(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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The UK Competition & Markets Authority said it and the European Commission are launching parallel investigations into Alphabet's Google and Meta Platforms' Facebook over competition concerns. The CMA said it will look into whether Google and Facebook hampered market competition in online display advertising services. The probe will cover header bidding - a service which allows vendors of advertising space to offer to multiple buyers instead of one at a time. This results in competition between buyers of advertising space, and means publishers can compare multiple bids at the same time. The service can make online auctions more competitive, the CMA said. The CMA will assess whether an agreement between Google and Facebook broke the law. The alleged pact, made in 2018, intended to "kill" an advertising tool used by Facebook that posed a competitive threat to Google's own advertising. This was in trade for Google granting Facebook advantages in online ad auctions routed through its technology.
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Walt Disney said it is taking steps to "pause all other businesses in Russia" following the invasion of Ukraine. It comes one week after the company delayed the theatrical release of its films in Russia in response to the ongoing crisis. In a statement, Disney said: "Given the unrelenting assault on Ukraine and the escalating humanitarian crisis, we are taking steps to pause all other businesses in Russia. This includes content and product licensing, Disney Cruise Line activities, National Geographic magazine and tours, local content productions and linear channels."
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Cybersecurity firm Avast joining the rapidly expanding list of companies that have withdrawn their services from Russia. Avast noted it has employees in both Russia and Ukraine. Ukraine, Russia and Belarus collectively contributed around 1.5% of Avast's annual revenue in 2021.
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Mondi said it is assessing all options for its interests in Russia, including any form of legal separation. But the Weybridge, England-based paper and packaging firm said this did not mean, or imply, that it is planning or initiating any liquidation or bankruptcy proceedings in relation to any of its Russian subsidiaries or assets. A number of companies globally have shut down their businesses in Russia since Moscow invaded Ukraine around two weeks ago. Mondi's operations in Russia represent 12% of its revenue by location and generated 20% of its underlying earnings before interest, taxes, depreciation and amortisation over the last three years. It has operated in Russia for over 22 years. The most significant facility in Russia is a wholly-owned integrated pulp, packaging paper and uncoated fine paper mill located in Syktyvkar. It also has three converting plants in Russia.
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Evraz said all 10 remaining non-executives have left the steel maker's board, with its recently appointed chief executive the last director standing. Alexander Abramov, Alexander Frolov, Alexander Izosimov, Deborah Gudgeon, Eugene Shvidler, Eugene Tenenbaum, Karl Gruber, Maria Gordon, Michael Peat and Stephen Odell have left their non-executive posts, Evraz said. Only CEO Aleksey Ivanov remains. Ivanov assumed the role from September 1, replacing Frolov who moved to a non-executive post at the end of August. Friday's mass exodus comes after the UK Financial Conduct Authority on Thursday temporarily suspended the listing of Evraz.
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Exxon Mobil is mulling the sale of a series of assets in North Dakota in a possible USD5 billion deal, Bloomberg reported. Bloomberg, citing people with knowledge of the matter, said the oil major is in the final stage of interviewing bankers to help launch a process to sell its Bakken shale assets. Exxon may yet decide against selling the Bakken assets, however, Bloomberg added. Bloomberg noted that output levels in the Bakken oil field are "muted" as the area is more mature.
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Oracle reported a sharp drop in third-quarter earnings as the business software provider was hurt by two of its investments. For the three months ended February 28, revenue was up 4.2% at USD10.51 billion from USD10.09 billion in the third quarter the year before. However, third-quarter net income more than halved to USD2.32 billion, or USD0.84 per diluted share, from USD5.02 billion, or USD1.68 diluted EPS, the year before. Oracle explained that third-quarter earnings were dented primarily because of a decline in the share price of gene sequencing company Oxford Nanopore Technologies and an operating loss at Ampere. Still, the Austin, Texas-based firm said it remains confident that its investments in the two technology companies will deliver strong returns.
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UK housebuilder Berkeley said its trading has been "robust" in the period from November 1 to February 28. The company said the value of underlying sales reservations has remained slightly ahead of pre-pandemic levels and cancellations are at normal rates, while sales pricing is "sufficiently" ahead of its business plan - allowing the housebuilder to absorb construction cost increases. As a result, Berkeley said it is on track to meet its annual earnings guidance for the year ending April 30. Forward sales, representing cash due under exchanged private sales, is expected to be above GBP1.70 billion at year-end. They stood at GBP1.70 billion on October 31. Net cash is forecast to be around GBP900 million, up from GBP846 million at the end of October.
