(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Wm Morrison Supermarkets will go up for auction, concluding a three-month bidding battle for the Bradford, England-based supermarket chain. The UK Takeover Panel said the auction will take place over five rounds, all on Saturday. Clayton, Dubilier & Rice and Softbank Group-owned Fortress, are the two suitors vying to acquire the FTSE 100-listed grocer. At the start of July, Morrisons agreed a GBP6.3 billion deal from a consortium of investment groups including Fortress, which was later increased to 272 pence, plus a special 2p dividend for each Morrisons share. It came after Morrisons rejected a first CD&R proposal worth GBP5.5 billion. However, Morrisons later accepted a GBP7.0 billion takeover offer from CD&R.
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Clothing and homewares retailer Next raised its profit guidance and promised shareholders a special dividend early next year. For the six months to July 31, revenue was GBP2.12 billion, up 5.2% from GBP2.01 billion at the same time in 2019, and pretax profit was GBP346.7 million, up 5.9% from GBP327.4 million. Compared to last year, Next swung to a pretax profit from a loss of GBP16.5 million. The retailer said full price sales in the past eight weeks were up 20% versus 2019, "materially exceeding" expectations. This was higher than with its previous guidance for the second half of its financial year of 6%. However, the business did warn of "some degradation" in service caused by potential labour shortages in the run up to Christmas if the UK government did not relax some immigration rules.
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Electricity distributor SSE said its Renewables unit has signed an agreement with Pacifico Energy, one of Japan's largest developers of renewable energy, to create a joint ownership company that will pursue offshore wind energy development projects in Japan. SSE explained the creation of the joint ownership company involves the acquisition by SSE Renewables of an 80% interest in an offshore wind development platform from Pacifico Energy for USD208 million. Separately, SSE said it remains focused on long-term, sustainable financial performance and remains confident about delivery of solid financial performance for the full year. It expects to report adjusted earnings per share in the range of 7.5p to 10p for the half-year to September 30. SSE also expects to pay interim dividend of 25.3p, in line with 80p plus RPI annual inflation.
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South Africa's Distell Group said that it is making "satisfactory" progress in the discussions for its majority acquisition by Dutch brewer Heineken. In May, the Stellenbosch-based brewing and beverages firm confirmed that it had been approached by Amsterdam-based Heineken and has been in discussions over the potential takeover since. Distell has a market capitalisation of around ZAR41.17 billion. Heineken has an equity value of EUR51.60 billion, about ZAR905.45 billion. "Satisfactory progress has been made with regards to the discussions with certain issues still to be agreed. The parties are committed to finalising these outstanding issues in the shortest possible time frame and Distell will inform shareholders immediately upon their finalisation," Distell said.
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Micron Technology on Tuesday reported a strong end to its financial year, with fourth quarter earnings more than doubling. Revenue for the fourth quarter to September 2 jumped 36% to USD8.27 billion from USD6.06 billion a year ago, leading net income to soar to USD2.72 billion from just USD988 million. Diluted earnings per share surged to USD2.39 from USD0.87. Micron President & Chief Executive Sanjay Mehrotra said: "The demand outlook for 2022 is strong, and Micron is delivering innovative solutions to our customers, fuelling our long-term growth." For the first quarter of the new financial year, it expects to achieve revenue of around USD7.65 billion, give-or-take USD200 million, which would be a sequential slip from its fourth quarter result. EPS is also set for a quarter-on-quarter dip, seen around USD2.00 in a range of USD0.10 either side.
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Banco Santander on Tuesday said it plans to return EUR1.7 billion to shareholders through dividends and a share buyback. The Spanish lender has decided to make a interim distribution equivalent to 40% of underlying profit for the first half of 2021. This will take the form of a dividend worth 4.85 cents per share, and the balance made up by a share buyback programme worth EUR841 million. It will unveil a further and final distribution for 2021 in the first quarter of next year. "Should the trend in the bank's performance for the first half of the year continue, it would result in a total cash dividend for 2021 that is in line with the cash dividend paid in 2019 (before regulatory restrictions were applied), and a total buyback equivalent to around 3% of the outstanding share capital," the bank said.
