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The following is a summary of top news stories Wednesday.
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COMPANIES
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China has announced it is investigating several executives at state-owned property companies over allegations of ‘serious violations of discipline and law’. The probes are another blow to a key sector, which is already struggling with slowing sales, angry customers and heavily indebted developers. Authorities said in separate notices on Tuesday that they were investigating Zhuang Yuekai, chair of C&D Real Estate, and Shi Zhen, chair of C&D Urban Services. They are also looking into Liu Hui, deputy general manager of Shenzhen Talents Housing Group, and Tang Yong, a former chair at China Resources Land. All four were ‘suspected of serious violations of discipline and law’, the notices said, providing few details.
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Compagnie Financiere Richemont said it has sold a 50.7% stake in its online fashion retailer Yoox Net-a-Porter to London-based, New York-listed Farfetch and Dubai-based Mohammad Alabbar-owned Symphony Global. Richemont will take a non-cash charge of just under €3 billion as a result of the deal. Describing it as ‘landmark’, Richemont said this transaction represented a ‘significant step’ in achieving its vision of making Yoox a neutral industry-wide platform. In the initial stage, Farfetch will acquire 47.5% interest in Yoox, accounting for a non-controlling stake that will not require it to consolidate Yoox in this phase. Farfetch is a global platform for the luxury fashion industry. Symphony Global will buy 3.2% shares in Yoox in the first part of the deal.
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Sumitomo Mitsui Financial said it will open new digital consumer banking business in the US called Jenius Bank. ‘Creating a digital banking presence in the growing US market will further leverage retail banking platforms to drive sustainable growth in the Americas,’ the Tokyo-based bank said. Jenius will launch in the ‘coming months’, initially offering personal loans, then expanding to savings and checking products in its first year.
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Campari said it has bought a 15% interest in Howler Head Kentucky straight bourbon whiskey with natural banana flavour. The Milan-based spirits, wines, and soft drinks producer said the agreement offers a medium-term route to total ownership, and to obtain exclusive global distribution rights. Howler Head is the official flavoured whiskey partner of the Ultimate Fighting Championship, and is among the fast-growing whiskey brands in the US, Campari said. It did not provide financial details of the deal.
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Intuit reported an increase in annual revenue thanks to the addition of email marketing platform Mailchimp during its financial year. It was a less convincing final quarter for the California-based financial software firm, however. In the three months ended July 31, it swung to a net loss of $56 million, from net income of $380 million a year prior. It swung to a basic loss per share of $0.20, from earnings per share of $1.39. Revenue dipped by 5.7% year-on-year to $2.41 billion from $2.56 billion. Intuit said the decline reflected an earlier IRS tax filing deadline. The revenue figure was greatly boosted by the addition of Mailchimp from November 2021. Excluding the impact of Mailchimp, revenue would have declined by 16% year-on-year. For the year as a whole, net income rose to $2.07 billion from $2.06 billion, though basic earnings per share dipped to $7.38 from $7.56. Revenue for the year jumped 32% to $12.73 billion from $9.63 billion.
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Moderna completed its submission to the US Food & Drug Administration for emergency use authorization for its Omicron-targeting Covid-19 booster vaccine. The application is for a 50 microgram booster dose for adults aged 18 and older.
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Almost 18 months after announcing a name change, abrdn's blue-chip status is under threat, according to indicative index changes provided by FTSE Russell. The investment company, which dropped Standard Life as well as the vowels in Aberdeen last year, is now set to be dumped from the FTSE 100. With a market capitalisation of £3.28 billion, it is the second-smallest FTSE 100 constituent. Hikma Pharmaceuticals, with a market value of £3.03 billion is also set to drop out. The indications are based on closing prices from Friday. The actual index changes will be based on closing prices on Tuesday next week, with the final rebalancing announced after market close on Wednesday. Replacing abrdn and Hikma are ConvaTec, a medical products and technologies company, and F&C Investment Trust, an investment firm that is over 150 years old.
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MARKETS
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Stock markets hardly budged on Wednesday, with little in the way of economic or company news to drive pricing. The week's key risk event is on Friday, with a speech by US Federal Reserve Chair Jerome Powell to the Jackson Hole Economic Symposium. Energy markets were more active, with European benchmark Brent oil rising back above $100 a barrel to $101.73. The US equivalent, West Texas Intermediate, was priced at $94.85, up from just above $90 when the week began.
