission meets Friday to give its fast-tracked opinion on Ukraine's bid for EU candidacy, a step closer to membership for the country a day after the bloc's most powerful leaders visited Kyiv as it battles Russia's invasion. Never before has an opinion been given so quickly on EU candidacy, which must be approved by all 27 member states. The opinion will serve as a basis for discussion at next week's EU summit, where leaders are expected to approve Ukraine's candidate status, but with stern conditions attached, and membership may take years or even decades. France, Germany, Italy and Romania are all in favour of Ukraine receiving ‘immediate’ candidate status, French President Emmanuel Macron said in Kyiv on Thursday.

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UK Prime Minister Boris Johnson's plans to unilaterally scrap parts of Northern Ireland's Brexit deal are ‘politically driven’ and ‘very damaging’ to EU-UK relations, the European Commission vice-president has said. Maros Sefcovic said the EU was not ‘here for political point scoring’ after the bloc launched fresh legal action against the UK in retaliation over the PM's just laid Northern Ireland Protocol Bill, which will effectively rip up key parts of the deal signed by Johnson and the EU in 2019. Sefcovic told Beth Rigby on Sky News: ‘I cannot resist the impression that the tabling of the Bill is politically driven, but it's not our role to comment on internal politics in the UK and therefore our doors for the negotiations will always be open. ’We are here for the results, not political point scoring…We are in a fixing business, but I am afraid to say what was tabled on Monday is very much nixing.

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