TOP NEWS SUMMARY: Eni joins TotalEnergies in huge Qatar gas project

Writer,

The following is a summary of top news stories Monday.

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COMPANIES

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Eni has joined Qatar Energy's $28.75 billion project to expand production from the world's biggest natural gas field, days after Russia slashed supplies to Italy. Eni will own a stake of just over 3% in the North Field East project, Qatar Energy's chief executive told a signing ceremony in Doha. Qatar announced last week that France's TotalEnergies will be its first, and largest, foreign partner on the development, with a 6.25% share. The project's LNG – the cooled form of gas that makes it easier to transport – is expected to come on line in 2026. It will expand Qatar's LNG production from 77 million tonnes a year to 110 million, Qatar Energy said. The Qatari company estimates that the North Field, which extends under the Gulf sea into Iranian territory, holds about 10% of the world's known gas reserves. More announcements are due this week. Industry sources have discussed Exxon Mobil, Shell and ConocoPhillips, while Bloomberg has reported that Chinese companies are in talks.

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AB Foods said its third-quarter trading performance was in line with expectations, and it kept its outlook unchanged. For the 36 weeks to May 28, revenue increased by 32%. Sales in its Food businesses increased 10% in the third quarter, which it said reflected price actions to recover input cost inflation and volume increases in the Ingredients arm. AB Sugar revenue for the quarter was 7% ahead of last year. At its Primark discount fashion chain, all stores traded during the period, in contrast to last year when most stores were closed until the middle of April, it explained. AB Foods said sales at Primark in the quarter were 81% ahead of last year and year to date were 69% ahead of the comparable period a year before. The company highlighted that like-for-like sales at Primark have been improving since the half year, and for the quarter were 9% below pre-Covid levels three years ago. In the UK & Republic of Ireland like-for-like sales have improved markedly, while in Continental Europe performance only started to improve at the end of the quarter following the removal of remaining Covid restrictions. Primark remains on track to deliver a full-year adjusted operating profit margin of around 10%, AB Foods said.

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Euromoney Institutional Investor confirmed that two private equity firms are considering a bid for the FTSE 250-listed business information publisher and events organiser. Euromoney confirmed it received an approach from a consortium of Astorg Asset Management and Epiris regarding a possible cash offer for Euromoney of 1,461 pence per Euromoney share, valuing the company at £1.6 billion. The latest offer represents a 34% premium to Friday's closing share price of 1,094.00p. The stock was up 25% at 1,366.81p early Monday. Euromoney said the proposal follows earlier approaches from the consortium to the board regarding a possible all cash offer for Euromoney at 1,175p, 1,250p, 1,310p and 1,350p per Euromoney share.

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easyJet warned about rising costs and the need to lease additional aircraft, due to the recent disruption of flights at two of its biggest airports. The Luton Airport-based budget airline said it expects the extra costs this summer to be a one-off occurrence, with more system resilience built in time for the 2023 peak season. It blamed this on an ‘unprecedented ramp up’ in flying, following a strong return of demand, especially in April and May. As a consequence, the company experienced ‘challenges’, such as air traffic control delays and staff shortages in ground handling and at airports. Coupled with increased ID check times, this reduced its ‘planned resilience’ and led to flight caps at two of its biggest airports, Gatwick Airport and Amsterdam Airport Schiphol. Further, it warned that there will be a cost impact from this disruption and the measures taken to combat it, which resulted in costs for additional wet leased aircraft, crew costs, and additional airport charges.

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Shares in Chinese gaming giant NetEase plummeted on Monday after the firm indefinitely postponed the China release of blockbuster title Diablo Immortal. Gamers in the country have been hotly anticipating their chance to play the game, which was released in Western countries at the start of the month. But co-developer Activision Blizzard said the planned June 23 launch date had been postponed pending ‘a number of adjustments for optimisation to the game’. NetEase stocks slumped more than 10% in Hong Kong on Monday, driving them to their lowest point since September. The benchmark Hang Seng Index was slightly up. In a statement on Sunday, Activision Blizzard said it had postponed the launch while developers worked on tweaks including support across more devices, high-quality rendering and performance optimisations.

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MARKETS

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European equities were trading positively on Monday, despite a mixed lead from Asia and US markets being closed for holiday. Among companies in the news, Eni and TotalEnergies both were up 1.1%. Oil prices eased slightly amid concern that rising interest rates will induce recession. Fresh from a 75-basis-point interest rate hike last week, US Federal Reserve Chair Jerome Powell testifies before lawmakers on Capital Hill on Wednesday and Thursday.

