Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The following is a summary of top news stories Friday.
----------
COMPANIES
----------
Athleisure retailer JD Sports Fashion named Andy Higginson as its new chair, effective from Monday. Higginson was formerly chair of supermarket chain Wm Morrison Supermarkets, from 2015 until its private equity takeover in November. He is also currently a senior independent director at Flutter Entertainment. In May, Peter Cowgill left as executive chair with immediate effect. JD Sports in July 2021 had bowed to shareholder pressure over its corporate governance, agreeing to split its controversial joint role of chair and chief executive officer. Cowgill had served as both executive chair and CEO of JD Sports, since taking up the latter position in 2014. Whilst the company searched for Cowgill's permanent successors, non-executive directors Helen Ashton and Kath Smith assumed the roles of interim non-executive chair & interim CEO, respectively.
----------
Growing oil refining margins are one of the main causes of soaring fuel prices, according to the UK competition regulator. A review by the Competition & Markets Authority found that the increase from the crude oil price when it enters refineries to the wholesale price when it leaves them as petrol or diesel has more than tripled in the last year, from 10p per litre to nearly 35p per litre. It said that retailers' margins ‘remained about 10p per litre on average’ over the same period. The CMA also attributed record fuel prices to an increase in the cost of crude oil. On the issue of whether the 5p-per-litre reduction in fuel duty introduced in March was passed on to drivers, the regulator said: ‘On the whole the fuel duty cut appears to have been implemented, with the largest fuel retailers doing so immediately and others more gradually.’ The regulator has launched a market study that will examine the sector ‘in more depth’. She said the watchdog will ‘use our formal legal powers’ to investigate pump prices, and ‘won't hesitate to take action’ if it finds evidence of ‘collusion or similar wrongdoing’.
----------
Daikin Industries said it will establish new factory for heat pump units at Ksawerow Industrial Park in Lodz Province, Poland, and invest €300 million. The plant will become operational in July 2024. ‘As the new production base in Europe, the new factory in Poland will serve to augment current production in Germany, Belgium, and the Czech Republic with production capacity quadrupling by 2025. It will also help the company to create a production system with a stable product supply for the ever-growing heat pump market,’ the firm explained.
----------
Tenaris has agreed to acquire the Benteler Steel & Tube pipe manufacturing plant from Benteler North America Corp for $460 million, on a cash-free debt-free basis. This will include $52 million of working capital. The plant is based in Shreveport, Louisiana, and has an annual pipe rolling capacity of up to 400,000 metric tons. ‘The acquisition would further expand Tenaris's production range and local manufacturing presence in the US market,’ the company said.
----------
Unite Group said its performance is ahead of pre-pandemic levels for the upcoming academic year, and the value of its funds made healthy gains over the second quarter. The Bristol-based student accommodation provider said sales have progressed well in the second quarter, with 90% of rooms sold for the 2022/2023 academic year, compared to 81% last year. This is ahead of pre-pandemic reservation levels of 80% for 2020/2021 and 89% in 2019/2020. Unite noted positive developments in pricing, especially as concerns around the Omicron variant eased towards the second half of the sales cycle. It expects to deliver occupancy rates of 97% for the upcoming academic year, and achieve rental growth at the top of, or slightly above, guidance of 3.0% to 3.5%. It continues to monitor potential Covid-19 travel restrictions for international students, especially in China.
----------
Vistry Group said it ‘significantly exceeded’ its expectations in the first-half of 2022. The Kent, England-based housebuilder expects adjusted pretax profit for 2022 at the top end of market forecasts, around £417.0 million. The company's forward sales jumped to a total £2.14 billion as at June 30, up 16% from £1.85 billion a year ago. It secured 2,166 plots through partnerships in 2022's first half, compared to 1,499 a year ago. Its adjusted gross margin is expected to be ahead of its 23% target. First half completions increased to 3,219 units from 3,126 a year earlier. ‘Demand has been strong across all areas of the business and our forward sales positions further strengthened,’ Chief Executive Officer Greg Fitzgerald commented. ‘Whilst mindful of the wider economic uncertainties, we are positive on the outlook for the group and expect to see significant margin progression in the full year.’
