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The following is a summary of top news stories Wednesday.
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COMPANIES
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Online retail behemoth Amazon.com is set to be watched more closely by Germany's competition authorities in the future, after the regulator classified it as an ‘undertaking of paramount significance for competition across markets.’ Andreas Mundt, the president of the Cartel Office, said on Wednesday that Amazon ‘acts as a seller, marketplace, streaming and cloud services provider, among others, and has combined its services to form a digital ecosystem.’ The new classification ‘enables us to intervene and prohibit potential anti-competitive practices of Amazon more effectively,’ he said. ‘Amazon's turnover-based market share in marketplace services for commercial sellers in Germany amounts to over 70%, which in the view of the Cartel Office amounts to a dominant position,’ the regulator said in a press release.
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Shell said it has taken the final investment decision to build Europe's largest renewable hydrogen plant in the Netherlands. The FTSE 100 oil major said the 200 megawatt electrolyser, called Holland Hydrogen I, will be built on the Tweede Maasvlakte in the port of Rotterdam, producing up to 60,000 kilograms of renewable hydrogen every day. The ‘renewable power for the electrolyser will come from the offshore wind farm Hollandse Kust (noord), which is partly owned by Shell,’ said the firm. Executive Vice President Anna Mascolo said: ‘Holland Hydrogen I demonstrates how new energy solutions can work together to meet society's need for cleaner energy. It is also another example of Shell's own efforts and commitment to become a net-zero emissions business by 2050. ’Renewable hydrogen will play a pivotal role in the energy system of the future and this project is an important step in helping hydrogen fulfil that potential.‘ The plant is expected to become operational in 2025.
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Just Eat Takeaway.com said it has partnered with Amazon.com to give Amazon Prime members in the US access to free deliveries on its Grubhub platform. Grubhub is an American online food ordering and delivery platform. The Chicago, Illinois-based company agreed to be taken over by Just Eat Takeaway in 2020 for $7.3 billion. The deal was completed a year later. From Wednesday, Just Eat Takeaway said that Amazon Prime members in the US can sign up for a free, one-year Grubhub membership, and access unlimited free deliveries from restaurants on Grubhub. Just Eat Takeaway expects the agreement to expand membership to Grubhub+. Further, it anticipates that the deal will have a neutral impact of Grubhub's 2022 earnings, and be earnings accretive from 2023 onwards. Under the agreement, which renews automatically each year unless terminated by Amazon or Grubhub, Amazon will receive warrants over 2% of Grubhub's shares and an additional 13% conditional on the deal bringing Grubhub enough customers.
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The boss of Lloyds Banking Group said the bank has seen the number of customers with persistent debt problems jump by almost a third as the cost-of-living crisis bites further. Charlie Nunn, who took over at the finance giant, said customers are ’concerned‘ about the economy but said he believes many are talking ’too negatively‘ about the financial outlook. It comes after inflation surged to 9.1% in May and is predicted to rise by as much as 11% this year amid jumps in the cost of energy, food and raw materials. Nunn told BBC Radio 4's Today Programme that Lloyds research shows three-quarters of its customers are worried about recent price hikes and the impact this is having on savings. ’Customers are concerned, and they should be,‘ he said.
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American ice cream brand Ben & Jerry's said Tuesday it is suing its parent company Unilever to block a move that would see its product sold in West Bank settlements, which would run counter to its values. The company, known for its political activism, took the unusual step seeking an injunction after London-based Unilever last week announced it had sold its interest in the ice cream to Israeli license-holder Avi Zinger. The legal action was ’essential to...protect the brand and social integrity Ben & Jerry's has spent decades building,‘ according to the complaint filed in a US district court.
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German pharmaceutical company CureVac said Tuesday it was suing rival BioNTech for patent infringement over the mRNA technology used to develop the Comirnaty coronavirus vaccine. CureVac intends to ’assert its intellectual property rights, accumulated over more than two decades of pioneering work in mRNA technology, which contributed to Covid-19 vaccine development‘, it said in a statement. The lawsuit against Mainz-based BioNTech and two of its subsidiaries will seek ’fair compensation‘ for infringement of intellectual property rights, the company said. The Comirnaty jab developed by BioNTech with US pharma giant Pfizer was the first Covid-19 shot to be approved in the West and has become one of the most widely used around the world.
