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The following is a summary of top news stories Wednesday.
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COMPANIES
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Aviva said 2021 was a year of significant strategic progress across the board following the disposal of eight non-core units, making the UK insurer a ‘much simpler, leaner business’. For 2021, Aviva posted adjusted operating profit of £2.27 billion, down from £3.16 billion in 2020 as a result of discontinued operations. Pretax profit from from continuing operations was £801 million, down from £1.81 billion. Turning to returns, Aviva declared a total dividend of 22.05p, up 5% from 21.00p in 2020. In addition, the London-based company said it will return £4.75 billion to shareholders comprising £3.75 billion via B share scheme on top of a £1 billion share buyback. Aviva also said it will acquire independent financial advice firm Succession Wealth for £385 million.
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Nordea Bank reported significant rises in profit and earnings per share in 2021 and consequently increased its annual payout. Net profit leaped 69% to €3.83 billion from €2.27 billion. Per share, basic earnings rose 73% to €0.95 from €0.55. The Nordic lender reported total operating income of €9.62 billion in 2021, up 14% from €8.47 billion the previous year. Net interest income rose 9.1% to €4.93 billion from €4.52 billion while net fee & commission income rose further, jumping 18% to €3.50 billion from €2.96 billion. Nordea explained that the increase in net interest income was driven by cross-Nordic mortgage volume growth, higher deposit margins in Denmark and high mortgage margins in Finland.
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Persimmon said its performance was strong in 2021 as it delivered more homes and strengthened its platform for future growth. For 2021, pretax profit was £966.8 million, up from £783.8 million in 2020 on revenue of £3.61 billion, up from £3.33 billion. The York, England-based housebuilder completed 14,551 new homes in 2021, almost a 1,000 more than 13,575 homes in 2020. The average selling price was £237,078, up from £230,534. Turning to returns, Persimmon is to pay a 125 pence regular annual dividend instalment in April, alongside a 110p payment of surplus capital in July. Looking ahead, Persimmon anticipates a greater proportion of completions in the second half of the year relative to the first, reflecting a ‘return to more typical trading patterns and the growth profile of our outlet network’. It also expects to deliver volume growth of 4% to 7% for 2022 from 2021 levels and that increases in selling prices will mitigate build cost inflation.
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US oil producer Exxon Mobil announced it will begin a phased withdrawal from the major oil field it operates in Russia on behalf of a consortium including Russian, Indian and Japanese companies, citing Moscow's invasion of Ukraine. ‘In response to recent events, we are beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture,’ the group said in a statement. Exxon added that it deplores Moscow's actions in Ukraine and stressed it will no longer invest in new projects in Russia. ‘We are deeply saddened by the loss of innocent lives and support the strong international response,’ the statement added. Exxon's move follows a decision by British energy group BP and Shell to pull out of joint projects in Russia. France's TotalEnergies said it would stay in Russia, but refrain from investing more money there.
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Airplane maker Boeing announced it was suspending its support for Russian airlines and its operations in Moscow amid a growing backlash to Russia's invasion of Ukraine. ‘We have suspended major operations in Moscow and temporarily closed our office in Kyiv,’ the Ukrainian capital, a Boeing spokesperson said. ‘We are also suspending parts, maintenance and technical support services for Russian airlines. As the conflict continues, our teams are focused on ensuring the safety of our teammates in the region.’ Boeing's pullout comes as US media reported President Joe Biden will announce a ban on Russian aircraft from using US airspace during his State of the Union speech Tuesday. The sanction, reported by CNN and other media, will add the US to a group including Canada and a host of European nations closing airspace to Russian airliners and other aircraft in response to the incursion into Ukraine that began last week.
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US credit card firms Visa, Mastercard and American Express said they are blocking Russian banks from their payment networks following international sanctions in response to Moscow's invasion of Ukraine. ‘As a result of sanction orders, we have blocked multiple financial institutions from the Mastercard payment network,’ Mastercard Chief Executive Michael Miebach said in a statement released Monday night. ‘We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve.’ Visa said on its website that it is ‘taking prompt action to ensure compliance with applicable sanctions, and is prepared to comply with additional sanctions that may be implemented.’ While American Express said its business in Russia was ‘small,’ it stressed that ‘since the beginning of this crisis, we have been complying with US and international sanctions.’
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Apple announced a halt in all product sales in Russia, the latest fallout over Moscow's invasion of Ukraine. Western governments and big companies have cut Russia off or dealt it punishing sanctions over the internationally condemned attack on its neighbour. ‘We have paused all product sales in Russia. Last week, we stopped all exports into our sales channel in the country,’ said an Apple statement. The iPhone maker also announced Apple Pay and other services have been limited, while Russian state-owned media RT and Sputnik news are no longer available for download outside Russia. ‘We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,’ the statement said.
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Glencore said it is reviewing its business activities in Russia, including its holdings in energy and metals company En+ Group and oil firm Rosneft. Glencore currently holds a direct equity stake of 0.6% in Rosneft and an 11% holding in En+, the majority owner of aluminium producer Rusal. ‘Glencore condemns the actions taken by the Russian government against the people of Ukraine. We have no operational footprint in Russia and our trading exposure is not material for Glencore,’ the company stated.
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MARKETS
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European stock markets were rising on Wednesday. London's FTSE 100 was outperforming, as its oil majors benefit from higher crude prices, with the North Sea benchmark topping $110 a barrel. Russia's invasion of Ukraine and the West's response with sanctions has sent oil prices through the $100 threshold, adding to concerns about untamed inflation. An increase in the eurozone inflation year last month seemed to confirm these fears. ‘After February's surprisingly strong inflation outturn and with energy prices surging, eurozone inflation is very likely to rise above 6% in the coming months,’ said Jack Allen-Reynolds, senior Europe economist at Capital Economics. ‘It then looks set to remain well above the ECB's target for a long time, most likely ending the year around 4%.’
