(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Elon Musk, the world's richest man, struck a deal on Monday to buy Twitter for USD44 billion, capping a saga complete with hostile takeover threats before delivering him personal control of one of the most influential social media platforms on the planet. The publicly traded firm will now become a private company owned by Musk, who negotiated a purchase price of USD54.20 per share, Twitter said. "Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated," Musk said in a statement released by Twitter. Co-founder & former CEO Jack Dorsey was supportive. "Elon's goal of creating a platform that is 'maximally trusted and broadly inclusive' is the right one," he tweeted. "This is the right path...I believe it with all my heart."
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HSBC said in the three months to March 31, it recorded USD4.17 billion in pretax profit, down 28% from USD5.78 billion in the same period the year prior. The Asia-focused lender blamed this on a net charge for expected credit losses and other credit impairment charges in the first quarter, compared with a net release the year before. The bank booked a USD642 million ECL charge versus a USD435 million release last year. Total revenue in the first quarter dropped to USD12.46 billion from USD12.99 billion. "While profits were down on last year's first quarter due to market impacts on wealth revenue and a more normalised level of ECL (expected credit losses), higher lending across all businesses and regions, and good business growth in personal banking, insurance and trade finance bode well for future quarters," Chief Executive Office Noel Quinn said in a statement.
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UBS reported a rise in profit in a "strong" first quarter, as the Swiss lender was able to capitalise on "volatile" markets to book record Global Markets revenue. In the three months to March 31, the investment bank and financial services firm recorded a net profit of USD2.14 billion, rising from USD1.82 billion the year prior. The bank set aside USD18 million for expected credit losses, reversed from a USD28 million gain the year prior. Operating income increased to USD9.36 billion from USD8.71 billion. Net interest income increased to USD1.77 billion from USD1.61 billion, while net fee & commission income fell to USD5.35 billion from USD5.69 billion. UBS noted its direst risk exposure to Russia was USD400 million at the end of the first quarter, down from USD600 million at the end of 2021.
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Banco Santander reported a rise in profit in the first quarter on strong customer growth, leading to a rise in its loan book. In the three months to March 31, the Madrid-based lender recorded pretax profit of EUR4.17 billion, increased 9.4% from EUR3.81 billion in the same period a year before. Underlying profit increased to EUR2.54 billion from EUR2.14 billion. Santander was able to increase profit despite upping its loan-loss provisions. In the first quarter, the bank set aside EUR2.10 billion to cover bad loans, up from EUR1.99 billion a year prior. The bank ended the quarter with a customer loan book of EUR1.011 trillion, rising from EUR939.76 billion at the same point a year before and up from EUR972.68 billion at the end of 2021. Total income increased to EUR12.31 billion from EUR11.39 billion. Net interest income rose to EUR8.86 billion from EUR7.96 billion.
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Novartis said its first-quarter profit was lifted year-on-year, thanks to higher sales of its key growth brands. In the three months to March 31, the Basel, Switzerland-based pharmaceutical company said net sales were essentially flat at USD12.53 billion, an increase of 1% year-on-year from USD12.41 billion. This was an increase of 5% in constant currency. The increase was driven by volume growth, but this was offset by price erosion and competition from generic drugs, the company said. Net profit was USD2.22 billion for the period, an increase of 8% from USD2.06 billion the year before. The increase was driven by higher operating profit which grew by 18% on higher sales and increased productivity, but partly offset by the loss of Roche income. Last year, Novartis sold its 53.3 million shares in Roche Holding back to Roche for CHF20.92 billion.
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Orange said its first quarter performance was largely flat on the previous year, as a better retail performance was offset by a decline in wholesale revenue. The Paris-based telecommunications company said revenue in the first quarter of the year rose 0.7% to EUR10.58 billion from EUR10.51 billion in the same period of 2021. Annual retail revenue growth of EUR149 million, up 2.0%, more than offsetting a 6.8% decline in wholesale revenue. Wholesale revenue fell by EUR129 million year-on-year.
