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The following is a summary of top news stories Friday.
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COMPANIES
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Negotiators from the European Parliament and EU member states have agreed on a landmark law to curb the market dominance of US big tech giants such as Google, Meta, Amazon and Apple. Meeting in Brussels, the lawmakers nailed down a long list of do's and don'ts that will single out the world's most iconic web giants as internet ‘gatekeepers’ subject to special rules. The ‘Digital Markets Act’ has sped through the bloc's legislative procedures and is designed to protect consumers and give rivals a better chance to survive against the world's powerful tech juggernauts. ‘The agreement ushers in a new era of tech regulation worldwide,’ said German MEP Andreas Schwab, who led the negotiations for the European Parliament. Once implemented, the law will give Brussels unprecedented authority to keep an eye on decisions by the giants, especially when they pull out the chequebook to buy up promising startups.
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UK engineering firm Smiths Group said it has seen ‘accelerated organic growth’ in its financial first half, which ended January 31. Revenue rose 3.7% yearly to £1.19 billion from £1.15 billion. Pretax profit almost doubled at £160 million from £84 million. Smiths noted it saw 3.4% year-on-year organic revenue growth during the half-year. ‘Our performance in the first half demonstrates the meaningful progress we are making against our strategy. We accelerated Smiths' organic revenue growth to 3.4% and converted that into even stronger profit and earnings growth, despite supply chain challenges and cost inflation,’ Chief Executive Paul Keel said. Smiths raised its interim payout by 5.0% to 12.3 pence per share from 11.7p. Smiths backed annual guidance for 3% organic growth in revenue. However, it expected a ‘more challenging aviation original equipment market in the near-term’.
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The EU's drug watchdog recommended for approval AstraZeneca's Covid-19 prevention cocktail, which can be used for patients with immune system problems or severe reactions to other coronavirus vaccines. The European Medicines Agency's human medicines committee ‘has recommended granting a marketing authorisation for Evusheld, developed by AstraZeneca for the prevention of Covid-19 in adults and adolescents from 12 years of age,’ the Amsterdam-based EMA said in a statement. Evusheld consists of two monoclonal antibodies tixagevimab and cilgavimab proteins designed to attack the spike protein of the Sars-CoV-2 virus which causes Covid-19 at two different sites, the EMA said. It said data from a test on 5,000 people who were given two jabs, showed it reduced the risk of Covid-19 infection by 77% and protection lasted for at least six months.
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Anglo American said it has sold its remaining 8.0% stake in coal offshoot Thungela Resources. The diversified miner took home R 1.67 billion, or $115 million, from the sale of its shares which were priced at R 154 each - a 12% discount to Thungela's closing price on Thursday. Last year in June, Anglo American completed the demerger of the South African thermal coal business. Thungela owns a 50% interest in Phola, which owns and operates the Phola coal processing plant in Mpumalanga, South Africa. Thungela also holds a 23% interest in the Richard Bay coal terminal, also in South Africa. In addition, Thungela produces thermal coal from seven collieries in Mpumalanga, namely Goedehoop, Greenside, Isibonelo, Khwezela, Zibulo, Mafube and Rietvlei. Anglo American had first announced the demerger in early April last year, as part of its ‘responsible transition’ away from thermal coal.
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Water works United Utilities expects to post a revenue rise for the financial year ending March 31, though underlying operating profit will be ‘broadly the same’. Increased revenue will be offset by ‘higher underlying operating costs’, driven by price inflation, United Utilities said. Underlying operating profit in financial 2021 amounted to £602 million, on revenue of £1.81 billion. Reported pretax profit was £551.0 million.
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The UK Competition & Markets Authority confirmed it will refer the acquisition of cyber-security firm Avast by US peer NortonLifeLock to a phase 2 investigation, as no undertakings have been offered. The decision was expected as NortonLifeLock had said last week it didn't intent to offer any remedies for the regulator's competition concerns.
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Russian gold miner Petropavlovsk noted the recent inclusion of Gazprombank on the UK sanctions list, a Russian bank with which it has ‘substantial commercial and financial relationships’. The UK added Gazprombank to its sanctions list on Thursday in response to Russia's ongoing invasion of Ukraine. Petropavlovsk said it has a $200 million term loan and a $86.7 million revolving credit facility with Gazprombank. ‘It is a condition of these facilities and the term loan that Gazprombank acts as an off-taker of 100% of the group's gold production,’ the Petropavlovsk explained. Sanctions and asset freezes imposed on Gazprombank currently prevent Petropavlovsk from making further sales of gold to Gazprombank. ‘Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group's gold output,’ Petropavlovsk warned.
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MARKETS
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Stock prices were marginally higher on Friday. Investors were monitoring developments in the war in Ukraine and the response of Western allies to Russia's invasion on the second day of meetings during the European visit of US President Joe Biden.
