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The following is a summary of top news stories Friday.
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COMPANIES
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JD Wetherspoon reported higher annual revenue and a rise in like-for-like sales in the first nine weeks of financial 2023, but said performance predictions are hard to make due to higher labour and repair costs. The Watford, England-based pub chain said revenue in the 53 weeks to July 31 came in at £1.74 billion, up significantly from £772.6 million the year prior. Compared to financial 2020, however, revenue was down 4.3% from £1.82 billion. Pretax loss before exceptional items narrowed substantially to £30.4 million from a £167.2 million loss on the year before. To start the current financial year, like-for-like sales increased by 10% in the nine weeks to October 2 compared to the same period a year before.
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Marshalls said full-year outturn will be below the bottom end of market guidance. The Elland, West Yorkshire-based landscaping products firm said revenue for the nine months to September 30 was £544 million, rising 20% year-on-year from £453 million. Marshalls Building Products saw revenue grow 22% to £149 million from £123 million a year before, with a strong performance from the Bricks & Masonry business. However, it now predicts its outturn will be slightly below the bottom end of the current range of market expectations for its full year. Consensus stands at a range of £95.1 million to £101.0 million.
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Clinical-stage biotherapeutics firm PureTech Health confirmed it is in combination talks with San Francisco-based biopharmaceutical company Nektar Therapeutics. PureTech shares fell 17% to 213.50 pence each in London on Friday morning. This compares to Nektar's closing price on Thursday of $3.38 per share on the Nasdaq in New York. Puretech has a market capitalisation of £596.8 million, Nektar has market capitalisation of $633.4 million, which is around £560.1 million. The exchanged proposals may include a takeover offer of PureTech, which develops medicines focused on serious diseases. Boston, Massachusetts-based PureTech noted that Nektar has until November 3 to announce an intention to make an offer, or to announce that it does not intend to make an offer.
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Credit Suisse announced tender offer from Credit Suisse International to repurchase certain operating company senior debt securities for up to fr.3 billion, around $3.03 billion. Credit Suisse also launched a separate cash tender offer for up to $2 billion in relation to 12 dollar-denominated senior debt securities. Offers will expire on November 3 and 10 respectively. The move follows recent spikes in the bank's five-year credit default swaps, which saw its shares come under heavy selling pressure. ‘The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of market conditions to repurchase debt at attractive prices,’ it explained.
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Sumitomo Mitsui Financial said Japan's financial regulator has ordered a report submission order be taken against the firm. This follows the regulator's investigation into Nikko Securities, where it was found to have engaged in stock market manipulation. Says it takes the incident ‘very seriously’ and will work to make the necessary improvements, and prevent a recurrence.
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Mizuho Financial Group said its securities division entered a strategic alliance with foreign exchange trading firm Rakuten Securities Inc. The partners will work on ‘a fully-fledged hybrid comprehensive asset management consulting service that meets the needs of all individual customers’. The alliance will combine Mizuho's strengths in product appeal and asset management consulting, and Rakuten's ability to attract a wide range of customers.
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MARKETS
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Stocks in Europe were holding their breath on Friday, as investors sit on the sidelines awaiting the week's headline event: the US nonfarms report.
‘Cautious trading stances prevail at the beginning of the last trading session of the week, as poor earnings from AMD and Samsung Electronics and a batch of EU macro data missing estimates added pressure to market sentiment,’ Pierre Veyret, technical analyst at ActivTrades, said. ‘That said, even if these developments induced some investors to take some profit out following this week's rally on stocks, no clear direction will be expected prior to today's US NFP release.’
According to Veyret, analysts have bet on 225,000 jobs created in September, the lowest figure in almost two years, while the previous one for August showed 315,000 adds.
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CAC 40: up 0.2% at 5,949.93
DAX 40: up just 5.51 points at 12,476.29
FTSE 100: up 0.3% at 7,015.86
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Hang Seng: closed down 1.5% at 17,740.05
Nikkei 225: closed down 0.7% at 27,116.11
S&P/ASX 200: closed down 0.8% at 6,762.80
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DJIA: called up 0.2%
S&P 500: called flat
Nasdaq Composite: called down 0.2%
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EUR: down at $0.9802 ($0.9837)
GBP: up at $1.1208 ($1.1191)
USD: up at JP¥144.87 (JP¥144.81)
Gold: down at $1,711.83 per ounce ($1,712.13)
Oil (Brent): up at $94.92 a barrel ($94.30)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Liz Truss has ruled out launching an energy-saving public information campaign, amid warnings planned blackouts could hit the UK if power plants cannot get enough gas to keep running. Business Secretary Jacob Rees-Mogg is believed to have backed a £15 million campaign this winter, with the Times reporting the idea was blocked by No 10. It added the campaign was seen as ‘light touch’ and included measures designed to help people save up to £300 a year, including lowering the temperature of boilers, turning off radiators in empty rooand advising people to turn off the heating when they go out. The newspaper quoted a government source describing the campaign as a ‘no-brainer’ and said No 10 had made a ‘stupid decision’, but it added Truss is said to be ‘ideologically opposed’ to such an approach as it could be too interventionist.
