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The following is a summary of top news stories Wednesday.
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COMPANIES
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Twitter sued Elon Musk for breaching the $44 billion contract he signed to buy the tech firm, calling his exit strategy ‘a model of hypocrisy,’ court documents showed. The suit filed in the US state of Delaware urges the court to order the billionaire to complete his deal to buy Twitter, arguing that no financial penalty could repair the damage he has caused. ‘Musk's conduct simply confirms that he wants to escape the binding contract he freely signed, and to damage Twitter in the process,’ the lawsuit contended. ‘Twitter has suffered and will continue to suffer irreparable harm as a result of defendants' breaches.’
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Boeing said it has delivered 121 commercial airplane programs in the second quarter of 2022, a 53% increase year-on-year from 79 deliveries. The firm made 216 deliveries in the year to date, 38% higher than 156 a year prior. The bulk of the deliveries are for 737 models, with 103 in the second quarter and 189 in the year to date.
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Exor completed the sale of reinsurer PartnerRe to French insurance company Covea for $9.3 billion in cash. Exor and Covea signed a memorandum of understanding for the acquisition back in October 2021. Exor said the acquisition of PartnerRe ‘reinforces PartnerRe's development as a great company in its industry thanks to a significant increase in the scale and capital strength that membership of a larger financial institution brings.’
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Walmart signed an agreement with mobility company Canoo to buy 4,500 all-electric delivery vehicles. The contract has an option to purchase up to 10,000 units. The vehicles will be used to deliver online orders in a sustainable way, the company explained. The first vehicle is expected to hit the road in 2023.
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Swiss bank UBS has hired Naureen Hassan from the Federal Reserve Bank of New York to be the new president of UBS Americas. Hassan was chief operating officer of the lead regional branch of the US central bank and has served as an alternate voting member of the policy-setting Federal Open Market Committee. She will replace Tom Nartil, who is stepping down as co-president of Global Wealth Management and president of UBS Americas on October 3 after a 39-year career at UBS. Iqbal Khan will become the sole president of Global Wealth Management. He has been co-president with Nartil since joining UBS in 2019.
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BT and ITV are among those being probed by a UK watchdog for breaking competition law in the field of sports broadcasting. The Competition & Markets Authority said the investigation relates to the purchase of freelance services to support production and broadcasting of sports content. ‘At this stage the CMA believes it has reasonable grounds to suspect one or more breaches of competition law. The CMA has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections to any party or parties,’ the CMA said. ITV noted the announcement and said it is ‘committed to complying with competition law and is cooperating with the CMA's inquiries’.
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MARKETS
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Stock markets were mostly lower on Wednesday as participants awaited a key US inflation reading for June. The US consumer price index is released at 1330 BST. Inflation is expected to have ticked up to 8.8% last month from 8.6% in May. A hot inflation reading is expected to reinforce expectations that the Federal Reserve to enact its second-successive 75 percentage point rate hike when it meets on July 26 and 27. Meanwhile, Brent crude slipped below the $100 a barrel mark before recovering to trade slightly higher. Oil traders are pricing in a greater likelihood of recession, even as supply remains tight according to OPEC and the IEA.
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CAC 40: down 0.4% at 6,018.24
DAX 40: down 0.8% at 12,803.62
FTSE 100: down 0.7% at 7,163.30
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Hang Seng: closed down 0.2% at 20,797.95
Nikkei 225: closed up 0.5% at 26,478.77
S&P/ASX 200: closed up 0.2% at 6,621.60
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DJIA: called up 0.3%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.3%
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EUR: down at $1.0033 ($1.0068)
GBP: down at $1.1887 ($1.1906)
USD: up at JP¥137.16 (JP¥136.66)
Gold: down at $1,727.40 per ounce ($1,732.30)
Oil (Brent): up at $100.82 a barrel ($100.37)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's export growth surged more than expected in June after its largest city eased lockdown rules, official data showed, but imports fell while lingering Covid controls kept consumers jittery. Business hub Shanghai reopened in June after being sealed off for two months to stamp out a coronavirus resurgence, helping to improve a backlog of goods. In June, exports rose more than expected at 18% year-on-year, accelerating from 17% the month before, customs data showed. ‘We are expecting some of the backlogs to be clearing since companies in Shanghai have been able to operate with lockdown measures lifted in June,’ Moody's Analytics economist Heron Lim told AFP.
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China's economic expansion slumped in the second quarter to levels not seen since early 2020, an AFP poll of analysts found, owing to painful Covid lockdowns and lingering weakness in the real estate sector. Leaders of the world's second-biggest economy remain firmly wedded to a zero-Covid approach of stamping out clusters as they emerge, but the fallout has sapped growth and is pushing policymakers' annual target of around 5.5% out of reach. The slowdown comes after the country's biggest city Shanghai was sealed off for two months over a virus resurgence snarling supply chains and causing factories to shut while dozens of others grappled with tightened rules to fight local outbreaks. Gross domestic product is estimated to have expanded 1.6% on-year in April-June, according to the AFP poll of experts from 12 financial institutions. Several analysts expect the economy to shrink on a quarterly basis a first since 2020 at the height of Covid.