----------
Twitter shares slid late Thursday after a Washington Post report that Elon Musk's $44 billion deal to buy the social media giant is in danger. The world's richest man has previously expressed misgivings and even implied he could walk away from the deal over concerns about what he believes are an abundance of fake accounts. According to the Post, however, Musk has been unable to pin down the percentage of Twitter accounts that are not genuine, despite being given access to internal data. While Musk has already made comments putting his commitment to the deal in doubt, the latest report cited an anonymous source saying his team is preparing for a ‘change in direction.’ Twitter shares, which were already trading lower than the price offered by Musk, sank about four percent on the news in after-market trades
----------
Boeing's CEO said the company could cancel the 737 MAX 10 if regulators don't certify the jet before new crew alerting system standards take effect in December, according to a report Thursday. The airplane manufacturer confirmed comments by Boeing Chief Executive Dave Calhoun, who told Aviation Week that shelving the MAX 10 ‘is not that threatening’ in light of some of the other challenges the company has faced in recent years. ‘The (737-10) is a little bit of an all-or-nothing,’ he told the publication. The US Federal Aviation Administration has been taking longer to approve Boeing planes after criticism of the agency in the wake of two fatal crashes of earlier versions of the 737 MAX that left the plane grounded globally for more than a year.
----------
MARKETS
----------
European equities pulled back at the end of a rocky week with focus lying on Friday's US nonfarm payrolls report, as traders try to gauge the likely quantum of the Federal Reserve's next interest rate hike. The euro recovered somewhat after slipping below the $1.01 mark, edging dangerously close towards dollar parity, but risks remain ahead as the monthly US jobs report looms. ‘After many months, where the non-farm payroll data was seen as conveying nothing much more than the labor market was exceedingly strong, the coming June data should in theory arbitrate between whether the economy is heading toward a marked slowdown (perhaps approaching a recession), or not,’ said Deutsche Bank.
----------
CAC 40: down 0.4% at 5,982.88
DAX 40: down 0.1% at 12,830.74
FTSE 100: down 0.2% at 7,176.53
----------
Hang Seng: closed up 0.4% at 21,725.78
Nikkei 225: closed up 0.1% at 26,517.19
S&P/ASX 200: closed up 0.5% at 6,678.00
----------
DJIA: called down 0.3%
S&P 500: called down 0.4%
Nasdaq Composite: called down 0.5%
----------
EUR: down at $1.0121 ($1.0172)
GBP: down at $1.1946 ($1.2002)
USD: down at JP¥135.87 (JP¥135.91)
GOLD: down at $1,737.37 per ounce ($1,742.44)
OIL (Brent): down at $104.38 a barrel ($105.66)
(currency and commodities changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Japan's former prime minister Shinzo Abe was pronounced dead on Friday afternoon, the hospital treating him confirmed, after he was shot at a campaign event. ‘Shinzo Abe was transported to (the hospital) at 12:20 pm. He was in a state of cardiac arrest upon arrival,’ said Hidetada Fukushima, professor of emergency medicine at Nara Medical University hospital. ‘Resuscitation was administered. However, unfortunately he died at 5:03 pm,’ he told reporters. Abe was flown to hospital by helicopter after a shooter opened fire while the former prime minister was delivering a campaign speech in the western region of Nara. But he was already showing no vital signs by the time he reached the hospital, with bullet wounds to the neck and chest. One bullet appeared to have entered through his left shoulder. Earlier Prime Minister Fumio Kishida abandoned the campaign trail and flew to Tokyo by helicopter where he addressed reporters in a voice that wavered with emotion. ‘Former prime minister Shinzo Abe was shot in Nara and I have been informed he is in a very grave condition,’ he said.
