TOP NEWS SUMMARY: German inflation confirmed at almost 28-year high

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

Alliance News 13 October, 2021 | 10:50AM
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(Alliance News) - The following is a summary of top news stories Wednesday.

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COMPANIES

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Apple is unlikely to meet production goals for its new iPhone before the Christmas holidays because of a global electronic chip shortage. The firm had planned to produce 90 million iPhone 13s before the end of the year, but will have to settle with 80 million as suppliers Broadcom and Texas Instruments cannot meet demand, Bloomberg News said, citing sources familiar with the matter who asked to remain anonymous. Apple presented a new line of iPhones last month, with four new models, including the iPhone 13 Mini, which sells from USD700, and the iPhone 13 Pro Max, which costs USD1,100.

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Nestle acknowledged that it is one of a number of businesses being accused by the French Competition Authority of restricting competition. The watchdog alleges that 14 trade associations and 101 companies - among them, some Nestle subsidiaries in France - restricted competition related to, among others, communication on the removal of Bisphenol A from metal packaging in France. Bisphenol A is a chemical compound that is added during the production of some plastics and resins. Separately, Nestle announced that it would restructure the business with the creation of new geographic zones from January next year. The company will be organised into five zones: North America, Latin America, Europe, Greater China and Asia, Oceania and Africa.

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GlaxoSmithKline's consumer unit is drawing interest from private equity firms in what could lead to the biggest buyout of all time, Bloomberg reported Tuesday, citing people with knowledge of the matter. According to Bloomberg, Advent International, CVC Capital Partners and KKR & Co were among potential suitors evaluating the business. Further, Blackstone, Carlyle Group and Permira were also seen as likely suitors for the unit, which could be valued at GBP40 billion.

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Advertising and marketing firm WPP said its majority-owned subsidiary Finsbury Glover Hering is to merge with Sard Verbinnen & Co to create "the world's leading strategic communications firm". The transaction values the combined Finsbury Glover Hering-SVC group at an equity value of USD917 million, and SVC alone at USD303 million. WPP will be the majority shareholder of the combined group, holding a 57.4% stake. The deal is expected to complete in the fourth quarter of 2021 and the combined firm, headquartered in New York, will start operating under a new name in 2022.

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Barratt Developments backed its outlook after seeing ongoing strength in demand for homes. For the financial year to date, it has seen net private reservations per average week of 281, down slightly from 288 in the same period a year ago but up on 262 two years ago. "Whilst the net private reservation rate was 2.3% below that reported in the prior year period, this was a particularly active period reflecting both pent-up demand following the initial national lockdown, and increased Help to Buy reservation activity," the housebuilder explained. Despite global supply chain issues, Barratt said it has not experienced any significant disruption to its build programme. It continues to expect build cost inflation of between 4% and 5% for the full-year.

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Just Eat Takeaway.com reaffirmed its annual guidance on the back of a healthy rise in orders as customer demand for takeaway food fails to lessen. For the third quarter ended September 30, the food delivery firm processed 266 million orders, representing a 25% increase compared with the same period of 2020. Total gross transaction value grew 23% year-on-year to EUR6.8 billion for the period. The company reiterated full-year guidance of order growth, excluding its Grubhub business, above 45% year-on-year and a gross transaction value in a range of EUR28 billion to EUR30 billion. An adjusted earnings before interest, tax, depreciation and amortisation margin between minus 1% to minus 1.5% of GTV is expected. "With most of the world returning to pre-pandemic life, our growth in the third quarter of 2021 has remained strong. Just Eat Takeaway.com is well-positioned for autumn and winter, our traditional growth season," commented Chief Executive Jitse Groen.

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Deutsche Bank faces paying EUR500 million in damages, the Financial Times reported, after Spain's Palladium Hotel Group said the German bank mis-sold it risky foreign exchange derivatives. The claim was filed last month to the High Court in London, the FT reported, with the hotel chain claiming Deutsche took advantage of its naivety to sell it derivatives that it did not understand. The newspaper said Deutsche will defend itself "vigorously" against Palladium's claim, which it said is "without foundation". Deutsche is conducting its own internal probe into the allegation. Palladium operates 50 hotels in Europe and the Americas, including the Ushuaia Ibiza Beach Hotel and Hard Rock Ibiza.

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Gymshark has begun planning for a London stock market listing of the athletic apparel brand, roughly a year after hitting a GBP1 billion valuation, Sky News reported on Tuesday. Solihull-based Gymshark, which makes fitness gear, accessories and equipment, has held early talks with institutional investors and investment banks, Sky News reported. London is the likely location for a float of the company, which was founded in 2012 and with the help of social media, has amassed a large following among millennials. Citing a person familiar with the matter, Sky News reported an announcement could come in the next few months.

