Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The following is a summary of top news stories Tuesday.
----------
COMPANIES
----------
Airline easyJet said it expects a narrowed half-year loss with current operations running broadly as planned despite wide-spread reports of disruption. For the first half to March 31, the budget airline expects to report revenue of £1.50 billion, with headline costs around £2.05 billion. It has guided for a headline pretax loss in the range of £535 million to £565 million, which would be narrowed from £701 million year-on-year. ‘First half losses have reduced year on year, outperforming expectations, as self-help measures including network optimisation, ancillary products, and a continued cost focus deliver,’ Luton-headquartered easyJet explained. The firm said summer bookings for the last six weeks have tracked ahead of pre-pandemic levels as travellers book closer to departure. The company added that it has ‘flown 94%’ of its planned scheduled in the last seven days, despite an increase in staff testing positive for Covid-19 as well as normal operational disruption such as weather.
----------
An undisclosed investor in Deutsche Bank and Commerzbank has sent the share prices of both German banks sinking after selling stakes in both companies, Reuters reported on Tuesday. Reuters reported that the shareholder has sold 116 million shares in Deutsche Bank and 72.5 million shares in Commerzbank, shedding stakes worth more than 5% in both banks. The sales come as both banks have started to implement turnaround strategies to lift profitability and restore investor confidence. According to information from the sale's bookrunner Morgan Stanley, the sales resulted in proceeds of €1.75 billion.
----------
Nokia will pull out of the Russian market, the Finnish telecoms provider said, a day after rival Ericsson decided to suspend its activities in the country indefinitely. Hundreds of mainly Western companies have announced the suspension of their activities or their departure from Russia since the invasion of Ukraine on 24 February and the severe sanctions against Moscow. Nokia, which stopped deliveries to the country in early March, ‘can now announce that we will exit the Russian market,’ the mobile telecoms giant said in a statement. The move will result in a provision of €100 million in Nokia's first quarter accounts, published on April 28, the group said. Russia accounted for less than 2% of Nokia's 2021 net sales and the group said it was maintaining its financial forecasts for 2022 ‘considering the strong demand we see in other regions.’
----------
Electrocomponents confirmed it expects over 25% like-for-like revenue growth for financial 2022. The London-based distributor of industrial and electronics products said its like-for-like revenue will jump 26% in the year ended March 2022, after a solid end to the year with 23% growth in the fourth quarter. Electrocomponents noted its growth in the final quarter advanced from the third quarter's 21% growth, but was unable to match its performance in either the second or first quarters. First quarter sales surged 37% and second quarter sales were up 26%. Electrocomponents said, as previously communicated, it expects its full-year adjusted operating profit margin to be at the top end of the consensus range. In financial 2021, it achieved an adjusted operating profit margin of 9.4%.
----------
Sika posted record sales for the first quarter of 2022, leading to the confirmation of its outlook for the annual period. For the three months ended March 31, the Swiss specialty chemical company's net sales rose 22% to fr.2.40 billion, around $2.58 billion, from fr.2.00 billion the same period a year before. ‘In the first quarter of the current fiscal year, we were confronted by ongoing strong raw material price increases. In addition to solid volume growth, we were able to implement consistent price adjustments. With our environmentally-friendly and innovative solutions we are positioning ourselves as a sustainability champion, and together with our customers, making a key contribution to climate neutrality in the construction and transportation industries,’ said Chief Executive Officer Thomas Hasler. Looking ahead, for 2022 Sika expects sales to rise by at least 10%, leading to an ‘over-proportional increase’ in earnings before interest and tax.
----------
Japanese automaker Honda Motor said it will invest nearly $40 billion into electric vehicle technology over the next decade as it works towards switching all sales away from traditional fuel cars. Honda said in a statement that it plans to launch 30 EV models by 2030, with an annual production volume of more than two million units. The company said it would allocate around JP¥5.0 trillion, around $39.9 billion, over the next 10 years ‘in the area of electrification and software technologies to further accelerate its electrification’. The investment is the latest step in its push to have electric and fuel cell vehicles account for 100% of all sales by 2040, a target announced a year ago.
----------
Japanese giant Sony Group and Lego's Danish parent firm announced Monday a $2 billion investment in US gaming powerhouse Epic Games for its work toward joining the metaverse vision for the internet's future. Scores of tech firms have been rushing to invest in building the metaverse, a loose term covering the growing eco-system of interactive online worlds, games and 3D meeting places that are already attracting millions of users. In the form of video games like Epic's hit Fortnite, the precursors of the metaverse already exist in a minimalist way, with people coming together not only to play, but also to interact and participate in events. The $2 billion in funding is aimed at advancing Epic's ‘vision to build the metaverse and support its continued growth,’ the three firms said in a joint statement.
----------
MARKETS
----------
European markets were trading on the back foot ahead of a US inflation print in the afternoon. The White House has already issued a warning ahead of the annual inflation rate reading, which is expected to accelerate to 8.5% in March from 7.9% in February. ‘We expect March headline inflation to be extraordinarily elevated,’ White House Press Secretary Jen Psaki told reporters ahead of the release. The data is due out at 1330 BST.
Germany's DAX index was bearing the brunt of Tuesday's losses in Europe due to share price declines for Deutsche Bank and Commerzbank, after a Reuters report that an undisclosed investor has sold stakes in the two German lenders.
