TOP NEWS SUMMARY: Bank of Japan keeps monetary policy expansionary

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

Alliance News 18 June, 2021 | 10:50AM
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(Alliance News) - The following is a summary of top news stories Friday.

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COMPANIES

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Tesco revealed slowing sales growth as the grocer starts to lap pandemic-elevated comparatives. The UK's largest supermarket chain said like-for-like retail sales for the 13 weeks to May 29 grew 1.0% year-on-year to GBP13.36 billion, and rose 8.1% on a two-year basis. For the financial year ended February, Tesco's like-for-like annual sales growth was 6.3%. In the UK, Tesco noted that two-year like-for-like growth of 9.3% includes a retained benefit of customers eating more meals at home than they were pre-pandemic. Online demand remains high, the grocer added, and there was a "particularly strong" contribution from general merchandise and clothing. Online sales in the UK were up 22% year-on-year during the first quarter. While its core grocery unit has seen growth stifled by easing virus restrictions, Tesco's wholesale unit Booker has benefited. Booker's catering sales rose 68% like-for-like, though retail sales fell 4.3%. Tesco retained its profit guidance for the full-year.

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Kerry Group said it has agreed to sell its Consumer Foods' Meats & Meals business in the UK and Ireland to Pilgrim's Pride for EUR819 million. However, it confirmed that it will retain its dairy business. The Meats business is a manufacturer of branded and private label meats, meat snacks, food-to-go and meat-free products, with its brands including Richmond, Fridge Raiders and Rollover. The Meals business primarily serves the UK market and "specialises in authentic ethnic chilled and frozen ready meals, multi-cuisine ready to cook ranges, and home delivery meals under the Oakhouse brand." The Meats & Meals business achieved revenue of EUR828 million and pretax profit of EUR63 million for 2020. Tralee, Ireland-based Kerry plans to use the sale proceeds for the ongoing strategic development of the Taste & Nutrition business, as well as for general corporate purposes. The deal is expected to close in the final quarter. "Following today's announcement, we will separate and realign the remaining dairy-related activities within the Consumer Foods Business. The strategic review of the dairy business has been completed, and there will be no disposal of the dairy business at this time," it added.

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ArcelorMittal said it completed the sale of its remaining stake in an iron ore producer, paving the way for a share buyback. The steel maker said it sold its remaining 38.2 million shares in Ohio-based Cleveland-Cliffs, a deal it announced in February. Cleveland-Cliffs shares ended down 6.5% at USD21.19 each in New York on Thursday. That makes the stake worth USD809.5 million. ArcelorMittal will distribute proceeds of the sale to shareholders through a USD750 million buyback, the company said.

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M3 said it will post a one-off profit gain of JPY10 billion, about USD90.9 million, after healthcare technology unit Medlive Technology had its Hong Kong listing plans approved. The Tokyo-based provider of medical-related services through the internet noted Medlive is a joint-venture it operates alongside Belize-based Tiantian. As Medlive's listing plan was approved, M3 agreed to revoke its right to nominate a majority of the company's directors.

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Adobe reported an "outstanding" quarter boosted by solid growth from its Creative Cloud, Document Cloud and Experience Cloud products. In the three months to June 4, the San Jose, California-headquartered computer software firm recorded net income of USD1.12 billion, up from USD1.10 billion in the three months to May 29, 2020. Diluted earnings per share grew to USD2.32 from USD2.27. Total revenue in the second quarter improved 23% year on year to USD3.84 billion from USD3.13 billion. Looking ahead, Adobe is guiding for total revenue of about USD3.88 billion in the third quarter with GAAP EPS at about USD2.27.

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Fox has authorised stock repurchases of up to USD2 billion of the New York-based media firm's class A and class B common stock. As a result, the company's total stock buyback authorisation has reached USD4 billion, of which around USD1.56 billion has been completed to date.

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MARKETS

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Stock prices in Asia and Europe were mixed on Friday, and Wall Street was called for a flat open, as investors pondered a week of central bank announcements highlighted by the US Federal Reserve and capped by the Bank of Japan. On Thursday next week, it is the turn of the Bank of England. It will be the last policymaking meeting for Chief Economist Andy Haldane, after 32 years at the UK central bank. Markets will watch for "any change in rhetoric rather than concrete action", commented Laith Khalaf, financial analyst at AJ Bell. "We're now beginning to reach that topsy turvy part of the cycle where good news becomes bad news, because markets worry that positive economic signals will hasten the withdrawal of central bank liquidity."