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MARKETS
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Stock markets were rebounding in Europe on Wednesday and were set to bounce back in the US, but investor concerns about price inflation and the withdrawal of central bank stimulus remain in the background. "The issues dominating this week – an energy crisis in Europe, electricity constraints in China and the imminent shut down of the US government – continue to dominate headlines," RMB Markets said, adding: "There is plenty of uncertainty around to drive market volatility higher." The dollar was rising across the board, benefiting as a safe haven and from the prospect of tighter US monetary policy.
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CAC 40: up 1.1% at 6,577.38
DAX 40: up 1.0% at 15,406.13
FTSE 100: up 0.9% at 7,090.63
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Hang Seng: closed up 0.7% at 24,663.50
Nikkei 225: closed down 2.1% at 29,544.29
S&P/ASX 200: closed down 1.1% at 7,196.70
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DJIA: called up 0.6%
S&P 500: called up 0.7%
Nasdaq Composite: called up 0.9%
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EUR: down at USD1.1665 (USD1.1684)
GBP: down at USD1.3507 (USD1.3545)
USD: firm at JPY111.33 (JPY111.27)
Gold: up at USD1,742.60 per ounce (USD1,739.12)
Oil (Brent): down at USD78.47 a barrel (USD79.00)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Former Japanese foreign minister Fumio Kishida is set to become the country's new prime minister after he won Wednesday's leadership election for the ruling Liberal Democratic Party. He is expected to succeed Yoshihide Suga as Japan's premier on Monday, based on the LDP majority in the lower house of parliament. The 64-year-old beat Taro Kono, the minister for the coronavirus vaccination campaign, for the top party job in a run-off vote. Suga threw in the towel as Japan's leader after just one year in power after garnering much criticism for his handling of the coronavirus crisis and unpopular decision to go ahead with the Olympics despite the pandemic. Kishida will have to work quickly to improve the party's tarnished image among Japan's public, with the election for parliament's lower house scheduled for November. Kishida wants to bolster Japan's defence and expand the military budget. Like his predecessors, he supports Japan's close security alliance with the US and wants to form a counterweight to China's growing might, together with democratic partners in Europe and Asia. His economic policy centres on a "new capitalism" to reduce the gap between rich and poor, which was exacerbated by the Covid-19 pandemic.
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US President Joe Biden postponed a Wednesday trip to Chicago to stay in Washington and fight for his domestic agenda, which hangs from a thread in Congress, the White House said. Biden had been meant to address his Covid-19 vaccination policy in the Midwestern city, but his two signature legislative policies – a USD1.2 trillion infrastructure bill and an even bigger social spending package – risk failing in the divided legislature. "He will now remain at the White House tomorrow to continue working on advancing these two pieces of legislation to create jobs," an administration official said late Tuesday. Lawmakers were also scrambling to break a deadlock over the prospect of a first-ever US debt default that would plunge the economy into a downwards spiral, alarming investors as the cliff edge draws closer. The government is likely to run out of cash on October 18, Treasury Secretary Janet Yellen warned, unless Congress raises the federal borrowing cap.
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Talks between the US and Europe to settle a dispute over steel and aluminium are at "advanced stages" and an agreement could be reached by early November, the EU trade commissioner said Tuesday. Citing national security concerns, former president Donald Trump in June 2018 levied tariffs of 25% on steel and 10% on aluminium from several countries and blocs, including the EU. The Europeans retaliated with tariffs on a host of American goods, including tobacco, corn, rice, orange juice, jeans and Harley-Davidson motorcycles. On his current visit to Washington, EU Trade Commissioner Valdis Dombrovskis said "discussions are in advanced stages, so I don't think there's a shortage of time." "There is a willingness to find a solution," he added, saying both sides had put in "very intensive" work on the issue.
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Eurozone employment expectations rose to a near three-year high in September, suggesting sentiment in the single currency bloc's jobs market has jumped from pandemic lows. Figures from the European Commission also showed the wider economic sentiment indicator improved by 0.2 of a point to 117.8 points in September. The print also confirmed an improved consumer confidence reading. The commission said the employment expectations indicator rose by 0.8 of a point to 113.6 points, its best level since "summer/autumn 2018". The indicator's long-term average is 100.0 points. Meanwhile, on the improvement to the economic sentiment indicator, the commission put this down to improving confidence in construction and among consumers.
Flash figures earlier in September, which were then confirmed on Wednesday, showed consumer confidence in the EU topped pre-virus levels in September. The consumer confidence indicator showed a 1.3 point hike for the eurozone, taking it to minus 4.0, above pre-virus levels.
