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The following is a summary of top news stories Friday.
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COMPANIES
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Amazon announced that it was acquiring a primary care organization that offers in-person care and online resources, in a multibillion-dollar deal. Amazon agreed to acquire One Medical for $18 per share in cash, valuing One Medical at about $3.9 billion, including net debt. Completion requires support from One Medical's shareholders and regulatory approval. On completion, Amir Dan Rubin will remain as chief executive officer of One Medical. One Medical is a US national human-centred and technology-powered primary care organization with seamless digital health and inviting in-office care, convenient to where people work, shop, live, and click.
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Delivery Hero lowered its full-year guidance despite posting increases in gross merchandise value and revenue in the second quarter of 2022. The Berlin-based food delivery service said its platform business broke even in May and June. The segment includes Delivery Hero operations in the Americas, Asia, Europe and the Middle East & North Africa. Gross merchandise value in the quarter was €9.9 billion, up 18% year-on-year but below the consensus figure of €10.1 billion. Revenue grew 38% to €2.1 billion but also lagged behind the consensus figure of €2.2 billion.
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BT received a boost after a planned sports broadcasting joint-venture with Warner Bros Discovery was given a regulatory green light. The UK Competition & Markets Authority has opted not to refer BT's sports joint-venture with Warner Bros Discovery to a phase two probe. In May, telecommunications firm BT agreed to a sports broadcasting JV with Warner Bros Discovery. The 50-50 JV will see BT Sports and Eurosport combine. In response, BT said the creation of the JV will be completed in coming weeks. ‘It's great news that the CMA has approved the new JV that we are forming with Warner Bros. Discovery, combining the very best of BT Sport and Eurosport UK, to create an exciting new offer for live sport programming in the UK,’ said Marc Allera, CEO of BT's Consumer division and the designated chair of the JV. ‘Today is a huge milestone, as we now look toward day one of the new business, which we hope to be in the coming weeks.’
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JD Sports Fashion backed its previous annual guidance, with sales on the up so far in its financial year. The Manchester-based sports clothing retailer said its ‘positive performance’ continued in June and sales in its like-for-like business during the first five months of its financial year were up 5% annually. It maintained full-year guidance, expecting headline pretax profit before exceptional items for the current financial year ending January 28 to be ‘in line’ with financial 2022. Pretax profit before exceptional items more than doubled to a record £947.2 million in financial 2022 from £421.3 million in financial 2021. JD Sports said the search for a new chief executive officer continues. Earlier in July, JD Sports named Andy Higginson as chair. In May, Peter Cowgill, then executive chair, left the company. JD Sports in July 2021 had bowed to shareholder pressure over its corporate governance, agreeing to split Cowgill's controversial joint role of chair and CEO.
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Intuitive Surgical reported a drop in second-quarter earnings as the surgical robotics company struggled with the Covid-19 pandemic continuing to cause surgical procedure disruptions. For three months to June 30, revenue was $1.52 billion, up from $1.46 billion in the second quarter last year. Second quarter net income was $313.6 million, or $0.85 per diluted share, down from $523.0 million, or $1.42 diluted EPS, last year. The Sunnyvale, California-based firm said during 2021 and 2022, Covid-19 resurgences continued to hit da Vinci procedure volumes. Further, it said the impact of the pandemic business has, and continues to, differ by geography and region. Covid-19 is likely to continue to have ‘an adverse impact on the company's procedure volumes’, it added.
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Meta Platforms-owned Facebook has split the news feed in two on its app, a significant change that mimics the experience on rival TikTok. One of the feeds unveiled Thursday is a chronological flow from the user's connections and the other option includes algorithm-driven recommendations on anything that might interest them. The recommendations focus makes Facebook more similar to TikTok's 'For You' feed, where the 'video app's algorithm aims to determine what people want to see and shows it
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MARKETS
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European stock markets were slightly higher near midday on Friday, following a mostly positive lead from Asia, though Wall Street was called to open slightly lower. Market participants were digesting a week of central bank decisions, including an outsized 50-basis-point interest rate hike by the European Central Bank on Thursday.
