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The following is a summary of top news stories Thursday.
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COMPANIES
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Taiwan Semiconductor Manufacturing Co said it planned to slash expenditure in the latest sign from a major global chipmaker that they are expecting the global downturn to deepen. TSMC operates the world's largest silicon wafer factories and produces some of the most advanced microchips used in everything from smartphones and cars to missiles. As part of its third-quarter results release the firm revealed it plans to spend around $36 billion in 2022 on capital equipment, 10% below its previous target.
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Uniqlo-owner Fast Retailing recorded increases in profit and revenue as a weaker yen boosted the company's international sales. Pretax profit in the year ended August 31 increased 55% to JP¥413.58 billion, about $2.82 billion, from JP¥265.87 billion. The Yamaguchi, Japan-based fashion retailer's revenue increased 7.9% to JP¥2.301 trillion from JP¥2.132 trillion as sales continued to recover after Covid-19. Fast Retailing said it is ‘determined to strengthen initiatives designed to expand our business operations.’ In particular, the company said it was working to accelerate new store openings ‘in all markets’ of Uniqlo International. Uniqlo International recorded ‘significant increases’ in both revenue and profit, with revenue rising 20% to JP¥1.119 trillion and operating profit up 42% to JP¥158.3 billion.
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GSK announced a vast decline in severe respiratory syncytial virus, or RSV, disease among people aged 60 years and older who were vaccinated with its RSV vaccine candidate. RSV is a common contagious virus affecting the lungs and breathing passages, with no vaccines currently available for treatment. GSK in June said it is close to developing the world's first RSV vaccine. In a phase 3 trial, the vaccine candidate showed a 94% reduction in the severe RSV-lower respiratory tract disease, LRTD, when compared to a group who received a placebo. Overall, it demonstrated a 83% efficacy against the disease, which was high and consistent among RSV A and B strains.
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Striking French oil refinery employees voted Wednesday to maintain blockades now in their third week, despite a government order for some of them to return to work in a bid to get fuel supplies flowing. The industrial action in pursuit of pay hikes has paralysed six out of the seven fuel refineries in France, leading to shortages of petrol and diesel exacerbated by panic-buying from drivers. Having previously threatened to use emergency powers to order essential workers back to the job on pain of fines or jail time, the government announced Wednesday it was putting them into action. Officials said that an Esso-Exxon-Mobil fuel depot in northwest France and another belonging to TotalEnergies in the northeast would be the first where workers are ‘requisitioned’.
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Entain backed annual guidance as it looks to a final quarter which will be boosted by the upcoming football World Cup. In the third quarter of 2022, net gaming revenue rose 2%, but was flat at constant currency. Online net gaming revenue was up 1%, or down 2% at constant currency, an outturn ‘broadly in line with expectations and demonstrating positive underlying momentum’. The gambling operator had a record level of active customers during the quarter, rising 6% year-on-year. Its US fortunes are improving. The BetMGM joint-venture, which Entain owns alongside MGM Resorts, has a 25% market share in the areas in which it operates. That excludes New York. Third-quarter net gaming revenue in the US surged 90% to $400 million, helped by the start of the US National Football League season. Same-state revenue was up 50%. Looking ahead, Entain's fourth quarter will benefit from the World Cup, as well as easier comparatives due to Covid-19 and the temporary closure of its Dutch arm. Annual earnings before interest, tax, depreciation and amortisation are expected to be in line with previous £925 million to £975 million guidance, growth of as much as 10% from 2021.
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easyJet reported a much improved fourth quarter. Disruption from cancellations, which plagued airlines for much of the summer, has since abated. The budget carrier flew 26.3 million seats in the quarter that ended September 30, 88% of the capacity from three year earlier, before the onset of the pandemic. Earnings before interest, tax, depreciation, amortisation and rent are expected to land between £665 million and £685 million, so in line with three years prior. ‘Operations have significantly improved as a result of management actions to mitigate the disruption that the whole airline ecosystem experienced through Q3. Since the start of July, easyJet's operations normalised, with Q4 on the day cancellations being below 2019 levels. Some specific areas of the wider European airline industry continue to have some ongoing challenges outside of easyJet's control, for example air traffic control,’ it said. Fourth-quarter revenue surged to £2.52 billion from £1.01 billion a year earlier. easyJet expects to report an annual revenue jump to £5.77 billion from £1.46 billion.
