TOP NEWS SUMMARY: UK signs first post-Brexit trade deal with Australia

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

Alliance News 15 June, 2021 | 11:10AM
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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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Europe and the US are expected to announce a five-year suspension of tariffs in their 17-year-old dispute over aircraft subsidies, Reuters reported. The five-year suspension will allow the two sides to focus on the threat posed by China's growing commercial aircraft industry, people familiar with the matter told Reuters. AFP also reported plans to prolong the aerospace truce, citing "European sources close to the matter". The dispute began in 2004 when the US withdrew from a 1992 aircraft subsidy pact, Reuters noted. The US took the EU to the World Trade Organisation, claiming Airbus SE had managed to equal Boeing Co's share of the aircraft market partly because of government subsidies.

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AstraZeneca said a study looking at its AZD7442 treatment in post-exposure prevention of symptomatic Covid-19 did not meet its primary endpoint, but it noted figures which showed its vaccine holds up well against the Delta variant. AstraZeneca said a trial studying its long-acting antibody combination to treat those recently exposed to the SARS-CoV-2 virus did not meet its primary endpoint. The primary endpoint was post-exposure prevention of symptomatic Covid-19 with AZD7442 compared to placebo. The 1,212 trial participants were unvaccinated adults with confirmed exposure to a person with a case of the SARS-CoV-2 virus within the past eight days. AZD7442 reduced the risk of developing symptomatic Covid-19 by a third compared to placebo, which was not statistically significant. Meanwhile, Astra noted new data from Public Health England demonstrating the Astra Covid-19 vaccine offers good protection against the Delta variant. Real world data from PHE, published as a pre-print, showed two doses of Astra's jab is 92% effective against hospitalisation from the Delta variant and showed no deaths among those vaccinated.

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Equipment rental firm Ashtead lifted its dividend as it ended its financial year on a strong note. Revenue for the financial year that ended April 30 was down 0.4% at GBP5.03 billion from GBP5.05 billion the year before, while pretax profit fell 4.8% to GBP936.0 million from GBP982.8 million. Ashtead noted that it had returned to growth in the fourth quarter, with rental revenue up 15% on a constant currency basis. The firm proposed a final dividend of 35 pence, taking the year's total to 42.15p, up 3.7% from 40.65p the year before. Ashtead said it enters the new financial year with "clear momentum" and is targeting rental revenue growth at constant exchange rates of 6% to 9%. This would compare with 1% for the recently ended year.

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Third Point, fronted by investor Daniel Loeb, has built a sizeable holding in Vivendi, Bloomberg reported, citing people familiar with the matter. Bloomberg said neither the size of Third Point's Vivendi stake, nor its reason for buying in, could be determined. It comes as the French media company plans to spin-out its Universal Music Group unit. Earlier in June, Paris-based Vivendi said it had entered talks with special purpose acquisition company Pershing Square Tontine Holdings over the possibility of selling a 10% stake in UMG. US-listed Pershing Square Tontine is a blank cheque company, and activist investor William Ackman is its chair & chief executive. London and New York-listed Pershing Square Holdings confirmed the discussions earlier this month.

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MARKETS

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Stock markets around the world were higher on Tuesday, amid continued positive economic data ahead of the US Federal Reserve's policy decision on Wednesday. "Markets continue to watch a slow-motion race, between the pressure on the Fed to normalise, and medical science's effort to vaccinate enough of the world to broaden global economic recovery before the metaphorical monetary punchbowl is pulled away," commented Kit Juckes of Societe Generale. The prominent exceptions to gains on Tuesday were Hong Kong and Shanghai, the two markets hurt by concern about a nuclear power plant in southern China.

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CAC 40: up 0.6% at 6,653.43

DAX 30: up 0.7% at 15,787.99

FTSE 100: up 0.4% at 7,177.15

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Hang Seng: closed down 0.7% at 28,638.53

Nikkei 225: closed up 1.0% at 29,441.30

S&P/ASX 200: closed up 0.9% at 7,379.50

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DJIA: called marginally higher, up 13.00 points

S&P 500: called up 0.1%

Nasdaq Composite: called up 0.1%

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EUR: flat at USD1.2126 (USD1.2124)

GBP: down at USD1.4078 (USD1.4112)

USD: up at JPY110.14 (JPY109.99)

Gold: up at USD1,864.63 per ounce (USD1,863.20)

