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The following is a summary of top news stories Monday.
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COMPANIES
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Rio Tinto on Monday reiterated its proposal to acquire full-ownership of Turquoise Hill Resources for C$34 per share, around $25.48. The announcement comes after Turquoise Hill said earlier in the day that it was no longer considering Rio Tinto's takeover offer. The Canadian mining firm said Rio Tinto's offer did not ‘fully and fairly reflect the fundamental and long-term strategic value’ of its majority ownership in the Oyu Tolgoi copper-gold project in Mongolia. As a result, the company said it was not in the best interest of the company or its shareholders to support Rio Tinto's proposal. Rio Tinto said it was ‘disappointed’ by the decision and asserted that the terms of its proposal would deliver ‘compelling value’ for Turquoise Hill. In March, the FTSE 100-listed miner announced it was proposing to acquire the remaining 49% of Turquoise Hill that it does not currently own. This represented a 32% premium to the firm's closing price on the Toronto Stock Exchange at the time.
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Thungela Resources said profit rose multifold as record high coal prices helped offset rail constraints in South Africa. Thungela was spun off from Anglo American in June last year and was then listed on both the London and Johannesburg stock exchanges in the same month. For six months to June 30, pretax profit for the Rosebank-based coal miner multiplied to R 11.76 billion from R 260.0 million in the prior year. ‘Very strong’ coal prices led to a record half-year profit, notwithstanding significantly higher mining royalty charges and losses on derivative instruments, it said. Benchmark coal prices reached an all-time high, averaging $277 a tonne in the first half from $97.71 per tonne around the same time last year.
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Phoenix Group Holdings reported a ‘record’ first half for cash generation, offering it confidence for the rest of the year, despite a widened interim loss. For the six months that ended on June 30, the London-based insurance services provider said total revenue climbed 28% to £2.69 billion from £2.10 billion a year earlier. However, its pretax loss widened to £1.65 billion from £454 million. Its bottom line was hit by a £31.61 billion net investment loss, swinging from income of £8.11 billion a year earlier. Administrative expenses rose to £1.1 billion from £963 million. ‘Phoenix delivered against all of its key objectives in H1, with a record set of financial results and clear strategic progress made. We have delivered further organic growth and also announced the cash funded acquisition of Sun Life of Canada UK. This will support us in delivering a dividend that is 'sustainable and grows over time',’ the London-based insurance services provider said.
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AstraZeneca and Daiichi Sankyo said their Enhertu drug met its primary endpoint in a breast cancer trial. Cambridge-based pharmaceutical firm AstraZeneca said a form of breast cancer in patients treated with Enhertu showed slowed disease progression. ‘These data further strengthen our confidence in Enhertu and reinforce its potential to transform patient outcomes across multiple treatment settings,’ said AstraZeneca Executive Vice President of Oncology Research & Development Susan Galbraith. Enhertu showed a ‘meaningful improvement’ in progression-free survival, the amount of time a patient lives without the disease getting worse. The trial involved sufferers of human epidermal growth factor receptor 2-positive unresectable and/or metastatic breast cancer. Participants had been previously treated with trastuzumab emtansine, an existing cancer therapy.
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Saudi Arabian Oil on Sunday unveiled record profit of $48.4 billion in the second quarter of 2022, after Russia's war in Ukraine and a post-pandemic surge in demand sent crude prices soaring. Net income leapt 90% year-on-year for the world's biggest oil producer, known as Saudi Aramco, which clocked its second straight quarterly record after announcing $39.5 billion for the first quarter. ‘While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential both to help ensure markets remain well supplied and to facilitate an orderly energy transition,’ said Aramco Chief Executive Officer Amin Nasser. ‘In fact, we expect oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts.’ Net income rose 23% from the first quarter in ‘strong market conditions’, Aramco said. Half-year profit was $87.9 billion, up from $47.2 billion for the same period of 2021.
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MARKETS
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European markets stalled at the start of the new week with investors mulling over some weak data from China, alongside an interest rate cut. ‘July economic data were simply bad. Deceleration resumed across the board, from production to investment and consumption, under the crushing weight of the zero-Covid policy and housing woes...Exports are the only bright spot, but the outlook is dimming amid the slowdown in the west and geopolitical tensions,’ said Societe Generale.
Besides this and some Japanese economic growth data, the economic calendar was quiet on Monday, but promises some excitement in the days ahead with UK unemployment and inflation due, eurozone GDP and inflation, and minutes from the US Federal Reserve's last meeting.
