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The following is a summary of top news stories Thursday.
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COMPANIES
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Shares in Deliveroo rallied after the food delivery platform said that 2021 was a year of strong growth that it is on a ‘path to profitability’. However, Deliveroo also acknowledged it is up against some tough headwinds in the year ahead. Consumers are facing strengthening inflationary pressures, squeezing disposal income. At the same time, restaurants are grappling with higher food, fuel and labour prices. Shares in Deliveroo were up 9.2% at 127.23 pence in London late Thursday morning. However, the current stock price remains just a third of its 390p listing price a year ago. For 2021, revenue was £1.82 billion, up 57% from £1.16 billion in 2020, but the pretax loss widened to £298.2 million from £212.6 million. Administrative expenses ballooned by 43% to £785.9 million from £548.0 million, feeding into the widened loss. Deliveroo said delivery orders totalled 300.6 million last year, up 73% from 173.7 million orders in 2020, and gross transaction value was £6.63 billion, up 67% from £3.98 billion in 2020.
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Ocado Retail, the online grocery joint venture between Ocado Group and Marks & Spencer, said revenue declined by 5.7% in the 13 weeks that ended February 27 from a year before but was up 32% from 2020. Retail revenue fell to £564.7 million from £599.1 million a year before. Average orders per week rose by 12% to 367,500 from 329,500, but average basket size shrank by 15% to £124, ‘as customer behaviours return towards pre-Covid levels’. Looking ahead, Ocado Retail expects revenue growth of 10% for the full-year, though this should in the high-teens toward the end of the year, it said. Meanwhile, profit margins will be hurt by food and energy price inflation.
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thyssenkrupp suspended its annual free cash flow forecasts amid uncertainty over the spillover effects from Russia's invasion of Ukraine. The industrial engineering and steel production firm said that while its immediate sales exposure to Russia and Ukraine is small, it could be hurt by wider economic impacts. ‘Although the group's sales from Russia and Ukraine are negligible at significantly less than 1% of total sales, the executive board estimates that the group's business performance will be impacted by the far-reaching macroeconomic and geopolitical consequences of the war in Ukraine...against this background in particular due to rising raw material prices thyssenkrupp suspends its forecast for free cash flow before M&A for fiscal year 2021/2022,’ the company said.
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Merck KGaA has been ordered to pay damages in France because of a change in the composition of its thyroid drug Levothyrox. The Court of Cassation in Paris confirmed on Wednesday a decision by the Court of Appeal in Lyon. Merck must now pay each of the more than 3,000 plaintiffs €1,000 in damages. They had accused Merck of not sufficiently informing them about the side effects of the changed composition of the drug. The Court of Cassation came to the conclusion that the pharmaceutical manufacturer had mentioned the new ingredients on the package leaflet as required. However, the small print had not been sufficient to properly inform the patients about the changed formulation.
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Netflix said it is testing charging a fee to subscribers who share their accounts with people who don't live in their homes. The US-based steaming service has long taken a relaxed approach to users sharing passwords with family or friends, but recently saw stock dive on quarterly results that showed cooling subscriber growth. Competition in the streaming television market meanwhile has been ramping up, particularly from Disney+, with the cost of producing coveted original shows climbing as well. In the coming weeks, Netflix will begin offering subscribers in Chile, Costa Rica and Peru the option to add as many as two people to ‘sub-accounts’ at a monthly fee of $2 to $3, Netflix product innovation director Chengyi Long explained.
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MARKETS
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Stock markets in Europe turned lower by midday on Thursday, after getting an initial lift from rallies in the US and Asia. The Hong Kong market had a particularly outstanding day, with its main index rising by 7% after adding 9% on Wednesday, amid suggestions of regulatory support from Beijing. In London, traders were preparing for an interest rate decision by the Bank of England at midday, following the US Federal Reserve's decision to start its tightening cycle with a quarter-point increase, as expected.
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CAC 40: down 0.5% at 6,556.05
DAX 40: down 1.0% at 14,302.45
FTSE 100: down 0.2% at 7,279.41
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Hang Seng: closed up 7.0% at 21,501.23
Nikkei 225: closed up 3.5% at 26,652.89
S&P/ASX 200: closed up 1.1% at 7,250.80
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DJIA: called down 0.5%
S&P 500: called down 0.6%
Nasdaq Composite: called down 0.8%
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EUR: up at $1.1055 ($1.1005)
GBP: up at $1.3175 ($1.3098)
USD: down at JP¥116.63 (JP¥118.50)
Gold: up at $1,941.63 per ounce ($1,908.85)
Oil (Brent): up at $102.20 a barrel ($99.33)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The fallout from the war in Ukraine could reduce global economic growth by ‘over one percentage point’ in the first year after the invasion, the OECD said in a report. The impact ‘if sustained’ would produce ‘a deep recession in Russia, and push up global consumer price inflation by approximately 2.5 percentage points’, the group of developed economies said in its report.