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CAC 40: up 0.3% at 6,572.77
DAX 40: up 0.4% at 14,325.87
FTSE 100: marginally higher at 7,467.53
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Hang Seng: closed down 2.5% at 21,404.88
Nikkei 225: closed up 0.1% at 28,149.84
S&P/ASX 200: closed up 0.3% at 7,406.20
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DJIA: called up 0.1%
S&P 500: called up 0.1%
Nasdaq Composite: called marginally lower, down 0.50 point
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EUR: firm at $1.1010 ($1.1002)
GBP: down at $1.3170 ($1.3187)
USD: down at JP¥121.60 (JP¥122.16)
GOLD: down at $1,956.86 per ounce ($1,964.88)
OIL (Brent): down at $117.44 a barrel ($118.85)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The US and EU announced a task force aimed at reducing Europe's reliance on Russian fossil fuels in the face of Moscow's war on Ukraine. The initiative being unveiled by US President Biden and EU chief Ursula von der Leyen will see the US work with partners to strive to supply Europe with an extra 15 billion cubic metres of liquefied natural gas this year, a statement said. The push comes as EU member states wrangle over calls for the bloc to ban Russia's key energy exports to punishment President Vladimir Putin for his invasion of Ukraine. Germany said Friday it was drastically slashing its energy purchases from Russia amid Moscow's invasion of Ukraine, with oil imports to be halved by June and coal deliveries to end by the autumn. After the meeting between Biden and von der Leyen on Friday, the US president is due to leave for Poland, which is hosting the largest contingent of Ukrainian refugees as the war-torn country's western neighbour.
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Canada announced it will boost oil exports by about 5% to help address supply shortages faced by allies shunning Russian energy. ‘Our European friends and allies need Canada and others to step up. They're telling us they need our help in getting off Russian oil and gas in the short term,’ Resources Minister Jonathan Wilkinson said in a statement. ‘Canada is uniquely positioned to help,’ he said, adding that Ottawa ‘will continue working with our international partners to support international energy markets.’ Wilkinson was taking part Thursday in a ministerial meeting of the International Energy Agency in Paris. Canada is the world's fourth largest oil producer.
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The US has imposed new sanctions on entities and people in Russia and North Korea after Pyongyang's latest ICBM missile test. The targeted persons and organizations are accused of ‘transferring sensitive items to North Korea's missile program,’ according to a State Department statement. The State Department said Washington has sanctioned the Russian entities called Ardis Group, PFK Profpodshipnik and Russian national Igor Aleksandrovich Michurin. It also sanctioned North Korean citizen Ri Sung Chol and a North Korean entity called Second Academy of Natural Science Foreign Affairs Bureau. The statement did not detail the specific allegations against these people and entities. The new sanctions were quickly derided by Moscow's ambassador in Washington Anatoly Antonov, who said: ‘serial sanctions will not achieve their goals.’
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Business sentiment in Germany tanked in March as the war in Ukraine caused a crisis of confidence, according to survey data from Ifo Institute. According to Ifo, the business climate index for Germany plummeted by 7.7 points to 90.8 points in March, down from 98.5 in February. ‘Companies in Germany are expecting tough times,’ observed Ifo President Clemens Fuest. Ifo said business expectations for Germany had seen a ‘record collapse’ of 13.3 points in March, which is further than the fall of 11.8 points seen at the outbreak of the pandemic in March 2020. Businesses' assessment of their current situation fell by 1.6 points.
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Consumer and business sentiment also has deteriorated in Italy in March in the wake of the Russian invasion, results of a survey conducted by national statistics office Istat showed. Consumer confidence in Italy decreased to 100.8 points in March, the lowest reading since January 2021, from 112.4 points in February. It significantly missed market forecasts of 108.3, amid surging energy bills and uncertainty. The business confidence index recorded a more contained decline, falling to 105.4 points from 107.9 in February.
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UK consumer confidence has continued to slump as the cost of living crisis deepens, a long-running survey showed. GfK's consumer confidence index fell five points to minus 31 in March as consumers confront a ‘wall of worry’ amid 30-year-high levels of price inflation. It is the fourth month in a row that the survey's headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising. Confidence in personal finances over the next 12 months fell four points to minus 18 28 points lower than this time last year. Expectations for the general economic situation over the coming year dropped by six points to minus 49, 32 points lower than March last year.
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UK retail sales fell on a monthly basis in February, undershooting expectations for an increase. According to the Office for National Statistics, retail sales declined 0.3% month-on-month in February, following a 1.9% hike in January from December. The figure for February was below FXStreet cited consensus of a 0.6% rise. Annually, retail sales rose 7.0% in February, slowing from growth of 9.4% in January. FXStreet-cited consensus had forecast a 7.8% yearly rise for February. February's retail sales volumes are 3.7% above the level of two years earlier, so just before the onset of the pandemic.
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Spain's economy continued to grow in the fourth quarter of 2021, according to new data from national statistics institute INE. Gross domestic product grew by 2.2% in the final quarter of 2021 from the third quarter, slowing slightly from 2.6% growth in the third quarter from the second. The year-on-year change in GDP in the fourth quarter was 5.5%. For 2021 as a whole, GDP at current prices was €1.21 trillion, which was 7.4% higher than €1.12 trillion in 2020, INE said. GDP grew by 5.1% in 2021 from the previous year in terms of volume. Separately, INE reported the industrial price index in February had risen to heights not seen since records began in January 1976. Prices rose by 41% in February from a year before, picking up pace from January's 36% annual rise.
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