A string of PMIs for the current month were providing further grist to the mill on Friday. These didn't make for positive reading. Commenting on the eurozone survey results, Capital Economics said: ‘July's flash PMIs suggest that the euro-zone is teetering on the brink of recession due to slumping demand and rising costs while inflationary pressures remain intense. The ECB will have to follow up on yesterday's historic rate hike with several more in the coming months even though this will worsen the downturn.’
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CAC 40: up 0.6% at 6,237.27
DAX 40: up 0.5% at 13,317.95
FTSE 100: up 0.2% at 7,286.68
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Hang Seng: closed up 0.2% at 20,609.14
Nikkei 225: closed up 0.4% at 27,914.66
S&P/ASX 200: closed marginally lower, down 2.80 points at 6,791.50
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DJIA: called down 0.1%
S&P 500: called down 0.3%
Nasdaq Composite: called down 0.5%
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EUR: down at $1.0157 ($1.0195)
GBP: unchanged at $1.1959 ($1.1958)
USD: down at JP¥137.56 (JP¥137.93)
Gold: up at $1,717.75 per ounce ($1,710.60)
Oil (Brent): up at $104.22 a barrel ($103.48)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone private sector went into reverse in July, with manufacturing activity shrinking, while growth in the services economy slowed. The composite purchasing managers' index fell to 49.4 points in July, according to the latest S&P Global flash figure, from June's final tally of 52.0. A figure below 50.0 denotes decline. The July score, a 17-month low, represents first time the single currency area's private sector has fallen into negative territory since February 2021. The manufacturing sector endured a month of woe, with the flash PMI falling to 49.6 points in July from 52.1 in June. July's figure is a 25-month low. The services PMI stayed in growth territory but fell markedly to 50.6 points in July's flash reading from the final 53.0 figure for June. It was the weakest growth since April 2021.
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Activity in the German services and manufacturing sectors contracted for the first time in 2022, in the worst performance for over two years. The flash PMI composite output index dropped below 50 for the first time since December, falling to 48.0 in July from 51.3 in June. The flash services PMI fell to 49.2 from 52.4 the previous month, hitting a seven-month low in July. The flash manufacturing PMI dropped to 49.2, a 25-month low, from 52.0.
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France's flash PMI signalled a further erosion of growth momentum. The composite output index fell for the third month in a row to 50.6 in July from 52.5 in June. The flash services PMI fell to 52.1 from 53.9 the previous month, a 15-month low. The flash manufacturing PMI hit a 20-month low at 49.6 in July, dropping from 51.4 in June.
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France's divided parliament passed its first major piece of legislation since elections last month, greenlighting a €20 billion package to help low-income families struggling with inflation. The vote in the early hours of the morning provided a boost for the centrist government of President Emmanuel Macron, which is 39 seats short of a majority and was desperate to show it could build consensus. The so-called ‘emergency purchasing power bill’ passed with 341 MPs in favour, 116 against and 21 abstentions in a vote that took place shortly before 6:00 am in Paris. The legislation includes a range of measures designed to help consumers, such as extending fuel tax cuts, raising pensions and benefits, and capping rent increases. One of the most controversial measures authorises the state to re-open a coal-fired power station in eastern France in the event of power shortages this winter.
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The UK's private sector remained in expansion territory in July, though growth was the slowest since February 2021. The latest S&P Global composite flash PMI fell to 52.8 points in July from June's final tally of 53.7. The services PMI weakened to 53.3 points in July from 54.3 in June, the lowest figure in 17 months. Growth in the manufacturing sector tumbled to a 25-month low. The PMI figure came in at 52.2 points in July, down from 52.8 in June.
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UK retail sales painted a mixed picture in June, with the sector seeing a slight Platinum Jubilee holiday boost, though the cost-of-living crisis also was evident. According to the Office for National Statistics, UK retail sales volumes fell 5.8% annually in June, worsening from a 4.7% decline in May. The figure was worse than the FXStreet-cited market consensus of a smaller 5.3% fall. On a monthly basis, sales fell 0.1% in June from May. In May, they had fallen 0.8% from April, and that figure was downwardly revised from a 0.5% fall.