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Troops will begin training to help deliver petrol supplies as UK Prime Minister Boris Johnson said he was making preparations to deal with potential problems until "Christmas and beyond". Johnson said the situation on the filling station forecourts is "stabilising" as he urged motorists to go about their business in the normal way. A decision to put 150 military drivers on standby has been formally approved, meaning they can begin training in case they are required. A further 150 drivers' mates are also ready to help out as part of the military effort. "They're still on standby but can now start training now it's approved," a UK government source told PA.
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UK mortgage approvals eased in August as the government's stamp duty holiday draws to a close, figures from the Bank of England showed. UK mortgage approvals were 74,500 in August, down from 75,100 in July. The latest figure was slightly above market expectations, cited by FXStreet, of 73,000, but was the lowest since July 2020. The UK government's stamp duty holiday will officially end on Thursday and will return to its original rate from Friday. UK Chancellor of the Exchequer Rishi Sunak introduced the tax break in July 2020 in a bid to support the property market.
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UK retail shops lowered prices at the slowest pace annually since the start of last year, as rising cost pressure was pushed onto consumers. Shop prices declined by 0.5% year-on-year in September, according to the latest British Retail Consortium-NielsenIQ shop price index. The rate of decline was slower than August's 0.8% fall and was the slightest fall since January 2020. The average decrease over the past 6 and 12 months were 0.8% and 1.4%, respectively. Non-food deflation slowed to 1.0% in September from 1.2% in August. Food prices rose 0.1% in September, following five months of deflation, including a 0.2% drop in August. Fresh food deflation, meanwhile, eased to 0.4% in September from 0.6% in August.
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Producer prices in Italy slowed their increase in August on a month-on-month basis, but prices remain elevated compared to 2020, data from national statistics office Istat showed. Producer prices rose by 0.5% in August from July, slowing from the 2.9% increase in July from June. Prices jumped by 12% year-on-year in August, the highest producer price inflation rate ever recorded, accelerating slightly from a 11% annual gain in July.
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Spain's inflation rate accelerated at a quicker pace than expected in September. According to preliminary numbers from INE, Spain's annual inflation rate ticked up to 4.0% in September, from 3.3% in August. According to consensus cited by FXStreet, September's inflation rate was expected to be 3.5%, so the actual figure topped forecasts. The harmonised consumer price index, allowing for EU-wide comparison, quickened to 4.0% annually, from 3.3% in August. The figure beat forecasts of 3.7%.
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Import prices in Germany grew at a stronger pace than expected in August. According to Destatis, import prices in Germany climbed 17% annually in August, beating forecasts of 16% growth, according to consensus cited by FXStreet. In July, they had risen 15%. Export prices, meanwhile, surged 7.2% yearly in August, the highest ever hike since a 7.3% rise in September 1981. August's growth quickened from 6.3% in July.
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Despite his defeat in the German election last weekend, Christian Democrat (CDU) leader Armin Laschet said he plans to hold talks with the Green Party and the pro-business Free Democrats (FDP) about forming a coalition government. "We will now talk to the FDP and the Greens in the next few days. Our offer of talks stands and I think that concrete talks are now the right thing to do," he said on Tuesday evening, after a meeting of his party's parliamentary group, which includes the CDU's Bavarian sister party, the Christian Social Union (CSU). "We did not win this election," Laschet said, but added that in such a confusing situation, parties should be prepared to act. The conservative bloc fell to a record low of 24.1% in the Bundestag elections, while the Social Democrats (SPD) gained in support, compared to the last elections, to capture 25.7%.
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Former Australian leader Malcolm Turnbull said his successor "deliberately deceived" France when he scrapped a multi-billion-euro submarine deal with Paris in favour of nuclear-powered US or British alternatives. Turnbull, whose government approved the submarine deal with France in 2016, was scathing about the way Prime Minister Scott Morrison handled the switch, which was part of a new strategic alliance with the US and Britain. "Morrison has not acted in good faith. He deliberately deceived France. He makes no defence of his conduct other than to say it was in Australia's national interest," Turnbull told the National Press Club in Canberra. "France believes it has been deceived and humiliated, and she was. This betrayal of trust will dog our relations with Europe for years," he added. "The Australian government has treated the French Republic with contempt."
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By Tom Waite; thomaslwaite@alliancenews.com
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