(Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Facebook-owner Meta Platforms is ending a run as one of the few major firms without debt, launching its first bond sale as the company battles uncertainty and bets heavily on its metaverse vision. Worries over the social media giant's future and fierce competition from TikTok have sent its stock plummeting, while the firm spends billions on its plan for the internet's next iteration. Meta reported to the US markets watchdog on Thursday that it has begun offering bonds to raise money for uses such as "capital expenditures, repurchases of outstanding shares of its common stock, acquisitions, or investments." The firm, which also owns Instagram and WhatsApp, declined to comment beyond its filing to the Securities & Exchange Commission. Its filing does not indicate the amount of funds it wants to raise, nor the term of the bonds, but Bloomberg news agency reported Meta may sell USD8 billion to USD10 billion in debt.
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Federal officials are investigating Goldman Sachs Group's credit card practices, part of the investment bank's growing consumer business. The probe, launched by the Consumer Financial Protection Bureau, concerns "the application of refunds, crediting of nonconforming payments, billing error resolution, advertisements and reporting to credit bureaus," Goldman said in a securities filing. The New York financial giant said it was cooperating with the investigation. Goldman's credit card business includes a much-touted Apple credit card, first launched in 2019. Goldman established its Marcus online bank offering in the US in 2016 as an effort to diversify its revenue stream following regulatory measures on trading enacted after the 2008 financial crisis.
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Twitter said the notion Elon Musk was "hoodwinked" into inking a USD44 billion buyout deal defies reason and the facts. In a filing, Twitter rejected counter claims made by Musk as he fights to walk away from the deal he inked in April to buy the San Francisco-based company. "According to Musk, he - the billionaire founder of multiple companies, advised by Wall Street bankers and lawyers - was hoodwinked by Twitter into signing a USD44 billion merger agreement," Twitter said. "That story is as implausible and contrary to fact as it sounds." Musk last week filed a countersuit along with a legal defense against Twitter's claim that the billionaire is contractually bound to complete the takeover deal. "The counterclaims are a made-for-litigation tale that is contradicted by the evidence and common sense," Twitter argued in the filing.
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Tesla shareholders have approved the US electric carmaker's second stock split in two years, converting each existing share into three new ones in a measure that makes the company more accessible to small investors. Tesla initially announced the plan in March, before saying in June that it planned a 3-for-1 split. At the company's annual general meeting in Austin, Texas on Thursday, the shareholders voted to approve the measure. It was not immediately clear when the split would take place. While stock splits don't change the market value of a company, they do lower the price per share. This can make the shares more attractive, especially for small investors, even though many brokers already offer to buy shares on a pro rata basis. Nevertheless, the measure remains popular with corporations, with US tech giants such as Amazon and Google parent company Alphabet also executing stock splits this year.
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Amgen reported a rise in second-quarter earnings but narrowed its annual revenue guidance. For the three months to June 30, revenue was up 1% at USD6.59 billion from USD6.53 billion in the second quarter a year before, driven by growth in global product sales, which more than offset lower revenue from the group's Covid-19 manufacturing collaboration. Second-quarter net income was USD1.32 billion, or USD4.65 per diluted share, up from USD6.53 billion, or USD1.77 per share, last year. Looking ahead, the Thousand Oaks, California-based firm said 2022 revenue guidance revised to a range of USD25.5 billion to USD26.4 billion, compared to USD25.4 billion to USD26.5 billion previously guided. 2022 EPS guidance was revised to USD11.01 to USD12.15 on a GAAP basis, down from USD12.53 to USD13.58 previously.
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Skyworks Solutions reported a drop in profit for the third quarter of its financial year, as a result of higher research and development costs, which more than offset revenue growth. For the three months ended July 1, the Irvine, California-based semiconductors firm posted net income of USD267.3 million, down 21% from USD337.8 million the same period a year before. Diluted earnings per share, dropped 18% to USD1.66 from USD2.02, on revenue which grew 10% year-on-year to USD1.23 billion from USD1.12 billion, beating consensus estimated. Looking ahead, Skyworks said it expects revenue to come between USD1.38 billion and USD1.43 billion, while non-GAAP diluted EPS is set to reach USD2.90.
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Allianz reported higher second-quarter revenue, driven by its Property & Casualty business, and backed its full-year forecasts. Revenue in the second quarter of 2022 rose 8.2% to EUR37.1 billion from EUR34.3 billion a year before, driven by 16% growth in the Property & Casualty arm, which brought in sales of EUR16.2 billion. Its other key revenue driver, Life & Health, reported 3.4% revenue growth to EUR19.1 billion. "In a quarter marked by heightened inflation and market volatility, we achieved a very strong operating profit in the second quarter, which emphasizes our ability to successfully navigate rapidly-evolving situations," said Chief Financial Officer Giulio Terzariol. He reaffirmed Allianz's outlook for 2022.
