(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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EU car sales fell to a new low last year as the auto sector was hobbled by the Covid pandemic and a shortage of computer chips, industry figures showed. Registrations of new passenger cars in the EU slid by 2.4% in 2021, to 9.7 million vehicles, the worst performance since statistics began in 1990, according to data from the European Automobile Manufacturers Association. That follows the historic fall of nearly 24% suffered in 2020 due to pandemic restrictions, and brought new car registrations in the EU to 3.3 million below the pre-crisis sales of 2019. The lack of semiconductors, the computer chips used in a multitude of car systems in both traditional and electric vehicles, was the main reason holding the industry back.
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Toyota Motor lowered its production forecast for its financial year, due to continued adjustments to the company's output plan, as a result of a shortage in parts. For February, the Toyota City, Japan-based carmaker expects global production to reach 700,000 units, however this figure is down 150,000 units from its original plan due to the effect of continued demand for semiconductors in excess of supply. As a result, Toyota Motor anticipates production for the financial year ending March 31 to be lower than prior guidance of 9.0 million units.
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The chief executives of America's largest airlines warned of a "catastrophic disruption" to travel and shipping operations if telecommunication firms roll out their 5G technology as planned Wednesday without limiting the technology near US airports. Verizon Communications and AT&T have already twice delayed the launch of their new C-Band 5G service, due to warnings from airlines and aircraft manufacturers concerned that the new system might interfere with the devices planes use to measure altitude. The executives, writing to Transportation Secretary Pete Buttigieg and other US government officials, highlighted the risk of "economic calamity" should Verizon and AT&T proceed with deploying the new technology before the necessary upgrades and changes have been made to aviation equipment.
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InterContinental Hotels Group said Patrick Cescau will step down as chair at the end of August, rounding off a nine-year stint in the post. The Holiday Inn owner named Deanna Oppenheimer as its next non-executive chair, a role she currently holds at wealth management platform Hargreaves Lansdown. Oppenheimer joins IHG's board as a non-executive director and chair designate from June 1. She will succeed Cescau from September 1.
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Miner Rio Tinto said production declined in the fourth quarter amid "challenging" operating conditions. Pilbara iron ore shipments fell 5% year-on-year in the fourth quarter and iron ore production was down 2% at 84.1 million tonnes. Bauxite, aluminium and titanium dioxide slag output declined 2%, 7% and 16% respectively, while mined copper production was flat. For 2021 as a whole, Pilbara iron ore shipments slipped 3% to 321.6 million tonnes and iron ore production was down 4% at 319.7 million tonnes. Bauxite, aluminium and titanium dioxide slag output were down 3%, 1% and 9%, respectively, and mined copper was down 7%. "In 2021 we continued to experience strong demand for our products while operating conditions remained challenging, including due to prolonged Covid-19 disruptions. Despite this, we progressed a number of our projects," said Chief Executive Jakob Stausholm.
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Online retail platform operator THG reported strong revenue growth last year, but flagged a margin hit from foreign exchange movements and slower sales growth in the year ahead. Fourth-quarter revenue was GBP711.7 million, up 27% on a year ago and nearly double on a two-year basis. For 2021 as a whole, revenue rose 35% to GBP2.18 billion. However, the beauty products retailer's full-year adjusted earnings before interest, tax, depreciation and amortisation margin is expected to be in the range of 7.4% to 7.7%, compared to market expectations of around 7.9%, after taking into account 90 basis points of adverse foreign currency movements, it said. For 2022, the margin is expected to improve throughout the year, and revenue growth is seen in a region of 22% to 25% at constant currencies, slowing from the 38% achieved in 2021.
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Perth-based petroleum exploration and production company Woodside Petroleum said it has started front-end engineering design activities for the H20K project, a liquid hydrogen output facility proposed for the Westport Industrial Park in Ardmore, Oklahoma. Woodside is aiming for a final investment decision in the second half of 2022, and first production in 2025.
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Atlantia has agreed to acquire Yunex Traffic from Siemens's Mobility unit for an enterprise value of EUR950 million. The deal is expected to close in September. "Yunex Traffic is a leader in innovative and intelligent infrastructure and traffic solutions for roads and cities. As a global leader in mobility infrastructure technology and services, Atlantia is a longterm, strategically oriented new owner for Yunex Traffic," the company says.
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MARKETS
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Equities markets were in the decline on Tuesday, as New York prepared to reopen after a three-day holiday weekend. The dollar was regaining its footing against major pairs. Gold was lower, but Brent oil continued its rise toward USD90 a barrel. The Bank of Japan slightly raised its forecast for inflation, though the rate price increases remains well behind other major economies. Meanwhile, in the UK, a strong jobs report increased expectations of a first interest rate hike soon by the Bank of England.
"With the labour market this tight, surely there will be upward pressure on wages in the months ahead, but weak real wage growth is a drag on discretionary spending, obviously, and I still think the four rate hikes that are priced in for this year, are the limit of what is imaginable," commented Kit Juckes of Societe Generale.