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UK house prices edged down marginally in September, according to the Halifax house price index. House prices fell 0.1% in the month, compared to a 0.3% rise in August. The cost of a typical home was £293,835, edging down from August's record high of £293,992. The decline was unexpected, with FXStreet-cited consensus predicting growth of 0.5%. Annually, prices rose 9.9%, slowing from 11.4% annual growth seen in August. This was slightly ahead of consensus which had expected 9.8%. ‘The events of the last few weeks have led to greater economic uncertainty, however in reality house prices have been largely flat since June, up by around £250. This compares to a rise of more than £10,000 during the previous quarter, suggesting the housing market may have already entered a more sustained period of slower growth,’ said Kim Kinnaird, Halifax Mortgage director.
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Industrial production in Germany in August fell 0.8% on a monthly basis. It had remained flat in July. The decline was slightly worse than expected, with FXStreet-cited consensus of a 0.5% drop. On an annual basis, production rose 2.1% in August, compared to a decline of 0.8% in July. Import prices continued to rise, meanwhile. Import inflation hit 4.3% on a monthly basis in August, accelerating from 1.4% in July. It overshot consensus, which expected a 2% rise in prices. On an annual basis, import prices were 33% higher, picking up speed from a 29% rise in July. Consensus had expected 30%. Also, retail sales in August fell 1.3% monthly in real terms. The fall eased from the 1.9% fall in July, but came in worse than consensus of a 1.0% drop. On an annual basis, retail sales fell 4.3% in August, worsening from a 2.6% fall the month before. The reading was better than expected, however, with consensus of minus 5.1%.
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US President Joe Biden said Thursday the world risks nuclear ‘armageddon’ for the first time since the Cold War and that he is trying to find Russian President Vladimir Putin's ‘off-ramp’. ‘We have not faced the prospect of armageddon since Kennedy and the Cuban missile crisis’ in 1962, Biden said at a Democratic party fundraising event in New York. Putin is ‘not joking’ when he threatens to use nuclear weapons, and ‘we are trying to figure out what is Putin's off-ramp. Where does he find a way out?’
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IMF chief Kristalina Georgieva urged global policymakers Thursday to take concerted action to avoid a ‘dangerous 'new normal,'’ as the risks of a worldwide recession are driven ever higher by repeated economic shocks. In a speech ahead of the fund's annual meetings next week, the IMF's managing director said it was critical to ‘stabilize the global economy by addressing the most immediate challenges’ including rampant inflation. Policymakers need to act together to ‘prevent this period of heightened fragility from becoming a dangerous 'new normal,'’ Georgieva said. But she warned the process will be painful and that if central banks move too aggressively to tamp down price pressures, it could trigger a ‘prolonged’ economic downturn. Finance ministers and central bank governors from more than 180 nations will gather next week in Washington for the first fully in-person meeting of the International Monetary Fund and World bank since 2019, prior to the Covid-19 pandemic.
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Restoring price stability in the US will likely ‘require ongoing rate hikes’ and a period of restrictive policy, Federal Reserve board member Lisa Cook said Thursday, in her first speech as a Fed governor. Prices have surged over the past year, partly due to global supply chain problems that created shortages of key parts such as semiconductors needed for cars and electronics. The situation was exacerbated with Russia's invasion of Ukraine in February spurring a surge in energy prices and affecting global food markets along with China's adherence to a strict zero-Covid policy. ‘Inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad based,’ said Cook, speaking at the Peterson Institute for International Economics think tank.
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EU leaders are set to meet in Prague on Friday in a bid to resolve tensions over how to tackle soaring energy prices. If and how a cap on gas prices could help alleviate the situation is likely to make for long discussions. Several member states support capping gas prices while others, including Germany, warn of the risks. European Commission President Ursula von der Leyen recently opened up to the idea of temporarily capping the cost of gas, without providing details of how this could be implemented. Ideas for gas price measures include capping the price of Russian gas imports, reducing the price of other gas imports, limiting the price of gas used for electricity generation, and capping the price of gas transactions within the bloc. Calls for an EU-wide solution have intensified in recent days, after Germany announced plans for an energy aid package worth up to €200 billion.
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Switzerland's unemployment rate stayed flat in September, figures from the State Secretariat for Economic Affairs showed. The jobless rate remained at 2.1% in September, unchanged from August. Consensus, according to FXStreet, had forecast the stable reading. At the end of September, there were 89,526 unemployed people. This was 1,846 fewer than in August.
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