----------
CAC 40: down 0.9% at 6,500.41
DAX 40: down 1.1% at 14,040.12
FTSE 100: down 0.4% at 7,588.54
----------
Hang Seng: closed up 0.5% at 21,319.13
Nikkei 225: closed down 1.8% at 26,334.98
S&P/ASX 200: closed down 0.4% at 7,454.00
----------
DJIA: called flat
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.3%
----------
EUR: down at $1.0870 ($1.0889)
GBP: down at $1.3004 ($1.3040)
USD: up at JP¥125.60 (JP¥125.52)
GOLD: up at $1,955.60 per ounce ($1,952.48)
OIL (Brent): up at $101.57 a barrel ($98.80)
(currency and commodities changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
UK unemployment declined in the three months to February, data from the Office for National Statistics showed. The ILO unemployment rate for the three months to February was 3.8%, down from 3.9% in the three months to January. ‘The latest Labour Force Survey estimates for December 2021 to February 2022 show the employment rate is unchanged on the quarter, while the unemployment rate decreased. Over the same period, the economic inactivity rate has increased slightly,’ the ONS explained. Growth in average total pay - including bonuses - was 5.4% and growth in regular pay, which strips out bonuses, grew 4.0%. In real terms, adjusted for inflation, growth in total pay was just 0.4% and regular pay fell 1.0% on the year. ‘While strong bonuses continue to mitigate the effects of rising prices on people's total earnings, basic pay is now falling noticeably in real terms,’ said Darren Morgan, ONS director of economic statistics. February's UK annual inflation rate was 6.2%, accelerating from 5.5% in January.
----------
Consumer prices in Germany rose at their fastest level since reunification, the federal statistics office said, piling pressure on the European Central Bank to counteract a run of red hot inflation readings. Destatis figures showed annual consumer inflation had run to 7.3% in March, ahead of the 5.1% figure seen in February - but was in line with market forecasts, according to FXStreet. Destatis noted March's reading saw inflation reach its highest level since German reunification - as energy prices continue to soar. ‘Especially the prices of energy products rose sharply: in March 2022 they exceeded the level of the same month of the previous year by 39.5% - in February 2022, it rose 22.5%. The prices of heating oil more than doubled. Motor fuel prices, up 47.4%, and natural gas prices, up 41.8%, rose substantially,’ Destatis said.
----------
German economic sentiment has declined in April, for the second time since the start of Russia's war in Ukraine, Mannheim-based ZEW's monitor showed. The ZEW economic sentiment index in Germany was minus 41.0 index points, down 1.7 points from March's minus 39.3, but remaining above FXStreet-cited market consensus of minus 48 points. In February, the reading was in positive territory at 54.3. For the eurozone as a whole, the ZEW economic sentiment index dropped to minus 43.0 points, a 9.4 point drop from March. ‘The ZEW Indicator of Economic Sentiment remains at a low level. The experts are pessimistic about the current economic situation and assume that it will continue to deteriorate. The decline in inflation expectations, which cuts the previous month's considerable increase by about half, gives some cause for hope. However, the prospect of stagflation over the next six months remains,’ said President Achim Wambach.
----------
The already-high US inflation rate likely climbed even further last month, the White House warned Monday, amid a spike in energy prices caused by Russia's invasion of Ukraine. ‘We expect March headline inflation to be extraordinarily elevated,’ White House Press Secretary Jen Psaki told reporters ahead of the Tuesday release of the closely watched consumer price index data. The world's largest economy has seen prices rise at record rates as it recovers from the Covid-19 pandemic, with CPI increasing 7.9% over the 12 months to February, its fastest rate in four decades. A range of factors have propelled the price hikes, including component and labor shortages, shipping delays and strong consumer demand spurred by government stimulus policies. The March report will be the first to fully encompass the fallout from Russia's invasion of its neighbor and the sanctions imposed by the West in retaliation, which have combined to cause a spike in prices for energy, including gasoline.
----------
The US announced it had ordered all non-essential employees at its Shanghai consulate to leave, while voicing concerns for the safety of Americans in China as the government enforces hard lockdowns to contain Covid-19. China has stuck tightly to a policy of ‘zero Covid’, aiming to eliminate infections through rigid lockdowns, mass testing and travel restrictions. But the policy has come under strain since March as more than 100,000 cases in Shanghai have led to a lockdown of the city's 25 million inhabitants, sparking widespread public outcry over food shortages and an inflexible policy of sending anyone who tests positive to quarantine centres. The US State Department ‘ordered the departure due to the ongoing Covid-19 outbreak’, a spokesperson from its Beijing embassy said in a statement. American diplomats have also raised ‘concerns about the safety and welfare of US citizens with People's Republic of China officials,’ the statement added.
----------
Russian troops were aiming to take control of the city of Mariupol on Tuesday, part of an anticipated massive onslaught across eastern Ukraine, as defending forces tried desperately to hold them back. Russia is believed to be trying to connect occupied Crimea with Moscow-backed separatist territories Donetsk and Lugansk in Donbas, and has laid siege to the strategically located city, once home to more than 400,000 people. Ukrainian forces were ‘surrounded and blocked’, tweeted Myhaylo Podolyak, an official from President Volodymyr Zelensky's office. But on Monday the Ukrainian army insisted that ‘the defence of Mariupol continues’. ‘The connection with the units of the defence forces that heroically hold the city is stable and maintained,’ the Land Forces of Ukraine wrote on Telegram.
----------
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.