(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Swiss Re said it has sold a 6.6% stake in Phoenix Group Holdings for GBP437 million, offloading part of the stake it acquired after selling its ReAssure Group subsidiary to Phoenix last summer. The deal has cut the Zurich-based reinsurance company's stake in Phoenix in half, so Swiss Re will now hold a 6.6% stake. In July last year, insurer Swiss Re completed the sale of its ReAssure Group subsidiary to Phoenix Group for GBP3.25 billion. The year before, Swiss Re suspended plans for a London IPO of life insurance closed-book consolidator ReAssure, citing a poor global economic outlook and worries about a possible no-deal Brexit. Phoenix paid GBP1.2 billion in cash, funded from debt facilities and cash on hand. The company then issued shares to Swiss Re for the remainder, part of which was transferred to MS&AD. After the deal, Swiss Re and MS&AD held about 28% of the enlarged Phoenix combined share total, with Swiss Re holding about 13% and MS&AD holding just under 15%. On Wednesday, Phoenix confirmed MS&AD will retain its 14.5% stake and said it is "committed to its strategic relationship".
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Persimmon and Aviva have committed to refund leasehold homeowners following an investigation into unfair terms and misselling, the UK Competition & Markets Authority said. Persimmon will allow homeowners to buy the freehold of their home at a discount, while Aviva will remove certain clauses from leasehold contracts and repay those who were affected by them. The CMA has been probing unfair leasehold contracts and potential misselling since June 2019. Some homeowners were forced to pay ground rents which doubled every ten years under the terms of the leasehold contracts, making it difficult to sell their homes. Persimmon said all homeowners who have bought a leasehold property since 2000 will be allowed to buy their freehold, for a price capped at GBP2,000. The company also will reimburse customers who already bought their freehold for more than GBP2,000 under an existing scheme. Aviva, which buys leasehold contracts from housebuilders, has agreed to remove "doubling clauses" and refund those who were affected by them.
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Ireland's minister for finance, Paschal Donohoe, said the government plans to sell some of its stake in Bank of Ireland Group over the next six months. The Irish state owns around 150.4 million shares, representing just under a 14% stake, in the Dublin-based commercial bank. The sales will be arranged by Citigroup Global Markets. "Under the trading plan, Citi have been mandated to effect a measured and orderly sell down of shares in the company on behalf of the minister. The minister has instructed Citi to target that up to, but no more than, 15% of the expected aggregate total trading volume in the company is to be sold over the duration of the trading plan. The number of shares sold will depend on market conditions, amongst other factors," the Department of Finance said. However, to protect the interests of taxpayers the Irish government instructed that shares not be sold below a minimum cap, which the department will continue to review. The Irish government stepped in to buy a stake in the company in 2009 amid the global financial crisis. The state pumped a total of EUR29.4 billion into Bank of Ireland, AIB Group and Permanent TSB Group Holdings from 2009 to 2011.
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Pernod Ricard upped its full-year profit guidance after the pace of its recovery has been "stronger than anticipated", and now expects profit from recurring operations in line with financial 2019. "Following an excellent third quarter, marking the return to organic sales growth in the first nine months of financial 2021, Pernod Ricard had shared, on April 22, its guidance of organic growth in profit from recurring operations for financial 2021 of about 10%," the French alcoholic beverage producer explained. It continued: "The pace of recovery is proving stronger than anticipated. The off-trade continues to be resilient while on-trade demand is accelerating as restrictions are progressively lifted." Pernod Ricard noted its sales acceleration came from continued business recovery, with on-trade gradually reopening but travel retail still "very subdued".
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Boeing Co said Tuesday the US Special Operations Command has awarded the aerospace firm a USD578 million foreign military sales contract approved by the US Department of State to deliver 14 extended-range Chinook helicopters to the UK Royal Air Force. "The extended range Chinook gives the RAF fleet more versatility to execute the domestic and international heavy-lift missions that only the Chinook can facilitate," Boeing explained.
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MARKETS
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London's FTSE 100 index was kept afloat by its chunky oil contingent as Brent prices traded at their best levels since 2018, leading to share price gains for Royal Dutch Shell and BP, while counterparts in Europe, such as the CAC 40 and DAX 30, slipped. Wall Street was on track for a mild start.
The euro and pound remained buoyant as figures showed both the eurozone and UK economies continued to rebound strongly at the end of the second quarter, though the single currency bloc saw growth accelerate sharply while the UK's momentum eased. "While the latest UK PMIs are a touch lower than they were last month, it bodes well for a healthy second-quarter growth rebound," commented ING's James Smith.
ING also thinks the eurozone's print on Wednesday sets the bloc up for a strong second quarter, with further improvement over the coming three months before growth "levels off a bit". "Overall our base case is one for strong converging growth numbers across the eurozone in 2021," said ING economist Bert Colijn.