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The US launched a major push into the Pacific as it seeks to hold off China's advances in the region, with Vice President Kamala Harris announcing the opening of new embassies in Tonga and Kiribati at a key regional summit. Washington will also appoint its first-ever envoy to the Pacific, Harris said as she pledged $600 million in funding for the region in her address to the Pacific Islands Forum in Fiji. The video-link appearance at the summit was a diplomatic coup for the US, with China's attempts to secure a meeting on the sidelines of the summit rebuffed. The forum marks the first time Pacific leaders have met since the Solomon Islands signed a controversial security pact with China earlier this year.
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The UK economy defied expectations and grew 0.5% monthly in May, following a revised 0.2% decline in April, while industrial production strengthened and the nation's trade deficit narrowed. According to the Office for National Statistics, the UK's trade deficit narrowed slightly to £9.75 billion from £9.81 billion in May. The last monthly trade surplus was the £1.40 billion recorded in May 2021. Exports rose 4.1% monthly in May to £61.11 billion from £58.68 billion. Imports were 3.5% higher at £70.86 billion from £68.49 billion. On an annual basis, exports were 9.4% higher, while imports were up 19%. EU exports rose 2.6% monthly in May, while imports were 5.2% higher. Exports to non-EU nations surged 13% in May from April, while imports were 3.2% higher. Industrial production, meanwhile, rose 0.9% on a monthly basis in May, following a 0.1% decline in April. May's growth was the joint-strongest since a 1.0% climb in November 2021. The figure for May topped FXStreet cited consensus which had forecast production to register no monthly growth at all.
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Eight contenders will be on the ballot paper when Tory members of Parliament begin voting on Wednesday to elect a successor to UK Prime Minister Boris Johnson, the chair of the 1922 Committee, Graham Brady, has announced. Rishi Sunak, Liz Truss, Tom Tugendhat, Kemi Badenoch, Penny Mordaunt, Jeremy Hunt, Nadhim Zahawi and Suella Braverman all secured the 20 nominations from fellow MPs needed to enter the contest. Moments before the announcement in a Commons committee room, former health secretary Sajid Javid said he was pulling out having apparently failed to attract enough support. Meanwhile Truss, the foreign secretary, gained the endorsement of prominent Boris Johnson loyalists Jacob Rees-Mogg, Nadine Dorries and James Cleverly, in what was seen as a concerted move to prevent Sunak entering No 10.
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Industrial output growth in the eurozone was ahead of expectations in May. According to Eurostat, industrial production climbed 0.8% in May from April, ahead of FXStreet cited expectations of a 0.3% month-on-month rise. In April, output had risen 0.5% from March. On an annual basis, industrial production climbed 1.6% in May, contrasting with April's 2.5% decline. May's growth topped market forecasts of a 0.3% rise, according to FXStreet.
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Germany's annual inflation rate cooled in June, official figures confirmed. According to Destatis, Germany's annual inflation rate slowed to 7.6% in June from 7.9% in May. The annual rise in the consumer price index was in line with an earlier estimate published late last month. On a monthly basis, consumer prices rose 0.1% in June from May, also in line with the previous estimate. In May, consumer prices had surged 0.9% from April. On a harmonised basis, designed for EU-wide comparison, Germany's annual inflation rate cooled to 8.2% in June from 8.7% in May.
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High oil prices have yet to damp demand, which is set to continue rising and may soon outstrip supply, the International Energy Agency warned. It cautioned that the global economic recovery could be derailed unless governments take measures to reduce consumption and fuel prices that pose a threat to stability in some nations. The IEA now expects oil demand to rise this year to 99.2 million barrels per day and to 101.3 million next year. Meanwhile, supply climbs to 100.1 million barrels per day this year. But even if it hits an expected record of 101.1 million next year, it will fall below demand. The IEA noted that the world has little spare capacity to increase production, with the combined buffer of Saudi Arabia and the United Arab Emirates set to fall to just 2.2 million barrels per day in August.
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OPEC also expects conditions on the oil market to remain tight into the coming year, with demand rising faster than supply, according to a report from the cartel's research department released in Vienna. Growth in demand would exceed growth in supply by a million barrels, OPEC said in its initial report on the oil market for 2023. At the end of July, OPEC+, which includes non-OPEC producers, significantly Russia, announced an increase in output by 648,000 barrels per day. Following a rapid rise in oil prices in response to the Russian invasion of Ukraine, OPEC+ came under pressure to increase output. But analysts believe that certain members of the cartel are not meeting the targets set.
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Russia and Ukraine were due Wednesday to hold their first talks with UN and Turkish officials aimed at breaking a months-long impasse over grain exports that has seen food prices soar and millions face hunger. The four-way meeting in Istanbul comes with Russia's invasion of Ukraine showing no sign of abating and the threat of food shortages spreading across the poorest parts of the world. Ukraine is a vital exporter of wheat and grains such as barley and maize. It has also supplied nearly half of all the sunflower oil traded on global markets. But exports across the Black Sea have been blocked by Russian warships and mines Kyiv has laid to avert a feared amphibious assault. The negotiations are being complicated by growing suspicions that Russia is trying to export grain it has stolen from Ukrainian farmers in regions under its control.
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