(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Credit Suisse Group said one of its board members will step aside after shareholders called for his head following major losses linked to the collapses of the Archegos and Greensill financial firms. The Swiss bank said in a brief statement that Andreas Gottschling, the head of the board's risk committee, would not seek re-election at a general assembly later on Friday. Credit Suisse has been hit hard by bankruptcies at Archegos, a US hedge fund, and British financial firm Greensill. Shockwaves rippled through global financial markets and institutions last month when then little-known Archegos sold at least USD20 billion in stocks as it sought to cover obligations to its lenders. Losses at leading global banks have jumped past USD10 billion, with Credit Suisse accounting for around half of the damage. Credit Suisse had also invested heavily in Greensill, a firm specialised in short-term corporate loans via a complex and opaque business model, and was forced to suspend four funds after the firm declared insolvency last month.
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Barclays posted a record quarterly profit figure as credit impairment charges were reduced. Pretax profit was a "record" GBP2.40 billion for the first quarter of 2021, up sharply from GBP913 million a year ago, even as total income fell 6% to GBP5.90 billion. Credit impairment charges were cut by 97% to GBP55 million from GBP2.12 billion. For the year ahead, Barclays said the outlook remains uncertain due to the pandemic but expects to deliver "meaningful" year-on-year improvement in [return on tangible equity] in 2021. The full-year impairment charge is expected to be "materially below" than of 2020's due to an improved economic outlook in the latter part of the first quarter - and if this persists, Barclays would expect to reduce the impairment provision level.
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AstraZeneca retained its full-year guidance as profit grew in the first quarter, with the pharmaceutical firm expecting an "acceleration" in performance as the pandemic eases in the second half of this year. Total revenue for the first three months of the year was up 15% year-on-year at USD7.32 billion, with Product Sales revenue rising 15% to make up the bulk of group revenue at USD7.26 billion, while Collaboration revenue rose 43% to GBP63 million. Revenue from its beleaguered Covid-19 vaccine totalled USD275 million for the quarter. The jab's use has been restricted by age in many countries over links to rare blood clots - with this also listed as a side effect for the Johnson & Johnson Covid-19 vaccine - but regulatory agencies have stressed that the benefits outweigh the risks. Pretax profit for the quarter jumped 72% to USD1.61 billion from USD935 million a year ago. Chief Executive Pascal Soriot said: "Given the performance in the first quarter, in line with our expectations, we reiterate our full-year guidance. We expect the impact of Covid to reduce and anticipate a performance acceleration in the second half of 2021."
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Amazon.com said late Thursday its net income more than tripled for the first quarter of 2021, driven by double digit growth in sales from all regions. For the three months ended March 31, the Seattle, Washington-based technology and e-commerce behemoth posted net income of USD8.11 billion, up sharply from USD2.54 billion the prior year. Diluted earnings per share also more than tripled to USD15.79 from USD5.01, while operating income more than doubled to USD8.87 billion from USD3.99 billion, following a strong profit performance from North America, and a swing to profit from the International region. This was on net sales that grew 44% year-on-year to USD108.52 billion from USD75.45 billion the year before. Segmentally, North American sales rose 40% to USD64.37 billion, while International sales increased 60% to USD30.65 billion.
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Twitter reported Thursday a rise in first-quarter advertising sales, but the social media platform warned user growth could slow in the coming quarters as activity seen during the coronavirus pandemic fades. For the first quarter to March 31, revenue was up 28% at USD1.04 billion from USD807.6 million a year before and net income at USD68.01 million, swinging from a loss of USD8.40 million. First quarter diluted earnings per share was USD0.08, swinging from a loss per share of USD0.01 in the first quarter of 2020. Total advertising revenue for the first quarter was USD899 million, up 32% from the same period a year ago. The San Francisco-based company reported average monetizable daily active users of 199 million, an increase of 20% year-on-year, primarily driven by ongoing product improvements and global conversation around current events. Twitter grew US mDAU by 13% and international mDAU by 22%.
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Darktrace climbed 40% at the start of conditional trading in London on Friday, giving it a GBP2.4 billion market capitalisation. The UK tech startup, founded in 2013, provides cybersecurity services to businesses using artificial intelligence. Darktrace's initial public offering on the London Main Market was priced at 250 pence per share, giving a GBP1.7 billion market capitalisation, trimmed back from an earlier mooted valuation of GBP3 billion. The scaled-back IPO priced seemed intended to avoid the disastrous recent debut of food delivery app Deliveroo, whose shares fell more than 30% on their first day. If so, it succeeded. In early dealings Friday, the stock was quoted at 350p, up 40% on the IPO price.
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MARKETS
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European markets were slightly higher on the last day of the month, despite a negative lead from Asia and a lower call for Wall Street. Markets were steady also in the face of weak data reports for the European continent and for China, with the eurozone economy shrinking at the start of the new year.
"Confirmation that the eurozone economy contracted again in Q1 means that the region suffered a second technical recession in just over a year as GDP has fallen in four of the last five quarters," commented Andrew Kenningham, chief Europe economist at Capital Economics. "The good news, however, is that things should get better towards the end of Q2 as the vaccination programme will allow governments to lift restrictions, hopefully for the last time."
