(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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A federal judge on Tuesday ruled that US regulators' re-worked anti-trust case against Facebook can go ahead, saying the complaint was more robust and detailed than the version denied last year. The US Federal Trade Commission has alleged the social media giant, which has renamed itself Meta Platforms, holds an illegal monopoly by acquiring potential competitors that it now owns like Instagram and WhatsApp. Judge James Boasberg's ruling is a blow to Facebook, which faced renewed scrutiny last year after a whistleblower leaked documents showing executives knew the harm their services could cause to teens, democracy and users' well-being. The FTC "may well face a tall task down the road in proving its allegations," but the case will not be dismissed, ruled Boasberg, who last year tossed out the original suit. His ruling Tuesday denied a push by Facebook, which did not reply to a request seeking comment, to also dismiss the re-worked complaint.
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Twitter has made a minority investment in Aleph Group, a global partner to digital media players, Aleph said on Tuesday. The financial terms were not disclosed. Aleph noted that the investment will help support its educational efforts worldwide. This includes building a proprietary educational tech platform, digital advertising education, training and certification to over 50,000 digital professionals in 90 countries across five continents, and efforts to create new digital jobs in underserved markets.
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Citigroup said it will exit its Mexican consumer banking business, the latest reorganization effort to steer the US financial heavyweight towards higher-return ventures. The New York-based bank plans to cease operations in Mexico in consumer, small business and middle-market customers, but will maintain an institutional client business in the country to provide financial advisory and private banking services. Chief Executive Jane Fraser said the move was consistent with a "strategy refresh" that included earlier moves to pare back consumer banking in other overseas markets. "Citi is uniquely positioned to support cross-border capital markets activity and trade flows in and out of Mexico for our institutional clients and we will continue to make material investments in our institutional operations and market-leading hub there," Fraser said.
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The UK competition regulator said it has started a merger investigation into Microsoft's acquisition of Nuance Communications. The Competition & Markets Authority is considering whether the deal will lessen competition in the UK. It has a deadline of March 9 for its phase one decision. Microsoft unveiled the USD19.7 billion deal for US speech recognition company Nuance in April last year. Microsoft said it would buy Massachusetts-headquartered Nuance for USD56.00 per share and the deal will include debt. But in December, the CMA had warned it was considering whether the deal will dampen competition and invited comments on the transaction.
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Bain Capital and CVC Capital Partners have joined forces to launch a bid for Walgreen Boots Alliance's UK retail pharmacy chain Boots, Sky News reported on Tuesday. Sky, citing sources, said the two are working on a plan to snap up Boots that is based on substantial investment in its digital, beauty and healthcare service offerings. A number of other private equity firms are expected to mull offers for Boots as part of a process run by Goldman Sachs. But while likely, Walgreen's decision to sell Boots is not guaranteed and spinning the chain off into a separately-listed firm is also a possibility, Sky said.
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Health technology company Royal Philips said fourth-quarter sales were lower than expected due to industry-wide supply chain issues. Sales in the final quarter of 2021 are expected to amount to EUR4.9 billion, being EUR350 million below earlier forecasts. This compares with sales of EUR6.0 billion a year ago. Adjusted earnings before interest, tax and amortisation for the quarter is expected to be EUR650 million, around 13% of sales, hit by the fall in revenue and higher supply costs. Ebita in the fourth quarter of 2020 stood at EUR1.14 billion, with a margin of 19%.
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J Sainsbury upgraded profit guidance for its financial year ending in March, following stronger-than-expected sales in its third quarter. The updated estimate annual pretax profit is GBP720 million, a 9.1% increase from the previous estimate of GBP660 million released back in June. This would be more than double the GBP356 million in underlying pretax profit recorded in financial 2021. What's more, it would up 23% on GBP586 million in the year that ended in March 2020, meaning before the pandemic took hold. The UK supermarket chain said that higher-than-expected grocery volumes and structural cost savings accounted for the raised guidance. These have offset higher operating costs due to inflation, and the company's investment in customer proposition. For the 16 weeks to January 8, total retail sales, excluding fuel, were down 5.3% year-on-year, worse than the year-on-year decrease of 1.7% in the company's second quarter. However, when fuel sales for the third quarter are taken into account, sales were only down 0.1% on a year before.
