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The following is a summary of top news stories Friday.
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COMPANIES
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Two associations have lodged a legal complaint against French oil major TotalEnergies for ‘complicity in war crimes’ for allegedly helping fuel Russian planes that have bombed Ukraine, a source close to the case said. The France-based Darwin Climax Coalition and Ukrainian group Razom We Stand handed the file to the national anti-terrorist prosecutor, who investigates war crime allegations, on Thursday. Le Monde newspaper in August said TotalEnergies held a stake in a company that extracted gas condensate from northern Russia, some of which was turned into jet fuel used by Russian air squadrons accused of war crimes in Ukraine. The legal complaint, seen by AFP, accuses TotalEnergies of helping to provide the Russian government with ‘the necessary means to commit war crimes’ by ‘continuing to exploit the Termokarstovoye deposit’ in northern Russia.
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Packaging firm Mondi said volume and price growth is more than offsetting inflationary pressure. In the third quarter of 2022, its underlying earnings before interest, tax, depreciation and amortisation surged 55% year-on-year to €450 million from €290 million. ‘Higher average selling prices and overall volume growth more than offset significant cost pressures,’ it said. The figures do not include Russian operations. Mondi is still trying to get its money out after its decision to leave the country. In August, Mondi agreed to sell Syktyvkar mill, its most significant facility in Russia, for around €1.5 billion. The disposal is conditional on the approval of Russian government. Furthermore, the planned remittance of the cash balance excluded from the deal of 16₽ billion, about €260 million, by form of a dividend to Mondi before completion requires the approval of Russia's finance ministry. These approvals remain outstanding, Mondi said on Friday.
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International Distributions Services said ‘significant and urgent’ change was needed at Royal Mail, as it swung to a first-half loss in the wake of ongoing industrial action. The recently renamed company plans to cut between 5,000 and 10,000 Royal Mail jobs between March and August 2023 to reduce costs. Royal Mail is the UK-focused division of International Distributions. GLS is its Netherlands-based international division. For the six months ended September 2022, Royal Mail reported revenue of £3.64 billion, down 11% from £4.07 billion a year prior. Adjusted operating loss for the same period was £219 million, swung from a profit of £235.0 million. The company said £70 million of the loss was a direct result of industrial action over 3 days. To date, the Communication Workers Union have taken six days of action, with a further two days in October expected to go ahead.
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Emerging markets-focused asset manager Ashmore reported a decline in assets under management. In the first quarter ended September 30, assets under management fell 13% to $56.0 billion from $64.0 billion at the June 30 financial year end. It reported net outflows amounting to $5.0 billion, as well as a $3.0 billion hit from its investment performance.
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Diageo said it plans to increase its stake in Nairobi-based East African Breweries via its subsidiary Diageo Kenya. Diageo wants to raise its stake in the Kenyan firm to 65% from 50% currently.
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Swedish commercial vehicle manufacturer Scania and miner Rio Tinto are developing autonomous haul trucks at a mine in Western Australia's Pilbara region to pursue potential environmental and productivity benefits, the companies said. The two companies have established a long-term research and development collaboration agreement for the advancement of the autonomous technology, under which Rio Tinto's Channar mine has become the first active partner site. The partnership also includes options for the future transition to electric-powered vehicles.
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Netflix said a subscription option subsidised by ads will debut in November in a dozen countries as the streaming service strives to jumpstart growth. Basic with ads subscriptions will be priced at $6.99 in the US, three dollars less than a basic option without ads, Netflix Chief Operating Officer Greg Peters said in a briefing. ‘The timing is great because we really are at this pivotal moment in the entertainment industry and evolution of that industry,’ Peters said. The ad-discounted tier, a first for Netflix, will roll out in Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico, Spain and the US. Nearly all of the Netflix library will be available, with some offerings held back until licensing deals are renegotiated. Video ads will be from 15 seconds to 30 seconds long.