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CAC 40: up 0.1% at 6,561.08
DAX 40: slightly lower at 13,793.85
FTSE 100: slightly lower at 7,498.87
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Hang Seng: closed down 0.7% at 20,040.86
Nikkei 225: closed up 1.1% at 28,871.78
S&P/ASX 200: closed up 0.5% at 7,064.30
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DJIA: called down 0.4%
S&P 500: called down 0.5%
Nasdaq Composite: called down 0.5%
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EUR: down at $1.0194 ($1.0248)
GBP: down at $1.2058 ($1.2121)
USD: down at JP¥133.38 (JP¥133.63)
GOLD: down at $1,779.82 per ounce ($1,797.13)
OIL (Brent): down at $94.66 a barrel ($97.91)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China on Monday said it had organised fresh military drills around Taiwan, as a delegation of visiting US lawmakers met the island's leader after a similar trip by House Speaker Nancy Pelosi heightened fears of conflict. The unannounced two-day trip came after Beijing sent warships, missiles and jets into the waters and skies around Taiwan, a self-ruled democracy that China's leaders claim and have vowed to one day seize. The five-member congressional delegation led by Senator Ed Markey of Massachusetts met with President Tsai Ing-wen on Monday, according to Washington's de facto embassy. ‘The delegation had an opportunity to exchange views with Taiwan counterparts on a wide range of issues of importance to both the US and Taiwan,’ it said. The bipartisan trip sparked a caustic response from Beijing, which said it had carried out ‘combat readiness patrol and combat drills in the sea and airspace around Taiwan island’ on Monday.
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China's central bank slashed key interest rates Monday in a bid to kick-start the country's stuttering economic recovery as data showed factory output and retail sales for July came in weaker than analysts' expectations. The world's second-biggest economy saw a bounce in business activity as some coronavirus restrictions eased in June, but the boost is fading and Beijing remains welded to a zero-Covid policy of snap lockdowns and long quarantines, which has battered sentiment. For July, China's industrial production rose 3.8% on-year, down from a 3.9% jump in June, the National Bureau of Statistics said Monday. Retail sales grew at a slower-than-expected 2.7% from a year ago, down from 3.1% in June, while the urban unemployment rate fell to 5.4%, the NBS said. And the People's Bank of China Monday cut its policy rates, bringing its seven-day reverse repurchase rate a key rate at which the central bank provides short-term liquidity to banks to a new low. It also cut its one-year medium-term lending facility, surprising forecasters, although some analysts believe this may not be enough to revive credit growth.
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Japan's economy expanded in the three months to June, official data showed Monday, after the government lifted Covid-19 curbs on businesses. The world's third-largest economy grew 0.5% quarter-on-quarter due to stronger consumption and capital investment. While the country never imposed strict stay-at-home orders during the pandemic, the government in March lifted virus restrictions primarily targeting business opening hours. Inbound tourism remains limited to group tours, however, and the economy is facing headwinds from the energy price crisis to fears of a global recession fuelled by biting inflation. From April to June, private consumption grew 1.1% compared with the 0.3% registered in the January-March quarter, according to the data released by the Cabinet Office.
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A divided Congress gave final approval on Friday to Democrats' flagship climate and health care bill, handing US President Joe Biden a back-from-the-dead triumph on coveted priorities that the party hopes will bolster their prospects for keeping their House and Senate majorities in November's elections. The House used a party-line 220-207 vote to pass the legislation, prompting hugs among Democrats on the House floor and cheers by White House staff watching on television. ‘Today, the American people won. Special interests lost,’ tweeted Biden, who was shown beaming in a White House photo as he watched the vote on TV from Kiawah Island, South Carolina. He said he would sign the legislation next week. The measure is but a shadow of the larger, more ambitious plan to supercharge environment and social programmes that Biden and his party unveiled early last year.
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German wholesale selling prices were 20% higher in July than the same month a year earlier, the latest data from Destatis showed. Compared to the previous month, wholesale prices fell by 0.4% in July, reversing a 0.1% rise in June. The higher annual prices were mainly driven by increased prices for raw materials and intermediate products, though the figure did slow from the 21% growth notched in June. The largest impact on the annual change was mineral oil products, up 54% against the previous year. However, the highest price increase was seen in solid fuels pricing, up 93% against the previous year.
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Switzerland's annual producer price inflation eased in July, figures on Monday. In addition, factory-gate prices actually weakened on-month in July, undershooting market expectations. According to the Federal Statistics Office, producer prices increased 6.3% on an annual basis in July, slowing from June's 6.9% incline. The figure for July fell short of FXStreet cited consensus of 6.7%. On a monthly basis, producer prices weakened 0.1% in July, the first decline since December. They had also fallen 0.1% in December. According to FXStreet, they had been expected to rise 0.7% in July, which would have been an acceleration from a 0.3% climb in June. ‘Lower prices were seen in particular for basic metals and semi-finished metal products,’ the FSO said.
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Keir Starmer has set out a ‘very strong, robust, costed plan’ to stop energy bills rising over the winter paid for in part by an extension of the windfall levy on the profits of the oil and gas companies. The Labour leader said the £29 billion plan to address the ‘national emergency’ would freeze the energy price cap at its current level of £1,971, saving the average household £1,000. He contrasted Labour's proposal with the inaction of ‘lame duck’ Prime Minister Boris Johnson and the ‘internal battle’ of the Tory leadership contest, increasing the pressure on contenders Liz Truss and Rishi Sunak to spell out how they would help families struggling with soaring bills. Starmer told BBC Radio 5 Live on Monday: ‘Millions of people are already struggling with their bills, we all know that across the country and the hikes that are expected for this October...from a price cap of just under about £2,000 to £3,500 and then £4,200 and millions of people, millions of families are saying 'I just can't afford that'.
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