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MARKETS
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The pound rebounded sharply on Thursday, pushing back toward $1.12. ‘Sterling's (just) up against both dollar and euro this week, but only because the end of last week was so bad; it remains vulnerable,’ commented Kit Juckes at Societe Generale. Market participants were awaiting the key US inflation report for September, due at 1230 GMT. Annual US inflation is expected to have slowed to 8.1% in September from 8.3% in August.
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CAC 40: up 0.2% at 5,827.95
DAX 40: up 0.7% at 12,253.58
FTSE 100: marginally lower, down 1.84 points at 6,824.31
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Hang Seng: closed down 1.9% at 16,389.11
Nikkei 225: closed down 0.6% at 26,237.42
S&P/ASX 200: closed down 0.1% at 6,642.60
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DJIA: called up 0.5%
S&P 500: called up 0.5%
Nasdaq Composite: called up 0.3%
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EUR: up at $0.9728 ($0.9702)
GBP: up at $1.1155 ($1.1066)
USD: down at JP¥146.78 (JP¥146.90)
GOLD: up at $1,675.14 per ounce ($1,670.16)
OIL (Brent): up at $92.79 a barrel ($92.55)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The International Energy Agency warned that a dramatic cut in oil production will have a serious impact on the economy and energy security. OPEC+, the oil cartel made up of most non-Western producers, said this week it is sharply cutting production to stabilize the price of crude oil which has fallen significantly in recent months. As of November, OPEC+ will produce 2 million barrels less per day, the group said earlier this month, after the fall in the price of crude due to concerns about a looming global recession. ‘The massive reduction in supply by OPEC+ increases the risks to global energy security,’ the IEA said in its monthly report. It said the production cut was leading to higher price levels in the oil market and weighing on the global economy.
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Germany's annual inflation was confirmed at a post-unification record of 10% in September. According to Destatis, the nation's yearly inflation rate accelerated to 10.0% in September from 7.9% in August. The figure was in line with the initial estimate. On a monthly basis, consumer prices surged 1.9% in September. They had risen 0.3% in August from July. Helping drive the monthly price change was the end of a €9 rail ticket scheme. The programme had allowed travellers unlimited use of the rail network for just €9 per month. On a harmonised basis, the yearly inflation rate was confirmed at 10.9% in September, quickening from 8.8% in August.
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Germany will sink into recession next year and inflation will soar, the government forecast Wednesday, as Europe's top economy battles skyrocketing energy prices following Russia's gas shutdown. The official predictions were the latest warning that Germany's economy, which was just getting back on its feet after the pandemic, is set to shrink in 2023 due to the fallout of Moscow's invasion of Ukraine. Unveiling the government's latest forecasts of 0.4% economic contraction and 7% inflation for 2023, Economy Minister Robert Habeck painted a dark picture of a ‘serious energy crisis’.
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Producer prices in Switzerland increased at a quicker pace than expected on an annual basis in September. According to the Federal Statistics Office, producer and import prices rose by 5.4% year-on-year in September, well ahead of FXStreet-cited consensus of 4.6% growth but slowed from 5.5% in August.
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Japan's annual producer price growth hit a five-month high in September. According to the Bank of Japan, producer prices rose by 9.7% year-on-year, quickening from a 9.4% climb in August and comfortably beating the market consensus of 8.8%. It was the largest rate of annual producer price growth since a 9.8% rise in April. On a monthly basis, producer prices rose 0.7% in September. They had climbed 0.4% in August from July.
