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The following is a summary of top news stories Friday.
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COMPANIES
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Anheuser-Busch InBev announced it will take a $1.1 billion impairment on its stake in a Russian joint venture. The Leuven, Belgium-based brewing company said it is in ‘active discussions’ to sell its non-controlling interest in AB InBev Efes joint venture to its partner Turkish Brewer Anadolu Efes. AB InBev Efes is the joint venture between Anheuser-Busch InBev and Anadolu Efes, which has operations in Russia and Ukraine. AB InBev's decision follows a growing list of companies, including McDonald's, Coca-Cola, Starbucks and Heineken, that have pulled out of Russia since it launched an attack on Ukraine in February.
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SAP said profit was hit in the first quarter, despite revenue growth, due to expenses stemming from the war in Ukraine. The Walldorf, Germany-based enterprise software developer said pretax profit in the first quarter dropped 29% year-on-year to €945 million from €1.34 billion. Revenue grew by 11% to €7.08 billion during the period, from €6.35 billion the year prior. Operating profit was 10% higher in the year, at €1.05 billion, compared to €960 million a year before. However, SAP reported a net financial loss of €56 million in the quarter, compared to income of €315 million a year prior.
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The World Health Organization said it ‘strongly recommended’ Pfizer's Covid-19 antiviral pill Paxlovid for patients with milder forms of the disease who were still at a high risk of hospitalisation. However the UN agency warned it was ‘extremely concerned’ that the inequality in access seen with Covid vaccines would again leave low- and middle-income countries ‘pushed to the end of the queue’. US pharma giant Pfizer's combination of nirmatrelvir and ritonavir was the ‘superior choice’ of treatment for unvaccinated, elderly or immunocompromised people with Covid, the WHO's experts said in the BMJ medical journal. For the same patients, the WHO also made a ‘conditional (weak) recommendation’ of the antiviral drug remdesivir made by US biotech firm Gilead which it had previously recommended against. The WHO recommended Paxlovid over remdesivir, as well as over Merck's molnupiravir pill and monoclonal antibodies.
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Variety goods store chain B&M European Value Retail said its long-time Chief Executive Simon Arora is stepping down next year. B&M European Chair Peter Bamford has begun planning for Arora's successor, who has led the firm for 17 years, and who plans to retire in 12 months. Simon Arora's brother, Bobby Arora, will remain with the company in his current role, as group trading director.
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MARKETS
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The dollar was mostly higher and stock markets lower after the top US central banker all but confirmed a chunky half-point interest rate hike at next month's policy meeting. Among companies in the news, ABInBev was down 2.0% in Johannesburg, while SAP was down 3.1% in Frankfurt. Investor sentiment in London was further hurt by a poor set of UK retail sales figures and the decision by the long-time CEO of one of the country's most successful store chains to step down.
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CAC 40: down 1.2% at 6,632.01
DAX 40: down 1.3% at 14,313.95
FTSE 100: down 0.5% at 7,586.56
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Hang Seng: closed down 0.2% at 20,638.52
Nikkei 225: closed down 1.6% at 27,105.26
S&P/ASX 200: closed down 1.6% at 7,473.30
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DJIA: called down 0.2%
S&P 500: called down 0.1%
Nasdaq Composite: called down 0.1%
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EUR: down at $1.0798 ($1.0852)
GBP: down at $1.2888 ($1.3040)
USD: down at JP¥128.24 (JP¥128.45)
Gold: down at $1,942.60 per ounce ($1,945.88)
Oil (Brent): down at $106.12 a barrel ($108.22)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The Federal Reserve may opt to hike US interest rates by a larger-than-normal half a percentage point at its policy meeting next month in a bid to battle record US inflation, Chair Jerome Powell said Thursday. ‘It is appropriate, in my view, to be moving a little more quickly. And I also think there's something in the idea of front-end loading whatever accommodation one thinks is appropriate,’ Powell said during a debate on the global economy hosted by the International Monetary Fund on the sidelines of its spring meetings. ‘I would say that 50 basis points will be on the table for the May meeting.’ Last month, the Fed hiked rates for the first time since slashing them to zero as the pandemic began, increasing them by a quarter point.
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Business activity in the eurozone accelerated in April, flash estimates showed, with the services sector boosted by a loosening of Covid-19 curbs. Activity in France alone reached a 51-month high, though a downturn in Germany's manufacturing production slowed growth in Europe's largest economy. The S&P Global eurozone flash composite purchasing managers' index rose to 55.8 points in April, from 54.9 in March. The figure rose further from the 50.0 no-change mark, showing growth has picked up. This was also ahead of an FXStreet-cited market estimate of 53.9 points. The flash PMI for services activity in the eurozone rose to an eight-month high of 57.7 points, from 55.6 in March. However, the manufacturing PMI fell to a 15-month low of 55.3 points, from 56.5 in March.
