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The following is a summary of top news stories Tuesday.
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COMPANIES
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Oracle late Monday posted a drop in profit for the first quarter of its financial year, citing a stronger US dollar compared to other currencies, and an overall increase in operating expenses. For the three months ended August 31, the Austin, Texas-based enterprise software firm posted net income of $1.55 billion, down 37% from $2.50 billion the same period a year before. Diluted earnings per share dropped 35% to $0.56 from $0.86, as total operating expenses increased 40% to $8.62 billion from $6.30 billion a year prior. Alongside a stronger US dollar, this more than offset 18% revenue growth year-on-year to $11.46 billion from $9.73 billion. Cloud services & license support, which makes up 76% of revenue, grew 14% year-on-year to $8.42 billion.
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Aveva is edging closer towards a deal which will see the company be taken over by French industrial group Schneider Electric, Sky News reported. Sky News reported that the boards of both companies are in discussions over a price of at least £30 per share, for Schenider to acquire the remaining 40% stake in Cambridge-based industrial software firm Aveva that it does not own. The price values the 40% interest up for grabs at around £3.5 billion. It also values Aveva in its entirety at around £9 billion. According to sources, a deal is expected to be announced before the deadline of September 21.
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BP announced it will acquire, through its American division, power and gas provider EDF Energy Services. The London-based oil & gas firm did not disclose the price for which it acquired Texas, US-based EDF Energy Services. It said the acquisition would expand its presence in the US commercial & industrial retail power sector. EDF Energy Services' customers are primarily corporations and public entities, including retailers, universities, and manufacturers. It does not supply residential consumers, BP explained.
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Online grocer Ocado Group reported sales growth for Ocado Retail in its third quarter, but warned that shoppers are checking out with smaller baskets and seeking value-for-money items due to the cost-of-living. Ocado Retail is a joint venture between Ocado and Marks & Spencer. For the 13 weeks to August 28, revenue edged up 2.7% to £531.5 million, with average orders per week rising 11% to 374,000. Ocado also flagged ‘record numbers’ of new customers. However, the average basket value was down by 6% in the period, with a greater decline experienced later in the quarter. ‘Notwithstanding positive customer growth, the accelerating trading down and smaller baskets, particularly over the last few weeks, mean that we now expect to see a small sales decline in FY22 and close to break-even Ebitda,’ said Ocado. In Ocado's half-year results, it had guided to low single-digit growth at Ocado Retail for the full-year.
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Fresnillo said it is currently conducting ‘extensive’ tests at its Juanicipio mine in Mexico, due to requirements from a local regulator, but does not expect this to hurt its annual guidance. The Mexico City-based silver and gold miner said it completed all activities for the final tie-in to the electrical grid at Juanicipio. Nonetheless, the state-owned electricity regulator Comision Federal de Electricidad, required Fresnillo to conduct additional testing to verify the compatibility between new and updated substation equipment, prior to the final tie-in of the electrical grid.
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abrdn said it has sold 43.0 million shares in HDFC Life Insurance, equivalent to around a 2.0% stake, for £262 million. The sale was conducted through subsidiary abrdn (Mauritius Holdings) 2006. The company continues to hold a 1.7% stake in HDFC Life, worth around £227 million. ‘The proceeds will further strengthen the company's capital resources supporting investment in the business and enabling the company to continue to return capital in excess of business needs,’ it said.
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Peloton Interactive, the home exercise equipment maker, announced the resignations of John Foley as chair and Hisao Kushi as chief legal officer. Foley resigns from Monday, while Kushi resigns from October 3. Karen Boone will replace Foley as chair. Foley co-founded the firm in 2012 and became chair in February. Kushi was also a co-founder in the company and has served as chief legal officer since 2015.
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MARKETS
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Stock markets were firm ahead of the week's key economic data point, the US consumer price index for August at 1230 GMT. ‘It's that time again,’ remarked Jim Reid at Deutsche Bank. ‘US CPI will clearly be the major focus today and could shape next week's [Federal Open Market Committee meeting] and the rest of the month's trading. Or, of course, it could be a damp squib, but I'm sure they'll be something in it to move markets.’ Deutsche expects headline annual inflation to ease to 8.0% but core inflation to edged up to 6.0%.
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CAC 40: up 0.4% at 6,357.12
DAX 40: up 0.2% at 13,424.39
FTSE 100: up 0.2% at 7,488.74
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Hang Seng: closed down 0.2% at 19,326.86
Nikkei 225: closed up 0.3% at 28,614.63
S&P/ASX 200: closed up 0.7% at 7,009.70
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DJIA: called up 0.4%
S&P 500: called up 0.4%
Nasdaq Composite: called up 0.4%
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EUR: up at $1.0152 ($1.0128)
GBP: up at $1.1713 ($1.1698)
USD: down at JP¥142.24 (JP¥142.35)
Gold: down at $1,726.30 per ounce ($1,731.11)
Oil (Brent): up at $94.95 a barrel ($94.63)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Germany's Federal Statistical Office confirmed the country's annual inflation print at 7.9% for August. The reading was up from 7.5% in July, and Destatis noted the inflation rate has remained clearly above 7% for half a year now. Versus the previous the month, consumer prices increased 0.3% in August, again confirming the flash estimate.Excluding energy prices and food, the annual inflation rate stood at 3.5% in August. On an EU-harmonised basis, inflation was 8.8% in August, again matching the flash reading and up from 8.5% in July.
