TOP NEWS SUMMARY: US Senate to debate stimulus; OPEC to meet on output

(Alliance News) - The following is a summary of top news stories ...

Alliance News 2 March, 2021 | 11:00AM
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(Alliance News) - The following is a summary of top news stories Tuesday.

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COMPANIES

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Ashtead guided to full-year results ahead of previous expectations. The equipment rental firm said that in the third quarter, underlying rental revenue was down 1% at GBP1.08 billion, with underlying pretax profit down 10% to GBP225 million. Statutory revenue was down 1% to GBP1.21 billion for the third quarter and down 2% to GBP3.76 billion for the nine-month period to January 31. Statutory pretax profit was down 4% to GBP210 million in the third quarter and down 17% to GBP716 million in the nine months. "This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet. This has enabled us to capitalise on our increasing scale while, at the same time, maintaining the business' agility," said Chief Executive Brendan Horgan.

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Flutter Entertainment's 2020 revenue more than doubled, boosted by its merger with Stars Group during the year. The gambling firm's revenue for 2020 jumped to GBP4.40 billion from GBP2.14 billion in 2019, with adjusted earnings before interest, taxes, depreciation and amortisation also doubling to GBP889 million from GBP425 million. Pretax profit all but evaporated, dropping to GBP1 million from GBP136 million. The sharp slide in profit came after separately disclosed items totalling GBP565 million for 2020, up from just GBP131 million in similar charges in 2019 and related to the combination with Stars Group. On a proforma basis, which adjusts for the completion of the Stars Group deal in May, revenue rose a more moderate, but still robust, 27% to GBP5.26 billion and adjusted Ebitda rose 13% to GBP1.23 billion. Flutter said it has seen strong momentum in 2021 with growth in player volumes across all divisions. Revenue has been up 36% year-on-year in the first seven weeks of 2021. "Covid restrictions continue to impact our retail business in the UK and Ireland. The latest government guidelines suggest that our UK shops may re-open in mid-April while it looks like it could be May at the earliest before we are able to reopen our Irish shops. For each month that our UK estate is shut, we anticipate an EBITDA loss of GBP5 million while in Ireland, the monthly loss is expected to be GBP4 million," the firm noted.

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Housebuilder Taylor Wimpey noted a good recovery in the second half of a "very challenging" year. Completions fell 39% to 9,799, primarily due to site shutdowns in the second quarter due to the pandemic, with revenue for 2020 falling 36% to GBP2.79 billion. Pretax profit slumped 68% to GBP264.4 million. "After an unusual and volatile year, our 2020 results are in line with market expectations," said Taylor Wimpey, adding the 2021 selling season has started well, following on from a stronger-than-expected housing market recovery in the second half of 2020. Taylor Wimpey added that it will be resuming ordinary dividend payments by returning GBP151 million, or 4.14 pence per share, as a final payout for 2020. The firm cancelled its 2019 final dividend and a planned special payout.

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Rio Tinto said it plans to dispute amended assessments brought forward by the Australian Taxation Office. The tax office has issued the miner with amended assessments of AUD359.4 million - around USD279.8 million - primary tax and AUD47.1 million of interest. This is on top of more than AUD8.4 billion of Australian income tax paid during the same period, the company highlighted. "The assessments relate to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. This borrowing was repaid in 2018. Borrowing to fund the payment of a dividend is a normal commercial practice. Rio Tinto is confident of its position and will dispute the assessments," the miner said. In line with its usual practice, Rio will pay 50% of the primary tax upfront as part of the objections process.

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Renishaw announced it is launching a formal sale process, after the pair who started the engineering and scientific technology firm in 1973 decided it is time to pass on the GBP5 billion business. Executive Chair David McMurtry and Non-Executive Deputy Chair John Deer, the company's founders, have indicated they intend to sell their "very substantial" shareholdings in Renishaw. Together, the founders own around 53% and want to sell their entire combined shareholding. The board has mulled over various options with its advisers, Renishaw said, and has unanimously concluded that it would be appropriate to investigate the sale of the company and thus is launching a formal sale process. UBS is acting as sole financial adviser and corporate broker to the company.

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Zoom Video Communications on Monday posted a sharp earnings rise during a year which saw many flock to the video conferencing firm as lockdown measures prevented in-person meetings. The company ended an "unprecedented year" with a sharp fourth quarter earnings hike. Revenue in the three months ended January 31 jumped to USD882.5 million, from USD188.3 million a year earlier. Pretax profit during the period jumped to USD264.7 million from USD14.5 million. For the year, pretax profit jumped to more than twenty-fold to USD678.0 million from USD26.4 million. Revenue surged to USD2.65 billion from USD622.7 million.

