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The following is a summary of top news stories Thursday.
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COMPANIES
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A US jury ordered Meta Platforms to pay $174.5 million for violating live-streaming patents developed by a US Army veteran seeking to fix shortcomings in battlefield communications. A trial in Texas federal court ended with jurors deciding that ‘live’ features at Facebook and Instagram used technology patented by Voxer, a company co-founded by Tom Katis, legal documents showed. ‘We believe the evidence at trial demonstrated that Meta did not infringe Voxer's patents,’ a company spokesperson said in response to an AFP inquiry. ‘We intend to seek further relief, including filing an appeal.’ Facebook approached San Francisco-based Voxer about potential collaboration after it launched a Walkie Talkie app in 2011, but no agreement was reached, according to legal documents. Instead, the lawsuit argued, Facebook went on to launch Facebook Live and Instagram Live, incorporating Voxer technology into the features.
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Meta Platforms is looking to cut its expenses by at least 10% partly through the reduction of staff in the face of competition and slowing growth, the Wall Street Journal reported. According to people familiar with the matter, the Menlo Park, California-based owner of Facebook, Instagram and WhatsApp has been cutting staff by giving affected employees a limited window of time to apply for other roles within the company, which forestalls the mass issue of pink slips. Meta has a practice where employees whose roles are eliminated are subject to be terminated if they can't find a new job internally within a month. The staff reductions are expected to be a opener to deeper cuts, with future savings anticipated to come from overhead and consulting budgets, but mostly from reduced employment.
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Sportswear retailer JD Sports Fashion announced a rise in interim revenue but a drop in profit, which it said was due to the previous year experiencing a one-off benefit in the US from government stimulus. In the six months to July 30, revenue rose to £4.42 billion from £3.89 billion a year previous. Cost of sales ticked up to £2.28 billion from £2.00 billion. Pretax profit dropped to £298.3 million from £364.6 million. Chair Andrew Higginson says the results were at the ‘top end’ of the company's expectations. JD Sports reinstated an interim dividend of 0.13 pence per share. It added that it expects its pretax profit for the year as a whole to be in line with the record performance for the year that ended this past January 29.
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Safety equipment maker Halma said its progress in the first half of its financial year to date has been in line with expectations, despite a challenging operational environment. It noted strong demand for products and services, with order intake ‘strongly’ ahead of both revenue in the year to date and order intake for the same period last year. Halma left its revenue growth guidance for the full-year unchanged at ‘good single digit percentage organic constant currency revenue growth.’
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Novartis said ahead of its Meet the Management event that its transformation into a pure-play Innovative Medicines company is nearing completion. The Swiss pharmaceutical firm said it will implement its new strategy with a focus on five therapeutic areas for investment: cardiovascular, immunology, neuroscience, solid tumours and haematology. To this end, Novartis will lead with its eight current in-market brands Cosentyx, Entresto, Zolgensma, Kisqali, Kesimpta, Leqvio, Pluvicto and Scemblix, which are expected to hold multi-billion dollar peak sales potential each. Geographically, Novartis said that it will focus on the US, by increasing its share of US patients in clinical trials, and also take up leading positions in China, Germany and Japan.
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Pharmaceutical firm AstraZeneca, along with American pharmaceutical firm Merck & Co, announced that Lynparza has been approved in China for the treatment of adults with advanced epithelial ovarian, fallopian tube or primary peritoneal cancer who are in complete or partial response to first-line platinum-based chemotherapy in combination with bevacizumab, and whose cancer is associated with homologous recombination deficiency-positive status. The approval was based on a Paola-1 phase III trial which showed Lynparza plus bevacizumab demonstrated a substantial progression-free survival improvement versus bevacizumab alone for patients with HRD-positive advanced ovarian cancer.