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Associated British Foods said interim earnings have returned to pre-virus levels, but the company warned that its Primark discount fashion stores will need to raise prices in order to offset cost inflation. AB Foods said revenue in the financial first half ended March 5 rose 25% to GBP7.88 billion from GBP6.31 billion a year prior. Pretax profit more than doubled to GBP635 million from GBP275 million. Operating profit jumped to GBP686 million from GBP320 million. The company also more than doubled its interim payout to 13.8 pence from 6.2p. In addition to Primark, all of the company's food units are "experiencing increasing inflationary pressures", AB Foods said.
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UK housebuilder Taylor Wimpey said that, for now, the higher cost of mortgages has not hurt demand. "The UK housing market remains healthy, underpinned by continued strong customer demand, low interest rates and good mortgage availability. The recent increase in interest rates, from 0.5% to 0.75%, has not impacted customer appetite and the mortgage market remains competitive, with good availability of low-cost fixed rate mortgage products," the company said. Its net private sales rate for 2022 up to April 17 was 0.96 per week, down a touch from 1.00 a year prior. The value of its order book stands at GBP2.97 billion, up 5.8% year-on-year. Taylor Wimpey is on track to meet annual guidance, it said. Flammable cladding has been in focus in recent weeks, with several housebuilders signing pledges to commit to the UK Building Safety Fund. Taylor Wimpey said it has paid GBP245 million for fire safety remediation works so far. On Tuesday, Jennie Daly succeeds Pete Redfern as CEO. Redfern steps down after 15 years in the role.
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Uber Technologies has agreed to pay a AUD26 million, about USD18.7 million, fine for misleading riders by falsely warning they could be charged a cancellation fee and for inflating estimates of comparable taxi rides, the ride share company and Australia's consumer watchdog said. Uber BV, a Netherlands subsidiary of San Francisco-based Uber Technologies, admitted breaching Australian Consumer Law by making false or misleading statements in its app, the Australian Competition & Consumer Commission said in a statement.
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MARKETS
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Elon Musk's purchase of Twitter was the centre of attention on Monday, but the market focus on Tuesday and the rest of the week will be on even bigger tech. Microsoft and Google-owner Alphabet report first quarter earnings after the New York close on Tuesday. Facebook-owner Meta Platforms follows on Wednesday. Then Thursday brings results from Apple and Amazon. Twitter closed up 5.7% on Monday at USD51.70, still short of Musk's agreed offer of USD54.20 per share.
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CAC 40: up 0.9% at 6,505.78
DAX 40: up 1.1% at 14,076.79
FTSE 100: up 0.9% at 7,443.64
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Hang Seng: closed up 0.3% at 19,934.71
Nikkei 225: closed up 0.4% at 26,700.11
S&P/ASX 200: closed down 2.1% at 7,318.00
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DJIA: called down 0.3%
S&P 500: called down 0.2%
Nasdaq Composite: called down 0.2%
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EUR: down at USD1.0686 (USD1.0715)
GBP: flat at USD1.2718 (USD1.2715)
USD: firm at JPY127.86 (JPY127.70)
Gold: up at USD1,902.35 per ounce (USD1,898.25)
Oil (Brent): up at USD101.19 a barrel (USD100.33)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Defence Secretary Lloyd Austin has invited around 40 countries to participate in a conference on the war in Ukraine being held on Tuesday at the Ramstein US airbase in Germany. The aim of the conference is to secure Ukraine's long-term security and sovereignty. It is expected to focus on the country's defence needs in the period following the war. The US Department of Defense has made clear that the conference is not being held under NATO auspices, and countries that are not members of the alliance are reportedly among those invited. In the run up to the conference, Austin and US Secretary of State Antony Blinken visited Kiev, where they met with President Volodymyr Zelensky on Sunday and agreed to provide Ukraine with additional military assistance.
