(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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BP raised its second-quarter dividend and joined oil peer Royal Dutch Shell in setting plans for a big share buyback. In addition, BP dangled the prospect of more such returns to shareholders as oil prices continue to recover from pandemic lows. For the second quarter of 2021, BP swung to a replacement cost profit attributable to shareholders of USD2.38 billion from a USD17.66 billion loss a year earlier. Total second quarter revenue rose 81% year-on-year to USD37.60 billion from USD20.78 billion. BP lifted its dividend and unveiled a USD1.4 billion share buyback. BP declared a dividend of 5.46 cents for the quarter, up 4.0% from 5.25 cents a year ago. If oil prices are at around USD60 per barrel, BP expects to deliver buybacks of around USD1.0 billion per quarter. In addition, it plans to kick off a share buyback of USD1.4 billion using surplus cash flow from the first half.
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Stellantis reported a surge in profit in its first six months, but the company formed from the merger of PSA and Fiat Chrysler will be forced to slow down production in the next quarter. In the six months to June 30, net profit jumped to EUR5.80 billion from EUR797 million a year before. Net revenue kicked into a higher gear, rising to EUR72.61 billion from EUR19.61 billion. Pro forma net revenue rose to EUR75.31 billion from EUR51.67 billion. Stellantis said the global shortage of semiconductors that forced the company to cut production by 700,000 vehicles. Palmer said production would be reduced by another 500,000 vehicles in the third quarter but that the chip shortage is not expected to worsen.
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Fellow automaker BMW reported record sales and profit in the second quarter of 2021 on the back of strong demand and continued good pricing. In the three months to June 30, net profit surged to EUR4.79 billion from a EUR212 million loss the year before. Revenue jumped 43% year-on-year to EUR28.58 billion from EUR19.97 billion. Automotive deliveries rose 45% in the second quarter to 702,441 from 485,464, while motorcycles deliveries increased 55% to 65,018 from 41,933.
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Precious metals miner Fresnillo posted a profit surge as metal prices improved in the first half of the year. Total revenue for the first half of 2021 was USD1.47 billion, up 39% on a year ago. Cost of sales rose at a slower pace, up 17% to USD860.1 million. This helped pretax profit to triple to USD445.4 million from USD127.9 million a year ago. The average realised silver price increased 57% from a year before to USD26.4 per ounce, while the average realised gold price rose 6.7% to USD1,789.2 per ounce. Gold was quoted at USD1,808.59 an ounce early Tuesday, lower than USD1,814.25 on Monday. Fresnillo declared an interim dividend of 9.90 cents per share. The miner said it remains to track to hit its full-year silver and gold production guidance. "We are assessing any potential impact that might result from the implementation of the new law restricting the ability to subcontract labour in Mexico. However, these new measures are not expected to materially impact second half production," Fresnillo noted.
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Standard Chartered reported "encouraging" first half results, with profit improved thanks to a credit release, and expects the momentum to continue into the second half. In the six months to June 30, the London-headquartered but Asia-focused lender recorded pretax profit of USD2.56 billion, up sharply from USD1.63 billion a year before. Aiding the profit boost was a sharp drop in the bank's credit provision, which turned into a USD51 million release in the first half compared to the USD1.58 billion provision booked last year. StanChart's operating income slipped 6% year on year to USD7.63 billion from USD8.10 billion. Net interest income fell 4% to USD3.38 billion from USD3.50 billion, while other income dropped 7% to USD4.24 billion from USD4.55 billion. The lender's net interest margin worsened to 1.22% from 1.40%. StanChart declared an interim dividend of 3 US cents and plans a USD250 million share buyback, which is expected to start "imminently".
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Sanofi has agreed to buy clinical-stage mRNA therapeutics company Translate Bio in a deal that could be worth USD3.2 billion. The Paris-based pharmaceuticals firm has entered into an agreement with the US's Translate Bio that will see Sanofi acquire all outstanding shares for USD38.00 per share, representing a total equity value of around USD3.2 billion. "Translate Bio adds an mRNA technology platform and strong capabilities to our research, further advancing our ability to explore the promise of this technology to develop both best-in-class vaccines and therapeutics," said Sanofi Chief Executive Paul Hudson. Translate Bio, based near Boston, Massachusetts, partnered with Sanofi in 2018 to develop mRNA vaccines and expanded this further in 2020 to address current and future infectious diseases. There are two ongoing mRNA vaccine clinical trials under the partnership including the Covid-19 vaccine phase 1/2 study.
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A US labour official has recommended the results be nullified in a failed vote to unionise Amazon workers at an Alabama warehouse, the union in the effort said Monday, opening a possible path to a new election. The recommendation by a hearing officer is a key step in potentially overturning the April ballot, which aimed to create the first union at a US-based Amazon facility but which the union alleges was tainted by the company's interference. US labour watchdog the National Labor Relations Board would need to give its approval for the proposal to take effect. The results, which showed a wide majority of workers rejecting the move, capped a bruising months-long battle that sparked intense debate over workplace conditions at Amazon, which has more than 800,000 US employees. Amazon has held firm that it did not interfere with the voting, and said it will appeal the hearing officer's recommendation.
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MARKETS
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European shares shrugged off mostly negative sessions in the US and Asia to trade slightly higher on Tuesday. Paris was outperforming, helped by positive half-year results from car maker Stellantis, which was up 4.2% in Paris and trading up 5.4% in the New York pre-market.
