The following is a summary of top news stories Monday.
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COMPANIES
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Ownership of lender NatWest crossed an important threshold, as the UK government early Monday said it has reduced its stake below 50%, more than a decade after a taxpayer bailout during the financial crisis. The Treasury said it sold 549.9 million shares back to NatWest in an off-market transaction at 220.5 pence per share, netting £1.21 billion. NatWest shares were up 2.0% at 224.90p Monday morning in London. NatWest will cancel the share that were purchased. After this, the government’s stake, held via UK Government Investments Ltd, will be 48.1%, falling from 50.6%. At one point the government had an 81% stake in NatWest, then called Royal Bank of Scotland Group, following a £45.5 billion bailout by taxpayers.
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National Grid agreed a deal to sell a majority stake in its UK gas transmission and metering business. National Grid said it will receive £2.2 billion from the sale of a 60% interest in the business. It will sell the holding to a consortium of ‘long-term infrastructure investors’. The consortium includes Macquarie Asset Management and British Columbia Investment Management. The deal implies an enterprise value of £9.6 billion for the unit, which National Grid calls NGG. National Grid also will receive about £2.0 billion from additional debt financing at completion of the deal. It has entered into an option agreement with the consortium of investors for the potential sale of the remaining 40%. The option may be exercised by the consortium during the first half of 2023. London-listed infrastructure investment fund Pantheon Infrastructure said it has agreed to invest roughly £40 million alongside the consortium.
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Barclays warned of a £450 million hit, due to the over-issuance of structured notes and exchange traded notes. The bank said securities issued as part of its US shelf registration statement during a period of roughly one-year exceeded the registered amount. Some purchasers now have a right of rescission, which would require Barclays to buy back the instruments at the original purchase price. Barclays expects rescission losses of £450 million, net of tax. The charges will be reflected in its first quarter earnings. It also means its £1 billion buyback will now kick off in the second quarter. ‘Barclays Bank PLC intends to file a new automatic shelf registration statement with the [US Securities & Exchange Commission] as soon as practicable. Barclays remains committed to its structured products business in the US,’ the company said.
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Drug maker AstraZeneca said its Evusheld antibody combination for the prevention of Covid-19 has been approved in the EU for use ‘in a broad population’. It is now approved for use in adults and adolescents aged 12 years and older weighing at least 40 kilogrammes. Primary analysis from a phase III probe showed the drug demonstrated a 77% reduction in the risk of developing symptomatic Covid-19, compared to a placebo. Six-month median analysis showed an 83% reduction.
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Peer GlaxoSmithKline on Friday said the US Food & Drug Administration has amended the emergency use authorization fact sheet for sotrovimab, an investigational Covid-19 neutralizing monoclonal antibody. The Brentford, England-based pharmaceutical company explained that the FDA determined that it is unlikely that the sotrovimab 500 milligram dose will be effective against the Omicron BA.2 variant. GSK and Vir Biotechnology Inc are now preparing a package of data in support of a higher dose of sotrovimab for the Omicron BA.2 sub-variant and will be sharing these data with regulatory and health authorities around the world for discussion. Sotrovimab is authorized for emergency use in the United States and has been granted a marketing authorization in the European Union as well as conditional marketing authorization in the UK.
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Dutch brewer Heineken announced it is pulling out of Russia, becoming the latest Western firm to exit the country in the wake of Moscow’s invasion of Ukraine. ‘Following the previously announced strategic review of our operations, we have concluded that Heinken’s ownership of the business in Russia is no longer sustainable nor viable in the current environment,’ it said.
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A Boeing technical team now is supporting the US National Transportation Safety Board and the Civil Aviation Administration of China, who will lead the investigation into the crash of China Eastern Airlines Flight MU 5735, the company said. Last Monday, a Boeing 737-800 passenger jet crashed onto a mountain after having lost contact with air traffic control and dropping thousands of metres in under three minutes, killing all 132 passengers on board.
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China’s Huawei reported record profit in 2021, up nearly 76% from 2020, despite being heavily hit by US sanctions. Huawei recorded net profit of ¥113.7 billion, about $17.8 billion, in 2021, but revenue slumped by around 29%, as the telecommunications equipment company grappled with US sanctions aimed at blocking access to key technology and supplies.
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Uber Technologies has been granted a two-and-a-half-year licence to operate private hire vehicles in London. The ride-hailing company had previously been denied a licence by Transport for London in November 2019. But a judge granted an 18-month licence in September 2020, deciding it was a fit and proper company ‘despite historical failings’. On Saturday, a TfL spokeswoman said: ‘Uber has been granted a London private hire vehicle operator’s licence for a period of two-and-a-half years.’ Uber said it is ‘pleased’ to have met TfL’s ‘high bar’ in terms of standards.
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MARKETS
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The restart of peace negotiations between Ukraine and Russia was giving stock markets a lift on Monday, while both gold and oil were giving back ground. Oil additionally was being hurt by concern about demand being crimped by new coronavirus lockdowns in China.
‘In the near term, we believe the most critical question for markets...is when will we reach - or have we already reached - peak sanctions and oil prices? The answer to this is uncertain...with European diplomats often more upbeat than their American counterparts about the prospects of a resolution to the war,’ comments Mark Haefele, chief investment officer at UBS Global Wealth Management.