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CAC 40: down 0.4% at 6,584.88
DAX 30: down 0.4%
FTSE 100: up 0.1% at 7,099.12
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Hang Seng: closed up 1.8% at 28,817.07
Nikkei 225: closed flat at 28,874.89
S&P/ASX 200: closed down 0.6% at 7,298.50
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DJIA: called up 0.2%
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.1%
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EUR: up at USD1.1940 (USD1.1905)
GBP: up at USD1.3961 (USD1.3927)
USD: up at JPY110.96 (JPY110.73)
GOLD: up at USD1,782.53 per ounce (USD1,780.60)
OIL (Brent): up at USD75.59 a barrel (USD74.91)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The private sector in the eurozone is poised to post its sharpest monthly growth in 15 years, flash data from IHS Markit showed. The headline IHS Markit eurozone composite purchasing managers' index increased to 59.2 in June from 57.1 in May, its highest since June 2006. Any figure above the 50.0 mark indicates expansion. The latest reading indicated a third successive month of accelerating output growth as the economy continued to open up from Covid-19 related restrictions. A further improvement in demand was also recorded, as new order growth likewise accelerated to the fastest since June 2006. Chris Williamson, chief business economist at IHS Markit, said: "The eurozone economy is booming at a pace not seen for 15 years as businesses report surging demand, with the upturn becoming increasingly broad-based, spreading from manufacturing to encompass more service sectors, especially consumer-facing firms."
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The UK private sector's expansion continued in June, according to preliminary figures, though both the manufacturing and services industries face accelerating inflation and signs that growth has peaked. The IHS Markit/CIPS UK flash composite output index, a weighted average of the services and manufacturing readings, fell to a two-month low of 61.7 points in June, from May's 62.9 tally. The figure showed the industry remained comfortably in growth territory, however, as it was above the 50.0 no change mark. The manufacturing purchasing managers' index slipped to 64.2 points, from May's 65.6. The services activity index fell to 61.7 points from 62.9. Both figures were also two-month lows. "June saw further strong growth in output across the UK private sector, according to the latest PMI data compiled by IHS Markit and CIPS. The overall expansion in activity was only slightly slower than the record posted in May and among the fastest since the series began in January 1998. Marked increases in output were seen across both the manufacturing and service sectors as the economy continued to reopen following the Covid-19 lockdown earlier in the year," IHS Markit said.
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German Chancellor Angela Merkel's conservative alliance was maintaining its lead over the Green Party, a poll showed, with three months to go until the national election. Germans will vote on September 26 to elect a new Bundestag, or federal parliament. After 16 years in power, Merkel is not running for re-election and will be succeeded as chancellor. Support for Merkel's Christian Democratic Union and their Bavarian allies, the Christian Social Union, stands at 29% in the latest voter survey by Forsa for broadcasters RTL/ntv, a 1 percentage point rise. The Greens saw a surge in support early in the year but have since lost some of their lustre. The party was unchanged in the Forsa poll at 21%. The centre-left Social Democrats - traditionally one of two major parties alongside the CDU/CSU - gained 1 percentage point to 15%, while the pro-business Free Democrats stood at 13% and the hard-left Linke at 6%.
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The Japanese private sector suffered a continued decline in June, with slower growth in manufacturing and services remaining in contraction, data from IHS Markit and au Jibun Bank showed. The au Jibun Bank flash Japan composite purchasing managers' index stood at 47.8 points in June, compared to the final score of 48.8 in May. Overall, there was a faster decline in new orders and output, as well as a backlog of work. The headline au Jibun Bank Japan manufacturing PMI dipped to 51.5 points in June from 53.0 in May, marking a four month low. Meanwhile, the au Jibun Bank flash Japan services business activity index improved to 47.2 points from 46.5 in May, but remaining under contraction levels. New business continued to fall at an unchanged pace, while the decline in output was softer.
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Australia's private sector sector growth continued to slow in June due to a sudden lockdown in Victoria hitting demand and economic conditions, data from IHS Markit showed. The flash Australia composite output index dropped to 56.1 points in June from the final reading of 58.0 in May, marking the tenth consecutive month of expansion, but a three month low. Any reading over 50.0 signals expansion, while one below points to contraction - meaning Australian business activity expanded in June, but at a slower pace than in May. Private sector output and new orders continued to expand, however the rate of growth was slower due to stricter Covid-19 restrictions in Victoria and supply bottlenecks. In addition, stronger demand kept backlogs increased for a fifth consecutive month, however many firms continued to be constrained by issues from labour shortages to supply delays. In addition, employment remained robust, with a marginal slowdown in private sector job creation. Overall firms remained optimistic on output for the coming 12 months, but eased for the second month in a row.
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Sydneysiders were largely banned from leaving the city Wednesday as Australian authorities rushed to stop a growing outbreak of the highly contagious Delta Covid-19 variant from spreading to other regions. More than 30 people have been diagnosed with Covid-19 since the cluster emerged in the city's Bondi Beach area last week, the latest in a string of flare-ups that highlight Australia's difficulty in extinguishing outbreaks. New South Wales state Premier Gladys Berejiklian announced new restrictions that will apply for the next week, including the immediate ban on non-essential travel out of Sydney and limits on social gatherings. A "very huge proportion" of Sydney's five million residents are subject to the travel ban, which applies to seven local government areas where Covid-19 cases have been detected, she said.
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Hong Kong pro-democracy newspaper Apple Daily announced Wednesday it was printing its final edition after authorities froze its assets using a sweeping new national security law, silencing the city's most China-critical media outlet. The decision is the latest blow to Hong Kong's freedoms and will deepen unease over whether the international finance centre can remain a media hub as China seeks to stamp out dissent. Apple Daily has long been a thorn in Beijing's side, with unapologetic support for Hong Kong's pro-democracy movement and caustic criticism of China's authoritarian leaders. Those same leaders have made no secret of their desire to see the newspaper shuttered and have used the new security law to bring about its rapid demise. Owner Jimmy Lai, currently in jail for attending democracy protests, was among the first to be charged under the law after its imposition last year.
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By Lucy Heming; lucyheming@alliancenews.com
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