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JD Sports Fashion said it delivered an "extremely robust" performance against a backdrop of disruption of the supply chain operations of some of its key brand partners. The UK sports and outdoor clothing retailer said total revenue for the 22 week period that ended January 1 in its like-for-like businesses was more than 10% ahead of the same period in 2020 with an equally positive performance across the Black Friday and Christmas period. Gross margins for the second half were in line with the prior year. JD Sports said that due to strong consumer demand, it was confident pretax profit for the year to January 29 will be ahead of market forecasts. It expects headline pretax profit of at least GBP875 million. It posted pretax profit of GBP324.0 million in financial 2021. JD Sports said it issue its annual results on April 12.
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Hotelier Whitbread reported a resilient performance in the UK with sales ahead of pre-pandemic levels but admitted that sales in Germany had struggled due to Covid restrictions. For the six weeks to January 5, the Dunstable, England-based hotel and restaurant company said that UK trading had been strong despite the Omicron variant. It reported total UK accommodation sales 5.1% ahead of the same period in financial 2020, the last period before the pandemic, and occupancy levels at 66%. The variant damped demand in December and through the festive period, Whitbread explained, but it said that Premier Inn UK total accommodation sales had nonetheless continued to outperform the market. In Germany, Whitbread's Premier Inn division fared worse with occupancy levels at 36%, down from 60% in its quarter. Whitbread explained that increased government restrictions in Germany are acting as a significant market drag to recent trading.
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Swiss Re sold 66.2 million shares in Phoenix Group at 664 pence each, raising GBP440 million. Following the placing run by Merrill Lynch, which was first announced late Tuesday, Swiss Re has fully exited its holding in Phoenix Group, an insurance company.
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Just Eat Takeaway.com revealed it is in discussions with several potential partners to strengthen its US market position, after reporting orders were up by a third for the fourth quarter. The food delivery firm processed 1.1 billion orders in 2021, representing a 33% increase compared with the previous year. The company processed EUR273.7 million orders in the fourth quarter, a 14% increase from EUR240.4 million in the same period of 2020. The UK & Ireland was the fastest growing division for both the quarter and the year, Just Eat noted, with adjusted earnings before interest, tax, depreciation and amortisation significantly improving. Sales orders for the region in 2021 rose 52% year-on-year to EUR295.9 million while the gross transaction value increased 42% to EUR6.6 billion. The group said it will invest heavily, especially in its London network, while it expects to further improve profitability in 2022. Orders from North America for the year rose 19% to EUR373.9 million, with the value of orders up by 6% to EUR91.6 million.
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MARKETS
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Asian and European markets on Wednesday were following up the rebound in US technology shares on Tuesday, though Wall Street was pointed to small gains at the open. After the Senate testimony by the US Fed chair on Tuesday, at which Jerome Powell promised to not let inflation get out of hand, attention will be on the release of a consumer price inflation reading in the US at 1330 GMT. The same from China earlier Wednesday showed easing price pressure in December.
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CAC 40: up 0.7% at 7,234.76
DAX 40: up 0.6% at 16,030.26
FTSE 100: up 0.7% at 7,543.04
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Hang Seng: closed up 2.8% at 24,402.17
Nikkei 225: closed up 1.9% at 28,765.66
S&P/ASX 200: closed up 0.7% at 7,438.90
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DJIA: called up 0.1%
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.1%
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EUR: flat at USD1.1366 (USD1.1363)
GBP: firm at USD1.3633 (USD1.3617)
USD: soft at JPY115.33 (JPY115.37)
Gold: up at USD1,817.80 per ounce (USD1,816.01)
Oil (Brent): up at USD83.90 a barrel (USD83.44)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Eurozone industrial production rebounded in November. Factory output rose 2.3% month-on-month in the single currency bloc, reversing a 1.3% decline registered in October. For the wider EU, growth was 2.5% after October's 0.8% fall. Behind the euro area growth was energy production, with growth ticking up to 1.2% from 0.5%, while non-durable consumer goods saw growth of 3.2% after October's 4.5% decline. On an annual basis, however, eurozone industrial production declined 1.5% after a substantial downwards revision to October's initially reported increase of 3.3%, now reported as just 0.2%.
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Inflation in China eased in December thanks to falling food and commodity costs, with analysts saying Wednesday's figures give policymakers room to unveil measures to kickstart the stuttering economy including interest rate cuts. Like most other countries, China has seen prices surge for much of the past year owing to pick-up in the cost of energy, putting pressure on an economy also being battered by a crisis in the key, growth-driving property sector. Factory price inflation has been particularly affected, hitting a 26-year high in October and raising concerns that those rises will filter through to the global economy owing to China's crucial role as an exporter. But on Wednesday, figures showed producer prices rose a less-than-expected 10% on-year last month, extending a slowdown seen in November. The consumer price index, a key gauge of retail inflation, came in at 1.5% – down from 2.3% in November and also short of forecasts.