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CAC 40: up 1.3% at 6,640.25
DAX 40: up 1.5% at 14,522.13
FTSE 100: up 0.4% at 7,516.32
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Hang Seng: closed up 1.3% at 21,684.97
Nikkei 225: closed down 0.7% at 27,943.89
S&P/ASX 200: closed up 0.1% at 7,412.40
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DJIA: called marginally higher, up 14.00 points
S&P 500: called up 0.1%
Nasdaq Composite: called up 0.4%
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EUR: flat at $1.0983 ($1.0987)
GBP: down at $1.3147 ($1.3185)
USD: up at JP¥124.61 (JP¥122.06)
GOLD: down at $1,927.04 per ounce ($1,955.60)
OIL (Brent): down at $116.62 a barrel ($120.08)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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The Kremlin said talks between negotiators from Moscow and Kyiv have so far made no major breakthroughs on the conflict in Ukraine as the delegations prepare for a new round of talks in Istanbul. ‘So far we cannot state any significant achievements or breakthroughs,’ Kremlin spokesman Dmitry Peskov told reporters during his daily press briefing on Monday. ‘For now we cannot and will not speak of progress,’ Peskov added. He said, however, that it was ‘important’ that it had been decided to continue the talks in person. Peskov said that the delegations were arriving on Monday and it was ‘unlikely’ that talks will resume the same day. Turkish President Recep Tayyip Erdogan had agreed to host the fresh talks in Istanbul during a telephone conversation with Russian President Vladimir Putin
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US President Joe Biden’s apparent call for Putin’s exit reverberated instantly around the world, sparking an administration rush to course-correct – and risks scrambling US efforts to rally a united front on the Ukraine conflict. Biden’s comment that the Russian president ‘cannot remain in power’ – delivered in Warsaw at the close of three days of marathon diplomacy – was termed ‘a horrendous gaffe’ by one Republican senator. The remark came as Biden wound up a forceful speech on Saturday capping what had been a widely-praised European visit, aimed at presenting a determined front against Russia’s invasion. His ad-libbed words – ‘For God’s sake, this man cannot remain in power’ – caught even US advisors off guard. The White House sprung immediately into action, clarifying within minutes that Biden was not advocating ‘regime change’ in Russia. When asked by reporters Sunday if that was what he was calling for, the president replied: ‘No.’
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EU leaders have agreed for officials in Brussels to make joint gas purchases for the bloc as it struggles with high prices amid Russia’s war on Ukraine, French President Emmanuel Macron said on Friday. ‘What we decided, for the first time, is that the European Commission will have a mandate to do joint procurement, which is exactly what we decided, remember, for vaccines at the time of the Covid crisis,’ Macron told journalists after an EU summit in Brussels. Discussions on energy dominated Friday’s final session of the two-day summit, which on Thursday was given over to a show of Western unity against Russia by US President Joe Biden participating. On Friday, Biden and European Commission chief Ursula von der Leyen announced plans for Washington and Brussels to work together to source US and other alternative natural gas sources for Europe as it weans itself off Russian gas.
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Just over 100 days after taking power, German Chancellor Olaf Scholz and his Social Democrats cleared their first electoral test, with a thumping win Sunday in regional polls in the small state of Saarland, preliminary results showed. The centre-left party was on course to secure an absolute majority with 29 of 51 seats in the regional parliament, snatching top spot from former chancellor Angela Merkel’s CDU party which obtained just 19 mandates, according to early results. The upset leaves the conservatives, which had controlled the state since 1999, deep in the doldrums while lending momentum to the SPD ahead of similar regional polls this year, including that of Germany’s biggest state North Rhine-Westphalia in May.
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Spanish Prime Minister Pedro Sanchez unveiled plans to offer €6.0 billion in direct aid to households and businesses struggling with the economic impact of Russia’s invasion of Ukraine. The emergency response plan, which will be approved at Tuesday’s cabinet meeting and which will stay in place until June 30, ‘will involve approximately €6.0 billion in direct aid and tax rebates, as well as €10 billion in state-guaranteed loans to cushion the impact of the crisis on families and businesses,’ Sanchez said.
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The EU’s coordinator for talks to restore the 2015 nuclear deal met Iran’s chief negotiator Sunday in Tehran, state media said, in a bid to close gaps in the negotiations. Iran has been engaged in negotiations to revive the accord formally known as the Joint Comprehensive Plan of Action with Britain, China, France, Germany and Russia directly, and the US indirectly since April 2021. EU diplomat Enrique Mora, who coordinates talks between Iran and the US, arrived in Tehran late Saturday and on Sunday met Iran’s chief negotiator Ali Bagheri, state news agency IRNA reported. ‘Bagheri stressed that an agreement can be reached if the American side is realistic,’ it added. Mora is expected to meet other officials, according to IRNA.
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China has begun locking down most of its largest city of Shanghai as part of its strict Covid-19 strategy, amid questions over the policy’s economic toll on the country. Shanghai’s Pudong financial district and nearby areas will be locked down until Friday as citywide mass testing gets underway, the local government said. In the second phase of the lockdown, the vast downtown area west of the Huangpu River that divides the city will start its own five-day lockdown on Friday. China has reported more than 56,000 infections nationwide this month, with a surging outbreak in the north-eastern province of Jilin accounting for most of them. Shanghai has had relatively few of those cases, with just 47 recorded on Saturday. But in response to China’s biggest outbreak in two years, Beijing has continued to enforce what it calls the ‘dynamic zero-Covid-19″ approach, calling that the most economical and effective prevention strategy against Covid-19. The government has not yet specified any new impact on air travel or the city’s bustling port.
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House prices have risen by 2.4% in the Republic of Ireland since the year began. A study by property website Daft.ie shows prices continue to go in an upward trajectory across the country, with the average price of a home nationwide now just over €299,000 in the first quarter of the year – an 8.4% increase on the same period last year. The report shows that the average price nationwide is only 19% below the peak seen in Ireland during the ’Celtic Tiger’ era.
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