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CAC 40: up 0.1% at 6,674.04

DAX 30: down 0.3% at 15,684.38

FTSE 100: down 0.6 at 7,114.02

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Hang Seng: closed up 0.9% at 28,801.27

Nikkei 225: closed down 0.2% at 28,964.08

S&P/ASX 200: closed up 0.1% at 7,368.90

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DJIA: called marginally higher, up 14.00 points

S&P 500: called marginally higher, up 0.75 point

Nasdaq Composite: called up 0.2%

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EUR: down at USD1.1908 (USD1.1920)

GBP: down at USD1.3875 (USD1.3933)

USD: down at JPY110.15 (JPY110.30)

Gold: up at USD1,791.25 per ounce (USD1,768.00)

Oil (Brent): down at USD72.47 a barrel (USD74.06)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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The Bank of Japan kept interest rates in negative territory and also its loose monetary policy unchanged. The Japanese central bank kept its key interest rate at minus 0.1%. It extended the duration of its Covid-19 support measures by another six months, to March 2022. It noted businesses are likely to "remain under stress due to the impact of the novel coronavirus, although it has improved compared with a while ago". The Bank of Japan said it will continue to "expanding the monetary base" until the annual consumer price inflation rate, excluding fresh food, reaches 2.0%. It also unveiled a new financing plan to encourage firms to boost climate change investments.

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Japanese consumer prices remained in deflationary territory on an annual basis in May, according to figures from the Statistics Bureau. Consumer prices fell 0.1% in May, easing from April's 0.4% decline. According to the consensus cited by FXstreet, deflation was forecast to quicken to 0.7% in May, so the figure topped expectations. Monthly, Japan's consumer price index rose 0.3% in May, following April's 0.3% decline.

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The eurozone's current account surplus widened on both the month before and a year earlier in April, figures from the European Central Bank showed. The bloc recorded a surplus of EUR23 billion in April, up 28% from EUR18 billion in March. There were total credits, largely from exports, of EUR350 billion. Debits amounted to EUR327 billion. Exports were 2.5% higher monthly at EUR207 billion. In April 2020, the surplus was EUR2 billion, so it has stretched more than tenfold year-on-year.

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German producer price growth picked up in May largely due to energy and intermediate products. Month-on-month producer price growth was 1.5% for May, nearly double the rate of 0.8% recorded for April. Annually, prices surged 7.2% in May as they picked up steam from April's 5.2% jump. Both readings were well ahead of consensus, which had seen monthly growth of 0.7% and an annual price increase of 6.4%, according to FXStreet. The annual price gain was the largest since October 2008, while the monthly rise was the fastest since July 2008.

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Germany will reopen its borders later this month to non-EU nationals who have been vaccinated against Covid-19, the government announced Thursday. Beginning on June 25, non-EU nationals may enter Germany for whatever reason, such as tourism or studying in a university, the interior ministry said. Currently, only those with exceptional reasons are allowed into the country. But travellers will have to have been completely vaccinated at least 14 days prior to their arrival with a vaccine approved by the European Medicines Agency. Travellers from countries where the circulation of the coronavirus is rampant will be barred, however.

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Retail sales volumes in the UK fell 1.4% month-on-month in May, pulling back after a 9.2% surge in April. Mid-April saw the re-opening of non-essential retail in England after months of lockdown. Consensus, according to FXStreet, had expected growth of 1.6% for May. The largest contribution to May's decline came from food stores, the Office for National Statistics noted, where sales fell by 5.7%. Evidence suggests the easing of hospitality restrictions diverted some spending to pubs and restaurants after months of eating and drinking at home. Non-food stores saw a 2.3% rise in monthly sales, with household goods stores - such as hardware and furniture stores - reporting growth of 9.0%.

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UK Prime Minister Boris Johnson's Tories suffered a humiliating by-election defeat as the Liberal Democrats scored a historic win in Chesham and Amersham. Lib Dem Sarah Green is the country's newest MP after winning the seat, which had been a Conservative stronghold since its creation in 1974. Ed Davey, the Lib Dem leader, said the result sent a "shockwave through British politics" by showing that the 'Blue Wall' of Tory southern seats could be vulnerable. In a stunning result, Green took 56.7% of the vote to secure a majority of 8,028 over the second-placed Tories.

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The administration of US President Joe Biden announced plans on Thursday to spend USD3.2 billion to accelerate the development and discovery of antiviral treatments against Covid-19 and future threats. The plan is called the Antiviral Program for Pandemics and its funding comes from the American Rescue Plan, a USD1.9 trillion package passed by Congress in March.

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By Tom Waite; thomaslwaite@alliancenews.com

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