TOP NEWS SUMMARY: UK to sell NatWest shares; Nord Stream breakthrough

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

Alliance News 22 July, 2021 | 11:12AM
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(Alliance News) - The following is a summary of top news stories Thursday.

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COMPANIES

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The UK government said it plans to sell a large part of its stake in lender NatWest Group, in a trading plan managed by US investment bank Morgan Stanley. The Treasury currently owns 6.34 billion shares in the lender, via UK Government Investments, representing a 54.7% stake. While the trading plan has been entered into on Thursday, the earliest that the sales will commence is August 12. The plan will run no later than August 11, 2022. The Treasury noted the plan allows Morgan "discretion to effect a measured and orderly sell down" of NatWest's shares on behalf of the government. The Treasury has, however, put a cap on how many shares Morgan can sell on any given day. The investment bank is limited to selling no more than 15% of NatWest's daily traded volume, in an attempt to avoid flooding the market with NatWest shares.

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Roche Holding maintained its outlook for 2021 after a rise in sales and a slip in profit in the first half. Revenue increased 4.9% year-on-year to CHF30.71 billion, about GBP24.36 billion, from CHF29.28 billion. On a constant currency basis, sales were up 8%. However, pretax profit fell 2.8% to CHF9.89 billion from CHF10.18 billion. Sales were driven by the diagnostics division, which saw 51% year-on-year growth because of high demand for tests, particularly for Covid-19. The pharmaceuticals division, which makes up about two-thirds of company revenue, saw sales fell 3% as Roche's products faced competition from biosimilar medicines made by rivals. The Basel, Switzerland-based company confirmed its outlook for sales growth in the low- to mid-single digit range at constant currency, "despite the continued strong impact of biosimilars."

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Johnson & Johnson noted a settlement to opioid-related claims in the US, with the pharmaceutical firm affirming it will contribute up to USD5 billion to a USD26 billion agreement. Officials from several US states on Wednesday unveiled a sweeping proposed settlement under which four pharmaceutical companies accused of fuelling the country's opioid epidemic would pay up to USD26 billion to resolve some 4,000 claims in federal and state courts. Under the agreement, three drug distributors – McKesson, Cardinal Health and AmerisourceBergen – along with Johnson & Johnson, would pay to resolve the claims and finance prevention and treatment programs, said a press release from New York Attorney General Letitia James, who was joined on a briefing by prosecutors from several states.

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Consumer goods firm Unilever reported interim sales growth, though noted input cost inflation. Revenue for the first half of 2021 rose 0.3% to EUR25.79 billion, while pretax profit dipped 3.6% to EUR4.37 billion. Underlying sales growth for the half-year was 5.4%, driven by volumes, though the company noted price growth stepped up in the second quarter. Unilever's underlying operating margin slipped 100 basis points to 18.8% due to investment into its brands and input cost inflation. "Competitive growth is our priority, and we are confident that we will deliver underlying sales growth in 2021 well within our multi-year framework of 3-5%, despite more challenging comparators in the second half," said Chief Executive Alan Jope. "We have seen further cost inflation emerge through the second quarter," Jope said. "Cost volatility and the timing of landing price actions create a higher than normal range of likely year end margin outcomes. We are managing this dynamically and expect to maintain underlying operating margin for 2021 around flat." Unilever added that the operational separation of the tea business is "substantially complete" and due to conclude in October. It is focused on the next phase for the business, which would include an initial public offering, sale or partnership. Unilever declared a quarterly dividend of EUR0.4268 per share, in line with what was declared for the first quarter.

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ABB reported a sharp rise in income for the second quarter of 2021, helped by lower restructuring expenses, higher demand, and an easy comparison to the same period a year prior, which was crippled by the Covid-19 pandemic. The Zurich-headquartered robotics, power, heavy electrical equipment and automation technology company said that, for the three months ended June 30, net income was USD752 million, more than doubled from USD319 million a year before. This was on revenue for the quarter which grew 21% year-on-year to USD7.45 billion from USD6.15 billion, with increased customer activity and sales from the Electrification, Motion and Robotics businesses. Looking ahead, ABB expects revenue growth for the third quarter of 2021 to be 10% at most, with orders set to grow more than revenue.

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Publicis Groupe said it will recoup all of the revenue lost in 2020 due to the robust performance of its US and Asia operations, noting it has even improved on its performance in the first half of 2019. In the first six months of 2021, the Paris-based advertising and public relations firm recorded attributable net income of EUR414 million, sharply higher from EUR136 million a year earlier. Operating income surged to EUR598 million from EUR254 million. Revenue improved 4.1% year on year to EUR5.49 billion from EUR5.28 billion, with net revenue, the firm's preferred measure, up 3.3% to EUR4.93 billion from EUR4.77 billion.

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Exxon Mobil committed more cash to sustainable causes on Wednesday, as the oil major grapples with investor pressure to go more green. The oil and gas firm said it understands the "tremendous challenge represented by climate change". It said it has supported the Paris Agreement since the accord's inception, just over five years ago. Exxon said it will invest a further USD3 billion on "lower-emission energy solutions" through to 2025. This is on top of USD10 billion is as spent over the past 20 years, the company explained. The firm also backed carbon pricing, which is essentially putting a cash sum on carbon pollution as a means to drive down emissions.

