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The following is a summary of top news stories Friday.
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COMPANIES
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Chinese tech giant Tencent Holdings will close its game streaming platform, less than a year after authorities blocked a merger that would have powered its drive to take on Amazon.com Inc's Twitch. Beijing has stepped up scrutiny over big tech, launching a major crackdown on some of the biggest names in the sector, while the gaming market has also taken a hit owing to tighter controls on play time for minors. Tencent's service, Penguin Esports, has halted new user registrations and in-app purchases, and will shut down all services on June 7, the firm said in a statement Thursday. The decision comes after China's financial regulator blocked a merger of the nation's two largest video game live-streaming sites over antitrust concerns in July. The planned merger of live streaming services Huya and Douyu could have brought the combined platforms' domestic market share to as much as 90% and Penguin Esports was to be moved under the combined entity.
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BT Group faces the threat of strike action after a union on Thursday rejected the telecommunications company's latest pay plan. The Communication Workers Union said it rejected a pay increase from BT. ‘We have no choice now but to immediately prepare for a statutory industrial action ballot,’ the CWU said in a statement on Twitter on Thursday. Earlier on Thursday, BT said it would hand its UK frontline workers a £1,500 pay rise. It would have been its biggest pay increase in more than 20 years. The rise would have been given to 58,000 workers including engineers, contact centre staff and retail staff.
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BHP Group reported the merger of its oil and gas business with that of Perth-based Woodside Petroleum was on track for completion on June 1. The all-stock merger was first announced back in August. The two formally entered a share sale agreement for the merger of their oil and gas portfolios on November 22. Upon completion of the merger that will create one of the 10 largest independent energy producers in the world, 52% of the new company will be held by Woodside shareholders and 48% by BHP shareholders. BHP shareholders are expected to be entitled to one Woodside share for every 5.5 BHP shares they hold. Based on Woodside's share price of $25.55 at April 6, the implied value of BHP Petroleum is $23.4 billion. Woodside said in a separate statement on Friday its shareholders will vote on the deal on May 19. Woodside also revealed that the independent expert's report has concluded that the merger is in the best interests of Woodside shareholders.
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Biotechnology company Biogen noted that the US has imposed curbs on its Aduhelm Alzheimer's treatment. Aduhelm has not been included by the Centers for Medicare & Medicaid Services, part of the US Department of Health & Human Services, in a final full Medicare coverage list. The drug will only be covered by Medicare in clinical trials. This is despite the drug having US Food & Drug Administration backing, Massachusetts-based Biogen said. ‘These coverage restrictions, including the distinction between accelerated approval and traditional approval, have never been applied to FDA-approved medicines for other disease areas. When additional data from this new class of treatments become available, Biogen urges CMS to reconsider today's decision for all FDA-approved amyloid-beta targeting therapies,’ Biogen said.
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Johnson Matthey said it anticipates its recently-ended financial year will meet market expectations, following a recovery for its Clean Air business. The London-based chemical and technology company said for its year ended March 31, underlying operating profit was likely to meet market consensus expectations of around £549 million, within a range of £528 million to £572 million. The FTSE 250-listed company said the growth has mostly come from an improved performance in Clean Air, where autos activity increased as end markets recovered. Efficient Natural Resources reaped the benefits of higher average metal prices, with operating profit expected to grow from the prior year. The company increased investment into Hydrogen Technologies in an effort to 'scale up' the business, which will result in an operating loss for the financial year.
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CMC Markets said it expects its annual profit to come at the upper end of forecasts after enjoying its ‘strongest quarter’ of its financial year. The online trading company said its net operating income performance for the year ended March 31 will be a non-pandemic record. CMC saw a bump in fortunes during the pandemic amid market volatility. CMC said the fourth quarter was the strongest quarter of if its financial year, pushing annual net operating income to the top end of guidance at around £280 million. This would represent a 32% fall from £409.8 million a year prior, a period boosted by the pandemic. Compared to financial 2020, net operating income is up 11% from £252.0 million. CMC said active monthly trading client numbers continue to remain at similar levels as reported earlier in the year. Its APAC stockbroking business finished financial 2022 with record assets under administration and a record number of annual active clients.
