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The following is a summary of top news stories Thursday.
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COMPANIES
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SMC said it has ceased all imports and exports within Russia and has suspended any new investments in the country. The Tokyo-based firm produces pneumatic control devices used in actuators, valves, vacuum products and sensors. It has customers in the automotive, mining, packaging and energy efficiency fields. SMC said it has made a commitment to assist in the evacuation and relocation of its employees and their families in Ukraine and Russia. ‘We have operated in Russia for over 30 years and employ nearly 480 associates who have become a part of the SMC family. We will continue to support them, but to remain neutral is not an option,’ the company said. ‘We stand firmly with the people of Ukraine and will continue to dedicate resources and support to aiding those impacted by these horrific events,’ it affirmed.
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Adyen reported interim profit and revenue growth despite trading challenges. The stock was trading 11% lower in Amsterdam on Thursday. The Amsterdam-based IT services provider reported net income of €282.1 million in the six months to June 30, up 38% from €204.8 million the previous year. Basic earnings per share jumped to €9.11 from €6.73 while net revenue increased by 38% year-on-year to €608.5 million from €445.0 million. The firm said the increase in revenue was driven by the successful execution of its 'land-and-expand' strategy. Adyen said that, on a macroeconomic level, the first half of 2022 was marked by supply chain disruption and accelerated inflation. Despite these challenges, the firm said it posted a ‘strong’ set of results that demonstrated ‘sustainable’ profitable growth.
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Marshalls hailed a ‘robust’ first half but is mindful of economic uncertainty, as it expects full year expectations to be in line with market forecasts. For the six months that ended on June 30, the Elland, West Yorkshire-based landscaping products said revenue climbed 17% to £348.4 million from £298.1 million a year earlier, reflecting ‘two months contribution from Marley and growth of 7% on a like for like basis.’ Back in April, Marshall agreed to buy pitched roof system manufacturer Marley Group for £535 million. The acquisition was completed later that month. The firm's pretax profit dropped 38% year-on-year to £23.9 million from £38.9 million, as net operating costs climbed 25% to £321.1 million from £257.1 million. Adjusted earnings before interest, tax, depreciation and amortisation rose 14% to £64.2 million from £56.4 million a year earlier.
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Helios Towers backed annual guidance after first half revenue growth. Helios reported revenue of $265.4 million for the half-year to June 30, up 25% from £212.4 million. However, the company's pretax loss ballooned to $122.2 million from $43.6 million. Finance costs surged to $104.7 million from $64.5 million. Adjusted earnings before interest, tax, depreciation and amortisation rose 19%, however, to $136.1 million from $114.2 million a year earlier. Helios Towers assured that it is protected from rising inflation through its contracts. ‘Consumer price index and power price escalators embedded into customer contracts provides an effective hedge against inflation and fuel price movements over a full-year cycle,’ it stated.
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Cisco Systems reported a drop in fourth-quarter earnings in the face of global supply shortage in the chip industry, though the computer networks provider issued upbeat guidance. For the three months to July 30, revenue was $13.1 billion, unchanged from the fourth quarter last year. Annually, revenue was up 3% at $51.56 billion form $49.82 billion the year before. Fourth quarter net income was $2.8 billion, or $0.68 per diluted share, down from $3.0 billion, or $0.71 diluted EPS, last year. For the 12 months to July 30, net income was $11.81 billion, or $2.82 per share, up from $10.59 billion, or $2.50 EPS, last year. Looking ahead, the San Jose, California-based firm guided for first-quarter revenue growth between 2% to 4% from a year prior and adjusted earnings per share between 82 cents and 84 cents.
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Astellas Pharma said the US Food & Drug Administration has accepted the new drug application for its menopause treatment, fezolinetant. The Tokyo-based pharmaceutical company said the FDA's acceptance brought it ‘one step closer’ to advancing care for women in the US who experience moderate to severe vasomotor symptoms associated with menopause. The acceptance was supported by results from phase three clinical trials and two other trials that showed the efficacy and safety of fezolinetant.
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A federal judge ordered Walmart, Walgreens Boots Alliance and CVS on Wednesday to pay $650.6 million to two Ohio counties plagued by the US opioid crisis. The penalties will account for the companies' ‘roles in failing to control the spread of deadly and addictive prescription opioids,’ said plaintiffs' lawyers at the Lanier Law Firm. ‘The award will allow Lake and Trumbull counties to fund education and prevention programs and reimburse local agencies and organizations for costs incurred to manage the crisis.’ More than 500 opioid overdose deaths in the two counties between 2015 and 2019 ‘could be directly or indirectly linked’ to prescription opioids or prescription painkillers, the Lanier firm said, citing testimony presented during the litigation. The order from US District Judge Dan Polster follows a November 2021 jury verdict against the same companies that found the three acted illegally in creating an ‘oversupply’ of the drugs.
