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The following is a summary of top news stories Friday.
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COMPANIES
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Nike shares dropped after the market closed despite reporting a rise in first-quarter revenue, due to higher sales across multiple regions but recorded a dip in profit on lower margins. The sports apparel maker reported a pretax profit of $1.83 billion in the quarter that ended August 31, down 13% from $2.11 billion a year before. The company's gross margin decreased 220 basis points to 44.3% from 46.5%. Revenue rises 4% to $12.69 billion from $12.25 billion, led by growth in North America, Europe, the Middle East & Africa and Asia Pacific and Latin America, which was partially offset by declines in Greater China, however.
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Facebook-parent Meta Platforms put out word to employees on Thursday that it will freeze hiring to cut costs as it endures tough economic times, The Wall Street Journal reported. Meta chief Mark Zuckerberg revealed a planned pause in hiring during a weekly all-hands meeting, the Journal reported, saying the move came as the social media titan planned to cut expenses by at least 10%. Meta declined to comment on the report, instead referring AFP to remarks Zuckerberg made in July when the company reported its first quarterly revenue drop and a plunging profit. Zuckerberg said during an earnings call that teams would shrink in order to ‘reallocate our energy’ as it battled a turbulent economy and the rising phenomenon of TikTok.
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ABB said on Friday that it has signed a deal to sell its remaining 19.9% stake in the Hitachi Energy joint venture to Hitachi for $1.68 billion. The deal follows Hitachi exercising its call option agreed in 2018. The joint venture was formed from ABB's Power Grids business in 2020, in which Hitachi owns 80.1% shares. The Swiss firm said it does not expect to post any major gain or loss as a result of the transaction, which is expected to be closed in the fourth quarter. ABB expects a net positive cash inflow of around $1.425 billion upon the closing of the transaction.
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Barclays will pay a total of $361 million to settle matters related to an overselling of financial instruments, a US watchdog. The Securities & Exchange Commission said Barclays has agreed to pay a $200 million civil penalty, as well as prejudgement interest of more than $161 million. The second sum was deemed as satisfied by an offer of rescission made by Barclays to investors involved. Barclays in March admitted it sold more products to investors than it was allowed to. The London-based bank explained that securities offered and sold under its US shelf registration statement for an approximate one-year period had exceeded a registered amount. This, the bank explained at the time, gave the purchasers of the affected securities a right of rescission. The SEC said the bank had offered and sold some $17.7 billion of securities in ‘unregistered transactions’.
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Water utility Pennon said it traded in line with expectations in the first half ended September 30, despite tough macro-economic conditions. It hailed its progress in achieving on outcome delivery incentives. ‘South West Water delivered the second highest ODI performance in the sector for 2021/22, and as a group we are on track for a net positive ODI outcome in 2022/23,’ Pennon added. The company said 95% of its energy usage for financial 2023 is hedged, though it expects total power costs to now be around £50 million higher year-on-year. In addition, it said it is allocating £160 million for investment in renewable energy generation.
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MARKETS
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Stocks were rounding off a difficult week - and quarter - with steady gains. Major benchmarks in London and France have lost some 3.5% so far in the third quarter, while the DAX in Frankfurt has slid more than 5%. Stocks have been hit central bank rate hikes and inflationary fears.
A strong, albeit surprising, GDP reading in the UK helped lift the mood and inject some 'Friday feeling' to European markets.
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CAC 40: up 0.6% at 5,712.27
DAX 40: up 0.7% at 12,060.43
FTSE 100: up 0.5% at 6,917.14
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Hang Seng: closed up 0.3% at 17,222.83
Nikkei 225: closed down 1.8% at 25,937.21
S&P/ASX 200: closed down 1.2% at 6,474.20
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DJIA: called up 0.6%
S&P 500: called up 0.7%
Nasdaq Composite: called up 0.6%
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EUR: down at $0.9802 ($0.9781)
GBP: up at $1.1161 ($1.1033)
USD: down at JP¥144.42 (JP¥144.48)
Gold: up at $1,667.38 per ounce ($1,658.20)
Oil (Brent): down at $87.58 a barrel ($88.71)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK house price growth slowed in September, according to figures from Nationwide. UK house prices rose 9.5% on an annual basis in September, easing from a 10% surge in August. On a monthly basis, prices were unchanged in September. They had risen 0.7% in August from July. ‘There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer enquiries. Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm,’ Nationwide analyst Robert Gardner commented.