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MARKETS
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Stock markets were higher on Friday after Wall Street on Thursday shrugged off a slightly stronger-than-expected reading of US consumer price inflation. The dollar resumed its rise, however, exceeding its 1998 high of JP¥147.65.
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CAC 40: up 0.8% at 5,926.95
DAX 40: up 0.6% at 12,432.56
FTSE 100: up 0.7% at 6,895.43
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Hang Seng: closed up 1.2% at 16,587.69
Nikkei 225: closed up 3.3% at 27,090.76
S&P/ASX 200: closed up 1.8% at 6,758.80
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DJIA: called down 0.4%
S&P 500: called down 0.4%
Nasdaq Composite: called down 0.7%
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EUR: down at $0.9753 ($0.9772)
GBP: down at $1.1272 ($1.1340)
USD: up at JP¥147.68 (JP¥147.19)
GOLD: down at $1,658.90 per ounce ($1,665.31)
OIL (Brent): down at $93.92 a barrel ($94.07)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK Chancellor Kwasi Kwarteng is flying back to London for crisis talks with Prime Minister Liz Truss amid turmoil in the Tory Party and intense speculation he will have to dismantle key elements of his controversial mini-budget. Kwarteng cut short his visit to the annual meeting of the International Monetary Fund in Washington DC as Conservative MPs questioned whether he and Truss can survive the coming days. At Westminster, there were reports of plotting among Tory MPs amid suggestions that Truss's two main rivals for the Tory leadership over the summer Rishi Sunak and Penny Mordaunt could be installed at the head of a new administration. Before he left the US, Kwarteng initially insisted he stood by his economic growth plan and would be setting out how he intended to get the public finances back on track in a statement on October 31 as planned. However, few MPs believe he can afford to wait that long, and in a later interview with The Daily Telegraph he said only ‘let's see’ when asked if he could ditch his promise on corporation tax. The commitment to scrap the planned increase in the levy on corporate profits from 19% to 25% is widely seen as likely to be the first element to go if the expected U-turn goes ahead.
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Labour has pledged to ban fracking ‘once and for all’ as it hit out at suggestions that the UK government could move to ban solar farms from much of England's farmland. The party intends to work with MPs who oppose fracking to force the government to maintain the ban, one of several issues to divide the Conservatives since Truss became leader. Ed Miliband, Labour's shadow climate secretary, will visit Bassetlaw on Friday to meet with the party's candidate Jo White and local residents to listen to concerns about the potential for fracking in their area. Labour is working to bring forward an opposition day motion to maintain the current ban, Miliband is expected to tell locals during his visit. Hitting out at what he called Truss's ‘unjust charter for earthquakes’, he said Labour would stand up to her plan to ‘outsource decisions about local consent to fracking companies’.
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Inflationary pressures in Germany are continuing to mount, according to Destatis. The wholesale price index surged 20% year-on-year in September, picking up speed from a 19% jump in August. According to FXStreet another rise of 19% was expected for September. On a monthly basis, wholesale prices rose 1.6% in September from August. They had risen 0.1% in August.
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France's annual inflation rate eased in September, final figures showed. Insee confirmed the nation's consumer price inflation rate cooled to 5.6% in September from 5.9% in August. The figure was in line with an earlier estimate. On a monthly basis, French consumer prices fell 0.6% in September, having advanced 0.5% in August. On a harmonised basis, allowing for EU-wide comparison, the French annual rate of inflation ebbed to 6.2% in September from 6.6% in August.
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France has for the first time started sending natural gas to Germany, French gas network operator GRTgaz said as Berlin strives to diversify its energy supply following the interruption of Russian gas deliveries. GRTgaz said the gas pipeline connecting both countries at the French border village of Obergailbach has started delivering an initial daily capacity of 31 gigawatt-hours. The amount is expected to eventually increase to a daily maximum of 100 gigawatt-hours, representing less than 2% of Germany's overall gas consumption, according to figures from the French Ministry for Energy Transition.