Oil (Brent): down at USD73.02 a barrel (USD73.28)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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UK Prime Minister Boris Johnson has agreed the broad terms of a free trade deal with Australia, the first negotiated from scratch since Brexit. Johnson said it marks a "new dawn" in the UK's relationship with Australia, with British products like cars, Scotch whisky and biscuits set to be cheaper to sell in the tariff-free agreement. Johnson and his Australian counterpart, Scott Morrison, announced the agreement on Tuesday despite concerns from farmers on both sides over the deal. Industry leaders have spoken out over possible compromises on food standards, while farmers fear they could be undercut by cut-price imports. Announcing the trade deal, Downing Street said there will be a cap on tariff-free imports for 15 years, while other "safeguards" will be brought in to protect British farmers. Elsewhere in the agreement, Downing Street said Britons under the age of 35 will be able to travel and work in Australia more freely – suggesting the farm work requirement on working holiday visas could be scrapped.

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Johnson on Monday set a new "terminus date" of July 19 for the end of England's coronavirus restrictions after being warned that easing restrictions as planned could lead to thousands of deaths. The prime minister ordered a delay of up to a month to the final phase of his road map to end the lockdown due to concerns over the rapidly spreading Delta variant first identified in India. The news was described as a "devastating blow" for the night-time industry, while hospitality businesses will also see trading impacted by continued social distancing. Experts feared going ahead with Step 4 on June 21 as anticipated could lead to hospital admissions on the scale of the first wave of Covid-19, heaping unsustainable pressure on the health service. Johnson said he is "confident" no further delay will be necessary but was unable to rule that out, warning of the possibility that an unforeseen and "far more dangerous" variant could emerge.

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The UK unemployment rate edged down again as data pointed to a continued recovery in the labour market, the Office for National Statistics said. However, concerns have been raised that the furlough scheme that has kept large numbers of UK workers in jobs wasn't extended alongside a delay in the ending in lockdown restrictions. The unemployment rate for the three months to April was 4.7%, down from 4.8% for the three months to March. This was in line with market expectations, according to FXStreet. The jobless rate started 2021 at 5%. This labour market recovery appears to have extended into May. The number of payrolled employees has increased for the sixth consecutive month, the ONS said, up by 197,000 in May to 28.5 million. However, this remains 553,000 below pre-virus levels.

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The eurozone's trade surplus slimmed in April as exports shrank and imports grew, data from Eurostat showed. Euro area exports to the rest of the world in April fell 2.3% month-on-month on a seasonally adjusted basis, while imports increased by 2.4%. This resulted in a trade surplus of EUR9.4 billion, down from EUR18.3 billion in March. On an annual basis, however, trade metrics improved sharply. Exports shot up 43% in April when compared with a year ago, when the bloc was under strict virus curbs, and imports grew 37% year-on-year.

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Germany's annual consumer price inflation accelerated in May, in line with estimates, according to final figures posted by Destatis. Consumer prices in Germany rose 2.5% from a year before in May, in line with market forecasts and an earlier estimate from Destatis. Compared with April, consumer prices were up 0.5%, also in line with market forecasts and the earlier Destatis estimate. The harmonised index of consumer prices, used for EU-wide comparison, was up 2.4% on a year before in May and up 0.3% from April, both confirming the provisional result.

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Beijing accused NATO of exaggerating the threat from China and "creating confrontation", after a vow from the Western allies to work together to counter the challenges posed by its policies. NATO leaders said Monday they would join forces against the "systemic challenges" posed by China's policies, as US President Joe Biden renewed Washington's Transatlantic ties at his first summit with the allies. In a broad statement of intent, the leaders said China's increasingly assertive actions in building a nuclear arsenal and space and cyber warfare capabilities threatened the international order. In an angry response, a statement from the Chinese Mission to the EU called for NATO to "view China's development rationally, stop exaggerating various forms of 'China threat theory' and not to use China's legitimate interests and legal rights as excuses for manipulating group politics [while] artificially creating confrontations".

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Japan's hard-pressed Prime Minister Yoshihide Suga has survived a no-confidence vote by the opposition. With a majority of seats from his Liberal Democratic Party and its smaller coalition partner Komeito, the lower house of parliament voted against the opposition's bill on Tuesday. The opposition has criticized Suga for his handling of the coronavirus pandemic and his unwavering commitment to put on the Olympic Games. The fragmented opposition camp wanted to continue the debate on this, but their demand for an extension of the current parliamentary session was rejected by the government as unnecessary. The opposition move came just over a month before the Tokyo Olympics are due to start. The capital is still under a state of emergency until Sunday. Suga's term as party leader and prime minister ends on September 30, and he must call lower house elections no later than October 21.

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By Tom Waite; thomaslwaite@alliancenews.com

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