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The following is a summary of top news stories Monday.
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COMPANIES
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Bayer said it is stopping all non-essential business in Russia and Belarus following the invasion of Ukraine. The Leverkusen, Germany-based pharmaceutical company explained that this included the suspension of all its advertising and promotional activities, the halting of its investment projects indefinitely and the decision to not pursue any new business opportunities in these countries. The company said that it decided against a complete stop of all its products as it, as a life sciences firm, has an ‘ethical obligation’ in every country it operates in. It explained that ‘withholding essential health and agriculture products from the civilian populations like cancer or cardiovascular treatments, health products for pregnant women and children as well as seeds to grow food would only multiply the war's ongoing toll on human life’. For the 2022 growing season, Bayer said it had already provided essential agricultural inputs to farmers in Russia. Looking to 2023 and beyond, Bayer said it will decide on supplies depending on Russia stopping its attacks on Ukraine.
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Rio Tinto said it was proposing to acquire the entire remaining share capital of Turquoise Hill Resources, the partial owner of a massive copper mine in Mongolia. The Anglo-Australian miner has made a $2.7 billion non-binding all-cash proposal for the remaining 49% of Toronto- and New York-listed Turquoise Hill, who owns 66% of the Oyu Tolgoi copper mine in Mongolia. Rio Tinto currently holds a majority stake in the company, with 50.8% of its issued capital, and manages operations at the mine. The remainder of the copper mine is owned by the Mongolian government. Under the proposal, minority shareholders of Turquoise Hill would receive C$34 cash per share, which is a premium of 32% to its last closing price on the Toronto Stock Exchange, said Rio. ‘The proposed transaction would enable Rio Tinto to work directly with the government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure,’ said Rio Chief Executive Jakob Stausholm.
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Phoenix Group Holdings unveiled a new payout policy, following the lifting of its dividend for an ‘outstanding’ 2021. For the year, the London-based insurance services provider posted record cash generation of £1.72 billion, edging upwards from the £1.71 billion generated the year before, and ahead of its target range of £1.5 billion to £16 billion. Phoenix's pretax loss for 2021 was £688 million, swinging from a profit of £944 million, reflecting £1.13 billion in adverse investment return variances, and £639 million in charges for amortisation and impairments. However, operating profit increased 2.5% to £1.23 billion from £1.20 billion, due to a full contribution from the group's ReAssure business and increased bulk purchase annuity new business in the period. Phoenix said that 2021 had seen the company ‘prove the wedge’, meaning that organic growth from its Open business had more than offset the run-off from its Heritage business for the first time.
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AstraZeneca said that the US Food & Drug Administration requested additional clinical data for Fasenra following the company's supplemental biologics licence application. The supplemental biologics license application was for Fasnera, also known as benralizumab, in patients with inadequately controlled chronic rhinosinusitis with nasal polyps. It included data from the OSTRO phase three trial which AstraZeneca said had met both co-primary endpoints. A biologics licence application requests permission to sell or market a new drug in the US. As a result of the US FDA's response letter requesting further data, Fasnera's progression is delayed. Fasenra is currently approved as an add-on maintenance treatment for severe eosinophilic asthma in the US, the EU, Japan and other countries. Despite this, the Cambridge, England-based pharmaceutical company said it remains committed to bringing Fasenra to patients and a second phase three trial.
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US carmaker Ford Motor is planning to speed up the electrification of its production, including with another billion dollars in investment in its site the western Germany city of Cologne. On top of a previously announced investment of $1 billion in its Cologne plant, Ford now plans to spend a total of $2 billion dollars to launch two e-car models and produce 1.2 million of these vehicles within six years. The first model is to be sold from 2023, the second from 2024. The basic parts for making both models - the so-called modular toolkit - will be supplied by Volkswagen. Ford Europe boss Stuart Rowley said the investment would secure the site for the future. Ford also announced plans to bring another Romanian-built electric passenger car and four electric commercial vehicles to the European market by 2024, in addition to the two Cologne models.
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German carmaker Volkswagen has temporarily halted production at three of its plants in China due to a coronavirus lockdown imposed in the north-eastern city of Changchun. The factories, which are operated jointly with the Chinese partner FAW, are to remain closed at least through Wednesday on the orders of the authorities, a VW spokesperson in Beijing said. One Volkswagen plant, one component parts plant and one Audi plant are affected. The pause in operations does not automatically mean there will be a reduction in the number of vehicles manufactured, the company said. The downtime could be made up for later, for example with extra shifts, if there is no long-term production stoppage.
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MARKETS
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European markets were firmly on the front foot at the start of the week as the fourth round of talks between Moscow and Kyiv got underway, while Wall Street was also on track for a bright start.
However, London's FTSE 100 lacked enthusiasm, edging up just 0.3% in late morning trade. Sentiment was damped by news that the Chinese tech hub of Shenzhen has locked down amid a spike in Omicron infections. Shenzhen is one of ten areas nationwide to issue some level of stay-at-home order.‘Strength in financials, consumer cyclicals and real estate stocks was offset by weakness in basic materials and energy. Another wave of Covid in China could in theory threaten commodities demand, hence why the miners were down,’ said Russ Mould, investment director at AJ Bell.