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Tesla founder Elon Musk said Wednesday he personally has invested in bitcoin and other cryptocurrencies but that he does not manipulate or "dump" the digital currencies. In a wide-ranging online panel discussion that included Twitter Inc and Square founder Jack Dorsey, Musk said he believes in cryptocurrencies as a way to "increase the power of the individual in relation to government," and that he has invested in ethereum and dogecoin in addition to bitcoin. Musk said he loses money when the value of bitcoin or other cryptocurrencies declines but that he has not been selling despite the volatility. "I pump but I don't dump," he told the forum sponsored by the Crypto Council for Innovation. "I would like to see bitcoin succeed." Musk said he expected that Tesla would resume auto sales in bitcoin which he suspended over concerns about high energy use for "mining" of the cryptocurrency.

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Separately, Anglo-Australian mining firm BHP said it has agreed to provide Tesla with supplies of nickel – a metal vital in producing high-powered batteries for electric cars. Under the agreement, the innovative carmaker will lock in supplies from a mine in Western Australia, one of the world's largest sources. Most nickel today is used in the production of stainless steel. But demand for the metal is projected to explode over the next decade, as electric vehicles become more common.

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MARKETS

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Stock markets continued their rebound on Thursday, with the FTSE 100 lagging due to a rise in the pound, which hurts its many dollar earning constituents. Wall Street also was called higher. NatWest was trading down 0.8% in London.

The day's main event will be the policy announcement by the European Central Bank at at 1345 CET, followed by a press conference with President Christine Lagarde at 1430 CET. "We were expecting a 'non-event'. Not anymore," said ING. "The conclusion of the ECB strategic review means the distribution of probabilities is skewed to lower EUR/USD," the Dutch bank commented. "The more dovish bias would imply a total reduction of the monthly purchases in 2022, which will be less than previously expected keeping EUR/USD negative." The euro was trading soft against the dollar ahead of the announcement.

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CAC 40: up 0.7% at 6,508.43

DAX 30: up 0.8% at 15,549.25

FTSE 100: up 0.3% at 7,014.13

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Hang Seng: closed up 1.8% at 27,723.84

Nikkei 225: Tokyo market closed for Marine Day holiday.

S&P/ASX 200: closed up 1.1% at 7,386.40

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DJIA: called up 0.2%

S&P 500: called up 0.2%

Nasdaq Composite: called up 0.2%

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EUR: soft at USD1.1796 (USD1.1800)

GBP: up at USD1.3735 (USD1.3684)

USD: unchanged at JPY110.25

GOLD: down at USD1,797.30 per ounce (USD1,805.13)

OIL (Brent): up at USD72.80 a barrel (USD71.86)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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The US Senate stumbled in the first test for a long-sought bipartisan infrastructure package as Republicans blocked the trillion-dollar measure's advancement, but lawmakers suggested a compromise deal was on the horizon. With Republican senators in the 50-50 chamber uniting to oppose the package moving forward in a key procedural vote, Democrats were well short of the 60 votes needed to overcome a filibuster and formally begin debate on the plan. Republicans argue that more time is needed to thrash out the details with Democrats and the White House, primarily how to raise sufficient revenue to fund the once-in-a-generation spending. But Republicans and Democrats alike expressed optimism that a deal was days away. "We'll have a pretty full outline, probably by Monday, and we'll be in favour of it then," Republican Senator Mitt Romney told AFP. Romney and the other 21 negotiators issued a joint statement after the vote saying they have made "significant progress and are close to a final agreement."

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US President Joe Biden has expressed frustration over the slowing Covid-19 vaccination rate in the US as the virus surges once again. Biden, speaking at a televised town hall in Cincinnati, said the public health crisis has turned largely into a plight of the unvaccinated as the spread of the delta variant has led to a surge in infections around the country. He said on the CNN town hall: "We have a pandemic for those who haven't gotten the vaccination - it's that basic, that simple." The president also expressed optimism that children under 12 will be approved for vaccination in the coming months. But he displayed exasperation that so many eligible Americans are still reluctant to get a shot. US hospitalisations and deaths are nearly all among the unvaccinated. But Covid-19 cases nearly tripled in the US over two weeks amid an onslaught of vaccine misinformation that is straining hospitals, exhausting doctors and pushing clergy into the fray.

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US Deputy Secretary of State Wendy Sherman will travel to China this weekend to address deepening tensions, the State Department announced Wednesday, in the highest-level visit under US President Joe Biden. The trip is going ahead despite nearly daily new rifts between the two powers including on human rights and cybersecurity, indicating that both sides want at least to test the waters to see if diplomacy can bring more stability to a relationship often described as the most consequential to the world. "These discussions are part of ongoing US efforts to hold candid exchanges with PRC officials to advance US interests and values and to responsibly manage the relationship," a State Department statement said, referring to the People's Republic of China.

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The US and Germany have reached a breakthrough in their conflict regarding the German-Russian Nord Stream 2 pipeline, US State Department diplomat Victoria Nuland said. Berlin also confirmed that a breakthrough had been reached, which should help to facilitate the intended new start in US-German ties after the difficult years under former US president Donald Trump. The US remains highly sceptical of the almost-complete pipeline, but the Biden administration had signalled that it was prepared to soften its stance on the pipeline, which is designed to transport Russian gas to Germany, bypassing Ukraine, which relies on revenue from the gas transit. During negotiations with representatives of the German government, the US side had been in close consultation with Ukraine. Nuland said Germany had committed itself in the agreement, among other things, to measures should Russia attempt to use energy as a weapon or commit further aggressive acts against Ukraine.

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By Tom Waite; thomaslwaite@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
NatWest Group PLC 220.70 GBX 1.42

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