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Online grocer Ocado noted the International Trade Commission on Thursday decided in favour of Ocado on all points in the complaint brought by AutoStore. The ITC, consisting of five patent judges, found that either the AutoStore patents were invalid or not infringed by Ocado's technology. Ocado said it continues to pursue its claims against AutoStore for infringement of Ocado's own intellectual property rights.
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MARKETS
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European equity markets were attempting to end the week on a positive note, as oil and gold prices gave back some of their recent dramatic gains. "Our view remains that simply selling risk assets is not the best response to the war in Ukraine," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "But in this environment of heightened uncertainty, we advise investors to reduce excess equity exposure above long-term strategic benchmark allocations and add to hedges."
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CAC 40: up 0.5% at 6,235.38
DAX 40: up 1.1% at 13,595.90
FTSE 100: up 1.1% at 7,174.20
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Hang Seng: closed down 1.6% at 20,553.79
Nikkei 225: closed down 2.1% at 25,162.78
S&P/ASX 200: closed down 0.9% at 7,063.60
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DJIA: called up 0.2%
S&P 500: called up 0.3%
Nasdaq Composite: called up 0.4%
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EUR: down at USD1.0967 (USD1.1007)
GBP: down at USD1.3073 (USD1.3125)
USD: up at JPY116.95 (JPY116.05)
Gold: down at USD1,990.00 per ounce (USD1,995.65)
Oil (Brent): down at USD111.78 a barrel (USD112.45)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian strikes hit civilian targets in central Ukraine's Dnipro city on Friday, as Moscow's troops edged closer to Kyiv, where officials said the capital was being transformed into a "fortress". Hundreds of thousands of civilians remained trapped and under fire in Ukrainian cities, including besieged Mariupol, after the first talks between Moscow and Kyiv's top diplomats ended Thursday without any progress. In the early hours of Friday, Russian war planes carried out what appeared to be the first direct attack on Dnipro, killing one person, emergency services said in a statement. Three air strikes hit a kindergarten, apartment building and a shoe factory, it said. Meanwhile two Ukrainian soldiers were killed and six wounded in Russian strikes on the Lutsk military airport in the northwest, local authorities said. Russian forces are currently encircling at least four major Ukrainian cities, while the capital Kyiv is increasingly at risk of being surrounded.
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Russia has requested a meeting of the UN Security Council on Friday over the US's alleged development of biological weapons in Ukraine, said Dmitry Polyanskiy, first deputy permanent representative of Russia to the UN. The Russian Defence Ministry has claimed there was a network of bio-labs in Ukraine working on behalf of the US Defence Department, a claim long dismissed as inaccurate. The US has warned that false "propaganda" from Moscow alleging Ukraine is producing weapons of mass destruction could be a pretext for Russia to use them itself.
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Latvia, Poland and Lithuania were advocating for an EU ban on Russian energy imports at an EU leaders' summit in Versailles on Thursday despite the risk to unity within the EU over Russia's war in Ukraine. "I'm convinced that we should make a decision to stop energy imports from Russia to get [Russian President Vladimir] Putin to the negotiating table to stop the war," Latvian Prime Minister Krisjanis Karins said. The EU's 27 heads of state came together at the informal summit after a frantic two weeks of supplying arms to Ukraine, sheltering nearly 2.2 million people and signing off on three rounds of massive sanctions on Russia for the invasion of its neighbour. Any moves towards an embargo however are likely to meet resistance from Germany, Austria and Hungary, who cover significant parts of their energy needs with Russian imports. German Chancellor Scholz came out strongly against the idea on Monday. EU leaders were also considering how to create the conditions for a ceasefire in Ukraine.
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Russia has no intention of suspending oil and gas deliveries to Europe despite the unprecedented sanctions imposed on Moscow, Russian President Vladimir Putin said, while Western governments weighed how to lessen their dependency on Russian power. "We will fulfil all our obligations in the field of energy supply. We will supply everything we have to supply," Putin said at a government meeting on Thursday, according to the Interfax news agency. He described Europe as the main customer for Russian energy. Putin threatened to cut off German natural gas supplies for the first time earlier this week, as the scale and severity of Western sanctions imposed on Moscow for the war in Ukraine became clear.