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CAC 40: up 0.4% at 5,902.97

DAX 40: up 0.6% at 13,206.40

FTSE 100: up 0.6% at 7,060.32

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Hang Seng: closed up 0.4% at 21,163.91

Nikkei 225: closed down 0.7% at 25,771.22

S&P/ASX 200: closed down 0.6% at 6,433.40

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New York closed for US Juneteenth holiday.

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EUR: up at $1.0520 ($1.0465)

GBP: up at $1.2235 ($1.2211)

USD: down at JP¥134.75 (JP¥135.17)

GOLD: down at $1,840.22 per ounce ($1,841.66)

OIL (Brent): down at $112.27 a barrel ($114.22)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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A recession in the US is not ‘inevitable’, but the economy is likely to slow, Treasury Secretary Janet Yellen said Sunday, days after the US Federal Reserve hiked interest rates, raising fears of a contraction. ‘I expect the economy to slow’ as it transitions to stable growth, she said on ABC's ‘This Week,’ but ‘I don't think a recession is at all inevitable.’ Yellen conceded that ‘clearly inflation is unacceptably high,’ attributing it partly to the war in Ukraine, which has pushed up energy and food prices. But she said she did not believe ‘a drop-off in consumer spending is the likely cause of a recession’. The US labor market is ‘arguably the strongest of the postwar period,’ Yellen said, and she predicted a slowing of inflation in coming months.

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Annual producer inflation in Germany surged to another record high in May, according to the latest data from the Federal Statistical Office. On an annual basis, the producer price index rose by 33.6% in May, accelerating from a 33.5% rise in April. Energy prices led the way, up 87% compared to the previous year and up by 2.5% compared to April.

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The head of the European Commission, Ursula von der Leyen, has expressed confidence that Ukraine will be granted official candidate status ahead of a key EU summit in Brussels later this month. ‘I firmly believe that we will get a positive decision, that we will get support, that the course has now been set,’ von der Leyen told German public broadcaster ARD on Sunday evening. ‘Of course, this is also a historic decision that the European Council now has to make, but the preparations are good,’ she said, adding that she was ‘confident’ of Ukrainian prospects. Von der Leyen's comments come after the EU Commission on Friday came out in favour of formally designating Ukraine and Moldova as candidates to join the EU. The 27 EU member states are due to discuss the Commission's recommendation at a summit in Brussels on Thursday and Friday. Also on the agenda will be Georgia's application for EU membership, which, in the Commission's estimation, should be subject to the fulfilment of various conditions.

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French President Emmanuel Macron lost his parliamentary majority after major election gains by a newly formed left-wing alliance and the far right, in a stunning blow to his plans for major second-term reform. The result from Sunday's second round poll threw French politics into turmoil, raising the prospect of a paralysed legislature or messy coalitions, with Macron forced to reach out to new allies. Macron, 44, now also risks being distracted by domestic problems as he seeks to play a prominent role in putting an end to Russia's invasion of Ukraine and as a key statesman in the EU. Macron's ‘Together’ coalition will still be the biggest party in the next National Assembly. But with 245 seats, according to full interior ministry results announced in the early hours of Monday, it is well short of the 289 seats needed for a majority in the 577-member chamber.

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Spain's conservative People's Party won a surprise absolute majority in regional elections in Andalusia, according to official vote counts. The PP, led by regional President Juanma Moreno, had won 57 seats in the regional parliament in Seville, with more than 93% of votes counted, the electoral commission announced on Sunday evening. The surprise result represents an increase of 31 seats on the last elections four years ago. For a majority, 55 seats are required. Meanwhile, the socialist PSOE of Spanish Prime Minister Pedro Sanchez - which governed Andalusia for decades until 2018 - won just 31 seats, coming in a distant second.

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Health ministers from the G20 group of the world's major industrialized economies began a series of meetings in the Indonesian city of Yogyakarta on Monday to discuss the strengthening of global health systems in light of the ongoing Covid-19 pandemic. On the agenda are building a health security system, harmonizing Covid-19 health protocols, standardizing international travel documents and strengthening the pharmaceutical industry, Indonesian health ministry spokesperson Nadia Tarmizi said. Also attending the meeting would be Secretary General of the World Health Organization, Tedros Adhanom Ghebreyesus, Tarmizi said.

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EU foreign ministers are due to discuss the impact of Russia's war in Ukraine on global food security and the bloc's energy supply at a meeting of its Foreign Affairs Council in Luxembourg on Monday. The EU was considering providing Egypt with up to €100 million to support the country's agricultural sector and the stockpiling of food in the coming months, top EU diplomat Josep Borrell said on Sunday. Borrell's comments came ahead of a planned meeting in Luxembourg with Egyptian Foreign Minister Sameh Shoukry, who is expected to join ministers on Monday. The bloc was also considering long-term financial aid for the wider region over the coming years, Borrell said.

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