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CAC 40: marginally higher, up 1.31 points at 6,303.88
DAX 30: up 0.4% at 15,219.79
FTSE 100: up 0.3% at 6,981.03
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Hang Seng: closed down 2.0% at 28,724.88
Nikkei 225: closed down 0.8% at 28,812.63
S&P/ASX 200: closed down 0.8% at 7,025.80
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DJIA: called down 0.2%
S&P 500: called down 0.3%
Nasdaq Composite: called down 0.4%
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EUR: down at USD1.2098 (USD1.2120)
GBP: down at USD1.3909 (USD1.3950)
USD: soft at JPY108.89 (JPY108.94)
Gold: up at USD1,769.84 per ounce (USD1,768.68)
Oil (Brent): down at USD68.16 a barrel (USD68.35)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Gross domestic product in the eurozone declined by 0.7% in the first quarter of 2021 from the last quarter of 2020 and by 4.9% from a year before, weighed down by its largest economy, Germany.
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The German economy contracted as renewed virus restrictions hampered Europe's heavyweight. German GDP shrank 1.7% in the first three months of 2021 on a sequential basis, undershooting market expectations, according to FXStreet, of a more moderate 1.5% decline. This followed 0.5% growth in the fourth quarter of 2020. Year-on-year, the economy contracted 3.0% in the first quarter of 2021, though this beat market expectations for a 3.2% decline and was improved from a 3.3% fall in the final quarter of 2020. After Germany recovered somewhat in the second half of 2020 from the pandemic's initial hit, the coronavirus crisis slammed the economy again at the beginning of 2021.
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The French economy returned to growth in the first quarter, official data showed on Friday, expanding slightly after the coronavirus outbreak plunged countries across Europe into historic recessions. The economy grew by 0.4% in the first three months of the year, according to France's national statistics institute, adding that the rebound was "limited" as it was well below pre-pandemic levels. Insee said GDP in the first quarter of 2021 was still down 4.4% versus the fourth quarter of 2019. The French economy sunk 1.4% in the fourth quarter of 2020. Market consensus, according to FXStreet, was predicting 0.1% expansion in the first quarter.
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The Spanish economy contracted at the start of 2021, the National Institute of Statistics said. Spanish GDP shrank 0.5% in the first three months of 2021 on a sequential basis, matching market expectations, according to FXStreet. This followed stagnation in the previous quarter, with the economy flatlining, posting zero growth. Year on year, Spain's economy contracted 4.3%, which is slightly worse than the 4.2% anticipated by the market, but significantly improved on the 8.9% fall in the final quarter of 2020.
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Factory activity in China slowed in April as a global shortage of shipping containers hindered the movement of goods, official data showed, but wider demand remained robust as the domestic economy rebounds from the coronavirus pandemic. The purchasing managers' index, a key gauge of manufacturing activity, came in at 51.1 this month – lower than in March but still above the 50-point mark separating growth from contraction, according to the National Bureau of Statistics. But challenges remained, with some companies reporting problems "such as chip shortages, blockages in international logistics, a lack of containers, and rising freight rates", said NBS senior statistician Zhao Qinghe in a statement. This has affected the delivery time of suppliers in high-tech manufacturing, particularly in the past three months, while the procurement cycle of raw materials has become longer, weighing on production.
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The Japanese manufacturing sector saw its strongest improvement in operating conditions in three years in April, the au Jibun Bank purchasing managers' index showed. The au Jibun Bank Japan Manufacturing purchasing managers' index rose to 53.6 in April from 52.7 in March. The figure climbed further above the 50.0 threshold, which separates growth from decline.
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The first US emergency aid to India arrived on Friday as the country battles a devastating surge in Covid-19 cases which has overwhelmed hospitals and crematoriums. A Super Galaxy military transporter carrying more than 400 oxygen cylinders and other hospital equipment and nearly one million rapid coronavirus tests landed at New Delhi's international airport. India is currently recording a world record infection rate of more than 370,000 cases and 3,600 deaths a day and a huge international aid operation has been launched with dozens of countries promising help. The delivery, which flew in from the Travis military base in California, followed talks this week between US President Joe Biden and India's Prime Minister Narendra Modi. "The US is delivering supplies worth more than USD100 million in the coming days to provide urgent relief to our partners in India," State Department spokesman Ned Price said Thursday. US officials said the special flights, which will also bring equipment donated by companies and individuals, will continue into next week.
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People aged 40 and over in England are now being invited to book their coronavirus jabs as the UK prime minister faced further calls to launch an inquiry into the handling of the pandemic. NHS England said that text messages will be sent out from Friday to 40 and 41-year-olds allowing them to arrange their vaccination appointments. With people aged 42 to 44 having already been texted this week it means 2.5 million more people have been invited for their jab, it added. The expansion of the vaccine rollout comes as the latest data showed an estimated 91.5% of people aged 45 and over in England had received their first dose of Covid-19 vaccine by April 25, and just over four-in-five aged 70 and over had been given both doses.
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UK house price growth re-accelerated in April after the government extended the stamp duty holiday, figures from Nationwide showed. House prices jumped 7.1% on an annual basis in April, picking up from 5.7% in March. Annual house price growth had been above 6% in both January and February, but slowed down a touch in March in anticipation of the original stamp duty holiday end-date. In March, however, Chancellor Rishi Sunak extended the stamp duty holiday from the end of that month until the end of June, and after this a new GBP250,000 threshold will apply until the end of September. Month-on-month, UK house prices recorded the strongest growth since February 2004, up 2.1% in April after a 0.3% contraction in March.
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By Tom Waite; thomaslwaite@alliancenews.com
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