(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Toyota Motor revealed that it will trim its global vehicle output for November by as much as 15% due to shortages of parts. The carmaker reported that production has remained below planned levels since August due to persisting problems in the supply of parts including chips needed for car manufacturing. It now plans global production volumes in November to reach between 850,000 and 900,000 vehicles, down from previous plans to produce around 1 million. However, November's production output will still be a step up from around 830,000 vehicles produced in the month a year before and between 500,000 to 600,000 made each in September and October this year.
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Insurance Australia Group said it is working with the Australian Securities & Investments Commission following regulator's launch of federal court action. The case relates to subsidiary Insurance Australia Ltd failing to honour discount promises made to customers between March 2014 and September 2019, including on home, motor, caravan and boat insurance. IAG said it self-referred to ASIC in 2019 and is now working closely with the regulator on a remediation program, which includes no civil penalty outcome as long as compensation is offered. Refunds covered by cash provisions established in last two years, with 80% affected already compensated.
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UK wealth management platform Hargreaves Lansdown reported a slight dip in revenue as it said the "normalisation" of retail investment activity post-pandemic has been in line with its expectations. Assets under administration stood at GBP138.0 billion at the end of September, up 2% since June 30. It reported net new business of GBP1.3 billion in the quarter and net new clients at 23,000, slowing from the year ago's addition of 31,000, to take active client numbers to 1.7 million. Revenue slipped to GBP142.2 million from GBP143.7 million a year ago. Asset-based revenue was higher, but this was more than offset by a drop in interest on client money and a reduction in share-dealing revenue. "As anticipated share-dealing volumes have declined post Covid lockdowns and across the quarter averaged 861,000 deals per month versus 980,000 in the quarter last year and 479,000 the year before," the Bristol-based company said.
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Educational publisher Pearson backed full-year forecasts as it continues to bolster its digital offering. For the nine months to the end of September, total sales were up 10% on an underlying basis. All segments saw growth except for Higher Education, where sales fell 7% as growth in international courseware, including Canada and the UK, was more than offset by a 9% decline in US Higher Education Courseware. Pearson pointed to a decline in US enrolments, particularly in community colleges. More positively, its new US learning app, Pearson+, launched in late July and is "progressing well" with over two million users. Pearson said it remains on track to deliver full-year adjusted operating profit in line with market expectations, which it placed at GBP377 million. This would be up from GBP313 million in 2020, but still far lower than the GBP581 million achieved in 2019.
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Rio Tinto lowered its 2021 guidance for iron, bauxite and mined copper after a "difficult" third quarter. In the three months that ended September 30, Pilbara iron ore shipments rose 2% year-on-year to 83.4 million tonnes and rose by 9% from the second quarter. Pilbara iron ore production slipped 4% from last year to 83.3 million tonnes but increased 10% from the previous quarter. The Pilbara mine is in Western Australia. Bauxite production in the third quarter slipped by 3% to 14.0 million tonnes from last year, but was up 2% on the second quarter. Aluminium production was down 3% annually to 774,000 tonnes and fell 5% from the previous quarter.Mined copper was down 3% from last year to 125,200 tonnes but 8% higher from the second quarter.
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Microsoft on Thursday said it will shut down career-oriented social network LinkedIn in China, citing a "challenging operating environment" as Beijing tightens its control over tech firms. The US-based company will replace LinkedIn in China with an application dedicated to applying for jobs but without the networking features, according to senior vice president of engineering Mohak Shroff. "We're... facing a significantly more challenging operating environment and greater compliance requirements in China," Shroff said in a blog post. According to The Wall Street Journal, LinkedIn was given a deadline by Chinese internet regulators to better oversee content on the site. LinkedIn, which launched in China in 2014, lets people use personal and professional relationships to find job opportunities.
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Johnson & Johnson turned to a bankruptcy court on Thursday in an attempt to resolve ongoing litigation tied to selling baby powder containing cancer-causing asbestos. The New Jersey-based pharmaceutical firm said its newly created subsidiary LTL Management, formed specifically to manage claims in the cosmetic talc litigation, had filed for voluntary bankruptcy protection. The filing is intended to resolve all claims in a "manner that is equitable to all parties", including any current and future claimants, Johnson & Johnson stated, adding it will provide funding to LTL for the payment of any debts the bankruptcy court determines are owed and will also establish a USD2 billion trust for the same purpose.
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MARKETS
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Equity markets in Asia and Europe carried through the strong rally on Wall Street on Thursday, which sent the Dow up 1.6%. Despite warning about production issues, Toyota shares added 0.4% in Tokyo. The pound and euro both were stronger against the dollar, but the US currency was rising against the yen, topping JPY114 for the first time in almost three years.
Capital Economics expects to see a stronger dollar but not because of the expected tapering of stimulus by the US Federal Reserve. "We doubt that the direct effects of the tapering of the Fed’s asset purchases will have much of an impact on the US dollar, and think that other factors will be more important in pushing the greenback higher," said Jonathan Peterson, markets economist at Capital. "We think tapering is likely to coincide with, rather than cause, a stronger dollar. Instead, our view remains that strong inflationary pressures in the US will underpin a gradual normalisation of Fed policy, pushing US Treasury yields and the dollar higher."