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The pressures pushing prices to multi-decade highs are likely to last till the middle of the year, and the US central bank is ready to respond to this risk, but policymakers are committed to extending the economic expansion to promote employment, Federal Reserve Chair Powell said Tuesday. The world's largest economy is on strong footing, and with inflation rising and employment recovering, "The economy no longer needs or wants the very highly accommodative policy," provided by the Fed in response to the Covid-19 pandemic, Powell told lawmakers, underlining the likelihood interest rate increases are coming. In the nomination hearing, Powell again vowed that the central bank will do all it can to ensure high inflation does not become entrenched. Inflation is "very near the top of the list" of risks to the economic outlook, Powell said, acknowledging the current rate is now "very far above target."
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US President Joe Biden took a major political gamble Tuesday in calling for a break in the Senate's supermajority rule so that Democrats can override Republican opposition to voting rights reforms that he called crucial to saving US democracy. Speaking in Atlanta, Georgia, the cradle of the civil rights movement, Biden – who called last year's Capitol riot by Donald Trump supporters an "attempted coup" – declared "this is the moment to decide to defend our elections, to defend our democracy." He challenged Democrats holding a razor-thin majority in the Senate to stand up for two bills that would expand access to polls and prevent practices that Biden said are being used to suppress Black and other Democratic-leaning voters. "Each one of the members of the Senate will be judged by history for where they stood before the vote and after the vote. There's no escape," Biden said.
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More than half of people in Europe are projected to catch Omicron by March, the World Health Organization said Tuesday, as the World Bank warned the contagious variant could hamper the global economic recovery. Millions in China were locked down again, exactly two years after Beijing reported the first death from a virus later confirmed to be Covid-19. Highly transmissible Omicron has swept across countries, forcing governments to impose fresh measures and scramble to roll out vaccine booster shots. Europe is at the epicentre of alarming new outbreaks and the WHO said Tuesday Omicron could infect half of all people in the region at current rates. Europe is currently reporting the largest number of deaths and cases worldwide, according to an AFP tally, with almost 8 million recorded infections over the past seven days.
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Top American scientist Anthony Fauci slammed a vaccine sceptic Republican senator for unleashing "crazies" who were threatening his life and harassing his family, in unusually emotional congressional testimony on Tuesday. The latest bitter exchange between Fauci and Senator Rand Paul came as Covid-19 cases driven by the Omicron variant soared, sending hospitalizations to an all-time high of 145,982, beating out a previous record of around 142,000 in January 2021. The US is the world's hardest-hit country, with more than 840,000 deaths, and is reeling from its fifth wave. President Joe Biden's top officials, including his chief medical advisor Fauci, Centers for Disease Control & Prevention director Rochelle Walenksy, and acting Food & Drug Administration head Janet Woodcock were summoned to testify before the Senate about the pandemic.
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UK Prime Minister Boris Johnson is to face members of Parliament amid furious demands to come clean over his attendance at a reported "bring your own booze" party in the No 10 garden in breach of Covid lockdown rules. Johnson will make his first public appearance since the leak on Monday of an email from his principal private secretary Martin Reynolds inviting Downing Street staff to the gathering in May 2020. The disclosure triggered a new wave of public anger following the reports last year of parties in the run up to Christmas 2020, with Tory MPs openly warning Johnson his position will be untenable if he has been shown to have lied. Downing Street has refused to say if he was present at the May event, despite reports he and his fiancee - now wife - Carrie Symonds, were among around 30 people to attend at a time when such gatherings were banned.
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The proportion of voters who think Johnson should resign has risen by 12 points since details of the Downing Street party emerged, according to polling. A snap poll from Savanta ComRes found 66% of UK adults thought the prime minister should step down. In Conservative voters, this figure was 42%. While 62% of those polled felt the party in the No 10 garden in May 2020 was a worse breach of trust than the initial Christmas party revelations. The survey of 1,040 UK adults on January 11 found the proportion of those who felt Johnson should resign had risen by 12 points since December. Among Tory voters this was a nine-point rise.
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By Tom Waite; thomaslwaite@alliancenews.com
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