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Leaders of the US Senate Intelligence Committee on Tuesday called for an investigation into whether Chinese officials are getting access to data about US users of video-snippet sharing sensation TikTok. In a letter to Federal Trade Commission chair Lina Khan, the senators urged her to scrutinize how well TikTok safeguards private data. ’We write in response to public reports that individuals in the People's Republic of China have been accessing data on US users, in contravention of several public representations,‘ the letter said. TikTok has consistently defended itself against such accusations, saying it gives no data about US users to the Chinese government despite its parent company, ByteDance, being based in China.
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MARKETS
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European equities rallied on Wedneday, reversing some of Tuesday's losses despite risk sentiment remaining fragile. Investors are awaiting US PMI data and minutes from the Federal Reserve's latest meeting. ’Later this afternoon it's the June ISM services sector index in the US that is expected to show its lowest reading since May 2020. But it's the minutes of the June FOMC meeting that should reveal whether recent market dynamics and economic data could have changed the Fed's deliberations over its next step in July a 50bp or 75bp hike,‘ said Rabobank.
The pound had recovered off its lowest levels since March 2020 following political turmoil in the UK, with both the chancellor and health secretary tendering their resignations on Tuesday and throwing UK Prime Minister Boris Johnson's leadership into fresh crisis.
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CAC 40: up 1.1% at 5,859.51
DAX 40: up 1.1% at 12,541.12
FTSE 100: up 1.5% at 7,132.94
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Hang Seng: closed down 1.2% at 21,586.66
Nikkei 225: closed down 1.2% at 26,107.65
S&P/ASX 200: closed down 0.5% at 6,594.50
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DJIA: called down 0.2%
S&P 500: called down 0.2%
Nasdaq Composite: called down 0.2%
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EUR: down at $1.0225 ($1.0240)
GBP: up at $1.1942 ($1.1900)
USD: down at JP¥135.31 (JP¥135.90)
GOLD: down at $1,764.60 per ounce ($1,767.88)
OIL (Brent): down at $103.96 a barrel ($105.18)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Prime Minister Boris Johnson has been left trying to save his premiership after a pair of cabinet resignations and a series of government exits threatened to force him from Number 10. Rishi Sunak quit as chancellor on Tuesday, alongside Sajid Javid who resigned as health secretary, in a move that came just as the prime minister was being forced into a humiliating apology to address the row over scandal-hit former deputy chief whip Chris Pincher. The pair were swiftly replaced on Tuesday night, with Nadhim Zahawi promoted to be the new Chancellor and Steve Barclay becoming Health Secretary. Sunak and Javid, both potential leadership rivals, offered sharp criticisms of Johnson in their resignation letters. The controversy stemming from the resignation of Pincher had engulfed Downing Street in recent days, as the prime minister faced questions about how much he knew of the allegations and rumours surrounding the Tory MP before he was appointed as deputy chief whip.
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Tens of millions of people were under lockdown in China on Wednesday as businesses in a major tourist city were forced to shut their doors and fresh clusters sparked fears of a return to blanket restrictions. Health authorities reported over 300 infections Wednesday, with clusters found in the historic northern city of Xi'an home to the Terracotta Army as well as the country's biggest city Shanghai. The fresh cases and the official response to them have deepened fears that China may be set to return to the kinds of strict restrictions seen earlier this year, when Beijing's hardline zero-Covid policy saw tens of millions locked down for weeks on end. In Shanghai, some residents on social media Tuesday reported receiving government food rations a throwback to the month's long confinement in the spring.
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US Secretary of State Antony Blinken is due to meet with his Chinese counterpart Wang Yi at the G20 foreign ministers' meeting in Bali this week, the US State Department has confirmed. Sitting down with Wang was one of several bilateral meetings on Blinken's agenda during the high level summit taking place on the Indonesian island on Thursday and Friday, the State Department said. The global food and energy crises would be among the topics being discussed in Bali, alongside the threat posed by Russia's ongoing war in Ukraine, the department said, adding that Blinken would be reaffirming the US commitment to work with its international partners to address global challenges. The US government unsuccessfully pressured Beijing to take a stand against Russia after its invasion of Ukraine in February. Russian Foreign Minister Sergei Lavrov is also due to attend the G20 meeting in Bali, according to the Russian embassy in Jakarta.