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London Stock Exchange Group said results in the first half of 2022 improved, as this year's interim period had an extra month's worth of contribution from recent acquisition Refinitiv. LSEG completed the USD27 billion acquisition of financial market data and trading infrastructure provider Refinitiv in January 2021. LESG's total income excluding recoveries jumped by 24% year-on-year to GBP3.57 billion from GBP2.87 billion. Including recoveries, the measure was up at the same rate to GBP3.74 billion from GBP3.02 billion. Pretax profit jumped 73% to GBP803 million from GBP463 million. The stock exchange operator said its offering benefits from market price volatility. Revenue from the Capital Markets unit alone jumped 34% year-on-year. Its largest revenue contributor, Data & Analytics, saw a top-line improvement of 26%. LSEG lifted its interim dividend by 27% to 31.7p per share from 25.0p. It launched a GBP750 million buyback, "phased over multiple tranches over 12 months".
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Retail investment platform Hargreaves Lansdown said it sees "continued, economic and geopolitical turbulence" ahead. "This will continue to impact key drivers of our business including asset levels and investor confidence. We have supported clients through such events and period for many years and each time we have come through stronger. This time will be no different," the FTSE 100 listing said. Pretax profit in the year that ended June 30 fell 26% to GBP269.2 million from GBP366.0 million. Revenue declined 7.6% to GBP583.0 million from GBP631.0 million. Over the financial year, assets under administration declined by 8.6% to GBP123.8 billion from GBP135.5 billion, "driven by market falls". HL raised its annual ordinary dividend by 3.1% to 39.7 pence from 38.5p. However, including a special payout of 12.0p for financial 2021, the total annual dividend is down 24% from 50.5p.
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Advertising agency WPP upped its annual outlook. It now expects organic revenue to rise between 6.0% and 7.0% for 2022. It had initially guided for a 5.5% to 6.5% rise. Pretax profit in the first half of 2022 surged 12% to GBP562 million from GBP502 million a year earlier. Revenue increased 10% to GBP6.76 billion from GBP6.13 billion. WPP upped its payout by 20% to 15.0p from 12.5p. "We have enjoyed a strong first half, with broad-based growth across our creative, media and public relations businesses. This reflects the improved competitive position of our creative businesses, with their growing capabilities in commerce, experience and technology, our continued strength in media and the resurgence in demand for strategic communications advice from our public relations agencies," CEO Mark Read said.
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Deutsche Lufthansa has managed to avert further strike action from ground staff after reaching a pay rise agreement with trade union Verdi. Salaries for some 20,000 employees are due to increase by at least EUR325 per month, with a further 2.5% pay rise to be implemented in three stages, the two sides said. Verdi said the agreement would lead to salary increases of between 13.6% and 18.4% for individual employees, while Lufthansa said that those on the lowest salary level would be receiving pay increases of 19.2%. The agreement came after Lufthansa was forced to cancel more than 1,000 flights last week due to industrial action by ground staff. Verdi negotiator Christine Behle welcomed the agreement, noting it was not contingent on Lufthansa's financial performance.
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MARKETS
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Global markets were effectively on hold on Friday, with investors worried by China's show of military strength around Taiwan and unwilling to take major new positions ahead of the key July unemployment report in the US. The nonfarm payrolls release is at 1230 GMT. The world's largest economy is forecast to have added 250,000 net new jobs last month, slowing from 372,000 in June. Unemployment is expected to have remained at 3.6%, nearly a 50-year low. Marshall Gittler at BDSwiss noted the market is particularly bad at forecasting the US nonfarm payrolls figure. "Since the beginning of 2021 the figure has beaten estimates 10 times and missed 8 times, making it pretty much a coin toss."
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CAC 40: down 0.5% at 6,479.82
DAX 40: down 0.1% at 13,649.21
FTSE 100: down 0.2% at 7,434.42
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Hang Seng: closed up 0.1% at 20,201.94
Nikkei 225: closed up 0.9% at 28,175.87
S&P/ASX 200: closed up 0.6% at 7,015.60
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DJIA: called up 28.00 points, 0.1%
S&P 500: marginally lower, up 0.75 point
Nasdaq Composite: called marginally lower, down 4.00 points
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EUR: firm at USD1.0229 (USD1.0220)
GBP: up at USD1.2141 (USD1.2115)
USD: down at JPY132.96 (JPY133.30)
Gold: up at USD1,787.08 per ounce (USD1,785.66)
Oil (Brent): down at USD94.23 a barrel (USD94.65)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Taiwan President Tsai Ing-wen called China's military exercises off the coast of the self-governing island "irresponsible not only for Taiwan, but also for the international community". Demanding that Beijing be "rational and self-restrained", Tsai said in a video address that Taiwan would not seek to escalate tensions with China further, but stressed that it would defend its sovereignty as the People's Liberation Army continued a series of live-fire drills around the island due to last until Sunday. The Taiwan government was working to ensure safe and smooth operations at the island's ports and airports, as well as the stability of the financial markets, she added. According to Japan's Defence Ministry, four Chinese missile shells landed inside Japan's exclusive economic zone after flying over Taiwan. However, Taiwan's Ministry of National Defence would not confirm that the missiles has passed over Taiwan, saying only that the military was employing various early-warning and monitoring mechanisms to track missiles fired by the PLA and had activated its defence systems.