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Consumer confidence remains ‘severely depressed’ in the UK, as households grapple with soaring food and fuel prices. GfK's long-running consumer confidence index languished at a historic low of minus 41 in July, despite a two-point uptick in hopes for personal finances over the next 12 months. Confidence in the general economic situation over the last 12 months fell one point to minus 66, 23 points lower than July last year, but expectations for the coming 12 months remained at minus 57, 52 points lower than 12 months ago.
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The final two vying to be the next UK prime minister have come to blows over their fiscal proposals, with Rishi Sunak warning against a ‘huge borrowing spree’ as Liz Truss defended tax-cutting plans worth at least £30 billion a year. The former chancellor did not pull any punches in an interview on Thursday evening, claiming the current evidence suggests the Conservatives would suffer a defeat at the next UK general election under his rival's leadership. Sunak said he thought borrowing £30 billion for unfunded tax cuts would be ‘inflationary’, adding that going on a ‘huge borrowing spree’ would only ‘make the situation worse’. He told Tonight With Andrew Marr on LBC: ‘If you look at all the polling evidence that we have, and you see what that says, it's pretty clear that I am the person that is best placed to defeat Keir Starmer in the next election.’ Earlier, Truss defended her tax cut plans as ‘affordable’, as the economic policies of the two candidates came under scrutiny. ‘What is not affordable is putting up taxes, choking off growth, and ending up in a much worse position,’ she told broadcasters during a visit to Peterborough.
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Japan's private sector showed its slowest expansion in activity in July since March as raw material shortages and continued cost increases hindered output and new order inflows. The au Jibun Bank flash composite PMI dropped to 50.6 for July from 53.0 points in June. The manufacturing output index dipped to 52.2 points in July from 52.7 in June. The services business activity index dropped to a three months low of 51.2 in July from 54.0 in June.
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Japan's core consumer prices for items excluding fresh products rose 2.2% in June from a year earlier, driven by energy costs, government data showed Friday. Excluding energy, the increase was just one percent compared to a year earlier, according to data released by the interior affairs ministry. The June inflation figures were in line with expectations and mark the third consecutive month that the reading has come in over 2%, after 2.1% increases in April and May.
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Australia's private sector slowed to a six-month low in July as the pace of selling price inflation accelerated to a record high. Data from S&P Global showed that the flash composite PMI dropped to 50.6 in July from 52.6 in June. The manufacturing PMI dropped to 55.7 in July from 56.2 in June, while the services PMI fell to 50.4 in July from 52.6 in June.
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Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman agreed in a phone call to continue cooperation on the oil market, according to Russian sources. ‘The importance of further coordination within the framework of OPEC+ was stressed,’ the Kremlin said on its website on Thursday. US President Joe Biden had also visited bin Salman only this week as part of his Middle East trip to try to persuade Saudi Arabia to increase oil production in a bid to push down oil prices on the world market. The results of Biden's trip to bin Salman, long ostracized by Washington for his alleged involvement in the murder of journalist Jamal Khashoggi, were described as meagre. Saudi Arabia only hinted that a limited increase in production was possible.
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An agreement to facilitate Ukrainian grain exports through the Black Sea is due to be signed in Istanbul by UN Secretary General Antonio Guterres, Turkish President Recep Tayyip Erdogan and representatives of Russia and Ukraine on Friday. The deal, which aims to bring a fast-worsening global food crisis to an end, provides for the creation of a United Nations-run control centre in Istanbul staffed by representatives of Russia, Ukraine and Turkey to oversee grain exports. The parties have reportedly agreed that ships bound for Ukraine will first be searched to ensure no weapons or other military equipment are on board. Searches are also to take place when ships carrying grain from Ukrainian ports want to pass through the Bosphorus Strait in the other direction.
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