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The following is a summary of top news stories Wednesday.
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COMPANIES
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The UK regulator on Wednesday threw a ‘surprising’ monkey wrench into the acquisition of Avast by US cybersecurity peer NortonLifeLock, finding that the combination could reduce competition. The Competition & Markets Authority noted that Avast and NortonLifeLock are ‘close competitors, with few other significant rivals’. The regulator said NortonLifeLock and Avast now have five working days to submit proposals to address its concerns, or it will refer the merger to a in-depth phase 2 investigation. NortonLifeLock had agreed back in August to buy Avast in a cash-and-shares deal worth $8.6 billion at the time. UK antitrust clearance was the only remaining regulatory condition for the deal, which had been expected to close on April 4. NortonLifeLock called the CMA's decision ‘surprising’, noting that the deal has received approval in the US, Germany and Spain. ‘NortonLifeLock remains confident that the merger should be approved and does not intend to propose any phase 1 remedies,’ it said. ‘The parties will continue to engage constructively with the CMA and their review.’ The two companies now expect the acquisition to complete in ‘mid-to-late 2022’.
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Apple manufacturing partner Foxconn said its iPhone plant in Shenzhen, China, has partially resumed operations after a shutdown due to coronavirus cases. The Taiwan-based company said a ‘closed loop’ system had been introduced for employees, with dormitories located on site. This has allowed some operations to restart at the Shenzhen site and was in line with the local government's pandemic prevention measures, the firm said. ‘This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and close-loop management policies issued by the Shenzhen government,’ Foxconn said. The Shenzhen government imposed a one-week lockdown on Monday and said all 17 million residents would be tested for Covid-19 during that time.
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The EU approved the purchase by Amazon of MGM studios, but the deal, which would boost the tech giant's streaming ambitions, still needs to clear regulatory hurdles in the US. The $8.4-billion buyout would bolster Amazon Prime Video with some 4,000 films and 17,000 television shows as it faces off with the likes of Netflix and Walt Disney in a fast-evolving market. The European Commission, which rules on competition issues in the EU, said in a statement that the proposed transaction would raise ‘no competition concerns’ and ‘cleared the case unconditionally’.
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E.ON said it saw a significant increase in income in 2021, exceeding its previous forecasts as a result of higher sales prices and higher capacity utilisation. The Essen, Germany-based electric utility reported net income of €5.31 billion, multiplying from the previous year's figure of €1.27 billion. This also surpassed the company's forecast of €2.2 billion to €2.4 billion for the year. E.ON explained its strong performance was driven by higher sales prices in the second half of the year and high capacity utilisation at its power plants. The company proposed a dividend of €0.49 for 2021, up 4.3% from €0.47 in 2020.
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MARKETS
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A combination of signs of progress in peace talks between Ukraine and Russia and a move by Chinese authorities to boost markets was giving share prices a lift on Wednesday. Asian markets followed a rally on Wall Street on Tuesday, and New York was called to open higher still on Wednesday. An expected decision to raise US interest rates by a quarter point is due from the Federal Reserve at 1800 GMT.
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CAC 40: up 2.4% at 6,504.88
DAX 40: up 2.2% at 14,215.83
FTSE 100: up 1.1% at 7,257.15
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Hang Seng: closed up 9.1% at 20,087.50
Nikkei 225: closed up 1,6% at 25,762.01
S&P/ASX 200: closed up 1.1% at 7,175.20
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DJIA: called up 0.9%
S&P 500: called up 1.1%
Nasdaq Composite: called up 1.7%
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EUR: up at $1.0986 ($1.0957)
GBP: up at $1.3061 ($1.3049)
USD: up at JP¥118.33 (JP¥118.26)
GOLD: down at $1,922.04 per ounce ($1,926.06)
OIL (Brent): up at $101.76 a barrel ($101.36)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The International Energy Agency cut its world oil demand forecast for 2022, while also warning that sanctions against Russia over its invasion of Ukraine could spark a global supply ‘shock’. ‘Faced with what could turn into the biggest supply crisis in decades, global energy markets are at a crossroads,’ the IEA said in a monthly report. ‘While it is still too early to know how events will unfold, the crisis may result in lasting changes to energy markets,’ said the Paris-based agency, which advises developed countries. The agency lowered its forecast for growth in oil demand by nearly one million barrels per day. It now expects world oil demand to reach 99.7 million barrels per day this year.
