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The following is a summary of top news stories Thursday.
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COMPANIES
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Shell's Jackdaw gas field in the UK North Sea on Wednesday received final regulatory approval. UK Business Secretary Kwasi Kwarteng welcomed the decision on the field, which lies 250 kilometres east of Aberdeen. ‘We're turbocharging renewables and nuclear, but we are also realistic about our energy needs now,’ he wrote on Twitter. ‘Let's source more of the gas we need from British waters to protect energy security.’ At its peak, Jackdaw is expected to deliver 6.5% of all gas production from the UK continental shelf, Shell said, enough energy to heat 1.4 million homes.
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Meta Platforms' second most powerful executive, Sheryl Sandberg, said she will leave after a 14-year tenure that included helping steer scandal-prone Facebook to advertising dominance. Sandberg, 52, has been one of the most influential women in Silicon Valley and her departure comes as the social media firm faces an uncertain future and fierce competition. Sandberg said on her Facebook page that she is stepping down as chief operating officer, but would remain on the board of parent company Meta. Javier Olivan will become Meta's next COO, but CEO Mark Zuckerberg said the role would not be as senior as it was under Sandberg.
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Swiss pharmaceutical company Novartis said it is resuming operations in Ukraine after a review of the safety protocols in the country to help ‘restore some basic critical business processes’. ‘Our team in Ukraine is eager to come back to their work, and to play their part in maintaining our priority to ensure that those in need of life-changing medicines gain the best possible support from Novartis and Sandoz.’ It said it would regularly review the plans to have operations running in Ukraine in the midst of a war.
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British Gas-owner Centrica and student accommodation provider Unite will join the FTSE 100 on June 20, following the latest quarterly index review, FTSE Russell confirmed on Wednesday. They will replace postal firm Royal Mail and broadcaster ITV. Among stocks joining the mid-cap FTSE 250 is online fashion retailer Asos, which recently moved to the London Main Market from AIM to become eligible for inclusion.
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Dublin-based lender AIB has acquired an Irish tracker mortgage portfolio from NatWest for €5.4 billion, as NaWest moves towards completing its exit from Ireland. AIB says the loans are worth €5.7 billion and would add 47,000 customers to the bank. The mortgages will be administered by a third-party service provider and are expected to be accretive to earnings in 2023, AIB said.
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Amazon said it will stop operating its Kindle e-bookstore in China from next year, closing the chapter on a massive consumer market. The e-commerce pioneer has in recent years appeared to admit defeat to local Chinese rivals such as Alibaba and JD.com, ending its online retail operations for Chinese consumers in 2019. Amazon's decision to pull the Kindle service comes about eight years after it first set up an official store for the e-book reader on Alibaba's Tmall platform.
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Hewlett-Packard Enterprise reported a slight drop in second-quarter earnings following its suspension of business operations in Russia. For the three months to April 30, net revenue was $6.7 billion, up from $6.42 billion in the second quarter last year. HPE posted second-quarter net income of $250 million, or $0.19 per diluted share, down from $259 million, or $0.19 per diluted share, last year - primarily due to $126 million of Russia related charges. For 2022, Hewlett Packard now expects earnings of $1.17 to $1.31 and adjusted earnings of $1.96 to $2.10 per share. This was lower than earnings of $1.36 to $1.50 per share and adjusted earnings of $2.03 to $2.17 per share it had previously guided.
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Tesla employees should stop working from home and return to the office...or else quit...Chief Executive Elon Musk told employees at the luxury electric carmaker, in an email that has been leaked. Like almost any other major companies, Tesla had allowed its employees to work remotely after the Covid-19 pandemic hit in 2020. However, the company's new policy was revealed in leaked emails Musk sent to Tesla's executive staff Tuesday, which was first reported by electric vehicle news site Electrek. ‘Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. This is less than we ask of factory workers,’ the mail reads.
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MARKETS
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European equities were ignoring down days in both the US and Asia to trade higher on Thursday. The dollar was lower, while gold was higher. The day's main mover was oil, after a report said Saudi Arabia is prepared to make up for any shortfall in Russian oil sales due to sanctions. The OPEC+ group is meeting on Thursday. ‘The big question [is] whether this issue will come up at today's meeting or whether it will be discussed discreetly among ministers first before making a formal agreement at next month's meeting or some other time. That, and not the change in the quotas (which are not being filled anyway) will be the main point for the markets from this meeting,’ said Marshall Gittler, head of Investment Research at BDSwiss.
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CAC 40: up 1.0% at 6,481.90
DAX 40: up 0.8% at 14,451.73
FTSE 100: London market closed for Platinum Jubilee holiday.