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The International Monetary Fund was set to lower its growth forecast for the global economy next month because of the consequences of Russia's war on Ukraine. "We got through a crisis like no other with the pandemic, and we are now in an even more shocking territory. The unthinkable happened: we have a war in Europe," IMF managing director Kristalina Georgieva said at a media roundtable on Ukraine Thursday. "We have contraction on a significant basis in Russia. And we see the likely impact on our World Economic Outlook [that] we will come up with next month to be a downward division of our growth projections." The latest World Economic Outlook, released in January, predicted that global economic growth would hit 4.4% in 2022. As planned, the IMF is set to present an updated forecast in April.
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The US Congress passed a huge omnibus 2022 spending bill, including almost USD14 billion in humanitarian and military aid to war-torn Ukraine, as its invasion by Russia entered its third week. Lawmakers had been facing the latest in a series of shutdown showdowns, with government funding due to expire at midnight Friday into Saturday, meaning thousands of workers would have been sent home without pay. With the deadline fast approaching, senators in the legislative body's upper chamber followed their House of Representatives colleagues, who green-lit the USD1.5 trillion package on Wednesday. "We're keeping our promise to support Ukraine as they fight for their lives against the evil Vladimir Putin," Chuck Schumer, the leader of the Senate Democrats, said in a statement.
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The Biden administration says two North Korean missile launches in recent weeks were test firings of a powerful new long-range ICBM, and warned that a full-range test could soon follow. The tests were of a missile reportedly larger than an ICBM North Korea launched in 2017 that was assessed to be capable of reaching the US. American missile defence and reconnaissance forces in the Pacific have been placed in a state of "enhanced readiness" in preparation for a full-range test, a senior administration official said. North Korea has claimed the March 4 and February 26 launches were merely to test cameras to be installed on a future spy satellite.
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The UK economy returned to growth in January, and has exceeded market expectations, data from the Office of National Statistics showed. Gross domestic product expanded 0.8% from the previous month in January, rebounding from December's 0.2% drop, and was ahead of market consensus - provided by FXStreet - of 0.2% growth. The ONS data showed industrial production growth was 0.7% in January versus the previous month, primarily driven by 0.8% growth in manufacturing. This follows industrial production growth of 0.3% in December 2021. The market had predicted a measly 0.1% rise in industrial production, while manufacturing was guided to rise by 0.2%.
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Inflation in Germany remained high in February, accelerating from the month before due to soaring energy prices. From a year before, consumer prices in February rose by 5.1%, the Federal Statistic Office Destatis reported. They rose 0.9% from January, when prices had increased 4.9% year-on-year. Significant price increases at upstream stages and delivery bottlenecks had "a major impact" on the rate of inflation, Destasis said. "The effects of the Covid-19 pandemic are increasingly superimposed by uncertainties related with the Russian attack on Ukraine," said FSO President Georg Thiel. The crises drove energy prices up by 23% year-on-year.
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Inflation in Spain accelerated in February, according to data from INE. Spain's consumer price index increased 7.6% annually in February, topping the flash estimate of 7.4% and quickening from 6.1% in January. On a monthly basis, consumer prices rose 0.8% in February, having fallen 0.4% in January. On a harmonised basis, allowing for EU-wide comparison, annual inflation was 7.6%, slightly higher than the flash estimate of 7.5%. In January, Spain's harmonised CPI was 6.2%.
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The Chinese National People's Congress approved a significant increase in China's military expenditure on Friday, the final day of the annual meeting in Beijing. Attended by nearly 3,000 delegates, a majority of the legislature approved the government's economic policies along with a draft budget that foresees a steep 7.1% increase in the military budget. This is the largest uptick in defence spending in three years. Total spending is expected to grow by only 3.9%. It comes before a backdrop of threats from the from the communist leadership towards democratic Taiwan and China's territorial disputes with its neighbours in the South and East China Seas.
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Japan's household spending jumped 6.9% in January from a year earlier despite pandemic restrictions, data showed Friday, in the first rise since July for the world's third-largest economy. The data, which beat analyst estimates of a jump around 3.6%, was the result of consumers spending more on hotels and other holiday accommodation, as well as travel and trains, the figures from the internal affairs ministry showed.
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By Tom Waite; thomaslwaite@alliancenews.com
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