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German Chancellor Olaf Scholz said he wants to hurry through reforms to the electricity market to ease the pressure on consumers and businesses ahead of the coming European winter. Russia has dwindled supplies of gas to Europe following the invasion of Ukraine, sending the price for the fuel soaring and dragging up the cost of electricity in its wake. Non-gas electricity companies, such as nuclear, solar or renewable firms, had been able to ‘make extra profits because the price is determined by the electricity produced with gas’, Scholz said in a speech in Berlin. Germany and the EU have developed proposals to cream off windfall profits from non-gas producers to ease the pressure on consumers and companies sinking under the weight of soaring bills. ‘We will now push this through with great speed so that we can relieve the burden,’ Scholz said.
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Consumer price inflation in Spain slowed a bit in August from July but still remained above 10%, according to data released by INE. The consumer price index was up 10.5% on a year before in August, slowing from a 10.8% rise in July. On an EU-harmonised basis, annual inflation also was 10.5%, easing from 10.7% in July. Less positively, the core rate of inflation increased to 6.4% in August from 6.1%, continuing an unbroken upward climb in core inflation since June of last year. It was the highest rate of core inflation since January 1993, INE said. On a monthly basis, prices rose by 0.3% in August from July, having fallen by 0.3% in July from June.
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Switzerland's producer & import price index inched lower in August, the Federal Statistical Office said. The index fell 0.1% month-on-month in August to 109.6 points. Compared with August 2021, the price level of the whole range of domestic and imported products rose by 5.5%.
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UK grocery price inflation has hit a record pace, prompting customers to switch to low-cost supermarkets and own-label ranges, according to survey figures from data analytics firm Kantar. Grocery price inflation reached over 12% over the past four weeks ending September 4, with the average household's annual grocery bill now set to soar to £5,181 - if consumers were to buy the same products as they did last year. Prices were rising the fastest in goods such as milk, butter and dog food, which have jumped 31%, 25% and 29%, respectively. ‘It seems there's no end in sight to grocery inflation as the rate at which food and drink prices are increasing continues to accelerate,’ said Fraser McKevitt, head of retail & consumer insight at Kantar. In an effort to cope with rising prices, people are increasingly turning to own-label value products, with sales of these increasing by 33%. Own-label ranges now hold 51% of the market in the UK compared to branded products, Kantar said.
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The UK jobless rate edged down to 3.6% in the three months to July, from 3.8% in the previous three-month period. Market consensus, according to FXStreet, had expected the rate to remain stable at 3.8%. The latest jobless rate was the lowest since May to July 1974. Total pay, which includes bonuses, grew 5.5% on-year over the three-month period, ticking up from 5.2% the prior period. Regular pay, which strips out bonuses, grew 5.2%, picking up from 4.7%. Both figures beat consensus, which had forecast growth of 5.2% and 5.0% respectively. However, in real terms - meaning adjusted for inflation - total pay fell by 2.6% and regular pay dropped by 2.8%. While July's fall in real pay was slightly smaller than the 3.0% gap seen last month, the ONS highlighted it remains ‘among the largest falls in growth since comparable records began in 2001’.
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US President Joe Biden sought to mediate in a labour dispute threatening to paralyse the US train network with strikes likely to hurt the wider US economy, the White House said. ‘The president and members of the cabinet have been in touch today with both unions and companies involved in order to try to avert a strike,’ an administration official told AFP on condition of anonymity. September 16 is the deadline for US unions and freight railroad companies to reach a collective bargaining agreement. Out of the 12 unions representing different workers, two have yet to make a deal and their workers could go on strike. The Association of American Railroads warned of steep economic fallout.
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The US invited Mexico to join a multibillion dollar push to boost semiconductor manufacturing to compete with China, during a visit by US Secretary of State Antony Blinken for high-level economic talks. Officials set aside trade tensions over Mexican President Andres Manuel Lopez Obrador's energy policies and focused instead on the potential benefits from cooperation in microchips and other technology. The Chips & Science Act, which US President Joe Biden signed into law last month, includes around $52 billion to promote production of microchips. ‘Now in China and Taiwan the testing, packaging and assembly industry for semiconductors is a $60 billion industry. In North America it's $3 billion,’ said US Secretary of Commerce Gina Raimondo, who accompanied Blinken.
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China is willing to shape the international order together with Russia in a ‘more just and rational direction’, a senior Chinese diplomat said as the two countries' leaders prepare to meet this week. Former Cold War allies with a tempestuous relationship, China and Russia have drawn closer in recent years as part of what they call a ‘no limits’ relationship acting as a counterweight to the global dominance of the US. ‘Under the strategic guidance of President Xi Jinping and President [Vladimir] Putin, the relationship between the two countries has always moved forward on the right track,’ the Communist Party's foreign affairs chief Yang Jiechi told Russia's ambassador to China Andrey Denisov on Monday, according to a foreign ministry readout. Yang said China was ‘willing to work with Russia to continuously implement the spirit of high-level strategic cooperation between the two countries, safeguard the common interests of both sides, and promote the development of the international order in a more just and rational direction’, according to the ministry.
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Ukraine said that its forces regained yet more ground in the past 24 hours and retook an area seven times the size of Kyiv this month, as Russia responded with strikes on some recaptured areas. The territorial shifts marked one of Russia's biggest reversals since its troops were turned back from Kyiv in the earliest days of the nearly seven months of fighting, yet Moscow signalled it was no closer to agreeing to a negotiated peace. The retreat of Russian troops in recent days has drawn weeping and relieved locals into bomb-cratered streets, including on Sunday in the strategic but heavily damaged town of Izyum.
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