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Accounting giant Deloitte has resigned as the auditor of mining giant Polymetal International due to the firm's ties to Russia. The London-listed firm, which primarily operates in Russia, has seen its shares plummet since Vladimir Putin launched a full-scale invasion of Ukraine more than a month ago. Last month, Deloitte said it would no longer operate in Russia and started a process to sever ties with its operations in Russia and Belarus. The auditor confirmed on Friday that it is therefore unable to work with the Anglo-Russian gold and silver miner. In a statement, Polymetal said: ‘Following the announcement on March 7 2022 that Deloitte's Russian and Belarus firms would separate from the global network of member firms of which Deloitte is a part, they have concluded that they will not be able to carry out an audit of the company given that the majority of its assets and operations are in Russia.’
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MARKETS
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European markets were shaking off the week's worries over Russia sanctions and a hawkish Federal Reserve on Friday, taking their cues from a positive finish on Wall Street overnight. However, Interactive Investor's Richard Hunter warned: ‘Markets remain finely poised and prone to volatility, with the immediate outlook for economies still up for debate.’
With Friday's economic calendar thin, attention lies on developments in the Ukraine conflict. European Commission President Ursula von der Leyen was travelling to Ukrainian capital Kyiv and UK Prime Minister Boris Johnson was set to meet German Chancellor Olaf Scholz to discuss reducing reliance on Russian energy.
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CAC 40: up 1.3% at 6,548.42
DAX 40: up 1.3% at 14,263.42
FTSE 100: up 1.0% at 7,627.76
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Hang Seng: closed up 0.3% at 21,872.01
Nikkei 225: closed up 0.4% at 26,985.80
S&P/ASX 200: closed up 0.5% at 7,478.00
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DJIA: called up 0.2%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.2%
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EUR: down at $1.0871 ($1.0900)
GBP: down at $1.3044 ($1.3057)
USD: up at JP¥124.08 (JP¥123.85)
GOLD: up at $1,932.00 per ounce ($1,931.30)
OIL (Brent): up at $101.55 a barrel ($99.08)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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World food prices hit an all-time high in March as Russia's invasion of Ukraine sent ‘shocks’ through markets for staple grains and vegetable oils, the UN's Food & Agriculture Organization said. The disruption in export flows resulting from the February 24 invasion and international sanctions against Russia has spurred fears of a global hunger crisis, especially across the Middle East and Africa, where the knock-on effects are already playing out. Russia and Ukraine, with vast grain-growing regions that are among the world's main breadbaskets, account for a huge share of the globe's exports in several major commodities such as wheat, vegetable oil and corn. ‘World food commodity prices made a significant leap in March to reach their highest levels ever, as war in the Black Sea region spread shocks through markets for staple grains and vegetable oils,’ the FAO said in a statement. The FAO's food price index, which had already reported a record in February, surged by 12.6% last month, ‘making a giant leap to a new highest level since its inception in 1990’, the UN agency said.
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China's President Xi Jinping praised the country's ‘tested’ zero-Covid strategy, even as Shanghai authorities prepared nearly 130,000 beds for Covid-19 patients amid surging cases and mounting public anger. Until March, China had kept cases low with localised lockdowns, mass testing, and strict restrictions on international travel. But the country has reported thousands of daily cases in recent weeks, with economic hub and outbreak epicentre Shanghai placed under lockdown over ballooning infections of the highly transmissible Omicron variant. Shanghai authorities said on Friday that 130,000 new beds were ready or under construction for Covid-positive residents in the city at makeshift venues including exposition halls. The city reported more than 21,000 new infections on Friday, the vast majority asymptomatic. Yet President Xi on Friday lauded the country's Covid response, saying at an event to honour Olympic athletes that the country's handling of the recent Winter Games showed that its virus policy ‘once again withstood the test.’