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CAC 40: up 0.5% at 6,427.24
DAX 40: up 0.4% at 13,955.41
FTSE 100: up 0.9% at 7,394.51
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Hang Seng: closed down 1.8% at 22,343.92
Nikkei 225: closed down 1.7% at 26,393.03
S&P/ASX 200: closed up 0.3% at 7,116.70
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DJIA: called up 0.7%
S&P 500: called up 0.7%
Nasdaq Composite: called up 0.8%
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EUR: down at $1.1080 ($1.1109)
GBP: down at $1.3310 ($1.3334)
USD: up at JP¥115.23 (JP¥114.89)
Gold: up at $1,942.23 per ounce ($1,930.54)
Oil (Brent): up at $111.25 a barrel ($106.10)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian forces said they had captured a Ukrainian port on Wednesday as Russian and Ukrainian troops battled for another urban centre and President Volodymyr Zelensky said Moscow wanted to ‘erase’ his country. As the conflict intensified further on the seventh day of the invasion, the Russian army said it had taken control of the Black Sea port of Kherson in southern Ukraine. Russian paratroopers also landed in Kharkiv, Ukraine's second-biggest city, triggering clashes in the streets, Ukrainian forces said. After Washington branded Russian President Vladimir Putin a ‘dictator’, Ukraine's leader said a strike on Tuesday on a television mast in the capital Kyiv demonstrated Russia's threat to Ukrainian identity. Five people were killed in the attack on the tower at Babi Yar, the site of a Nazi massacre in which over 33,000 people were killed most of them Jews.
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US President Joe Biden vowed in his first State of the Union address to check Moscow's aggression in Ukraine as he announced a ban on Russian planes in US airspace. Biden also noted the US was working to seize the yachts and apartments of Russian oligarchs, saying: ‘We are coming for your ill-begotten gains.’ Biden, in remarks before Congress, highlighted the bravery of Ukrainian defenders and the resolve of a newly reinvigorated Western alliance that has worked to rearm the Ukrainian military and cripple Russia's economy through sanctions. He warned of costs to the American economy, as well, but warned ominously that without consequences, Russian President Vladimir Putin's aggression would not be contained to Ukraine. ‘Throughout our history we've learned this lesson when dictators do not pay a price for their aggression, they cause more chaos,’ Biden said. ‘They keep moving. And the costs and threats to America and the world keep rising.’
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The International Energy Agency said member countries had agreed to release 60 million barrels of oil from their emergency reserves to stabilise the market after Russia's invasion of Ukraine. The decision taken by 31 member countries of the IEA's governing board aims to ‘send a unified and strong message to global oil markets that there will be no shortfall in supplies’ as a result of the Ukraine conflict, it said in a statement. Ministers ‘expressed solidarity with the people of Ukraine and their democratically elected government in the face of Russia's appalling and unprovoked violation of Ukraine's sovereignty and territorial integrity,’ the statement added.
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The eurozone's annual inflation rate accelerated to fresh record levels in February, according to Eurostat. On an annual basis, the consumer price index rose 5.8% in February, picking up pace from 5.1% in January according to a flash estimate from Eurostat. The latest reading was higher than the market forecast, cited by FXStreet, of 5.4% and remains substantially above the European Central Bank's 2.0% target. In addition, it marked the fourth straight month in which the inflation rate hit a record high. Annual core inflation rate in the euro area - which excludes prices of energy, food, alcohol and tobacco - picked up to 2.7% in February from 2.3% in January. It was also above estimates of 2.5%.
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German unemployment dropped to pre-pandemic levels in February, two years after the coronavirus shuttered large parts of the economy. The jobless rate stood at 5% in February on a seasonally adjusted basis, according to the BA federal labour agency, the same level as in February 2020.
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UK house prices continued to rise in February but growth looks set to slow in the coming months against a backdrop of higher UK interest rates, mortgage lender Nationwide said. On an annual basis, the Nationwide UK house price index rose 13% in February, accelerating from 11% in January. The print beat the market forecast, cited by FXStreet, of 11%. UK house prices increased 1.7% in February month-on-month, ticking up from 0.8% growth in January. The latest reading was more than double the consensus estimate of 0.6%. The average UK house price stood at £260,230 in February, rising 1.8% from £255,556 in January.
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UK shop price growth surged to a more than 10-year high in February. According to the latest British Retail Consortium-NielsenIQ tracker, yearly UK shop price inflation accelerated to 1.8% in February, from 1.5% in January. February's figure was the hottest since November 2011, the BRC said. On a monthly basis, UK shop prices increased 0.5% in February, following a 0.1% hike in January. Annual non-food inflation quickened to 1.3% in February, from 0.9% in January, the highest rate since September 2011. Food inflation was unmoved at 2.7% in February, while fresh food inflation alone accelerated to 3.3% from 2.9% in January.
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The US warned citizens against travelling to Hong Kong, citing the risk of children being separated from parents as the Chinese city imposes controversial Covid isolation policies. The State Department upgraded Hong Kong to its highest ‘Do Not Travel’ warning ‘due to COVID-19 related restrictions, including the risk of parents and children being separated’. ‘In some cases, children in Hong Kong who test positive have been separated from their parents and kept in isolation until they meet local hospital discharge requirements,’ the State Department added. The Asian financial hub is in the grip of its worst coronavirus outbreak, registering tens of thousands of new cases each day, overwhelming hospitals and shattering the city's zero-Covid strategy. China has ordered local officials to stamp out the outbreak even as studies suggest as many as a quarter of the city's residents may have been infected in the current wave.
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