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European Commission chief Ursula von der Leyen has said the EU needs to make emergency plans to prepare for a complete cut-off of Russian gas in the wake of the Kremlin's war in Ukraine. The EU has already imposed sanctions on Russia, including on some energy supplies, and is moving away from Kremlin-controlled deliveries but von der Leyen said the 27-member bloc needs to be ready for shock disruptions coming from Moscow. ’We also need to prepare now for further disruption of gas supply and even a complete cut-off of Russian gas supply,‘ von der Leyen told the EU legislature in Strasbourg, France. She said a dozen members have already been hit by reductions or full cuts in gas supplies as the political stand-off with Moscow over the Ukraine invasion intensifies. ’It is obvious: Putin continues to use energy as a weapon. This is why the Commission is working on a European emergency plan,‘ she said.
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Retail sales volumes edged up by 0.2% in May from April in the eurozone and were unchanged in the EU, new data from Eurostat showed. The rise in the Eurozone was behind a 0.4% consensus estimate, as cited on FXStreet. Annually, retail sales in the eurozone increased by 0.2%, and rose by 0.8% in the EU. In April, monthly sales had decreased by 1.4% in the eurozone and by 1.3% in the EU. April annual sales were up 3.9% in the Eurozone, and 5.0% in the EU. In the eurozone, retail trade volumes increased by 1.2% for non-food products, but decreased by 0.2% for automotive fuel and by 0.3% for food, drinks & tobacco.
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Weakness in the eurozone's construction sector continued in June. The latest S&P Global eurozone construction purchasing managers' index fell to 47.0 points in June, from 49.2 in May. Sinking further below the 50.0 no change mark, it was the second successive month the single currency area's construction sector has been in negative territory. It was also the weakest performance since February 2021, S&P Global added. ’The reduction was commonly linked to weaker demand amid acute price pressures and economic uncertainty. House building fell at the sharpest pace since May 2020, when the sector was shuttered by the initial wave of the Covid-19 pandemic. Commercial and civil engineering activity fell at quicker rates, the steepest for 15 and eight months respectively,‘ S&P Global added.
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New manufacturing orders in Germany inched up monthly but continued to slide on an annual basis. According to Destatis, new factory orders climbed 0.1% monthly in May, defying FXStreet cited forecasts of a 0.6% decline. In April, orders had declined 1.8%. ’Foreign orders in manufacturing increased by 1.3% in May 2022 on the previous month. New orders from the non-euro area went up by 3.7%. New orders from the euro area fell by 2.4% and domestic orders registered a decrease of 1.5% on the previous month,‘ Destatis explained. Year-on-year, new manufacturing orders declined 3.1% in May, easing from a 5.3% drop in April.
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Construction activity in the UK slowed in June, but managed to remain in growth territory, as firms battled decreasing new orders. The headline seasonally adjusted S&P Global-CIPS UK construction purchasing managers' index fell to 52.6 in June from 56.4 in May - marking the weakest pace of growth for nine months. ’Worries about the near-term economic outlook led to a sharp decline in business expectations for the year ahead. June data indicated that growth projections are now the least upbeat since July 2020,‘ S&P Global explained. Despite the drop, S&P Global said June's reading was the seventeenth consecutive month of growth. In terms of sub-sectors, civil engineering was the ’most resilient‘, S&P Global said, with commercial activity also battling in June.
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Consumer confidence in the UK economy has hit its lowest point since the start of the pandemic as households feel the effects of the cost-of-living crisis, figures suggest. Just 8% of consumers think the UK economy will improve over the next 12 months, while 78% think it will worsen, according to the Which? Consumer Insight Tracker. Net confidence in the future UK economy now stands at minus 70, compared with minus 47 in May. Confidence in future household finances also dropped to minus 40 in June matching the lowest point of the pandemic in March 2020 compared with minus 28 in May.
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