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CAC 40: up 0.7% at 6,723.44
DAX 30: marginally higher, up 4.14 points at 15,572.87
FTSE 100: up 0.5% at 7,116.08
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Hang Seng: closed down 0.2% at 26,194.82
Nikkei 225: closed down 0.5% at 27,641.83
S&P/ASX 200: closed down 0.2% at 7,474.50
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DJIA: called up 0.4%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.1%
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EUR: flat at USD1.1883 (USD1.1880)
GBP: firm at USD1.3910 (USD1.3900)
USD: down at JPY109.16 (JPY109.30)
GOLD: down at USD1,810.63 per ounce (USD1,814.25)
OIL (Brent): down at USD73.17 a barrel (USD73.58)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Authorities in Wuhan said they will test its entire population for Covid-19 after the central Chinese city where the coronavirus emerged reported its first local infections in more than a year. The city of 11 million is "swiftly launching comprehensive nucleic acid testing of all residents", senior Wuhan official Li Tao said at a press conference on Tuesday. Wuhan officials announced on Monday that seven locally transmitted infections had been found among migrant workers in the city, breaking a year-long streak without domestic cases after it squashed an initial outbreak with an unprecedented lockdown in early 2020. China has confined the residents of entire cities to their homes, cut domestic transport links and rolled out mass testing in recent days as it battles its largest coronavirus outbreak in months. China reported 61 domestic cases on Tuesday as an outbreak of the fast-spreading Delta variant reached dozens of cities after infections among airport cleaners in Nanjing sparked a chain of cases that have been reported across the country.
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The Reserve Bank of Australia left its cash rate target unchanged, pointing out that economic recovery in Australia has been stronger than was earlier expected. The central bank left its the cash rate target at 0.1% and the interest rate on Exchange Settlement balances of 0%. The RBA will maintain the target of 10 basis points for the April 2024 Australian government bond, and noted it will continue to purchase government securities at the rate of AUD5 billion a week until early September and then AUD4 billion a week until at least mid-November.
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Factory price inflation in the eurozone accelerated as expected in June. Eurostat said producer prices in the bloc jumped 10.2% on an annual basis, ticking up from 9.6% growth in May and only just lagging consensus forecasts, according to FXStreet, for a 10.3% rise in June. Price growth was driven by the energy sector, which saw prices surge 25%. Prices for intermediate goods rose 11%. Month-on-month for the entire euro area, prices increased 1.4%, in line with forecasts and picking up from 1.3% in May.
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The Irish manufacturing sector saw growth slow a touch in July, but is still expanding at record rates, survey results from IHS Markit showed. The AIB manufacturing purchasing managers' index registered a three-month low of 63.3 points in July, down from 64.0 in June and May's all-time high of 64.1. Any figure greater than 50.0 indicates overall improvement of the sector. Nevertheless, the latest figure still signalled a rapid overall improvement in Irish manufacturing business conditions at the start of the second half of 2021, and stronger growth than in any preceding period since the survey began in 1998, AIB noted.
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UK plans for an "amber watchlist" have been abandoned as ministers prepare to review the traffic light system which will decide the travel rules for most of August. Prime Minister Boris Johnson pledged to keep travel rules as simple as possible on Monday and ministers are due to carry out a review meeting on Thursday. The government had been considering the new category for nations at risk of being moved into the red group which requires hotel quarantine for 10 days at a cost of GBP1,750 for an adult. But following a backlash by Tory MPs, ministerial concerns and complaints from the travel industry, government sources confirmed there would be "no amber watchlist". The confirmation came after Johnson said "a balanced approach" was necessary, adding: "What I want to see is something that is as simple and as user-friendly for people as possible."
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Nicola Sturgeon is set to announce if Scotland will lift its coronavirus restrictions and move beyond the current Level 0 rules in place. Her statement on Tuesday afternoon will say whether or not most measures implemented north of the border as a result of the pandemic last March are to be lifted on Monday, August 9 as hoped. The Scottish first minister set the date in June, even before the move to Level 0 on July 19 which increased the numbers of people who could gather and extended the opening hours of hospitality. Other businesses such as soft play were finally allowed to reopen – however nightclubs are among those still closed ahead of Tuesday's statement in a virtual session of the Scottish Parliament. Sports stadia and concert venues may go back to being able to welcome full capacity crowds again for the first time in nearly 18 months if changes are approved.
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US Treasury Secretary Janet Yellen on Monday called on Congress to take steps to address the federal government's borrowing limit which was hit on Sunday. Congress suspended the debt limit in 2019, but the two-year suspension lapsed July 31, forcing Treasury to begun taking "extraordinary measures" to remain under the ceiling and continue funding government operations. But private economists estimate those steps will only buy the government a few weeks after which debt repayments would be at risk unless the debt limit is increased or suspended. "I respectfully urge Congress to protect the full faith and credit of the US by acting as soon as possible," Yellen said in a letter to congressional leaders. The debt limit was reset to the total as of Friday, just over USD28 trillion, according to Treasury figures. The non-partisan Congressional Budget Office said this year's budget deficit will be USD3 trillion, second only to the record deficit in 2020.
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By Tom Waite; thomaslwaite@alliancenews.com
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