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Hang Seng: closed down 1.0% at 21,082.13
Nikkei 225: closed down 0.2% at 27,413.88
S&P/ASX 200: closed down 0.8% at 7,175.90
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DJIA: called up 0.4%
S&P 500: called up 0.5%
Nasdaq Composite: called up 0.7%
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EUR: up at $1.0682 ($1.0655)
GBP: up at $1.2537 ($1.2490)
USD: down at JP¥129.87 (JP¥129.95)
GOLD: up at $1,852.30 per ounce ($1,843.12)
OIL (Brent): down at $113.67 a barrel ($117.23)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Producer prices in the eurozone rose by 1.2% in April from March, slowing from a 5.3% monthly increase in March but still up a whopping 37% on a year before. The 1.2% monthly advance in prices was below market consensus cited by FX Street of 2.3%. Excluding energy prices rose by 2.6% in April from the month before.
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Inflation in Switzerland exceeded market forecasts in May, with the consumer price index rising 2.9% from a year before, accelerating from 2.5% in April, according to figures from the Federal Statistical Office. Inflation in May had been expected to come in at 2.6%, according FX Street. From the month before, prices rose by 0.7% in May, picking up pace from 0.4% in April and far exceeding the consensus market forecast of 0.3%.
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Australia's surplus on goods and service expanded in April from March, led by an increase in services exports, particularly in travel, the Australian Bureau of Statistics said. The seasonally adjusted balance showed a surplus of A$10.50 billion, about $7.54 billion, in April, up from A$9.74 billion in March and A$7.83 billion in February. The May surplus beat market expectations cited by FX Street of a A$9.30 billion positive balance. Exports grew by 1.0% to A$50.38 billion in April from A$49.90 billion in March, while imports were reduced by 0.7% to A$39.88 billion from A$40.16 billion. Meanwhile, retail sales in Australia rose by 0.9% in April from March and by 9.6% from a year before, ABS said.
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Major oil producers led by Saudi Arabia and Russia hold talks Thursday on whether to adjust output, hard on the heels of an EU ban on Russian oil imports. Analysts had expected OPEC+ producers to likely stick to their policy of only increasing output modestly, as they have done since May 2021. However, a Wall Street Journal report on Monday that said OPEC was considering suspending Russia from the output deal has sown doubts. ‘Such a move would effectively bring a premature end to the group's supply agreement and pave the way for an unrestricted increase in output,’ Stephen Brennock, an analyst at PVM Energy, said. That would enable Saudi Arabia and the United Arab Emirates to use their spare capacity and lift oil production. The 13 members of the Organization of the Petroleum Exporting Countries, chaired by Saudi Arabia, and their 10 partners, led by Russia, drastically slashed output in 2020 as demand slumped because of the coronavirus pandemic and worldwide lockdowns. They have increased output modestly to the tune of around 400,000 barrels per day each month since last year, resisting pressure by top consumers, including the US, to open the taps wider. The expectation was that output would increase by another 432,000 barrels per day in July.
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The fighting around Severodonetsk, the provisional capital of eastern Ukraine's Luhansk region, was continuing on Thursday morning, according to Ukrainian military reports. ‘The enemy is carrying out attacks in the locality of Severodonetsk,’ the Ukrainian general staff in Kiev announced in its daily situation report. It is currently unclear how much of the city remains in Ukrainian hands, though Russian forces were reported to be in control of the city centre by late on Wednesday. Despite being supported by grenade launchers, however, battles in the nearby villages of Bobrove and Ustynivka brought Russian troops little success, according to the report. On the other hand, the Ukrainian military conceded that the Russian offensive in Komyshuvakha, an urban settlement south of the city of Lysychansk, the Russians' likely next objective, was at least ‘partially successful’.
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Voters in Denmark overwhelmingly chose to overturn their country's decades-long opt-out from the EU's common defence policy. The ‘Yes’ camp gathered 67% of the vote, official results showed, while 33% of voters opposed the measure. The result means Denmark will be able to participate in European security and defence cooperation programmes in the future - for example, in EU military missions abroad. Denmark was the only EU country with such a special arrangement, which has been in place since 1993.
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China said it ‘firmly opposes’ trade talks between the US and Taiwan after Taipei and Washington announced the launch of a new initiative to deepen economic ties. Beijing claims Taiwan as part of its territory and tries to keep it isolated on the world stage, bristling at any attempt to treat the self-governing democracy as an independent nation. ‘China always opposes any form of official exchanges between any country and the Taiwan region of China, including negotiating and signing any economic and trade agreements with sovereign connotations and an official nature,’ commerce ministry spokesman Gao Feng said. Washington is vying to bolster its influence in the region to counter Beijing and US President Joe Biden is coming under bipartisan pressure from US lawmakers to deepen ties with Taiwan. The talks announced on Wednesday the 'US-Taiwan Initiative on 21st-Century Trade' come on the heels of a trade agreement announced last week between the US and 12 Asian economies, which excluded Taiwan.
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Biden defended his handling of a spiralling baby formula supply crisis, insisting at a meeting with infant food executives that the White House is doing all it can. A product recall and shutdown of a major plant by industry leader Abbott in February triggered a dramatic and ongoing reduction in availability of formula for parents across the country. Increasingly, the issue is also turning into a political maelstrom for Biden, with critics questioning his command of the crisis. Biden told reporters Wednesday that he was only informed about the looming problem in early April and that he'd pulled all the levers of government to resolve shortages ever since.
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