(Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Japanese technology investor SoftBank Group reported a 39% drop in first quarter profit. Net sales in the three months to June 30 rose 16% year-on-year to JPY1.479 trillion - equivalent to around USD13.40 billion - from JPY1.280 trillion. Pretax profit jumped 55% to JPY1.292 trillion in the financial first quarter. However, attributable net profit amounted to JPY761.51 billion, down 39% from JPY1.256 trillion a year ago. This reflected a non-repeating gain of JPY734.5 billion a year ago from the loss of control of former SoftBank-subsidiary Sprint, as it merged with telecoms peer T-Mobile US. SoftBank highlighted a JPY1.263 trillion gain on investments in the quarter, compared with JPY982.9 billion a year ago.
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M&G reported an increase in assets under management that missed expectations in the first half of 2021. Assets under management and administration rose 9.2% to GBP370.0 billion from GBP338.7 billion a year ago. The institutional business saw net inflows of GBP2.2 billion, down from GBP2.8 billion a year ago. Outflows at the retail business were GBP3.4 billion, narrowing from GBP7.7 billion. Revenue jumped to GBP9.21 billion from GBP1.47 billion a year ago. Pretax profit fell 89% to GBP74 million from GBP665 million, after M&G recorded high charges.
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abrdn, the Edinburgh-based investment and asset manager formerly known as Standard Life Aberdeen, reported a swing to pretax profit of GBP113 million in the first half of 2021 from a GBP498 million loss a year ago, amid higher adjusted operating profit and lower impairments. Otherwise, things were mostly steady. abrdn kept its interim dividend unchanged at 7.3 pence per share and maintained its previous guidance. Assets under management and administration were mostly unchanged at GBP532 billion, compared to GBP535 billion a year ago, as net outflows were staunched, reduced to GBP5.6 billion from GBP24.8 billion.
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InterContinental Hotels Group said trading "improved significantly" in its first half as bookings began to recover and payroll-related reimbursement costs fell. For the six months to June 30, IHG swung to an operating profit of USD138 million from a loss of USD233 million a year prior despite a 5.6% drop in total revenue to USD1.18 billion from USD1.25 billion. Significantly, revenue per available room - a key metric in the hotel industry - was 20% higher than at the same time in 2020. The Buckinghamshire-based hospitality provider under brands such as Holiday Inn said its domestic leisure bookings, particularly in the US and China, enhanced its first-half results. IHG did not declare an interim dividend, but was confident the resumption of dividend payments would resume in "due course".
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Flutter Entertainment said it enjoyed a very strong first half with revenue growth driven by increased average monthly players. For the six months to June 30, revenue was up 99% at GBP3.05 billion from GBP1.54 billion in the prior year and pretax profit more than tripled to GBP77 million from GBP24 million. Adjusted earnings before interest, tax, depreciation and amortisation - excluding the US business - doubled to GBP684 million from GBP339 million. Flutter did not declare an interim dividend but said its payout policy was to be kept under review. Looking ahead, Flutter expects second half adjusted Ebitda of between GBP1.27 billion to GBP1.37 billion.
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A review of Rio Tinto's Oyu Tolgoi project found that geological issues were not the cause of delays and cost overruns, as the Anglo-Australian miner initially claimed, the Financial Times reported. The independent report - peer reviewed by two leading mining engineers - found that ground conditions were not a major factor behind delays and overspending in the USD6.75 billion expansion of the Oyu Tolgoi copper project in Mongolia, according to the newspaper. In July 2019, Rio Tinto had announced delays of 16 to 30 months and additional costs of USD1.2 billion to USD1.9 billion at the massive copper mine.
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The first generation vaccine developed by BioNTech SE-Pfizer works against coronavirus variants such as the Delta strain and does not need to be modified for the moment, the chief executive of German company BioNTech said Monday. "It is quite possible that in the next six to 12 months, further variants will emerge and that would require adaptation of the vaccine but it is at the moment not yet the case," Ugur Sahin told journalists. A decision to make a switch should be made only if it is clear that the vaccine failed to work or is only offering sub-par protection against the virus.
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German pharmaceutical and chemical firm Bayer lost a third appeal in a case over claims that its Roundup weedkiller is carcinogenic. A court in San Francisco on Monday upheld a ruling that Bayer is liable for cancers suffered by plaintiffs Alberta and Alva Pilliod. A jury in California first sentenced Bayer in 2019 to pay the couple damages and fines totalling around USD2 billion. The court later reduced the amount to USD86.7 million. "We respectfully disagree with the Court's ruling as the verdict is not supported by the evidence at trial or the law," a spokesperson told dpa. "Monsanto will consider its legal options in this case." "We continue to stand strongly behind the safety of Roundup, a position supported by four decades of extensive science and the assessments of leading health regulators worldwide that support its safe use," the spokesperson added.