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Italy's parliament met for the first time Thursday since the far-right won elections last month, a rocky first step in the process of forming a government, with tensions running high. Giorgia Meloni's Brothers of Italy party, which has neo-fascist roots, secured a historic 26% of the vote in the September 25 polls. But she can only form a government with her fractious allies, Matteo Salvini, head of the far-right League, and former premier Silvio Berlusconi, founder of right-wing Forza Italia. Tempers frayed Thursday as members of the Senate and lower house voted for new speakers, who will play a key role in consultations on the creation of the next government.
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Staff at the European Central Bank feel more modest interest rate hikes than expected would be needed to get a handle on inflation, Reuters reported. The news agency, citing four sources close to discussions, reported that a new model has found that the ECB would need to lift its deposit rate at the pace the market expects. The Target-Consistent Terminal Rate model has found a deposit rate of 2.25% would be sufficient to get inflation back towards 2%. That deposit rate could be even lower, depending on how much the central bank shrinks its balance sheet. Either way, Reuters noted the TCTR is below market expectations of a 3% deposit rate.
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China's consumer inflation hit two-year high in September, fuelled by soaring pork prices and as extreme weather hit farmers. The country's annual inflation rate hit 2.8% last month, quickening from 2.5% in August. The reading is the highest since April 2020, when the country was emerging from its first wave of Covid-19 lockdowns. Meanwhile, the country's factory-gate inflation dropped to 0.9% year-on-year, its lowest in more than a year, data showed, on the back of falling raw material prices. The figure was down from a 2.3% rise in August and the lowest since January 2021, according to official data. Analysts polled by Bloomberg had expected consumer prices to rise by 2.9% and producer prices by 1%.
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President Xi Jinping has embarked on a ‘final round of purges’ ahead of a major Chinese Communist Party congress, wielding his long-running anti-corruption campaign to cement his grasp on power. Critics say the campaign is also a thinly veiled political tool that has helped Xi eliminate his rivals and the build-up to this year's congress has seen more heads roll. About 1,100 officials have been caught in the party dragnet since the beginning of this year, according to party data. Xi is widely expected to secure a third term as party leader at the meeting, upending the succession norms in place since the 1990s.
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Lawmakers probing the 2021 attack on the US Capitol voted to subpoena former president Donald Trump to testify on his involvement in the violence, in a major escalation of its sprawling inquiry weeks before it is due to wind up. In what was expected to be its final hearing before the midterm elections, the House panel of seven Democrats and two Republicans agreed unanimously to compel Trump's appearance before investigators.
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The US and Saudi Arabia traded barbs over last week's OPEC+ oil output cut, with Washington accusing Riyadh of knowingly boosting Russian interests. The Saudi-led OPEC+ cartel which includes Russia angered the White House by cutting production by two million barrels a day from November, raising fears that oil prices would soar. Saudi Arabia issued a rare press release on Thursday, shrugging off accusations it was ‘taking sides in international conflicts’ as Russia's war in Ukraine rages on.
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A resumption of the nuclear deal with Iran is ‘not close,’ according to the spokesperson for the White House's National Security Committee. ‘The president still believes that a diplomatic way forward is the best way to achieve that outcome,’ said John Kirby while speaking to reporters. ‘That said, we are not close to securing a reimplementation of the JCPOA,’ he said, referring to the original 2015 deal under which Iran agreed to controls that would slow down its nuclear weapons programme in exchange for sanctions being lifted.
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Flash floods swamped hundreds of homes in southeastern Australia and thousands of people were warned to flee surging waters threatening towns across three separate states Friday. A major flooding emergency was unfolding in Victoria Australia's second most populous state where rapidly-rising waters forced evacuations in the Melbourne suburb of Maribyrnong. Cars left on the streets of the suburb were almost completely swallowed by the floods, while some stranded residents had to be saved by inflatable rescue boats.
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