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MARKETS

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Equities and currencies were mixed on Wednesday ahead of a key US consumer price inflation reading, due 1230 GMT. A rebound by the pound was causing London's FTSE 100 index to under-perform, due to its many dollar-earning constituents. The index's oil majors and miners also were giving back some recent gains. "We have seen further signs of growth slowing and inflation rising hence lifting the overall stagflation risk," Danske Bank commented on the overall market mood. "While US job growth has disappointed the details reveal a rising issue with labour supply which monetary policy cannot easily solve. Hence we still expect Fed to announce tapering at the November meeting and ultimately hike rates in H2 2022."

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CAC 40: up 0.2% at 6,559.82

DAX 40: up 0.7% at 15,247.21

FTSE 100: down 0.2% at 7,115.84

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Hang Seng: Hong Kong market closed due to typhoon

Nikkei 225: closed down 0.3% at 28,140.28

S&P/ASX 200: closed down 0.1% at 7,272.50

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DJIA: called up 0.1%

S&P 500: called up 0.2%

Nasdaq Composite: called up 0.4%

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EUR: up at USD1.1553 (USD1.1544)

GBP: up at USD1.3631 (USD1.3595)

USD: up at JPY113.58 (JPY113.34)

Gold: up at USD1,767.55 per ounce (USD1,763.12)

Oil (Brent): down at USD82.93 a barrel (USD83.50)

(currency and commodities changes since previous London equities close)

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ECONOMICS AND GENERAL

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Eurozone industrial production growth slowed in August, figures from Eurostat showed. Month-on-month, industrial output was down 1.6% in the single currency bloc after 1.4% growth in July. This fall was in line with market expectations, according to FXStreet. On an annual basis, eurozone industrial growth growth was 5.1%, again deteriorating from July's rise of 8.0% but beating expectations for an increase of 4.9%.

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German inflation for September was confirmed at its fastest pace since 1993. German consumer prices ticked up 4.1% year-on-year in September, accelerating from 3.9% in August. This was the highest inflation rate since December 1993, when German prices rose 4.3%. Month-on-month, prices were flat.

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UK economic growth disappointed expectations, with output growing less-than-expected in August and this was compounded by a downgrade for July. Gross domestic product grew 0.4% month-on-month in August to bring economic output 0.8% below pre-virus levels. This was slightly below consensus for 0.5% growth, according to FXStreet. Services output grew by 0.3% in August, while manufacturing grew 0.8% and manufacturing 0.5%. Construction dipped 0.2%. "The economy picked up in August as bars, restaurants and festivals benefited from the first full month without Covid-19 restrictions in England. This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing," said Darren Morgan, director for Economic Statistics at the Office for National Statistics. Further, July's reading was revised down to a contraction of 0.1% from growth of 0.1%. "Later and slightly weaker data from number of industries now mean we estimate the economy fell a little overall in July," said Morgan.

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The EU on Wednesday will present a "toolbox" of measures to mitigate an energy crunch that threatens to send Europeans' power bills soaring. The European Commission has been under pressure to act on the looming crisis, even though individual EU governments are more directly responsible for their energy sources and taxation. Some EU officials accuse Russia, source of most of the imported gas into the bloc, of "blackmail" by limiting supplies to try to force Germany to activate the newly completed Nord Stream 2 pipeline across the Baltic, bypassing Ukraine. Outgoing German Chancellor Angela Merkel, however, has questioned that, suggesting there had been insufficient long-term gas contracts from European countries. The issue will headline an EU leaders' summit next week.

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Germany's centre-left Social Democrats (SPD), the Greens and the pro-business Free Democrats (FDP) are to continue their talks on a possible government formation in a smaller circle on Wednesday, they announced. After exploratory talks on Monday and Tuesday, top party officials are to put down on paper what has been negotiated so far, while Finance Minister Olaf Scholz of the SPD - who could be the next chancellor - attends G20 talks in Washington.

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The US will open its land borders with Mexico and Canada in "early November" to non-essential travellers who are fully vaccinated against Covid-19, a senior White House official announced Tuesday. The official said the administration would give the "precise date very soon" – both for the land crossings as well as international trips by plane, which the official said would be timed to "go together." The US already announced in September that it would lift bans in November on all vaccinated air passengers who undergo testing and contact tracing.

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China's exports rose unexpectedly in September, official data showed, despite fears that a recent power crunch in the country might hamper production. This followed a sharp jump in trade in the world's second largest economy in August, suggesting that overseas demand for consumer goods had surged as a domestic virus outbreak was brought to heel. But last month many factories were forced to halt operations owing to power outages caused by emission reduction targets, the surging price of coal and supply shortages – raising concern about global supply chains. Yet, exports rose a better-than-expected 28% on-year in September, according to customs authorities – up from 26% in August. However, imports missed predictions and rose 18%, just over half as much as the previous month's increase.

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By Tom Waite; thomaslwaite@alliancenews.com

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