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MARKETS
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Share prices were directionless in Europe despite a consistently positive lead from Asia. Wall Street also was pointed to a flat open. The oil market was more active, with Brent crude rising. "Oil prices are likely to remain volatile as the outlook for the economic recovery becomes increasingly uncertain, with a rise in cases of the Delta variant in Asia continuing to be a reason for concern," commented Ricardo Evangelista, senior analyst at ActivTrades, "while at the same time in the US the Senate will vote on the deployment of a massive infrastructure bill, which, if approved, will certainly increase demand for oil."
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CAC 40: marginally lower, down 0.35 point at 6,812.83
DAX 30: marginally higher, up 4.78 points at 15,750.19
FTSE 100: down 0.2 at 7,120.73
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Hang Seng: closed up 1.2% at 26,605.62
Nikkei 225: closed up 0.2% at 27,888.15
S&P/ASX 200: closed up 0.3% at 7,562.60
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DJIA: called down 0.1%
S&P 500: called marginally lower, down 1.25 points
Nasdaq Composite: called up 0.1%
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EUR: down at USD1.1729 (USD1.1748)
GBP: up at USD1.3863 (USD1.3856)
USD: up at JPY110.45 (JPY110.24)
GOLD: up at USD1,731.15 per ounce (USD1,730.32)
OIL (Brent): up at USD70.27 a barrel (USD68.80)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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US lawmakers laid out a USD3.5 trillion budget framework, calling it the "most consequential" social spending plan since the 1930s, and launching what are expected to be tough congressional negotiations over the programs it covers. The 10-year budget blueprint pushes Congress towards the next step in President Joe Biden's ambitious vision for his first term in office, following on the heels of the USD1.2 trillion infrastructure plan, which the Senate is expected to approve Tuesday in vote at 1100 Washington time before the measure is sent to the House of Representatives. The dollar amount is staggering, almost matching the size of Germany's economy in 2020. The spending plan published Monday includes funding for climate measures, new investments in infrastructure including items left out of the targeted Senate package, residency status for millions of migrant workers, and two years paid tuition at public universities.
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The number of job openings in the US reached a record high in June, figures on Monday showed. Data from the job openings and labour turnover summary, posted by the US Bureau of Labor Statistics rose by 590,000 monthly to a series high of 10.1 million in June. June's figure topped FXStreet cited consensus of 9.3 million. In addition, the number of hires surged by 697,000 to 6.7 million. "The June JOLTS report depicted strong labor market conditions in June and offered some encouraging signs that hiring has started to catch up with red-hot labour demand," analysts at Oxford Economics commented.
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Sydney posted a new record of Covid-19 infections Tuesday as the city struggles to control an outbreak that is sending other Australian regions into lockdown. New South Wales state announced 356 new cases, a fresh record for a Delta-variant outbreak that began in mid-June and continues to grow in a population with low vaccination rates. More than five million people in Sydney, Australia's biggest city, are now in their seventh week of lockdown as the cluster hit 5,805 cases with 32 deaths to date. "Our strategy is to get to as close to zero as we can...but regrettably we have seen those numbers increase in the last few days," state premier Gladys Berejiklian said. The coastal town of Byron Bay became the latest put under stay-at-home orders – joining regional centres such as Newcastle and Tamworth – with a snap seven-day lockdown announced late Monday after an infected person travelled there from Sydney.
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The ZEW indicator of economic sentiment for Germany declined to 40.4 points in August from 63.3 in July. It was the lowest level since November and well below market expectations, cited by FXStreet, of 56.7.
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UK retail sales growth slowed in July, with poor weather partially offsetting an easing in lockdown measures and as the sector tracks tougher comparatives. It was around July 2020 that UK retailers began to fully re-emerge from the first Covid-19 lockdown in the UK. In 2021, all legal Covid-19 restrictions in England ended on July 19, in what was dubbed 'freedom day'. According to the latest British Retail Consortium-KPMG sales monitor, total UK retail sales rose 6.4% annually in July, following growth of 3.2% a year earlier. Though still fairly sizeable, July's growth was below the three-month average of 15%. Compared to two years earlier, so prior to the pandemic, total UK retail sales were 9.1%
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By Tom Waite; thomaslwaite@alliancenews.com
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