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The following is a summary of top news stories Thursday.
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COMPANIES
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Luxury sports carmaker Porsche raced onto the Frankfurt stock exchange on Thursday with one of Europe's biggest listings in years, leveraging its brand power to defy global market turmoil. Its shares rose to €84 at the start of trading, bettering the €82.5 price set by its parent company Volkswagen, and outperforming a weak Frankfurt market. Even as markets worldwide suffer from surging inflation and mounting recession fears, the maker of the 911 sports car has pushed ahead with the bold flotation that gives Porsche a valuation of more than €76 billion. ‘This is a historic moment for Porsche,’ said the carmaker's chief Oliver Blume, who is also chief executive officer of the wider German auto group Volkswagen. Porsche's is the biggest stock market debut in Germany since Deutsche Telekom's in 1996, and the largest in Europe since the 2011 flotation of miner Glencore. It rasied €9.4 billion in the IPO>
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Next lowered annual guidance as the clothing and homewares retailer believes tough trading in August and cost-of-living pressures will offset any boost from recent UK government stimulus measures. In the half-year ended July 30, revenue climbed 12% to £2.38 billion from £2.12 billion a year earlier. Pretax profit advanced 16% year-on-year to £400.6 million from £346.7 million. Full price sales advanced 12% year-on-year in the first half, though the company now expects a decline for the second half. Full price sales are to shrink by 1.5% year-on-year. It had previously guided for 1% growth. Next also lowered bottom-line guidance. It now expects annual pretax profit of £840 million, down from the previous £860 million guidance, but up 2.1% on last year. ‘August trade was below our expectations and cost of living pressures are set to rise in the coming months. Sales in September have improved, and we may see benefits from recent government measures,’ Next said, adding that the decision to lower full price sales guidance was a ‘very difficult call’. Next, returning to a normal dividend cycle, declared a 66 pence per share interim payout. It expects to declare a final dividend ‘no lower than’ the 127p it paid in August.
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Holiday Inn-owner InterContinental Hotels said it is carrying out extra ‘recovery and assurance plans’ after its technology systems were hit by ‘unauthorised activity’ earlier this month. ‘Following a period of disruption, by Wednesday 7 September IHG had re-activated its booking websites and mobile app together with most of its other booking channels and revenue-generating systems. Subsequently, service at our reservation and customer care call centres has been recovered and all our systems restored,’ the company explained. During the disruption, its hotel sites were able to to take booking directly. ‘We have continued to carry out additional steps as part of our recovery and assurance plans to review and further enhance our security measures. External specialists were engaged to investigate the incident, and no evidence of unauthorised access to systems storing guest data has been identified,’ IHG added.
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M&G has named Andrea Rossi as its new chief executive, effective October 10. He succeeds John Foley who steps down after seven years in the post. Foley's retirement from the role was announced in April. The wealth manager at the time said Foley would remain in the role until a replacement was found. Rossi was formerly CEO of AXA Investment Managers and spent six years on the executive committee of parent AXA SA. ‘Most recently, Andrea has been a senior adviser to Boston Consulting Group. He will step down from this role following his appointment at M&G,’ M&G added.
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MARKETS
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European stock market sentiment, which had been buoyed by positive trading in the US and Asia, turned negative by the open on Thursday, after more leaks were found in the pipelines bringing gas to the EU from Russia. Wall Street also was called to open lower.
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CAC 40: down 1.3% at 5,689.78
DAX 40: down 1.2% at 12,034.72
FTSE 100: down 1.1% at 6,925.95
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Hang Seng: closed down 0.5% at 17,165.87
Nikkei 225: closed up 1.0% at 26,422.05
S&P/ASX 200: closed up 1.4%. at 6,555.00
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DJIA: called down 0.8%
S&P 500: called down 0.9%
Nasdaq Composite: called down 1.1%
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EUR: up at $0.9667 ($0.9645)
GBP: up at $1.0803 ($1.0763)
USD: up at JP¥144.73 (JP¥144.41)
GOLD: lower at $1,645.03 per ounce ($1,653.20)
OIL (Brent): firm at $88.32 a barrel ($88.17)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Another leak has been detected in undersea pipelines running from Russia to Europe, the Swedish Coast Guard said, after several explosions were reported earlier this week in suspected sabotage, causing huge gas leaks. ‘There are two leaks on the Swedish side and two leaks on the Danish side,’ a Swedish Coast Guard official said, after three leaks were confirmed earlier this week on the Nord Stream pipelines in the Baltic Sea. The vast leaks cause significant bubbling at the surface of the sea several hundred metres wide, making it impossible to immediately inspect the structures. Suspicions of sabotage emerged after the leaks were detected. Moscow denied it was behind the explosions, as did the US, saying Moscow's suggestion it would damage the pipeline was ‘ridiculous’. The UN Security Council will meet Friday to discuss the incident.