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GSK said it has signed an exclusive licence agreement with Massachusetts-based biotechnology firm Spero Therapeutics for the latter's tebipenem pivoxil hydrobromide, or tebipenem HBr. Tebipenem HBr is being developed as the first oral carbapenem antibiotic for the treatment of complicated urinary tract infections, including pyelonephritis. Under the agreement's terms, Brentford-based GSK will receive an exclusive licence to develop and commercialise tebipenem HBr in all countries except Japan and other Asian countries, which will be retained by Spero's partner Meiji Seika. Spero will be responsible for the costs and launching of a new phase three clinical trial in 2023, while GSK will fund additional clinical development, including regulatory submission and commercialisation activities.
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Telecommunications firm BT said that its workers, along with those at Openreach, are to stage fresh strikes in a long-running dispute over pay. The Communication Workers Union said its members will walk out on October 6, 10, 20 and 24. The action will include the tens of thousands of Openreach engineers and BT call centre workers who have walked out in previous months. The dispute centres on workers opposing the imposition by company management of an ‘incredibly low’ flat-rate pay rise of £1,500 which the union said was a real-terms pay cut because of the soaring rate of inflation.
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MARKETS
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The dollar dropped sharply against the yen, and the euro and pound as well, after the Tokyo government announced it had intervened to support the Japanese currency for the first time in nearly a quarter century. The move followed the Bank of Japan's decision to maintain its loose monetary policy, after the US central bank announced another 75-basis-point increase. Meanwhile, the Swiss National Bank moved its key rate back into positive territory, while the Bank of England is up next, announcing its interest rate decision at 1100 GMT.
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CAC 40: down 0.7% at 5,989.87
DAX 40: down 0.5% at 12,702.12
FTSE 100: down 0.3% at 7,219.23
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Hang Seng: closed down 1.6% at 18,147.95
Nikkei 225: closed down 0.6% at 27,153.83
Sydney market closed for holiday.
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DJIA: called up 0.3%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.2%
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EUR: flat at $0.9884 ($0.9879)
GBP: down at $1.1321 ($1.1336)
USD: down at JP¥142.16 (JP¥144.13)
Gold: up at $1,671.67 per ounce ($1,667.36)
Oil (Brent): up at $90.58 a barrel ($89.80)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Japan's finance ministry said it intervened in the currency market to bolster the yen, which has plummeted against the dollar in recent months on the widening policy gap between the US and Japanese central banks. It was the first government intervention to prop up the currency since 1998 and came after the dollar surged to nearly JP¥146 earlier in the day. The yen has been weakening against the dollar for months, but sank further on Thursday after the US Federal Reserve again hiked rates to tame inflation, while the Bank of Japan left its ultra-loose monetary policy in place.‘There have been some rapid, one-sided developments on the back of speculative movement in the foreign exchange market,’ Japan's vice finance minister for international affairs Masato Kanda told reporters on Thursday evening. ‘The government is worried about these excessive fluctuations and has just taken resolute action,’ he added, confirming this referred to intervention.
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Japan's central bank left its ultra-loose monetary policy unchanged. In a statement, the bank said it would leave its current policy in place, ‘aiming to achieve the price stability target of two percent, as long as it is necessary’. ‘It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI exceeds 2% and stays above the target in a stable manner.’ Prices in Japan are rising, with inflation in August at 2.8%, its highest level since 2014, but the central bank has said repeatedly it views the increases as temporary. The bank said it sees Japan's economy as on a recovery path, ‘with the impact of Covid-19 and supply-side constraints waning’, though it warned of uncertainty from commodity price increases linked to the war in Ukraine.
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The Federal Reserve ‘will keep at it’ until inflation is well and truly tackled, Chair Jerome Powell said after a third successive 75 basis point rate hike by the central bank. The third 75 basis point hike on-the-trot took the target range for the federal funds rate to 3.00% to 3.25%. The Fed has now lifted rates by 3% this year. And dot-plot projections suggest there are more rate hikes to come. The median forecast is for the federal funds rate to stand at 4.4% at the end of 2022, up from the June forecast of 3.4%.