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US Federal Reserve policymakers are likely to press on with rate hikes in the short term, but the pace of hikes might slow after December, according to the central bank's meeting minutes from September. It also said slower gross domestic product growth and a ‘softening’ of the jobs market would be need to get a handle on inflation. Inflation had shown ‘little sign so far of abating’, they considered. ‘The market-implied path suggested reasonable odds of additional 75 basis point and 50 basis point rate increases at the November and December meetings, respectively. Market participants generally anticipated a further slowing in the pace of rate increases after December, with the peak policy rate being reached in the first half of 2023,’ the minutes said.
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US President Joe Biden's administration said it would prioritize winning a competition with China, seeing it as the only global rival to the US, even as it also works to constrain a ‘dangerous’ Russia. Releasing a national security strategy delayed by the Ukraine war, the White House said the 2020s would be a ‘decisive decade for America and the world,’ both for reducing conflict and confronting the key shared threat of climate change. ‘We will prioritize maintaining an enduring competitive edge over the PRC while constraining a still profoundly dangerous Russia,’ the strategy said, referring to the People's Republic of China.
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Russian President Vladimir Putin must ‘return to the table’ to discuss making peace in Ukraine, French President Emmanuel Macron said, adding that he thought Kyiv would have to negotiate with him at some point. ‘Today, first of all, Vladimir Putin must stop this war, respect Ukraine's territorial integrity and come back to the table for talks,’ Macron told broadcaster France 2, saying he aimed to avoid a ‘global war’.
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The United Nations General Assembly on Wednesday overwhelmingly voted to condemn Russia's annexations of parts of Ukraine after Moscow vetoed a similar effort in the Security Council. The General Assembly approved the resolution with 143 in favour and five against but 35 nations abstained including China, India, South Africa and Pakistan despite a major US diplomatic effort to seek clearer condemnation of Moscow.
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The property boom is coming to an end, according to a study published by Swiss bank UBS, with Frankfurt and Toronto topping the list of imbalanced markets. The bank's annual study of the world property market looked at prices in 25 major cities across the globe. House prices in the cities analysed rose 10% between mid-2021 and mid-2022, said the study the highest increase since 2007. And of the top five with the fastest-growing prices, four were US cities: Miami, Los Angeles, San Francisco and Boston. ‘Imbalances in global metropolitan housing markets are highly elevated and prices are out of sync with rising interest rates,’ said the report. But the cities where there was most risk of the property bubble bursting were Toronto in Canada and the German city of Frankfurt.
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‘Storm clouds are visible’ in the UK housing market, according to surveyors, with surging mortgage rates expected to push house prices downwards in the year ahead. The market lost momentum in September, with new buyer inquiries falling for the fifth month in a row, the Royal Institution of Chartered Surveyors said. A limited supply of properties for sale is still supporting modest price rises, but this looks set to end as the pace of growth slows markedly, the latest report from Rics indicated. The outlook for interest rates and uncertainty over the wider economy are taking their toll, with the impact of rising mortgage rates expected to outweigh the boost that buyers could get from stamp duty cuts in the recent mini-budget. The average two-year fixed mortgage rate on the market on Wednesday this week was 6.46%, according to Moneyfacts.co.uk, while the average five-year fixed deal was 6.32%. Both of these average rates are the highest since 2008. New instructions to sell have continued to fall, Rics said, with stock levels remaining at historic lows.
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UK Prime Minister Liz Truss was under fire from her own MPs as they demanded more U-turns on her tax-slashing agenda after she ruled out spending cuts to balance the books. The PM's leadership was in renewed peril as she was accused of ‘trashing the last 10 years’ of the Tories' record at a bruising meeting with backbenchers. MPs piled pressure on her to restore market confidence in her government, with reports suggesting she is facing mounting calls to reverse or delay her plan to cancel a rise in corporation tax from 19% to 25%, due in April. Truss has insisted this and other tax cuts will boost growth, but the so-far unfunded measures in Chancellor Kwasi Kwarteng's mini-budget have sparked chaos in the financial markets.
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