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The following is a summary of top news stories Monday.
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COMPANIES
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US drugstore chain CVS Health is in advanced talks to buy US home-healthcare company Signify Health for about $8 billion, according to a newspaper report. CVS appears to have beat out other potential buyers including Amazon.com and UnitedHealth Group, who had also been circling Signify for a deal. However, there is still no guarantee that CVS will reach a deal for Signify, which has been exploring strategic alternatives since earlier this summer, the Wall Street Journal reported.
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UBS Group has called off its $1.4 billion agreement to acquire automated wealth management provider Wealthfront. UBS first agreed to buy Wealthfront back in January. ‘UBS remains committed to its growth plans in the US and will continue the build-out of its digital wealth management offering,’ it said. Instead of the all-cash deal, UBS will acquire $69.7 million in convertible notes in Wealthfront.
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Shell said it is investing an undisclosed sum in a renewable energy-powered field in the Malaysian state of Sarawak. The investment in the Rosmari-Marjoram gas project via Shell's 80% subsidiary Sarawak Shell and Petronas Carigali Sdn, in which Shell holds 20%, ‘will help to deliver a secure and reliable supply of energy, responsibly and efficiently,’ said Shell Upstream Director Zoe Yujnovich. The offshore platform will be powered by solar power. Shell expects gas production of up to 800 million standard cubic feet of gas per day to start in 2026.
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Dechra Pharmaceuticals said annual growth was driven by an improved performance across all its key markets, prompting a double-digit dividend rise. In the financial year that ended June 30, Dechra reported pretax profit of £77.6 million, up from £74.0 million the year prior. Revenue increased to £681.8 million from £608.0 million. Its total dividend was raised to 44.89p from 40.50p. It said the veterinary pharmaceutical market, particularly in the Companion Animal Products - which represents 75% of total revenue - is ‘resilient and in growth’.
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AstraZeneca received two treatment approvals - one in the US and one in China. US regulators approve Imfinzi to treat adults with locally advanced or metastatic biliary tract cancer. Approval was based on the Topaz-1 Phase III trial, which showed Imfinzi plus chemotherapy reduced the risk of death by 20% versus chemotherapy alone. In China, Astra gets approval for Forxiga to treat chronic kidney disease in patients at risk of progression with and without type-2 diabetes. Approval is based on positive results from the DAPA-CKD Phase III trial.
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Vistry and Countryside Partnerships have agreed to a merger, with Vistry offering 0.255 of a share and 60 pence cash for each Countryside share. Notes offer represents 249p per Countryside share, valuing it at about £1.25 billion. Countryside shareholders will own about 37% of enlarged firm. ‘The combination would create one of the country's leading homebuilders, comprising a top tier housebuilder and a leading partnerships business, with capability across all housing tenures, and delivering much needed affordable housing,’ Vistry said. Chief Executive Greg Fitzgerald said proposed merger has ‘highly compelling strategic rationale’. The Countryside board unanimously recommends the deal.
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Aston Martin Lagonda Global Holdings confirmed its plan for a £575.8 million 4-for-1 rights issue. Notes Saudi Arabia's sovereign wealth fund, the Public Investment Fund, Lawrence Stroll's Yew Tree Consortium, and fellow car maker Mercedes-Benz Group are taking up their full entitlements, amounting to 45% of the total rights issue. Issuing 559 million new shares as part of the rights issue. The fully committed and underwritten raise is part of a larger £653.8 million equity raise, announced back in July. ‘The board believes the proposed capital raise will serve to further support the company's re-affirmed medium-term targets of approximately 10,000 wholesales, approximately £2 billion revenue and approximately £500 million adjusted Ebitda by 2024-25, and strongly positions it for positive free cash flow generation from 2024,’ Aston Martin said.
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MARKETS
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Stock markets in German and France were sharply lower on Monday, after Russia turned off gas supplies indefinitely. Adding to the investor gloom was private sector survey results suggesting the eurozone service sector fell into contraction last month. The double knock to the eurozone economy comes ahead of a European Central Bank interest rate decision on Thursday. Wall Street is closed for a holiday on Monday.
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CAC 40: down 1.8% at 6,057.73
DAX 40: down 2.5% at 12,724.81
FTSE 100: down 0.7% at 7,233.80
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Hang Seng: closed down 1.2% at 19,225.70
Nikkei 225: closed down 0.1% at 27,619.61
S&P/ASX 200: closed up 0.3% at 6,852.20
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US financial markets closed for Labor Day holiday.