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CAC 40: up 1.8% at 6,370.03
DAX 40: up 2.8% at 14,006.79
FTSE 100: up 0.3% at 7,175.03
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Hang Seng: closed down 5.0% at 19,531.66
Nikkei 225: closed up 0.6% at 25,307.85
S&P/ASX 200: closed up 1.2% at 7,149.40
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DJIA: called up 0.4%
S&P 500: called up 0.9%
Nasdaq Composite: called up 0.7%
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EUR: firm at $1.0962 ($1.0955)
GBP: down at $1.3041 ($1.3075)
USD: up at JP¥118.01 (JP¥117.05)
GOLD: down at $1,962.88 per ounce ($1,982.75)
OIL (Brent): down at $108.56 a barrel ($111.92)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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A fourth round of talks between Moscow and Kyiv got underway Monday, a senior Ukrainian negotiator said, amid mutual claims of shelling and civilian deaths earlier in the day. Kyiv's lead negotiator and presidential aide Mikhailo Podolyak posted a picture on Twitter of video-conference talks with Russian officials describing the negotiations as ‘hard’, saying that the two sides were outlining their ‘specific positions’.
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Russian authorities, facing potential economic calamity as Western sanctions take hold, have threatened foreign companies hoping to withdraw from the country with arrests and asset seizures, the Wall Street Journal reported Sunday. Russian prosecutors have issued warnings to several foreign entities via calls, letters and in-person visits including to Coca-Cola, McDonald's, Procter & Gamble, IBM and Yum Brands, the parent company of KFC and Pizza Hut, according to the business daily, citing sources familiar with the matter. They have threatened to arrest officials who have criticized the government or to seize assets, including intellectual property. ‘The warnings have prompted at least one of the targeted companies to limit communications between its Russian business and the rest of the company, out of concern that emails or text messages among colleagues may be intercepted, some of the people (familiar with the matter) said,’ according to the Wall Street Journal. The Russian embassy in the US on Sunday dismissed the report as ‘fake’.
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Russia's finance ministry on Monday accused foreign countries of wanting to force Russia into an ‘artificial default’ through unprecedented sanctions over Ukraine and said it would meet its debt obligations. As Russia is due to make an interest payment on its external debt later this week, Moscow warned that it will be doing so in rubles if sanctions prevent it from using the currency of issue. ‘The freezing of foreign currency accounts of the Bank of Russia and of the Russian government can be regarded as the desire of a number of foreign countries to organise an artificial default that has no real economic grounds,’ Finance Minister Anton Siluanov said in a statement. Ratings agency Fitch last week downgraded Russia's sovereign debt rating deeper into junk territory, warning that the decision reflects the view that a default is ‘imminent’.
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Seventeen million people in the Chinese tech hub of Shenzhen began their first full day under lockdown Monday, as a key factory making iPhones closed and restrictions spread across Shanghai and other major cities in an effort to extinguish the biggest-ever threat to the nation's zero-tolerance Covid strategy. The southern city of Shenzhen took the measures on Sunday as authorities battled an Omicron flare-up in factories and neighborhoods linked to nearby Hong Kong, which is recording scores of daily deaths as the virus runs rampant. Major Apple Inc supplier Foxconn suspended its operations in Shenzhen, the company said Monday, as the lockdown bit hard into economic activity across the factory hub. Shenzhen is one of ten areas nationwide to issue some level of stay-at-home order. Health officials have warned tighter measures could be on their way, as concerns mount over the resilience of China's ‘zero-Covid’ approach in the face of the highly-transmissible Omicron variant.
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The UK will continue to challenge Saudi Arabia over human rights abuses despite reports Boris Johnson will turn to the Gulf to supply oil and gas, a Cabinet minister has said. Health Secretary Sajid Javid said Britain had a ‘very candid and frank’ relationship with the Gulf state, as the prime minister was reported to be preparing for a trip to Riyadh amid the cost of living crisis. The invasion of Ukraine by the Kremlin has put more pressure on energy costs as the West tries to wean itself off supplies of Russian oil and gas. Johnson reportedly plans to meet Crown Prince Mohammed bin Salmon in the hope his kingdom can raise its production of oil and gas to make up for a reduced reliance on Russia. The Saudi prince has been repeatedly criticised for human rights abuses and, over the weekend, the country's state-run Saudi Press Agency announced the executions of 81 people convicted of a variety of crimes, marking the largest mass execution conducted there in recent memory.
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France has lifted most Covid-19 restrictions, abolishing the need to wear face masks in most settings and allowing people who are not vaccinated back into restaurants, sports arenas and other venues. The move had been announced earlier this month by the French government based on assessments of the improving situation in hospitals and following weeks of a steady decline in infections. It comes less than a month before the first round of the presidential election scheduled on April 10. But in recent days, the number of new infections has started increasing again, raising concerns from some scientists it may be too soon to lift restrictions. The number of new infections has reached more than 60,000 based on a seven-day average, up from about 50,000 a week before.
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