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The following is a summary of top news stories Wednesday.
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COMPANIES
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Volkswagen almost doubled its profit in the first quarter, boosted by higher vehicle prices. Pretax profit surged to €8.90 billion in the first three months of 2022 from €4.46 billion a year ago, the German auto maker reported. Revenue grew by 0.6% to €62.74 billion from €62.38 billion. However, the company sold fewer vehicles. Deliveries to customers fell by 22% to 1.9 million units from 2.4 million a year ago, while vehicle sales shrank by 15% to 2.0 million from 2.3 million. Production fell to 2.0 million from 2.3 million units. VW credited cost discipline and a positive sales mix for achieving the improved profit despite falling vehicle sales. Looking ahead, VW said it will put a special focus on North America, especially the US, as it aims to achieve a target of 10% market share by 2030, which would be up from 2.4% in 2020.
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Aston Martin Lagonda Global Holdings confirmed a report by the Financial Times that Chief Executive Officer Tobias Moers will leave the board immediately and the luxury auto maker at the end of July. Aston Martin confirmed the appointment of ex-Ferrari boss Amedeo Felisa as its new CEO, with Executive Chair Lawrence Stroll saying the company needs to ‘enter a new phase of growth and development’. Moers's dual role of CEO and chief technology officer will be split, with another former Ferrari executive, Roberto Fedeli, brought in to be CTO.
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Fresenius SE & Co said it made a ‘solid’ start to 2022 and confirmed its annual growth outlook. Fresenius Medical Care, a separately listed company partly owned by Fresenius SE, also saw sales rise in the first quarter of 2022. In the three months to March 31, Fresenius SE reported a drop in net income to €599 million from €671 million in the same period a year prior. Sales were up 8% to €9.72 billion from €8.98 billion. Fresenius Medical Care net income in the first quarter fell to €157 million from €249 million, though revenue rose 8.1% to €4.55 billion from €4.21 billion.
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Match Group warned annual sales growth will be towards the bottom of guidance as it also reported the departure of Chief Executive Shar Dubey. Dubey will be resigning as an officer of the company though will continue to serve as a director on the board and will serve as an advisor to the company, allowing her to focus on product strategy. Bernard Kim, the president of social gaming company Zynga, will become Match's next CEO. ‘Between 2016 and 2022, Kim helped quadruple Zynga's market cap, leading to its pending $12.7 billion acquisition by Take-Two, which was announced in January 2022,’ highlighted Match. Turning to Match's first quarter results, the Tinder dating app owner reported revenue of $798.6 million, up 20% from $667.6 million a year before. This pushed up net income by 3.9% to $180.6 million from $173.8 million, and diluted earnings per share grew 5.3% to $0.60 from $0.57. For the full-year, it warned revenue growth is likely to be closer to the bottom end of its 15% to 20% growth guidance.
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Boeing's Starliner capsule is finally ready to reattempt a key test launch to the International Space Station on May 19, officials said. The uncrewed flight, named OFT-2, is a vital step towards certifying the spaceship for eventually carrying passengers, giving NASA a second taxi provider alongside SpaceX. Aerospace giant Boeing, which was awarded a $4.2 billion contract for the purpose in 2014, initially attempted the test in 2019, but failed to rendezvous with the ISS after experiencing software glitches that caused flight anomalies. The program has since experienced several delays. It was last supposed to fly in August 2021, but the mission was aborted just hours before launch because high humidity led to corrosion within Starliner's valves.
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Coffee house chain Starbucks reported second-quarter earnings growth despite margins coming under pressure. Revenue for the second quarter ended April 3 rose 11% to $7.64 billion from $6.67 billion year-on-year, with global comparable store sales up 7%. North America and US comparable store sales increased 12%, while China dragged down its international sales arm as comparable sales dropped 23% in the country amid a drop in transactions. China's zero-Covid policy has resulted in strict lockdowns throughout the latter part of Starbuck's second quarter. Net earnings attributable to the firm grew 2.3% to $674.5 million from $659.4 million. Diluted earnings per share rose 3.6% to $0.58 from $0.56. Starbucks grew earnings despite its operating margin contracting to 17.1% from 19.3%.
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Flutter Entertainment reported a rise in first-quarter earnings as the gambling operator hailed the strength of its US business. For the three months that ended March 31, revenue rose 5.4% to £1.57 billion from £1.49 billion in the first quarter last year. Average monthly players increased 15% to 8.9 million from 7.7 million. In the US, Flutter's FanDuel business delivered another ‘excellent performance’ with 2.4 million customers and revenue of $574 million during the quarter. It remained the number one US sportsbook with a 37% online sports betting share, Flutter said. The company said it launched its FanDuel sportsbook in New York and Louisiana in January and expanded into Ontario in April. It also beat FanDuel records in the quarter, with Super Bowl Sunday the single biggest day ever for new customers with 1.5 million active customers on the day.
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AstraZeneca said its drug Imfinzi plus chemotherapy was granted priority review by the US Food & Drug Administration for patients with locally advanced or metastatic biliary tract cancer. Back in December of 2020, Imfinzi was granted orphan drug designation by the FDA for the treatment of BTC.
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National Grid's Western Power Distribution, the largest electricity distribution network operator in Britain, has agreed to make a voluntary redress payment of £14.9 million after failing vulnerable customers, UK regulator Ofgem said. WPD accepted that it failed to meet its obligations after instances of failing to provide information, advice and services to customers on its Priority Services Register.