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Negotiating positions with Russia in the Ukraine conflict are now more realistic, Ukrainian President Volodymyr Zelensky said in a video message. But it would still take a while before Ukraine can be satisfied, he added. Ukrainian and Russian negotiators met via video conference on Monday and Tuesday. Presidential adviser Mykhailo Podolyak said on Tuesday evening that talks would continue on Wednesday. Ukraine is demanding an end to the war and a withdrawal of Russian troops. Among other things, Moscow is demanding that Kiev recognize the annexed Black Sea peninsula of Crimea as Russian and the separatist areas in Ukraine's east as independent states. Russian Foreign Minister Sergei Lavrov said he sees ‘some hope’ for reaching a compromise in the negotiations between Moscow and Kiev to end the war. Lavrov told the RBK newspaper he believed there were already positions upon which the sides ‘are close to agreement’. While the talks are difficult, ‘there is some hope of reaching a compromise.’
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US President Joe Biden will announce $800 million in new security assistance to Ukraine Wednesday, a White House official said, with the announcement set to come soon after Zelensky addresses the US Congress. The announcement, expected to come at 11.45 am Washington time, brings ‘the total [aid] announced in the last week alone to $1 billion,’ the official, who spoke on condition of anonymity late Tuesday, said. Biden had already authorized $200 million in additional military equipment to Ukraine on Saturday. That came on top of $350 million authorized by Washington, also for military equipment, on February 26 at the time, the largest such package in US history.
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Russia's foreign ministry on Tuesday announced sanctions on US President Joe Biden and Canadian Prime Minister Justin Trudeau, alongside several officials in a reciprocal response to Western measures. The measures, also applied to US Secretary of State Antony Blinken and Defense Secretary Lloyd Austin, ‘is the consequence of the extremely Russophobic policy pursued by’ Washington, Moscow said in a statement. In a separate statement, Russia's foreign ministry announced punitive measures against 313 Canadians including Trudeau and several of his ministers. In response to Russia's military intervention in Ukraine, the US banned Russian President Vladimir Putin and Foreign Minister Lavrov while adopting sanctions largely cutting Russia off from the rest of the world financially.
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Biden's nominee for the role of the top Federal Reserve banking cop Sarah Bloom Raskin said she was withdrawing her name from consideration, a source familiar with the matter told AFP. Raskin had previously won bipartisan approval for senior roles at the Fed and Treasury, but faced opposition from Republicans as well as a key Democratic lawmaker over her stance on climate change. Disagreements over Raskin's nomination had led the Republican opposition in the Senate to boycott a committee vote on her post and four other top Fed positions, stalling their progress towards approval in Congress' upper house. In a letter published by The New Yorker, Raskin cited the boycott as the main factor in her decision to drop out.
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Chinese authorities pledged much-needed support to beaten-down markets. The official Xinhua news agency said authorities would maintain capital market stability and adopt measures to handle risks for troubled property developers. The government guidance was announced after a committee meeting under China's State Council chaired by Vice Premier Liu He, Xinhua reported. The meeting stressed the need to ‘effectively support the economy in the first quarter’, adding that monetary policy should be proactive and new loans should grow appropriately. In the real estate sector, authorities should also propose ‘effective response plans to prevent and defuse risks’, the meeting found, according to the agency.
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Japan posted a merchandise trade deficit of JP¥668.3 billion, about $5.6 billion, in February, the Ministry of Finance said. The figure marked Japan's seventh month in a row of trade deficits. It also missed expectations for a deficit of just JP¥112.6 billion. Exports climbed 19% on year to JP¥7.190 trillion, shy of forecasts for an increase of 21% but still up from the 9.6% gain in the previous month. Imports rose by 34% year on year, compared to expectations for an increase of 28% following a 38.7% increase a month earlier, revised down from an original 39.6%.
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Consumer price inflation in Italy accelerated to a 27-year high in February in line with market expectations, data from national statistics office Istat showed. The consumer price index rose by 5.7% on an annual basis in February, accelerating from January's 4.8%, confirming the flash estimate and touching a ‘level that had not been recorded since November 1995’, said Istat. The annual core inflation rate, which excludes energy and unprocessed food, edged up to 1.7% from 1.5% in January.
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