----------
The European Central Bank pulled no punches in its first 'climate stress test', saying European lenders are not ‘sufficiently’ prepared to manage climate risks. ‘Euro area banks must urgently step up efforts to measure and manage climate risk, closing the current data gaps and adopting good practices that are already present in the sector,’ said Andrea Enria, chair of the ECB's Supervisory Board. The test looked into how banks incorporate climate risk into their stress-testing frameworks and internal models. The ECB did note, however, the test was ‘not a capital adequacy exercise’ but rather a ‘learning one for banks and supervisors alike’. The exercise, in which 104 banks participated, showed that around 60% did not have the necessary assessment frameworks and many ‘lack relevant data’ to assess climate risks in their portfolio. In the short term, 41 banks that provided projections faced about €70 billion in losses in a ‘disorderly’ scenario, where the cost of carbon emissions rose quickly.
----------
Russia's top diplomat stormed out of talks with G20 foreign ministers meeting in Indonesia on Friday as Western powers criticised Moscow over its invasion of Ukraine. Washington and allies condemned Russia's assault ahead of the meeting before Foreign Minister Sergei Lavrov faced what US Secretary of State Antony Blinken called a barrage of Western criticism at the closed-door talks. ‘What we've heard today already is a strong chorus from around the world... about the need for the aggression to end,’ Blinken said from the meeting on the resort island of Bali. Blinken and Lavrov had joined colleagues for day-long talks in their first meeting since the outbreak of war, with the host immediately telling them the conflict must end through negotiations. But Lavrov walked out of a morning session as German counterpart Annalena Baerbock criticised Moscow over its invasion, diplomats said.
----------
The Nord Stream pipeline, which supplies Germany with most of its Russian gas, will be shut down for routine maintenance from Monday with fears rising that it may remain off for good. Germany is already feeling the effects of the energy squeeze caused by the war in Ukraine, with many households and businesses turning down the thermostat or dimming the lights. Economy Minister Robert Habeck has even made headlines for extolling the virtues of shorter, colder showers. Now, nervousness abounds as the scheduled 10-day pause in deliveries via the vital Nord Stream pipeline threatens to make things even worse. ‘No scenario can be ruled out,’ Habeck has warned. Confronted with the risk that supplies may never return to previous levels, many businesses and local authorities have come up with contingency plans.
----------
Would-be contenders to claim the Tory crown are assessing whether they have the support to mount leadership bids following the dramatic resignation of UK Prime Minister Boris Johnson. With no clear frontrunner, around a dozen potential candidates including backbenchers as well as ministers are thought to be weighing a challenge. Meanwhile there is growing pressure from senior Conservatives for Johnson to immediately step down as prime minister and not wait for the election of a new leader. Following the tumultuous events in Westminster, some MPs fear a summer of ‘chaos’ if Johnson remains in Number 10 while the leadership contest which could run for weeks or even months plays out. Former prime minister John Major was among those backing calls for Deputy Prime Minister Dominic Raab to be installed as a caretaker premier until a permanent successor is in place. Alternatively, he suggested a foreshortened leadership contest with Tory MPs electing the new leader who would then take office while party members in the country would be asked to endorse their choice.
----------
Italy industrial production fell as expected on a monthly basis in May, the first decline since January, figures from national statistics office Istat showed on Friday. Italian industrial output decreased by 1.1% in May on a monthly basis, following a 1.4% increase in April. May's figure was in line with markets estimates cited by FXStreet. Industrial output for energy fell by 3.9%, and by 0.7% in consumer goods and 0.6% in intermediate goods. On the other hand, capital goods output grew for the fourth consecutive month, up 0.4% in May. On an annual basis, industrial production increased by 3.4%, slowing from the 3.9% increase in April and below expectations of a 4.0% jump.
----------
Copyright 2022 Alliance News Limited. All Rights Reserved.