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European Commission President Ursula von der Leyen announced Friday that she was en route to the Ukrainian capital Kyiv, along with the bloc's diplomatic chief Josep Borrell. ‘Looking forward to Kyiv,’ Von der Leyen wrote on Twitter accompanied by a picture of her with Borrell and Slovak Prime Minister Eduard Heger. The EU foreign chief meanwhile wrote on the platform that he was, ‘going to Kyiv’. Von der Leyen had announced the Friday trip earlier in the week saying that, ‘the Ukrainian people deserve our solidarity.’ ‘I want to send a very strong message of unwavering support to the Ukrainian people and their brave fight for our common values’. They are to meet with Ukraine President Volodymyr Zelensky, before attending the Stand Up For Ukraine event in Warsaw on Saturday. Their visit comes after one made last week by the speaker of the European Parliament, Roberta Metsola the first trip to Ukraine by the head of an EU institution since the war began.
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Russia's central bank announced it was cutting its key interest rate, which had been hiked after troops were sent into Ukraine, saying risks to financial stability had ‘ceased to increase’ for now. The February 24 military operation triggered a litany of Western sanctions on Moscow, sending the ruble into free-fall and accelerating already high inflation, but the Russian currency has rebounded in recent weeks. The central bank said in a statement that its main rate will be lowered from 20 to 17% on Monday and could be further cut at future meetings. ‘Financial stability risks are still present but have ceased to increase for the time being, including owing to the adopted capital control measures,’ the central bank said. The bank said there has been a ‘steady inflow of funds to fixed-term deposits’ and a ‘noticeable slowdown in the current price growth rates’.
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UK Prime Minister Boris Johnson is set to meet the German Chancellor Olaf Scholz as they look to discuss how to help European countries wean themselves off Russian gas following the attack on Ukraine. The PM will host Scholz at Downing Street on Friday, with a press conference planned for the afternoon. Johnson is expected to offer assistance to Berlin, which is still heavily reliant on Russian gas, to reduce its dependence on Moscow's energy exports in a bid to starve Vladimir Putin's war machine of funds. It comes after Foreign Secretary Liz Truss, following a meeting of Nato counterparts in Brussels on Thursday, said she hoped to see ‘more countries’ commit to banning Russian energy imports. The UK has pledged to end all imports of Russian coal and oil by the end of 2022, with gas to follow as soon as possible.
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The EU on Thursday said it had approved an embargo on Russian coal and the closing of the bloc's ports to Russian vessels over the Ukraine war. An official from the French presidency of the European Council said the moves spearhead a ‘very substantial’ fifth round of sanctions against Moscow. That package also includes a €10 billion ban on exports to Russia, including high-tech goods, and the freezing of several Russian banks' assets. In addition to the sanctions, the EU also backed a proposal to boost its funding of arms supplies to Ukraine by €500 million, taking it to a total of €1.5 billion. European Council President Charles Michel said on Twitter the package would be ‘swiftly approved’.
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Japan said Friday it will end imports of Russian coal and announced the expulsion of eight of Moscow's diplomats over ‘war crimes’ in Ukraine. The move comes as Ukraine's allies step up pressure on Moscow after allegations that Russian troops killed civilians in areas around Kyiv. ‘Russian troops have killed civilians and have attacked nuclear facilities, gravely violating international humanitarian law. These are war crimes that can never be forgiven,’ Japanese Prime Minister Fumio Kishida told reporters. ‘We will ban imports of Russian coal,’ Kishida said, pledging to find alternatives and asking Japanese citizens for their ‘understanding and cooperation.’ He outlined additional measures, including new asset freezes and a ban on imports from Russia, including machinery and vodka, and said Tokyo would back efforts to investigate Moscow's actions at the International Criminal Court.
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Japan's consumer confidence declined in March, while separate figures showed the nation recorded a current account surplus in February, after falling into deficit in January. According to Japan's Cabinet Office, the consumer confidence index fell by 2.4 points in March to a tally of 32.8. The figure came in behind FXStreet-cited consensus of 35.9 points, which would have represented a slight rise from 35.3 in February. Markers for overall livelihood, income growth, employment and a willingness to buy durable goods all fell, Cabinet Office figures showed. Separate figures from the Ministry of Finance showed on Friday that Japan posted a current account surplus for February. Japan's current account surplus for February was JP¥1.648 trillion, swinging markedly from a JP¥1.189 trillion deficit in January.
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By Lucy Heming; lucyheming@alliancenews.com
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