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EUR: down at $0.9913 ($1.0027)
GBP: down at $1.1500 ($1.1575)
USD: up at JP¥140.54 (JP¥140.05)
GOLD: down at $1,710.60 per ounce ($1,713.90)
OIL (Brent): up at $95.36 a barrel ($94.00)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Berlin and Moscow traded blame for the halting of gas flows through the Nord Stream 1 Baltic Sea pipeline between the two countries, after Russia failed to turn the taps back on after a planned period of maintenance ended. ‘[Russian President Vladimir] Putin's Russia has broken its contracts,’ German Chancellor Olaf Scholz said, and has not been fulfilling its supply commitments for some time now: ‘Russia is no longer a reliable supplier of energy.’ For its part, the Kremlin blamed the EU for the suspension of gas deliveries via Nord Stream 1, news agency Interfax reported on Sunday. Speaking in a television broadcast titled ‘Moscow. Kremlin. Putin.,’ Kremlin Press Secretary Dmitry Peskov said: ‘If the Europeans make an absolutely absurd decision, where they refuse to maintain their systems, or rather, systems belonging to Gazprom, then it is not Gazprom's fault but the fault of the politicians who decided about the sanctions.’ Gazprom had announced on Friday evening that it would no longer send natural gas to Germany through the Nord Stream 1 pipeline, citing an oil leak in a compressor station. The German government has questioned the reasoning, along with pipeline manufacturer Siemens, arguing that such oil leaks are fairly routine and do not require gas deliveries to stop.
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Faced with recession fears, the OPEC+ countries are expected to agree a modest increase in oil production at a meeting on Monday, with some experts even forecasting a cut to support prices. The 13 members of the Organization of the Petroleum Exporting Countries cartel, led by Saudi Arabia, and their 10 partners, led by Russia, are meeting to adjust their quotas for October. Talks are due to start at 1200 GMT. Far from their highs near $140 a barrel, Brent North Sea crude and US WTI crude prices suffered their third consecutive monthly decline in August amid a gloomy global economic outlook.
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The eurozone's service sector fell into decline in August, as a drop in demand and cost-of-living concerns led to weakness in business activity, data from S&P Global showed. The S&P Global eurozone services purchasing managers' index swung down to 49.8 points from 51.2 points in July, passing below the neutral mark of 50.0 points to indicate a contraction. The reading for August marked a 17-month low. On Thursday last week, the manufacturing PMI for August came in at 49.6 points, down from July's 49.8. As a result, the composite output index dropped further into contraction at 48.9 points in August from 49.9 in July, marking an 18-month low.
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Nationally, the slowdown was felt the most in the eurozone's biggest economy, Germany, where the composite PMI was revised down to a 27-month low of 46.9 points from 48.1 points in July. The services PMI business activity index came in at 47.7 in August, down from 49.7 in July. As reported last week, the manufacturing PMI had slipped to 49.1 in August from 49.3 points in July.
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Meanwhile, France remained in expansion territory, with the composite PMI score standing at 50.4 in August. However, this reflected a slowdown from 51.7 points in July, and reflected a 17-month low. The services reading was 51.2, down from 53.2 in July; however the manufacturing PMI returned to growth at 50.6 points from 49.5 points in July.
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Italy's service economy advanced in August, though the wider private sector remained in decline. The composite PMI posted 49.6 points in August, up from 47.7 in July, signalling a slower pace of contraction and one that was only fractional overall. The services PMI grew to 50.5 points in August from 48.4 in the previous month.
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The UK services sector's growth slowed in August, as sales took a hit from growing economic uncertainty and reduced client confidence. The headline seasonally adjusted S&P Global/Chartered Institute of Procurement UK services PMI business activity index fell to 50.9 points in August from 52.6 in July. Despite being in growth territory, the print came in well short of market expectations, according to FXStreet, of 52.5. S&P Global noted August's reading is the softest in 18 months. The composite PMI dropped to 49.6 in August from 52.1 in July. Market consensus seen the composite number at 50.9. Last Thursday, data showed the manufacturing PMI fell to 47.3 points in August from 52.1 in July.
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The UK will learn Monday who will be its next prime minister, with Liz Truss the favourite to succeed Boris Johnson and take charge as the country battles a spiralling cost-of-living crisis. The result will be announced at 1230 BST, after foreign minister Truss and her rival, former finance minister Rishi Sunak, spent the summer rallying support among the Conservative Party members who cast the final vote. If she wins, Truss will become the UK's third female prime minister following Theresa May and Margaret Thatcher. The 47-year-old has consistently been ahead of 42-year-old Sunak in polling among the estimated 200,000 Tory members eligible to vote.
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Survey data from Caixin and S&P Global showed a slowdown in private sector activity in China. In the services sector, the seasonally adjusted headline business activity index dips down 55.0 points in August from 55.5 in July, as new business activity still expanded at a strong, but softer rate, due to improvements in customer demand and the receding effect of Covid-related restrictions. The composite output index meanwhile slipped to 53.0 points in August from 54.0 points in July, marking the softest increase in output for three months.
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The au Jibun Bank Japan services PMI fell into contraction at 49.5 points in August, down from 50.3 in July, as the surge in Covid-19 infections caused a reduction in business activity and demand, with new business stagnating in August after three months of growth. The rise in infections also triggered a drop in business optimism to a three-month low. The composite PMI output index also dropped to contraction levels, at 49.4 in August from 50.2 in July.
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