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China's foreign ministry announced sanctions against US House Speaker Nancy Pelosi, after her visit to Taiwan this week prompted the show of military force from Beijing. The ministry said Pelosi was "seriously interfering in China's internal affairs and seriously undermining China's sovereignty and territorial integrity" with the visit, and that Beijing would "impose sanctions on Pelosi and her immediate family", without giving further details. China has announced sanctions on a number of US officials in recent years for acting against what it views as its core interests and speaking out on human rights issues in Hong Kong and the northwestern region of Xinjiang, often without specifying punitive measures.
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Three cargo ships carrying grain left the Black Sea ports of Odessa and the adjacent port of Chornomorsk early on Friday, Ukrainian Infrastructure Minister Olexandr Kubrakov reported on the ministry's Telegram channel. "The first convoy carrying Ukrainian grain has sailed from the ports of Greater Odessa," Kubrakov said. The vessels are reported to be carrying 57,000 tons of maize. The ships are reported to be the Turkish freighter Polarnet, the Navi Star, which sails under the flag of Panama, and the Rojen, which is under a Maltese flag. According to the Ukrainian authorities, the ships will first sail to Istanbul for inspection and then on to Britain and Ireland.
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The US Senate this weekend will begin debating a major health and climate investment bill, Democratic leader Chuck Schumer said Thursday, expressing confidence that it will be passed. The bill, a trimmed version of President Joe Biden's campaign promise, earmarks nearly USD370 billion for clean energy projects and climate initiatives, as well as USD64 billion to provide secure subsidies for medical coverage and reduced drug prices. "I expect we will have some late nights and extended debates here on the floor," Schumer said. "But in the end, Democrats are going to make good on our word to pass the Inflation Reduction Act." With the Senate split 50-50 between Democrats and Republicans, the fate of the bill depends on the support of Kyrsten Sinema, a conservative Democrat, who has already buried a number of Biden's reform plans. Sinema announced Thursday evening that she has agreed to support the bill, with some changes. "I'll move forward," she said. Schumer said an agreement reached among Democratic senators preserves the bill's key components.
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Biden's government declared monkeypox a public health emergency in the US, a move that should free up new funds, assist in data gathering and allow the deployment of additional personnel in the fight against the disease. The move came as nationwide cases topped 6,600, around a quarter of them from New York State, and experts warned swift action was needed if the outbreak is to be contained in its early stages. "We're prepared to take our response to the next level in addressing this virus, and we urge every American to take monkeypox seriously and to take responsibility to help us tackle this virus," Health & Human Services Secretary Xavier Becerra said in a call. Observers believe the real number of cases could be much higher than official figures suggest, since symptoms in the current global outbreak, which began in May, have included subtle signs, such as single lesions, in addition to the more familiar widespread rashes.
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German industrial production trends improved in June, figures from Destatis showed. Production rose 0.4% month-on-month, reversing a 0.1% decline in May and beating expectations, according to FXStreet, of a further 0.3% drop. On an annual basis, the decline slowed to 0.5% from 1.7% the month before. "Production is still affected by the extreme shortage of intermediate products," Destatis noted.
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Spanish industrial production unexpectedly picked up in June, driven by energy, figures from the National Institute of Statistics showed. Production rose 7.0% year-on-year, accelerating from 4.5% in May. This defied expectations, according to FXStreet, of a slowdown to 3.1%. This was driven by energy production, up 14%, while production of capital goods rose 11%. Consumer goods also notched robust growth, of 7.1%, while intermediate goods production was near stagnant.
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Italy's industrial production declined on both a monthly and annual basis in June, figures from national statistics office Istat showed. Italy's industial output fell by 2.1% on a monthly basis in June after decreasing by 1.1% in May and against estimates of a less-marked decline of 0.2%, as cited by FXStreet. On an annual basis, the 1.2% decrease in July followed a 3.4% increase in May and confounded estimates of a 4.0% rise.
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UK retail footfall stalled in July as record temperatures and the rising cost of living deterred people from visiting local shops. Total UK footfall fell by 14% in July compared with three years previously – a timeframe to avoid pandemic disruption – making it 3.7 percentage points worse than June, according to the BRC-Sensormatic IQ Footfall Monitor. Footfall on high streets declined by 16%, two percentage points worse than last month's rate and steeper than the three-month average decline of 14%. Shopping centre visits were down 25% on three years earlier. British Retail Consortium Chief Executive Helen Dickinson said: "There was some respite in the last week of July, ahead of the Women's Euros finals, as people stocked up on food and drink to watch the Lionesses bring footfall home."
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UK house prices declined on a monthly basis for the first time in over a year in July, figures from mortgage lender Halifax showed. House prices in the UK declined 0.1% on a monthly basis in July, defying expectations of a 0.9% rise, according to FXStreet. In June, prices had risen 1.4% from May. "Following a year of exceptionally strong growth, UK house prices fell last month for the first time since June 2021, albeit marginally. This left the average house price at GBP293,221, down GBP365 from the previous month's record high," Halifax Managing Director Russell Galley said. On an annual basis, growth slowed to 12% in July, from a 13% hike in June.
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By Tom Waite; thomaslwaite@alliancenews.com
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