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MARKETS
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European markets were pushing higher after a wobbly start to the session, following a shaky session in Asia and falls on Wall Street as investors mulled a warning in the latest set of Federal Reserve meeting minutes that inflation is likely to remain ‘uncomfortably high’ for some time. ‘We continue to expect 125bp of Fed hikes during the rest of the year, broadly in line with market pricing, but see risks tilted towards inflation surprising to the upside,’ said Danske Bank. Stocks in New York were seen steadying after Wednesday's losses.
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CAC 40: up 0.4% at 6,554.50
DAX 40: up 0.7% at 13,715.96
FTSE 100: flat at 7,514.72
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Hang Seng: closed down 0.8% at 19,763.91
Nikkei 225: closed down 1.0% at 28,942.14
S&P/ASX 200: closed down 0.2% at 7,112.80
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DJIA: called flat
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.1%
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EUR: up at $1.0170 ($1.0155)
GBP: up at $1.2070 ($1.2040)
USD: down at JP¥135.21 (JP¥135.44)
GOLD: up at $1,768.92 per ounce ($1,753.55)
OIL (Brent): up at $94.76 a barrel ($93.38)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone's annual inflation hit a record high in July, figures from Eurostat confirmed. On an annual basis, the eurozone consumer price index rose at a record pace of 8.9% in July, picking up from an 8.6% increase in June. The print was in line with an earlier estimate. The inflation rate is well above the European Central Bank's medium-term target of 2%. The strongest contributors to the inflation rate were energy, food, alcohol and tobacco and industrial goods. Core inflation, stripping out energy, food, alcohol and tobacco, accelerated to 4.0% in July, from 3.7% in June.
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Separately, Eurostat reported industrial production declined in June. The eurozone's industrial production fell by 1.3% in June from May. In May, it had declined 0.3% on a monthly basis. Annually, growth slowed to 0.1% in June, from 2.3% in May.
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Swiss employment rose in the second quarter of 2022 while exports and imports declined in July, data from the Swiss Federal Customs Administration showed. During the second quarter of the year, employment rose by 1.6% against the same period a year prior. Unemployment fell from 5.0% to 4.1%. Swiss foreign trade declined in July. Exports fell 4.3% month-on-month and imports fell 4.2%. Switzerland's trade balance showed a surplus of fr.2.42 billion, around $2.5 billion, down from fr.2.53 billion in June.
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The Australian Bureau of Statistics reported that Australian unemployment fell in July. The unemployment rate fell to 3.4% in July from 3.5% the previous month. The number of unemployed people fell by 20,200, or 4.1%, to 473,600 from 493,900. Full-time employment decreased by 86,900 to 9.4 million people, and part-time employment increased by 46,000 to 4.1 million people.
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The US and Taiwan announced on Wednesday objectives for trade negotiations set for the early autumn in another step to boost ties even as tensions soar with China over the self-ruled island. The negotiations would cover a variety of areas, including agriculture, digital trade, good regulatory practices and removing trade barriers, the Office of the US Trade Representative said in a statement. The negotiations ‘will deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses,’ said Deputy US Trade Representative Sarah Bianchi. ‘We plan to pursue an ambitious schedule for achieving high-standard commitments and meaningful outcomes covering the eleven trade areas in the negotiating mandate that will help build a fairer, more prosperous and resilient 21st century economy.’
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Japan's national security adviser met China's top diplomat for seven hours of talks that covered topics including Taiwan and the war in Ukraine, a Japanese government official said. Accepting an invitation from China, Takeo Akiba travelled to the city of Tianjin, southeast of Beijing, to meet Yang Jiechi on Wednesday afternoon, the official told AFP. Chinese state news agency Xinhua also reported that the pair had met, weeks before the countries commemorate the 50th anniversary of their normalised ties on September 29. Relations between Asia's two biggest economies are not always friendly, and have long been beset by issues ranging from wartime history to territorial disputes. In recent weeks, Japan has protested Chinese missiles that it believes landed in its economic waters during military drills around Taiwan, while China called visits by Japanese ministers to a controversial war shrine a ‘serious provocation’.
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The US Federal Reserve reaffirmed its commitment to reducing historically high levels of inflation but could rein in the pace of interest rate increases ‘at some point’, minutes from its latest policy meeting showed on Wednesday. In the minutes of the July policy meeting, which saw a second straight 75 basis points increase, the Fed officials said it will take some time to bring ‘unacceptably high’ inflation back down near 2.0% target levels. Policymakers at the Fed judged that there was little evidence to date that inflation pressures were subsiding. Further, participants judged that inflation would respond to monetary policy tightening and the associated moderation in economic activity with a delay and would likely stay ‘uncomfortably high for some time’. Participants observed that, following the July meeting's policy rate hike, the nominal federal funds rate of 2.25% to 2.5% would be within the range of their estimates of its longer-run ‘neutral level’.
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