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CAC 40: up 0.3% at 6,706.25
DAX 40: up 0.3% at 15,502.87
FTSE 100: up 0.2% at 7,220.33
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Hang Seng: closed up 1.5% at 25,330.96
Nikkei 225: closed up 1.8% at 29,068.63
S&P/ASX 200: closed up 0.7% at 7,362.00
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DJIA: called up 0.3%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.2%
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EUR: up at USD1.1605 (USD1.1587)
GBP: up at USD1.3730 (USD1.3680)
USD: up at JPY114.35 (JPY113.63)
Gold: down at USD1,784.93 per ounce (USD1,797.11)
Oil (Brent): up at USD84.78 a barrel (USD83.75)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The eurozone's trade surplus for August fell well short of expectations, according to data from Eurostat. The non-seasonally adjusted trade balance for August was EUR4.8 billion, diving from EUR20.7 billion in July and undershooting forecasts, according to FXStreet, for a surplus of EUR16.1 billion. In August 2020, the bloc's surplus was EUR14.0 billion. Exports grew 18% year-on-year to EUR184.3 billion but import growth outpaced this, up 27% to EUR179.5 billion. The seasonally-adjusted trade balance for August came in at EUR11.1 billion, down from EUR13.5 billion in July and again below forecasts for a rise to EUR19.3 million.
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Consumer prices declined in France in September, according to figures from the National Institute of Statistics & Economic Studies, driven by services. The consumer price index fell 0.2% month-on-month in September due to a sharp drop in the price of services and a seasonal decline in the prices of some tourism-related services. Year-on-year, consumer prices increased 2.2%, after being up 1.9% in August. The increase in annual inflation was mainly due to an acceleration in the prices of services on an annual comparison, up 1.4% yearly, accelerating from 0.7% in August. Energy prices rose 15%. On a harmonised basis, allowing for EU-wide comparison, French consumer price growth slowed to 1.3% yearly in September from 1.5% in August. Harmonised CPI was 0.2% lower monthly, after a 0.7% climb in August.
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The annual rate of consumer price inflation in Italy accelerated to 2.5% in September from 2.0% in August, though the final figure for September was slightly below the preliminary reading of 2.6%, figures from Istat showed. The rise in the consumer price index was driven by higher energy product food product and durable goods prices. So-called 'core-core' inflation rate, which excludes both fresh food and energy prices, still accelerated to 1.0% in September from 0.6% in August. On a monthly basis, consumer prices declined by 0.2%, switching from a 0.4% rise in August. The harmonized index of consumer prices, calculated for EU-wide comparison, rose by 1.3% on monthly basis in September, having increased by just 0.2% in August from July. It climbed by 2.9% on annual basis, accelerating from 2.5% in August, but was just below the flash estimate of a 3.0% increase.
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China's economic growth is expected to have slowed further in the third quarter, according to an AFP poll of analysts, with a mounting energy crisis and property market tremors casting a pall as the country's post-Covid recovery lost steam. While the world's number-two economy bounced back quickly from the coronavirus outbreak last year, with gross domestic product growth returning to pre-pandemic levels, economists say further slowdown is "inevitable". Growth is forecast to come in at 5.0% on-year for July-September by the 12 analysts polled by AFP, representing a sharp slowdown from the 7.9% clocked in the previous three months. They also downgraded their full-year growth expectations to 8.1%, from the 8.5% predicted in a July poll. Official figures will be released on Monday.
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Sydney will scrap all quarantine requirements for travellers from next month, officials said, an abrupt step toward reopening Australia's long-shuttered borders. In a surprise announcement, Premier Dominic Perrottet of New South Wales said that from November 1 vaccinated travellers would be allowed to enter the state without quarantine of any kind. "For double vaccinated people around the world, Sydney, New South Wales, is open for business," Perrottet said. But Perrottet's suggestion that tourists and students could be weeks away from returning to Australia was promptly slapped down by the country's Prime Minister Scott Morrison – whose government controls borders, while quarantine rules are a state issue. "All we are talking about now is Australian citizens, residents and their immediate families," Morrison said, insisting he would not open the borders to visitors just yet.
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French economic minister Bruno Le Maire said that implementing a global minimum tax in 2023 should remain a "common goal," though he acknowledged taxing global tech giants remains an issue. The deal brokered by the Organisation for Economic Co-operation & Development sets a global tax of 15% and is aimed at stopping international corporations from slashing tax bills by registering in nations with low rates. A deal by 2023 "must remain our common goal for the concrete implementation of the international agreement on taxation," Le Maire told AFP in Washington on the sidelines of annual meetings of the IMF and World Bank.
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US President Joe Biden signed into law Thursday a bill to lift the nation's borrowing authority, averting the threat of a first-ever debt default – but only for a few weeks. On Tuesday the Democratic-controlled House of Representatives voted along party lines to pass the stop-gap USD480 billion hike, which advanced from the Senate last Thursday after weeks of heated debate. Without this increase in the debt limit, the Treasury warned that the federal government would be incapable of securing and servicing loans after October 18. This increase in the debt ceiling "is expected to be sufficient to allow the Federal Government to continue to meet its full commitments through early December," the White House said in a one sentence statement announcing Biden signed the bill. The new arrangement merely kicks the can down the road, possibly to complicate another major funding deadline – a shutdown that would begin from December 3 when the government's coffers theoretically run out.
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US Trade Representative Katherine Tai on Thursday signaled a shift in Washington's stance on the World Trade Organization's dispute resolution process, saying the US wanted to thaw relations with the global trade body. "We all recognize the importance of the WTO, and we all want it to succeed," Tai said in a speech before The Geneva Institute's Geneva Trade Platform. Under then-president Donald Trump, the US brought the WTO's dispute settlement system to a grinding halt in December 2019 by blocking the appointment of new judges to the key Appellate Body. Tai, appointed by Trump's successor Joe Biden, indicated Washington is looking to boost ties and improve how trade conflicts are settled by the WTO. The body's seven-member Appellate Body can uphold, modify or reverse the initial findings of a WTO dispute panel.
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By Tom Waite; thomaslwaite@alliancenews.com
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