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The eurozone's annual inflation rate jumped to a fresh high in February, figures from Eurostat showed. On an annual basis, the consumer price index rose 5.9% in February, accelerating from a 5.1% rise in January. The latest reading just beat the market forecast, cited by FXStreet, of 5.8% and remains well above the European Central Bank's 2.0% inflation target. Eurozone CPI increased 0.9% month-on-month in February, ticking up from a 0.3% rise in January. The monthly print was in line with market forecasts.
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The US Federal Reserve enacted its first interest rate hike since 2018 on Wednesday and projections indicate there could be six more increases to come before the end of 2022. The US central bank raised the federal funds rate range to 0.25% to 0.50% on Wednesday, as widely forecast by the market. The dot-plot was in focus. The chart indicated a median expectation of a 1.9% funds rate at the end of 2022. The median view for the funds rate at the end of 2022 was 0.9% back in December. For 2023, the median forecast rises to 2.8%, from 1.6% back in December. Fed Chair Jerome Powell said: ‘In terms of the pacing, I would point out there are seven remaining meetings this year. This isn't something we discuss or debate or agree on, but there's seven remaining meetings and there's seven rate hikes. I would add, there's also the shrinkage of the balance sheet...that might the equivalent of another rate increase.’
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US President Joe Biden announced $1 billion in new security help and the deployment of longer-range weapons and drones to Ukraine on Wednesday assuring the ally of America's ‘unprecedented’ support in its war with Russia. The cash, approved as Russian forces close in on Ukraine's besieged capital Kyiv, includes $200 million allocated over the weekend and $800 million in new funds from an aid package approved last week by Congress. ‘These are direct transfers of equipment from our Department of Defense to the Ukrainian military to help them as they fight against this invasion,’ said Biden, who also announced US help for Ukraine to acquire ‘additional longer-range anti-aircraft systems.’
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Biden called Russian counterpart Vladimir Putin a ‘war criminal’ on Wednesday over his bloody invasion of neighbouring Ukraine. ‘I think he is a war criminal,’ Biden told reporters. White House Press Secretary Jen Psaki said Biden was ‘speaking from his heart’ after seeing images on television of ‘barbaric actions by a brutal dictator through his invasion of a foreign country.’ Putin ordered a large-scale invasion of Ukraine three weeks ago, saying Russia wants to force the disarmament of Ukraine's military and topple the pro-Western government. Ukraine's military, backed by a heavy flow of Western weapons, has fought back, largely stalling the Russian advance. Russian troops have turned increasingly to bombardments of civilians, prompting three million Ukrainians to become refugees.
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Ukraine accused Russia of bombing a theatre that was sheltering more than 1,000 civilians in the city of Mariupol. The latest assaults on civilians across Ukraine came as President Volodymyr Zelensky made a searing appeal for help to the US, which responded by pledging $1 billion in new weapons to fight Russia's invading army. Officials across Ukraine are struggling to count the civilian dead with authorities saying 103 children have been killed since the invasion began who have been targeted in homes, hospitals, ambulances and food queues. In the port city of Mariupol where more than 2,000 people have died so far a Russian bomb hit the Drama Theatre, which city council officials said had been housing over 1,000 people.
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UK Prime Minister Boris Johnson met with oil-rich Saudi Arabia's de facto ruler Crown Prince Mohammed bin Salman to lobby for higher production on Wednesday after Russia's invasion of Ukraine sent markets into turmoil. Johnson, one of the few Western leaders to visit Riyadh since the 2018 murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul, said he had a ‘very productive conversation’ with Prince Mohammed, but did not announce any concessions from his hosts. ‘I think you need to talk to the Saudis about that,’ Johnson said after the talks. He added that there was a ‘lot of agreement that it's important to avoid inflation’ and ‘an agreement that we need to work together to bring peace to Ukraine.’ The UK leader is hoping the oil-rich Gulf states will raise production to help calm oil prices, which soared to nearly $140 a barrel before dropping below $100, and help end the West's dependency on Russian oil following the invasion.
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A powerful 7.3-magnitude quake jolted eastern Japan on Wednesday night, rattling the capital Tokyo and prompting a tsunami advisory for parts of the northeast coast near the site of the Fukushima nuclear disaster. At least one person died in the quake, local news agency Kyodo reported, as authorities said emergency departments in affected areas received numerous calls to respond to emergencies and injuries. A tsunami advisory warned of waves of up to one metre for the Fukushima and Miyagi regions, but reports indicated only small tsunami waves had hit the coast in the subsequent hours.
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