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CAC 40: up 0.1% at 6,367.25
DAX 40: marginally lower, down 1.01 points at 13,193.22
FTSE 100: down 0.3% at 7,463.79
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Hang Seng: closed down 1.2% at 19,268.74
Nikkei 225: closed down 0.5% at 28,313.47
S&P/ASX 200: closed up 0.5% at 6,998.10
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DJIA: called marginally higher, up 6.00 points
S&P 500: called up 3.00 points, 0.1%
Nasdaq Composite: called up 12.50 points, 0.1%
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EUR: down at $0.9945 ($0.9987)
GBP: down at $1.1822 ($1.1864)
USD: up at JP¥136.47 (JP¥136.28)
Gold: flat at $1,751.69 per ounce ($1,751.38)
Oil (Brent): up at $101.73 a barrel ($99.90)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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China's autumn harvest is under ‘severe threat’ from high temperatures and drought, authorities have warned, urging action to protect crops in the face of the country's hottest summer on record. The world's second-largest economy has been hit by record temperatures, flash floods and droughts this summer phenomena that scientists have warned are becoming more frequent and intense due to climate change. Southern China in particular has recorded its longest sustained period of high temperatures and sparse rain since records began more than 60 years ago, the agriculture ministry said. Four government departments issued a notice on Tuesday urging the conservation of ‘every unit of water’ to protect crops.
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UK households face a ‘dramatic and catastrophic winter’, a senior energy firm executive has warned ahead of the increase in the price cap on bills. Philippe Commaret, the managing director at Electricite de France, or EDF, warned that half of UK households could be in fuel poverty in January as a result of rocketing energy prices. His comments came as the National Grid prepared to hold an exercise to test the resilience of the UK's systems in the event of a gas supply emergency. Consumers will find out on Friday how much the energy price cap will rise, with analysts expecting average annual bills to increase to more than £3,500.
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Satisfaction with UK living standards and income has plunged amid devastating predictions for Friday's new energy price cap, a survey suggested. The Which? consumer insight tracker shows satisfaction with living standards and income has crashed to its lowest point since 2014, even before Ofgem is widely expected to announce a new price cap for October topping £3,500 on Friday, up from £1,971 currently. Some 93% of consumers said they were worried about energy prices. The consumer advocate's latest survey found just over half of consumers, 55%, are currently satisfied with their standards of living, while just 39% are content with their household income and 34% are happy with their savings. Confidence in household finances has plunged to the level it was at the start of the pandemic as inflation driven largely by food and energy prices reached a 40-year high.
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Germany and Canada signed a cooperation agreement for the production and transport of hydrogen on Tuesday, the second day of German Chancellor Olaf Scholz's inaugural trip to Canada. The two countries ‘aim to closely collaborate on all aspects necessary to kickstart the hydrogen economy and to create a transatlantic supply chain for hydrogen well before 2030, with first deliveries aiming for 2025,’ the agreement states. It outlines Canada's plans to pour billions of dollars into developing technology and infrastructure, and Germany's commitment to supporting domestic importers in establishing an international trade corridor.
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Ukraine on Wednesday will both celebrate its national day and mark six months since Russia launched its invasion. Ukrainian President Volodymyr Zelensky it was an important day for Ukrainians and ‘for our enemy,’ as he warned the public to follow safety rules and observe curfews as Russian strikes were possible. He also said he plans to present awards to Ukrainians who have contributed to the country's strength for Independence Day, which marks 31 years since Ukraine broke away from the Soviet Union. ‘We have planned many activities - something that will emphasize the path we have covered. Covered together - Ukrainians in Ukraine, throughout our territory - free and temporarily occupied, because our people are fighting everywhere,’ Zelensky said on Tuesday evening. The US also warned ahead of the date that Russia might use the anniversary to launch heightened attacks on Ukrainian civilian infrastructure and government facilities.
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Germany is prepared to ship more than €500 million in weapons to help Ukraine fend off the ongoing Russian invasion, a spokesperson for Chancellor Olaf Scholz said. Kyiv is to receive three more IRIS-T air defence systems and a dozen Bergpanzer armoured vehicles, among other items, the spokesperson said as the chancellor visits Canada. Scholz had recently promised further large-scale financial and military support for Ukraine.
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Ukraine is on course to ship nearly as much grain this month as it did before the Russian invasion, in a triumph for international efforts to ease food shortages, according to a US official. Ukraine is one of the world's largest exporters of wheat, corn, barley and sunflower oil, shipping around five million metric tonnes of grain each month before the war. Its exports ground to a trickle after the February 24 invasion, contributing to a spike in global food prices that has hit poor nations especially hard. ‘Thanks to intensive international cooperation, Ukraine is on track to export as much as four million metric tons of agricultural products in August,’ a senior US State Department official told AFP.
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