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MARKETS
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Stock markets in Asia and Europe traded lower on Wednesday, ahead of a key interest rate decision by the US Federal Reserve, while Wall Street was called slightly higher, adding to gains made on Tuesday. The Federal Open Market Committee will conclude its two-day policy meeting and announce its policy decision at 1800 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1830 GMT.
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CAC 40: down 0.4% at 6,447.73
DAX 40: down 0.3% at 13,993.94
FTSE 100: down 0.5% at 7,521.60
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Hang Seng: closed down 1.1% at 20,869.52
Nikkei 225: Tokyo market closed for holiday
S&P/ASX 200: closed down 0.2% at 7,304.70
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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 $1.0523 ($1.0535)
GBP: unchanged at $1.2515 ($1.2511)
USD: up at JP¥130.05 (JP¥129.97)
GOLD: down at $1,868.30 per ounce ($1,873.30)
OIL (Brent): up at $108.30 a barrel ($106.12)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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European Commission President Ursula von der Leyen unveiled a plan for the EU to stop Russian oil imports by the end of the year, as part of the bloc's latest round of sanctions against Moscow. The ban is to ‘maximize pressure on Russia,’ von der Leyen told a debate in the European Parliament on Wednesday in Strasbourg, France, adding the move ‘will not be easy’. The proposal to deprive Russia of a significant revenue stream comes after weeks of negotiations as EU member states wrestled with the economic fallout of an oil embargo. The plan gained momentum after Germany, a huge importer of Russian energy, announced it would support a ban. The ban is to be managed in a phased approach to preserve the bloc's economic stability and global oil market prices, von der Leyen said, with the aim to minimize ‘collateral damage to us and our partners.’ Crude oil imports are to be phased out first within six months and the bloc is to remove ‘refined products by the end of the year,’ von der Leyen said.
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Von der Leyen also announced the expulsion of Sberbank, Russia's largest bank, from the international financial communication system, SWIFT.
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Major oil producers led by Saudi Arabia and Russia will meet on Thursday with less pressure to open taps more widely than planned as China's Covid lockdown threatens demand. The meeting on Thursday also comes as the EU is eyeing a ban on Russian oil imports, following similar moves by the US, Britain and Canada. The alliance known as OPEC+ slashed output in 2020 when oil prices crashed due to the pandemic. When demand picked up again last year as countries emerged from lockdowns, the coalition began to modestly increase production each month. But the US has led calls for OPEC+ to raise output even further as prices soared to new heights earlier this year. Russia's invasion of Ukraine sent prices rocketing higher and they have mostly remained above $100 a barrel. Despite the pressure, analysts expect the group to stick to the usual increase of around 400,000 barrels per day.
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An indicator of activity in the eurozone's private sector raced to a seven-month high in April, survey results from S&P Global showed, with the continent's services sector enjoying growth as Covid restrictions and cases continue to ease. The seasonally adjusted S&P Global eurozone purchasing managers' index composite output index rose to 55.8 points in April from 54.9 in March. The final eurozone services business activity index improved to 57.7 in April from 55.6 in March. On Monday, S&P Global had said the eurozone manufacturing PMI fell to a 15-month low of 55.5 in April.
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UK shop price growth accelerated in April, as the retail sector moved to weather increasing inflationary pressures. According to figures from the latest British Retail Consortium-NielsenIQ tracker, shop prices rose 2.7% annually in April. Growth quickened from 2.1% in March. April's climb was also above the six-month average rise of 1.5%, the BRC noted. Food inflation alone accelerated to 3.5% in April from 3.3% in March, above the six-month average price growth of 2.6%. ‘The impact of rising energy prices and the conflict in Ukraine continued to feed through into April's retail prices,’ BRC Chief Executive Helen Dickinson said. Annual non-food inflation quickened to 2.2% in April from 1.5% in March.
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UK mortgage approvals were fractionally lower in March, figures from the Bank of England showed. Approvals for house purchases, an indicator of future borrowing, were little changed at 70,700 in March, from 71,000 in February, according to the BoE. The print was in line with the market forecast, cited by FXStreet, of 70,775.
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Australia's private sector confirmed its expansion, with both domestic and foreign demand rising as Covid disruptions ease, survey results showed. S&P Global said the services PMI rose to 56.1 points in April from 55.6 in March, marking the third month of growth in a row and a two-month high. With the easing of Covid-related restrictions, business activity and sales growth were able to accelerate, while export orders rose at a record rate with the return of overseas demand. Overall, Australia's private sector recorded growth, with the composite index rising to 55.9 points in April from 55.1 in March, reflecting the third month of expansion through a rise in demand, though price pressure remains a concern.
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India's central bank announced a surprise interest rate hike of 0.4 of a percentage point, as Asia's third-biggest economy reels from galloping inflation in the wake of the Ukraine war. In its first increase in borrowing rates since August 2018, Reserve Bank of India Governor Shaktikanta Das said it would ‘increase the policy repo rate by 40 basis points to 4.40% with immediate effect.’
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Beijing closed dozens of subway stations on Wednesday, as Covid restrictions slowly constrict movement across the Chinese capital of over 21 million people. The world's second-biggest economy has been battling its worst coronavirus flare-up since the early days of the pandemic, with most cases found in the business hub of Shanghai, where residents have been largely stuck at home for more than a month. Scenes of chaos and anger at the rolling lockdown there have alarmed Beijing residents, who fear their city is being closed down by stealth despite recording just dozens of daily cases. On Wednesday, the Chinese capital recorded just 51 local virus infections including asymptomatic ones, while Shanghai reported nearly 5,000, a downward trend as the city loosens some restrictions.
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