(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Telecommunications firm Vodafone Group posted what it called a "resilient" performance for its recently ended financial year, despite a decline in revenue. Revenue for the financial year to March 31 was EUR43.81 billion, down 2.6% from EUR44.97 billion the year before but beating market expectations of EUR43.64 billion. Vodafone blamed the impact of the Covid-19 pandemic on roaming charges, amid foreign travel restrictions, for the decline in revenue. Vodafone said revenue also took a hit from lower handset sales, foreign exchange movements, and the disposal of Vodafone New Zealand. Adjusted earnings before interest, tax, depreciation and amortisation fell 3.3% - or 1.2% on an organic basis - to EUR14.39 billion from EUR14.88 billion. Adjusted Ebitda was expected by market consensus at EUR14.54 billion, so this was missed slightly. Vodafone kept its dividend for the year steady at 9.0 cents, as expected by market consensus.
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GlaxoSmithKline said a phase 2 trial of its Covid-19 vaccine developed with Medicago Inc gave positive interim results. The vaccine was developed by Quebec-based biotech firm Medicago using a GSK adjuvant to increase its effectiveness. It created a good immune response in adults of all ages in the trial, with no severe adverse events and only short-term mild to moderate side effects. Neutralizing antibody responses were 10 times higher than in people recovering from Covid-19. Medicago is one of several companies that GSK is working with to produce Covid-19 vaccines. On Monday, GSK and Sanofi reported strong phase 2 results for their vaccine. The London-based pharmaceutical firm also has partnerships with SK Bioscience and CureVac.
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The Pfizer and Moderna Covid vaccines should remain highly effective against two coronavirus variants first identified in India, according to new research carried out by US scientists. The lab-based study was carried out by the NYU Grossman School of Medicine and NYU Langone Center and is considered preliminary because it has not yet been published in a peer-reviewed journal. "What we found is that the vaccine's antibodies are a little bit weaker against the variants, but not enough that we think it would have much of an effect on the protective ability of the vaccines," senior author Nathaniel "Ned" Landau told AFP on Monday. Overall, for B.1.617 they found an almost four-fold reduction in the amount of neutralizing antibodies - Y-shaped proteins the immune system creates to stop pathogens from invading cells. For B.1.618, the reduction was around three-fold.
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Phoenix Group Holdings, noting press reports, confirmed it is in advanced talks over a potential sale of its European businesses. "A sale of the European businesses will only be considered if it maximises value for shareholders. Discussions are on-going and there can be no certainty that any transaction will be agreed," the long-term savings and retirement business said. Earlier, Sky News had reported that Phoenix is close to agreeing a GBP550 million deal to sell its European operations to European Life Group Holding, a privately owned vehicle backed by the US-based fund Sixth Street. Phoenix back in November confirmed it was mulling a possible sale of its European businesses.
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Eurostar has secured a GBP250 million rescue package after warning it was "fighting for its survival" due to the coronavirus crisis. The cross-Channel rail operator said it has reached a financing agreement with its shareholders and banks. This includes French state rail company SNCF, which is the company's majority shareholder. The UK sold its Eurostar stake to private companies for GBP757 million in 2015, and the government resisted pressure to contribute to the bailout. Transport Secretary Grant Shapps told MPs in February that the government was "very keen for Eurostar to survive" but insisted "it's not our company" and its difficulties were "the shareholders' problem to resolve".
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BP is in advanced talks to sell its stake in the Shearwater oil field, located in the UK North Sea, Bloomberg reported. BP has a 28% stake in the asset, which is operated by fellow oil major Royal Dutch Shell. Bloomberg added that the buyer of the stake, Tailwind Energy, is backed by commodity trading firm Mercuria Energy. Tailwind Energy has assets in the UK Central North Sea, as well as the Conwy field located in the Irish Sea. In addition, it has a 25% interest in the Columbus field, which is about 35 kilometres from Shearwater. BP has previously struck a deal to sell its holding in the asset. It was due to be purchased by Premier Oil last year after oil prices crashed due to the Covid-19 pandemic. The transaction, which was valued at USD625 million, was later dropped following a reverse-takeover of Premier by Chrysaor Holdings.
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Amazon.com is in discussions to acquire the MGM film studio for about USD9 billion, the Financial Times reported, citing "people familiar with the matter". The newspaper noted that MGM is one of the few remaining independent Hollywood studios amid industry consolidation. The purchases of Fox by Walt Disney, Universal by Comcast, and Paramount by ViacomCBS in recent years were followed by confirmation on Monday by AT&T of agreement to merge WarnerMedia with Discovery. The WarnerMedia-Discovery merger is intended to create a video streaming provider that can compete with Netflix Inc, Disney+ and Amazon's own Prime services.