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Russia has warned of the "real" threat of World War III breaking out, ahead of a Tuesday meeting between the US and allies over sending further arms to war-torn Ukraine. Moscow's invasion of its neighbour has triggered an outburst of support from Western nations that has seen weapons pour into the country to help it wage war against Russian troops. But Western powers have been reluctant to deepen their involvement, for fear of sparking a conflict against nuclear-armed Russia. Speaking to Russian news agencies, Moscow's Foreign Minister Sergei Lavrov warned the risk of a World War III "is serious" and criticised Kyiv's approach to floundering peace talks. "It is real, you can't underestimate it," Lavrov said.
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The UK said it has dropped tariffs on all goods from Ukraine while slapping a ban on some technology exports to Moscow to help Kyiv in its fight against the Russian invasion. Responding to a direct request from Ukrainian President Volodymyr Zelensky, the UK's international trade department said Monday it had reduced "all tariffs on goods imported from Ukraine", including key exports such as barley, honey and poultry. "The UK will continue to do everything in its power to support Ukraine's fight against Putin's brutal and unprovoked invasion," international trade secretary Anne-Marie Trevelyan said in a statement. At the same time, Britain announced it would prevent the export of "products and technology that Russia could use to repress the heroic people of Ukraine", including possibly surveillance and interception equipment.
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According to a study commissioned by Greenpeace, the consequences of an oil embargo against Russia would be feasible for Germany to handle. The consequences of an embargo for oil prices would be manageable and an all-out ban on imports would prevent money from flowing into Russia's war chest, the study by energy expert Steffen Bukold found. The German government is staunchly opposed to a ban on Russian oil and gas. According to information from the Economy Ministry, Germany's dependence on Russian oil has fallen from 35% to about 25%. By the middle of the year, Russian oil imports to Germany are expected to be halved.
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Beijing launched mass coronavirus testing for nearly all its 21 million residents, as fears grew that the Chinese capital may be placed under a strict lockdown like Shanghai. China is trying to contain a wave of infections in Shanghai – its biggest city – which has been almost entirely locked down for weeks and reported 52 new Covid deaths on Tuesday. Beijing authorities have ordered people in 12 central districts accounting for most of its population to undergo three rounds of PCR testing after the detection of dozens of cases in the city in recent days. The capital's most populous downtown district Chaoyang was the first to order mass testing from Monday, with people waiting in long lines to be swabbed by health workers in protective gear. Eleven more districts began testing residents on Tuesday
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The jobless rate in Japan fell slightly to 2.6% in March from 2.7% in February, according to figures from the country’s Statistics Bureau.
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UK public sector borrowing for the financial year that ended in March came in markedly lower than the year earlier, figures from the Office for National Statistics showed. However, borrowing remains at a historically high level and the full financial year figure topped forecasts set out by the Office for Budget Responsibility. UK public sector net borrowing - excluding public sector banks - amounted to GBP151.8 billion, around 6.4% of gross domestic product for the year ended March. It was the third-highest borrowing figure since records began in 1947, but less than half the GBP317.6 billion from the previous financial year. It was above the OBR's most recent GBP127.8 billion forecast, however. The OBR is non-departmental body which sets out forecasts for UK public finances. In March alone, net borrowing came in at GBP17.32 billion, halved from GBP26.08 billion a year earlier. The figure topped FXStreet cited consensus of GBP15.0 billion. It also was above February's GBP9.85 billion net borrowing figure.
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UK grocery sales have fallen year-on-year in recent weeks and notably declined on a two-year basis for the first time since the pandemic began, figures from Kantar showed. This was despite UK grocery price inflation reaching a more than 10-year high. In the 12 weeks to April 17, UK grocery sales fell by 5.9% year-on-year to GBP29.73 billion from GBP31.60 billion. On a two-year basis, sales fell 0.6%. It was the first fall on a two-year basis since the onset of the pandemic. However, sales are now lapping strong comparatives from 2020, when consumers turned to stockpiling in fears of shortages as the Covid-19 spread. Grocery price inflation in the 12 weeks was 4.8%. In April alone, it was 5.9%, the chunkiest rate since December 2011.
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By Tom Waite; thomaslwaite@alliancenews.com
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