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The Fed upped its inflation outlook. Personal consumption expenditures inflation is expected to hit 5.4% in 2022, ahead of the previous 5.2% forecast. For 2023, it is expected to land at 2.8%, up from the June 2.6% projection. The 2024 forecast was lifted to 2.3% from 2.2%. It won't be until 2025 that PCE inflation returns to 2.0%. Powell once again spoke about the potential of ‘pain’ as the central bank looks to get a handle on inflation. He also warned that the chances of a ‘soft-landing’ may diminish.
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The Fed sharply lowered its 2022 US gross domestic product forecast to just 0.2% growth, from 1.7% in the June forecast. The forecast for 2023 was lowered to 1.2% from 1.7% and for 2024, it was lowered to 1.7% from 1.9%. The Fed expects the unemployment rate to increase from 3.7% in August to 3.8% at year-end and 4.4% in each of 2023 and 2024. In 2025, it expects the jobless rate to sit at 4.3%.
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An executive board member of the European Central Bank expressed the central bank's willingness to raise interest rates further in the fight against record-high inflation. ‘I assume that the ECB Governing Council will raise interest rates further at its next meeting,’ ECB executive board member Isabel Schnabel told the news portal t-online in an interview. ‘How big this interest rate step will be and to what level we will raise rates, I cannot say at the moment. We are...reassessing the economic and inflation data before each meeting,’ she said. The key interest rate in the eurozone now stands at 1.25%. The next regular meeting of the ECB Governing Council is scheduled for October 27.
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The Swiss and Norwegian central banks announced hefty interest rate hikes. The moves follow big rate rises in Sweden and the US this week and come ahead of another increase expected to be announced by the Bank of England on Thursday. Norway's central bank raised its rate to its highest level since 2011 while the Swiss National Bank ended its negative-rate era. The Swiss central bank raised its policy rate by 0.75 percentage point to 0.5%. The SNB, which first pushed its rates down into negative territory in January 2015, said the move was needed to counter ‘the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected’.
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Hong Kong is set to end the year in the midst of a full-blown recession, the city's finance chief warned, as Covid-19 controls and spiralling interest rates hammer the economy. ‘There is a very high chance for Hong Kong to record a negative GDP growth for this year,’ Financial Secretary Paul Chan told reporters. ‘Hong Kong has been raising interests at a pace that was never seen in the past three decades,’ he added. The Chinese city's monetary policy moves with the Federal Reserve because its currency, one of the cornerstones of its business hub reputation, is pegged to the US dollar.
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US President Joe Biden tore into Vladimir Putin at the United Nations, after the Russian leader dramatically escalated his seven-month war in Ukraine by calling up 300,000 military reservists. Biden accused Putin of ‘shamelessly’ violating the UN Charter and castigated him over a threat to use nuclear weapons, warning that ‘a nuclear war cannot be won and must never be fought.’ ‘Just today, President Putin has made overt nuclear threats against Europe,’ Biden said in his address to the annual UN General Assembly, lambasting Putin's ‘irresponsible’ stance.
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EU foreign policy chief Josep Borrell has promised new sanctions targeting Russia following President Vladimir Putin's latest escalation in his war against Ukraine. ‘We decided to bring forward as soon as possible additional restrictive measures against Russia in coordination with partners,’ Borrell said late on Wednesday following a meeting of EU foreign ministers on the sidelines of the UN General Assembly in New York. The meeting was convened by Borrell after Putin ordered the partial mobilization of reservists in order to bolster his military's flagging efforts in Ukraine.
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England's fracking ban has been lifted as UK Prime Minister Liz Truss's government vowed to explore all avenues to improve energy security, setting Downing Street on a collision course with environmental campaigners. Business & Energy Secretary Jacob Rees-Mogg said the impact of Vladimir Putin's invasion of Ukraine means securing domestic energy supplies is vital as he defended lifting the moratorium on fracking, which has been in place since 2019 after a series of tremors caused by the process. Rees-Mogg suggested limits on acceptable levels of seismic activity are too restrictive and said the government is determined to ‘realise any potential sources of domestic gas’.
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