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In contrast to the wider eurozone, the latest flash composite PMI for Germany showed growth has slowed to a three-month low, falling to 54.5 points in April, from 55.1 in March. Although the flash services PMI rose to an eight-month high of 57.9 points, up from 56.1 in March, this was offset by a slump in manufacturing. The flash manufacturing PMI for Germany fell to a 20-month low of 54.1 points for April, from 56.9 in March, showing growth has slowed.
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The flash composite PMI for France showed growth has accelerated, with the indicator reaching a 51-month high of 57.5 points, up from 56.3 points in March. The figure was also markedly higher than market consensus estimates cited by FXStreet of 55 points. The flash services PMI for France rose to a 51-month high of 58.8 points in April, from 57.4 in March. Manufacturing also grew, though more modestly. The manufacturing PMI in April was 55.4 points, increased from 54.7 in March.
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The UK's private sector saw its growth slow in April, as inflation and the war in Ukraine continued to weigh on output, preliminary survey figures from S&P Global showed. The flash S&P Global/CIPS composite PMI dropped to 57.6 in April from 60.9 in March. The flash services PMI fell to a three-month low of 58.3 points in April from 62.6 in March, while the manufacturing PMI inched higher to 55.3 from 55.2.
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Retail sales slumped badly in the UK in March, data from the Office for National Statistics showed, and came in significantly worse than market consensus. March's retail sales volumes dropped by 1.4% from the month before, worsening from February's revised 0.5% fall. According to FXStreet, market consensus had tipped just a 0.3% month-on-month fall in March. ONS director of economic statistics Darren Morgan said: ‘Retail sales fell back notably in March, with rises in the cost of living hitting consumers' spending. Online sales were hit particularly hard due to lower levels of discretionary spending. Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month.’ The ONS said the largest contribution to the fall in retail sales came from non-store - meaning online - retailing, where sales volumes fell by 7.9% over the month following a fall of 6.9% in February.
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Japan had the sharpest rise in private sector output for four months, as the flash composite PMI rose to 50.9 points in April from March's final figure of 50.3, according to new figures from au Jibun Bank. ‘The latest flash PMI data showed that Japanese private sector activity improved at a sharper rate at the start of the second quarter of 2022. Services companies recorded an expansion in activity for the first time since last December, while manufacturers saw output levels rise for the second successive month. April data signalled the sharpest expansion in four months, though the pace of growth was only marginal. Moreover, growth in incoming business in the private sector stagnated amid increased headwinds,’ commented Usamah Bhatti, an economist at S&P Global.
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Japan's core consumer prices rose at the fastest rate in over two years in March, reflecting the soaring cost of energy and other products, official data showed. The core consumer price index, which excludes fresh food, edged up 0.8% year-on-year, in line with market expectations. The index has marked increases for seven straight months, reflecting pandemic distortions including supply chain issues and, more recently, the effects of the war in Ukraine. However, the figure remains far below the Bank of Japan's target of 2.0%. The figure is also much lower than elsewhere in the world, and excluding energy, prices were actually down 0.7% in March.
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Australia's private sector recorded growth for the third month in a row, as the S&P Global flash PMI increased to 56.2 points for April, from 55.1 points in March. ‘The expansion of the Australian economy continued in April...buoyed by the easing of COVID-19 disruptions. Foreign demand played a part as well with new export business rising for the first time since December 2021. Price pressures persisted, however, for private sector firms that faced higher costs across raw material to wages. Input costs rose at the fastest pace since data collection began in May 2016, reflecting the impact from both the Ukraine war and lockdowns in China,’ said S&P Global Economics Associate Director Jingyi Pan.
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Ukrainian President Volodymyr Zelensky has contradicted claims by Russian President Vladimir Putin that the strategically vital Ukrainian port city of Mariupol had finally fallen to the Russian military on Thursday. Putin appeared on Russian state television with Defence Minister Sergei Shoigu to announce that he was rescinding the order to storm Mariupol's Azovstal steel plant, where the remaining Ukrainian forces in the city are surrounded, adding that he now planned to seal the plant ‘so that not even a fly can get in or out’. Putin also reiterated his demand that the encircled Ukrainian fighters in the city lay down their weapons and surrender if they wanted to escape with their lives. The city continues to resist the Russians, Zelensky said in his nightly video message. ‘Despite what the occupiers say about them.’ He had earlier said that Mariupol was not yet a totally lost cause. ‘The situation is difficult, the situation is bad,’ Zelensky told journalists in Kiev on Thursday, but there were several ways to liberate the city still remaining.
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