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Hurricane Ian left much of coastal southwest Florida in darkness early Thursday, bringing ‘catastrophic’ flooding that left officials readying a huge emergency response to a storm of rare intensity. The National Hurricane Center said the eye of the ‘extremely dangerous’ hurricane made landfall just after 3:00 pm on Wednesday on the barrier island of Cayo Costa, west of the city of Fort Myers. Dramatic television footage from the coastal city of Naples showed floodwaters surging into beachfront homes, submerging roads and sweeping away vehicles. Some neighborhoods in Fort Myers, which has a population of more than 80,000, resembled lakes. The NHC said Ian's maximum sustained winds reached 150 miles per hour when it landed.
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The White House said it remains bullish on the ‘resilient’ US economy in the face of growing political and economic strains around the world. The prognosis was issued in a statement after President Joe Biden was briefed by top economic advisors, including the treasury, energy and labour secretaries, for ‘an update on global financial and energy markets.’ ‘They reported that the US economy remains resilient in the face of global challenges, thanks in part to the president's economic plan, which has helped spur a historic recovery’ from the Covid pandemic slump, the statement said. Biden told his team to stay in ‘frequent touch with partners, allies, and key market actors, and to brief him regularly as conditions evolve.’
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Consumer confidence in the eurozone declined again in September. According to the European Commission, the single currency area's consumer confidence index fell to minus 28.8 points in September, from minus 25.0 points in August. It is the fifth month of the year that consumer confidence has fallen. The index stood at minus 9.7 in January. Its long-term average is minus 11.2 points. Confidence has taken a hit from rampant inflation, which has been exacerbated by the ongoing war in Ukraine.
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Germany's leading economic research institutes have forecast a contraction in gross domestic product for three quarters in a row, starting with the current third quarter. For 2022 as a whole, the institutes still expect economic growth of 1.4% due to the better first half of the year, according to the joint report commissioned by the German Economy Ministry. For 2023, they predict a decline in economic output of 0.4%.
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Spain's annual inflation rate slowed at a greater pace than expected this month. Early figures from INE showed that Spain's annual inflation rate eased to 9.0% in September, from 10.5% in August. According to consensus cited by FXStreet, September's rate of inflation was forecast to ease to 10.1%, so the figure was lower than forecast. Harmonised inflation, allowing for EU-wide comparison, was steady at 9.3% on an annual basis in September. August's 9.3% harmonised inflation rate had slowed from 10.7% in July.
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Producer prices in Italy rose at a slower pace on a monthly basis in August, figures from national statistics office Istat showed. Industrial producer prices in Italy grew by 2.8% on a monthly basis in August after rising by 5.0% in July. On an annual basis, prices increased 40% in August, quickening from 37% in July.
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French schools, trains and businesses were the target on Thursday of the first major strike called since the re-election of President Emmanuel Macron in April, as unions push for wage hikes and the end of planned pension reform. The extent of disruption remains uncertain, however, with the strike a test for the CGT union behind the protests, which is seeking to build support for a lengthy battle with the centrist government. Macron has approved pay rises for civil servants and teachers and put in place one of Europe's most generous anti-inflation safety nets that has capped energy prices for households and held down inflation. But his insistence on raising the retirement age from its current level of 62 one of his main re-election campaign pledges has stirred up unions and other left-wing opponents and remains broadly unpopular around the country.
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UK Prime Minister Liz Truss has insisted the government's tax-cutting measures are the ‘right plan’ in the face of rising energy bills and to get the economy growing despite market turmoil sparked by the chancellor's mini-budget. In her first public comments since the mini-budget triggered a sell-off of gilts and the pound, Truss defended Chancellor Kwasi Kwarteng's measures, insisting ‘urgent action’ was needed, although she admitted the Government's decisions have been ‘controversial’. Truss told BBC Radio Leeds: ‘We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation. Of course that means taking controversial and difficult decisions but I am prepared to do that as prime minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.’
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Price sensitivity is showing signs of returning to the UK housing market as house hunters' buying power takes a hit, according to a property website. Zoopla said 6% of homes listed for sale have seen the asking price adjusted downwards by 5% or more, marking the highest level since before the coronavirus pandemic. The website said that, given the economic backdrop and factors including rising energy prices and rising interest rates, this is a clear sign of a return to more of a buyers' market, after two years of a market that favoured sellers. The findings were released in a week when a slew of mortgage products have been pulled from the market and rates have been hiked, amid turmoil after the mini-budget last Friday.
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Australia's annual inflation rate accelerated in July, before fading in August. The consumer price index quickened year-on-year by 7.0% in July, from 6.8% in June. Annual inflation slowed back to 6.8% in August, however. The Australian Bureau of Statistics usually publishes inflation data on a quarterly basis. However, it is now also introducing a monthly series. The next batch of inflation data, encompassing the whole of the third quarter, will be released on October 26.
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