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A single shot of the Pfizer or Oxford-AstraZeneca vaccine offers dramatic protection against hospital admission and severe disease in older people, according to a new study from Public Health England. UK Health Secretary Matt Hancock hailed the "exciting" real-world data which found either vaccine is more than 80% effective at preventing hospital admission around three to four weeks after the first dose. England's Deputy Chief Medical Officer Jonathan Van-Tam said the data offered a glimpse of how the vaccine programme "is going to hopefully take us into a very different world in the next few months". The study, which has yet to be peer-reviewed, included more than 7.5 million people aged 70 and over in England.

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MARKETS

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European stock markets were rebounding after a lower start on Tuesday, but Wall Street still was pointed lower after Monday's rally when the S&P 500 closed up 2.4%. Worries about rising inflationary pressure persisted. "While it is still early days, the ingredients for a sustained pick-up in inflation over the next few years seem to be falling into place in the US," commented Vick Redwood, senior economic adviser at Capital Economics. "It is a different picture in other developed economies; indeed, we still think that medium-term inflation risks are much lower in the euro-zone and Japan."

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CAC 40: up 0.2% at 5,806.85

DAX 30: up 0.2% at 14,042.23

FTSE 100: up 0.5% at 6,623.24

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DJIA: called down 0.3%

S&P 500: called down 0.5%

Nasdaq Composite: called down 0.5%

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S&P/ASX 200: closed down 0.4% at 6,762.30

Hang Seng: closed down 1.2% at 29,095.86

Nikkei 225: closed down 0.9% at 29,408.17

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EUR: down at USD1.2021 (USD1.2055)

GBP: down at USD1.3881 (USD1.3953)

USD: up at JPY106.87 (JPY106.62)

Gold: down at USD1,727.15 per ounce (USD1,737.01)

Oil (Brent): down at USD63.72 a barrel (USD64.94)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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The eurozone's annual inflation rate is estimated to have remained steady at 0.9% in February, preliminary figures showed. The bloc's annual inflation rate was confirmed last week at 0.9% for January, which snapped a streak of deflation that started in August 2020, driven by tumbling energy prices as the pandemic slammed demand for fuel. Excluding energy prices, February's annual inflation rate was 1.2%, easing from 1.5% in January. Energy prices slipped 1.7% in February, moderating from the 4.2% slump seen the month before.

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Employment in Germany rose slightly in January on the previous month on a seasonally adjusted basis, the Federal Statistical Office reported. About 44.3 million people resident in Germany were in employment in January, according to provisional calculations of Destatis. The seasonally adjusted number of persons in employment rose slightly by 14,000 in January from December. On a year-on-year basis, the number of persons in employment decreased by 714,000 people or 1.6%. The number of persons in employment thus is still markedly below the pre-crisis level. On a seasonally adjusted basis, the number of persons in employment in January was down by 1.6%, or 726,000, on February 2020, the month before restrictions were imposed due to the coronavirus pandemic in Germany.

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UK house price growth surprisingly accelerated in February, according to figures from mortgage lender Nationwide. Annually, UK house price growth was 6.9% in February, strengthening from the 6.4% rise seen for January. On a monthly basis, prices grew 0.7%, reversing the 0.2% dip seen at the start of the year. This brought the average house price in the UK to GBP231,068 in February, the highest on record, from GBP229,748 in January. "This increase is a surprise. It seemed more likely that annual price growth would soften further ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase," said Robert Gardner, Nationwide's chief economist. Last week, The Times said it had been told that Chancellor Rishi Sunak – who has been urged not to end the stamp duty holiday – will use his budget statement on Wednesday to move the deadline to the end of June.

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The US Senate will start its debate "this week" on President Joe Biden's massive economic stimulus plan, Democratic Majority Leader Chuck Schumer said Monday. The House of Representatives, also under Democratic control, on Saturday approved the USD1.9 trillion package designed to jumpstart the US economy after the implosion caused by the Covid-19 pandemic, and which included a hike in the federal minimum wage. The version of the bill the Senate will debate will not include the latter section on increasing minimum wage due to congressional rules governing the budgetary process. Despite disappointment from many in his party, the president called on Congress to quickly adopt the rest of the package.

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As members of the oil cartel OPEC and its allies meet this week to discuss adjusting output, analysts expect old tensions between oil producer giants to flare up again. Russia and Saudi Arabia, respectively the world's second and third largest producers of oil after the US, had often been at loggerheads in the past, but when crude oil prices plunged due to the pandemic, they rallied to radically cut production levels and underpin prices. Now that prices have rebounded to pre-pandemic levels, at around USD65 a barrel, the two heavyweights and their partners will discuss how to move forward – and how much crude to release back onto the global market.

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