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The following is a summary of top news stories Thursday.
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COMPANIES
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Fast Retailing, the operator of Japanese casualwear giant Uniqlo, revised its annual net profit forecast upwards even as business in China is hit by fresh lockdowns. Uniqlo operations in mainland China saw ‘a decrease in revenue and a large decline in profit’ for the six months to February, Fast Retailing said, attributing the falls to curbs on movement. But elsewhere in Asia, business was brisk, buoyed by strong performance in countries such as Malaysia where virus restrictions were eased. These factors, coupled with what the group described as a ‘greater diversification’ of its revenue streams, led to net profit for the first half jumping 39% on-year to JP¥146.8 billion yen, around $1.2 billion. ‘Operating profit reached a record high, even after stripping out the impact of yen depreciation,’ the company said as it logged JP¥189.2 billion in operating profit in the first half, up 13% on-year. The cheap-chic Japanese clothing group, which rivals Zara, Gap and H&M, revised its full-year net profit forecast from the previous JP¥175 billion to JP¥190 billion.
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Volkswagen said it expects to report a sharp rise in profit for the first quarter of 2022, even as it starts to feel the bite from the war in Ukraine. For the three months ended March 31, the German auto giant said it expects operating profit before special items at around €8.5 billion, up 77% from €4.8 million in the same period a year prior. The strong profit performance was attributed to a robust operating performance, and €3.5 billion from positive fair valuation movements on hedging instruments. Also, for the month of March, Volkswagen delivered 655,800 units worldwide, down 31% from 955,300 the same month in 2021. For the first quarter of 2022, the group's worldwide deliveries dropped 22% year-on-year to 1.90 million from 2.43 million.
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Standard Chartered laid out plans to ‘simplify’ its operations in Africa & the Middle East in an attempt to ‘deliver efficiencies’ and ‘reduce complexity’. The FTSE 100-listed lender said it will redirect resources within its Africa & Middle East business to ‘those areas where it can have the greatest scale and growth potential, in order to better support its clients.’ ‘Subject to regulatory approval, the group now intends to exit onshore operations in seven markets in AME and in a further two markets focus solely on its Corporate, Commercial & Institutional Banking business,’ StanChart explained. The seven markets StanChart expects to make be a full exit from are Angola, Cameroon, Gambia, Jordan, Lebanon, Sierra Leone and Zimbabwe. In Tanzania and Ivory Coast, the bank will exit its Consumer, Private & Business Banking businesses and the focus will turn solely to CCIB.
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National Grid upped its earnings guidance due to a better than expected performance by two of its businesses. The London-based power infrastructure firm said it expects to deliver underlying operating profit in its UK Electricity Transmission and Electricity Distribution business units above guidance. National Grid credited this to higher inflation. As a result, the company anticipates its underlying earnings per share to be ‘modestly higher’ than previous guidance - which was raised in November to be seen ‘significantly’ above the top end of a 5% to 7% range. National Grid noted underlying operating profit across its New England, New York, and National Grid Ventures units will be in line with previous guidance. The FTSE 100 company updated that the sale of our Rhode Island business to PPL Corp ‘continues to make progress.’
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A San Francisco judge on Wednesday slashed the $137 million in damages Tesla Inc was told to pay a former employee in a racial discrimination case down to $15 million but upheld the verdict. In his ruling, US District Court Judge William Orrick said ‘the weight of the evidence amply supports the jury's liability findings’ but the damages ordered were ‘excessive,’ citing constitutional limitations on punitive damages set by the Supreme Court. Tesla was ordered in October to pay Black former employee Owen Diaz $137 million in damages for turning a blind eye to racism the man encountered at the firm's Silicon Valley auto plant. Rejecting Tesla's request for a retrial, Orrick said ‘Tesla's indifference to Diaz's complaints is striking.’ The original award comprised $130 million in punitive damages and $6.9 million for emotional distress, which Orrick cut to $13.5 million in punitive damages and $1.5 million for emotional harm, ‘the maximum amount supportable by proof.’
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A ‘significant’ shareholder in Peloton Interactive on Wednesday reiterated its call for company's board to sell the firm. Blackwells Capital took issue with the leadership of the New York City-based home fitness company, as well as its ‘severe and lingering governance issues’. Blackwells Chief Investment Officer Jason Aintabi took aim at former chief executive officer John Foley, who now holds the role of executive chair, believing him to be ‘financially distressed’ and unable to deliver value for shareholders. Barry McCarthy, who served as chief financial officer at Spotify as well as at Netflix Inc, took over the CEO position on February 9. Aintabi put forward that shareholders had lost $2 billion in value in the first 60 days under the new leadership.
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E-cigarette firm Juul Labs has agreed to pay $22.5 million in a US lawsuit that alleged the company deliberately targeted teenagers and lied about how addictive its products are, Washington state's attorney general said Wednesday. The company, whose wide range of exotic flavoured vapes including mango and creme brulee made it a byword for e-cigarettes in the US, did not admit any wrongdoing but agreed to rein in its advertising. In 2018, Altria Group closed a $12.8 billion investment in Juul, snapping up a 35% stake. In the latest such multi-million-dollar suit it has settled with a US state, Juul Labs agreed to pull commercials that appeal to young people, including on social media. It will also work to ensure stores in the state are not selling its products to anyone underage.
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A Covid-19 vaccine effective against multiple variants is possible before the end of 2022, the head of US pharmaceutical giant Pfizer said Wednesday. Chair Albert Bourla said the firm was also working on producing a vaccine that could provide good protection for a whole year, meaning people would come back annually for boosters, as with influenza shots. ‘I hope, clearly by autumn... that we could have a vaccine’ that worked against not only the dominant Omicron but all known variants, he said. ‘It is a possibility that we have it by then. It is not a certainty,’ he told a media briefing organised by the International Federation of Pharmaceutical Manufacturers & Associations big pharma lobby group.