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CAC 40: down 1.0% at 7,131.07
DAX 40: down 1.0% at 15,771.83
FTSE 100: down 0.7% at 7,556.78
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Hang Seng: closed down 0.4% at 24,112.78
Nikkei 225: closed down 0.3% at 28,257.25
S&P/ASX 200: closed down 0.1% at 7,408.80
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DJIA: called down 0.7%
S&P 500: called down 1.1%
Nasdaq Composite: called down 1.8%
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EUR: soft at USD1.1395 (USD1.1405)
GBP: down at USD1.3624 (USD1.3650)
USD: flat at JPY114.63 (JPY114.60)
Gold: down at USD1,810.06 per ounce (USD1,818.80)
Oil (Brent): up at USD87.50 a barrel (USD86.01)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Japan's central bank revised its inflation forecast and adjusted its view of price risks, while leaving its monetary easing policy in place in a nod to lingering pandemic uncertainty. As prices rise swiftly in other economies, Japan's inflation remains relatively feeble, and still far below the Bank of Japan's 2% target. In a quarterly report on prices and the economy, the central bank said it now forecasts inflation of 1.1% for the fiscal year to March 2023, up from its previous forecast of 0.9%. It also revised up its forecast for the fiscal year to March 2024 to 1.1% from 1.0%, leaving the projection for the current year unchanged. The BoJ revised down its economic growth forecast for the current fiscal year to 2.8% from the previous 3.4%. But it now sees faster-than-expected 3.8% growth in the fiscal year to March 2023, with a slight downward revision of 1.1% growth in the year to March 2024. Governor Haruhiko Kuroda said the BoJ policymaking board sees no need to change its easy money policy now, and it has not discussed an interest rate hike.
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The UK unemployment rate unexpectedly edged down to 4.1% in the three months to November, having been forecast by analysts to remain steady at 4.2%. Annual growth in total pay - or including bonuses - was 4.2%, and regular pay, which strips out bonuses, rose 3.8%. These figures were as expected and marked a slowdown from the previous month. Both were below the annual UK inflation rate for November, which was 5.1%. The number of job vacancies in October to December 2021 rose to a new record of 1.2 million, an increase of 462,000 from its pre-coronavirus January to March 2020 level. There were 29.5 million payrolled employees in the UK in December, up 184,000 on November and over 400,000 above pre-virus levels. "All regions are now above pre-coronavirus levels, with Scotland having the largest percentage increase on the month," the UK Office for National Statistics said.
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Downing Street has denied claims by Dominic Cummings that UK Prime Minister Boris Johnson was told in advance staff were holding a drinks party in the No 10 garden in the midst of the first Covid lockdown. Johnson's former chief adviser said he was prepared to "swear under oath" that Johnson was lying when he told MPs he had not known beforehand about the "bring your own bottle" event on May 20, 2020. In the Commons last week Johnson admitted spending 25 minutes at the gathering saying he had believed "implicitly" that it was a work event. But in his latest salvo at the man he once worked for, Cummings said both he and another senior official had challenged Martin Reynolds, the prime minister's principal private secretary who sent out invitations to around 100 staff, as to whether it was within the rules. He said he believed that Reynolds then checked with Johnson who had agreed the event should go ahead. When he tried to raise the issue with Johnson directly he said his objections were brushed aside.
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German economic sentiment has picked up dramatically at the start of 2022, on expectations of a fall in Covid cases by early summer, the Mannheim-based ZEW's monitor showed. The ZEW economic sentiment index in Germany was 51.7 points in January, leaping from 22.9 points in December and well above FXStreet-cited market consensus of 32.7. For the eurozone as a whole, the ZEW economic sentiment index rose to 49.4 points in January from 26.8 in December. This also was well above market expectations of 26.4.
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Italy's trade surplus narrowed to EUR4.16 billion in November from EUR6.86 billion a year before, as imports rose at a faster pace than exports, data from national statistics office Istat showed. Exports totalled EUR48.2 billion, up by 17% from November 2020. Exports to the EU surged 20%, and outside the EU, they rose by 13%. Imports posted even stronger yearly growth. Imports jumped 28% year-on-year in November to EUR44.13 billion, with incoming trade up by 22% from the EU and by 38% from outside the EU.
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Producer and import prices slipped in Switzerland in December, while average inflation for 2021 as a whole rose, figures from the Federal Statistical Office showed. The producer & import price index declined in December by 0.1% to 105.1 points, compared to the previous month. On an annual basis, however, prices for the whole range of domestic and imported products increased 5.1%. For 2021 as a whole, average annual producer price inflation was 2.7%, compared to a 3.0% decline in prices for 2020.
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The European Parliament is to select its new president on Tuesday following the unexpected death of previous office-holder David Sassoli, with conservative Maltese lawmaker Roberta Metsola tipped to replace him.The timing of the election, to be carried out by secret ballot, has nothing to do with Sassoli's death, however. His time in office was set to end anyway in January after two and a half years. The 65-year-old had already indicated he did not plan to run for re-election. Metsola, who turns 43 on Tuesday, belongs to the centre-right European People's Party faction, whereas Sassoli came from the centre-left Socialists & Democrats. Sassoli was unexpectedly elected in 2019 with the support of two major political groupings - the S&D and the EPP - along with liberal lawmakers.
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By Tom Waite; thomaslwaite@alliancenews.com
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