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EU ministers on Friday agreed on cuts to peak-hour power consumption and to impose windfall levies on energy companies in an urgent effort to bring down sky-high energy prices. The decision, announced by the Czech Republic in its role holding the EU presidency, aims to mitigate energy prices sent soaring by Russia's war in Ukraine. They are already fuelling record inflation in the bloc as winter looms.
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Inflation in the eurozone is forecast to accelerate faster than expected in September, according to preliminary figures from the statistical office of the EU on Friday. Eurostat's flash estimate showed annual inflation is expected to reach 10% in September, picking up pace from 9.1% in August. Inflation sped up quicker than predicted, overshooting FXStreet-cited consensus of 9.7%.
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Eurozone figures showed unemployment remained steady in the single currency area in August. The unemployment rate was 6.6%, unchanged from July, and in line with consensus expectations. The number of unemployment people in the eurozone decreased by around 30,000 in August, totalling 10.97 million.
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Japan is preparing another round of economic stimulus measures, the government said Friday, as rising prices and the plummeting yen squeeze the world's third-largest economy. Prime Minister Fumio Kishida told ministers to draft the relief package by the end of October so it can be passed by parliament this year, government spokesman Hirokazu Matsuno told reporters. He did not give a figure for the measures, but said they would include ‘efforts to deal with rising prices and to encourage wage increases’. Ministers have also been told to seek ‘ways to recover and strengthen regional economies' abilities to do business by taking advantage of the yen's depreciation’, Matsuno added. The yen has hit 24-year lows in recent weeks, prompting an intervention by the government last week.
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Japan's unemployment rate fell to the joint-lowest level in roughly two-and-a-half years in August. The nation's jobless rate faded to 2.5% in August, from 2.6% in July. The unemployment rate last sat that low in April. The last time the jobless rate came in below 2.5% was in February 2020. The latest figure was in line with FXStreet cited consensus.
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Hurricane Ian unleashed ‘historic’ devastation in Florida, leaving a yet unknown number of dead in its wake, officials said Thursday, as the storm restrengthened in the Atlantic on a path toward the Carolinas. The storm, one of the most powerful ever to hit the US, left hundreds of people in need of rescue, Florida Governor Ron DeSantis said, while warning it was still too early to get a clear picture of the death toll. ‘We absolutely expect to have mortality from this hurricane,’ he said at a press conference Thursday evening. President Joe Biden, after a briefing at FEMA emergency management headquarters in Washington, said ‘this could be the deadliest hurricane in Florida history.’
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China's manufacturing sector fell deeper into decline this month. The latest Caixin purchasing managers' index fell to 48.1 points in September, from 49.5 in August. The reading fell further below the 50.0 no change mark, suggesting the rate of contraction quickened. Caixin also noted that worries of more Covid-19 outbreaks has hit confidence. Sentiment towards future prospects is at its lowest since November 2019, before the onset of the pandemic.
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Russia will annex four occupied regions of Ukraine at a ceremony at the Kremlin on Friday, Moscow said, after President Vladimir Putin threatened he could use nuclear weapons to defend the territories. The Russian leader is expected to deliver a major speech at the event, following referendums held last week in which four Ukrainian regions voted in a landslide to join Russia, but which were dismissed as a sham by the West. In a presidential decree issued Thursday evening, Putin said he had recognised the independence of Zaporizhzhia and Kherson, paving the way for Moscow to claim the territories.
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