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MARKETS
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Stock markets were buoyant on Tuesday, amid a risk-on investor mood, while the pound, euro and gold were gaining at the expense of a weaker dollar. Sterling was trading above USD1.42 for the first time since late February, when the UK currency had reached its highest point since April 2018. "We believe investors should brace for further bouts of volatility, driven by inflation data along with other risks such as setbacks in curbing the pandemic," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "But we don't see inflation concerns ending the rally in stocks, which we expect to be led by cyclical parts of the market as the global economic reopening broadens."
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CAC 40: up 0.2% at 6,381.77
DAX 30: up 0.3% at 15,445.30
FTSE 100: up 0.4% at 7,063.95
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Hang Seng: closed up 1.4% at 28,593.81
Nikkei 225: closed up 2.1% at 28,406.84
S&P/ASX 200: closed up 0.6% at 7,066.00
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DJIA: called up 0.2%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.8%
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EUR: up at USD1.2217 (USD1.2146)
GBP: up at USD1.4207 (USD1.4119)
USD: down at JPY108.86 (JPY109.20)
Gold: up at USD1,869.55 per ounce (USD1,865.60)
Oil (Brent): up at USD70.03 a barrel (USD69.24)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone economy's slide into a double-dip recession was confirmed after a second estimate from Eurostat. Euro area gross domestic product fell 0.6% in the first three months of 2021 when compared with the previous quarter. This was in line with the flash estimate published at the end of April and followed a decline of 0.7% quarter-on-quarter in the final quarter of 2020. A technical recession is considered two consecutive quarters of GDP decline, and the eurozone's 2021 first quarter print means the bloc has entered its second technical recession in the space of a year. The eurozone entered a technical recession after the second quarter print for 2020 showed a quarter-on-quarter slump of 12% after a 3.6% fall in the first three months of the year, but the bloc rebounded strongly in the third quarter of the year with growth of 13%. Year-on-year, GDP fell 1.8% in the first quarter of 2021, moderating from the 4.9% decline seen in the previous quarter.
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Japan's economy contracted 1.3% in the three months to March after the government reimposed coronavirus restrictions in major cities as infections surged, data showed. The quarter-on-quarter fall came after the world's third-largest economy grew for two quarters to December, but the expansion was stopped in its tracks by a winter increase in coronavirus cases. The government imposed new virus states of emergency in January in response, urging people to stay at home and calling for restaurants to close earlier. The contraction was largely in line with economists' expectations. The figures released by the cabinet office shortly before markets opened showed private consumption fell 1.4%, following two quarters of expansion, reflecting slower spending in the services sector. Capital expenditure, including manufacturing, was down 1.4%, but economists said that was only relative to a sharp increase in the previous quarter and the overall recovery trend was on track.
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The UK jobs market has been "broadly stable" in recent months, the Office for National Statistics said, with the unemployment rate unexpectedly edging down. The unemployment rate was 4.8% for the three months to March, easing from 4.9% in the three months to February. Consensus, according to FXStreet, had seen the March reading holding steady at 4.9%. "The latest figures suggest that the jobs market has been broadly stable in recent months, with some early signs of recovery," the ONS said. The number of payroll employees increased for a fifth consecutive month in April, though does still remain 772,000 below pre-pandemic levels. The largest falls in jobs since February 2020 have been in the hospitality sector, among those aged under 25 years, and those living in London.
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Bringing the US economy back from the brutal downturn caused by Covid-19 will take time, and hiccups like last month's weak hiring data will happen, a top Federal Reserve official said Monday. The comments from Fed Vice Chair Richard Clarida come after government data showed the US economy added only 266,000 jobs in April, far fewer than expected and complicating expectations for a strong bounceback in employment and growth this year. "We're still more than eight million jobs short of where we were 14 months ago, so there's still a deep hole in the in the labor market. But I also believe that it may take more time to reopen a USD20 trillion economy than it did to shut it down," Clarida said in a conversation with Atlanta Federal Reserve President Raphael Bostic.
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The UN Security Council was due to hold an emergency meeting Tuesday amid a flurry of urgent diplomacy aimed at stemming hostilities between Israel and armed Palestinian groups that have left over 200 dead. Amid calls for an end to the fighting, Israeli Prime Minister Benjamin Netanyahu said late Monday Israel would "continue striking at the terrorist targets". Israel launched its air campaign on the Gaza Strip on May 10 after the enclave's rulers, the Islamist group Hamas, fired rockets towards the Jewish state, an escalation sparked by unrest in Israeli-annexed east Jerusalem. In total 212 Palestinians have been killed in Gaza, including at least 61 children, and more than 1,400 wounded – whilst in Israel, ten people have died, including one child, with hundreds injured, according to officials on both sides. Tuesday's emergency UNSC session – the fourth since the conflict escalated – was called after the US, a key Israel ally, blocked the adoption of a joint statement calling for a halt to the violence for the third time in a week on Monday.
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By Tom Waite; thomaslwaite@alliancenews.com
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