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MARKETS
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European stocks were mixed heading into the European Central Bank's latest monetary policy decision, due at 1245 BST, while Wall Street was pointed towards a subdued start ahead of a raft of US banking earnings. ‘Alongside the slightly lighter volumes which traditionally accompany the four day trading week leading into Easter, the quarterly earnings season is now kicking off in earnest as the US banks begin to report. Inflationary pressures such as energy and labour costs are expected to pressure earnings, which are unlikely to scale the heights of last year,’ said Richard Hunter, head of markets at Interactive Investor.
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CAC 40: up 0.3% at 6,563.94
DAX 40: up 0.1% at 14,094.01
FTSE 100: down 0.1% at 7,573.86
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Hang Seng: closed up 0.7% at 21,518.08
Nikkei 225: closed up 1.2% at 27,172.00
S&P/ASX 200: closed up 0.6% at 7,523.40
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DJIA: called marginally higher
S&P 500: called flat
Nasdaq Composite: called up 0.1%
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EUR: up at $1.0915 ($1.0863)
GBP: up at $1.3137 ($1.3060)
USD: down at JP¥125.36 (JP¥125.69)
GOLD: down at $1,969.77 per ounce ($1,977.64)
OIL (Brent): up at $108.22 a barrel ($106.79)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US President Joe Biden announced an $800 million military aid package for Ukraine on Wednesday as international prosecutors declared the war-torn Western ally a ‘crime scene’ amid fears of a massive revamped Russian assault. The announcement came with the Russian military threatening to strike Ukraine's command centers in the capital Kyiv if Ukrainian troops continue to attack Russian territory. ‘We are seeing Ukrainian troops' attempts to carry out sabotage and strike Russian territory. If such cases continue, the Russian armed forces will strike decision-making centers, including in Kyiv,’ the Russian defense ministry said in a statement. The warning sparked alarm in Ukraine's largest city, as Moscow was believed to be refocusing its war aims withdrawing from Kyiv after failing to capture it and shifting attention to the south and east. Biden has accused President Vladimir Putin of genocide a claim dismissed as ‘unacceptable’ by the Kremlin as Russia comes under increasing scrutiny over atrocities discovered in towns since abandoned by its forces.
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Ukrainian presidential advisor Oleksiy Arestovych tweeted on Thursday that the heavily damaged Russian warship Moskva had sunk. ‘Where is the Moskva? She has sunken,’ Arestovych wrote, and while official confirmation is still pending, Ukrainian national television reported on the tweet. Russia said the ship was only badly damaged. The flagship of the Russia Black Sea fleet was hit by two Neptun missiles on Wednesday evening, according to reports from Kiev. While the Russia Defence Ministry did confirm the boat was damaged and that the crew had been evacuated, it claimed there only been a fire and did not give reasons. Reports on where the flagship was when it was hit are contradictory, with some claiming it was in front of Zmiinyi Island (also known as Snake Island), and others that it was in Sevastopol Bay, by the Crimean Peninsula.
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UK Prime Minister Boris Johnson was braced to potentially receive further fines for breaches of coronavirus laws after a justice minister resigned over the ‘repeated rule-breaking’ in Downing Street. Conservative peer David Wolfson said he had ‘no option’ other than to quit because the scale and nature of the events determined by police to be breaches so far are ‘inconsistent with the rule of law’. Multiple newspapers carried reports suggesting the prime minister could receive further fixed penalty notices after he accepted a fine for attending a birthday party held for him in No 10 during Covid restrictions in June 2020. Downing Street sources said they were awaiting the outcome of the ongoing Scotland Yard inquiry after Johnson conceded more fines could follow, having reportedly attended six of the 12 events under investigation. The prime minister will attempt to move on from the scandal with a major speech on Thursday setting out new plans for the asylum system, including sending individuals more than 4,000 miles to Rwanda for processing.
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Australia's unemployment rate remained stable in March at the lowest point it has been in for the monthly survey, data from the Australian Bureau of Statistics showed. Australia's unemployment rate was unchanged monthly at 4.0%, the lowest rate in the monthly survey since its start at November 1974, when beforehand the survey was quarterly. The unemployment rate reflects a drop of 1.7 percentage points on an annual basis, and 1.3 points lower than March 2020. On a monthly basis, employment numbers edged up 0.1% to 13.38 million, and represented a 2.6% annual hike.
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Producer and import prices rose in Switzerland in March, due to higher prices from petroleum and metal products, figures from the Federal Statistical Office showed. The producer & import price index rose 0.8%, to 107.0 points, compared to the previous month. On an annual basis, prices for the whole range of domestic and imported products rose 6.1%. On a monthly basis, the rise in prices were attributed to petroleum products, as well as basic metals and semi-finished metal products.
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A 62-year-old man accused of shooting 10 people on the New York subway was taken into custody Wednesday and faces a federal terror charge, following a day-long manhunt in a city set on edge by the attack. Frank James who is suspected of detonating two smoke canisters on the train as it pulled into a Brooklyn station, before firing into the crowd was stopped by officers on a Manhattan street and arrested without incident. ‘My fellow New Yorkers: we got him,’ Mayor Eric Adams told a news conference. ‘There was nowhere left for him to run,’ added New York Police Department commissioner Keechant Sewell, whose officers made the arrest acting on a tip. Announcing the charges against James, US District Attorney Breon Peace said he could face a life sentence if convicted of violating a federal prohibition on ‘terrorist and other violent attacks against mass transportation systems.’
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By Lucy Heming; lucyheming@alliancenews.com
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