The following is a summary of top news stories Monday.
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COMPANIES
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SoftBank Group swung to a sizeable first-quarter loss, with valuations in its tech-heavy Vision Funds battered by rising interest rates and economic downturn fears. For the three months to June 30, the Tokyo-based telecommunications provider and technology investor posted net sales of JP¥1.572 trillion, about $11.62 billion, up 6.3% annually from JP¥1.479 trillion. It swung wildly to a JP¥3.292 trillion pretax loss, however, from a JP¥1.292 trillion profit a year earlier. SoftBank posted a loss on its investments totalling JP¥2.834 trillion, an eye-popping swing from a JP¥1.263 trillion gain a year earlier. Highlighting just how badly sentiment towards the tech sector has weakened amid a series of rate hikes from central banks across the globe, SoftBank posted a JP¥2.919 trillion loss on investments from its Vision Funds alone. It had reported a gain of JP¥507.30 billion a year earlier. SoftBank’s Vision Funds include its investments in buy now pay later firm Klarna, online licensed sportswear retailer Fanatics and automation firm AutoStore.
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Miner BHP said it offered to buy Oz Minerals late last week, but the Oz board rejected its approach. Oz Minerals is a gold, copper and nickel miner in Australia and Brazil. BHP said it offered A$25.00 per share in cash for Sydney-listed Oz, 32% above its close on Friday of A$18.92. On Monday, the stock ended up 35% at A$25.59, giving Oz a market capitalisation of A$8.57 billion, about £4.93 billion. ‘Our proposal represents compelling value and certainty for Oz Minerals shareholders in the face of a deteriorating external environment and increased OZL operational and growth-related funding challenges,’ said BHP CEO Mike Henry. ‘We are disappointed that the board of OZL has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal.’ In response, Oz said the offer from BHP ‘significantly undervalues’ the company and ‘does not adequately compensate shareholders’ for the company’s growth prospects.
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Veolia Environnement said it has secured a deal to sell the UK waste business of its Suez arm to Macquarie Group, soothing antitrust concerns. Veolia will sell the unit to the infrastructure assets investor for €2.4 billion. The Paris-based utilities firm said the sale ‘addresses the main concerns’ from the UK Competition & Markets Authority. It has been almost two years since Veolia mounted a bid to acquire the remaining 70% of Suez that it does not already own, for about €9 billion. Regulatory approvals have been stumbling blocks, however, and in May, the CMA said it had antitrust concerns about the tie-up.
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Pfizer is in advanced talks to acquire San Francisco, California-based drugmaker Global Blood Therapeutics for around $5 billion, the Wall Street Journal reported. Citing people familiar with the matter, the newspaper said Pfizer is looking to make a deal in the coming days, however it said there are still several suitors in the mix. Global Blood manufactures a drug called Oxbryta, which treats blood disorders. In response, the New York-based drugmaker declined to comment, while a spokesperson from Global Blood Therapeutics said it does not ‘comment on market rumours or speculation’.
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AstraZeneca and Daiichi Sankyo said their drug conjugate Enhertu has been approved for more patients in the US. It can now be used for patients ‘with unresectable or metastatic human epidermal growth factor receptor [HER2]-low breast cancer who have received a prior chemotherapy in the metastatic setting or developed disease recurrence during or within six months of completing adjuvant chemotherapy,’ AstraZeneca explained. Back in May, Cambridge-based AstraZeneca said the drug conjugate was approved for the treatment of unresectable or metastatic HER 2-positive breast cancer in the US. At the time, Enhertu also had received breakthrough therapy designation for the treatment of patients with HER2-low breast cancer, and it was approved for this use on Monday.
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Berkshire Hathaway revealed it swung to a huge net loss in the second quarter of 2022, due to investment losses from falling stock markets. The Omaha, Nebraska-based insurance and railways conglomerate led by Warren Buffett, reported a $43.76 billion net loss attributable to shareholders, falling from a $28.09 billion profit a year before. For the entire first half of the year, Berkshire booked a $38.30 billion loss, swung from a similar-sized profit, $39.81 billion, in 2021. Revenue rose by 10% in the recent three months to $76.18 billion from $69.11 billion a year ago, but Berkshire suffered a loss on investments and derivative contracts of $66.92 billion, compared to a gain of $27.39 billion. Looking at the operating business, all divisions - including insurance, railroad, utilities & energy, and manufacturing, service & retailing - showed annual improvement in the second quarter. Addressing the economic impact of Russia’s invasion of Ukraine, Berkshire said: ‘While direct losses to-date have not been material to consolidated results, these events had indirect impacts by contributing to the disruptions of global supply chains, resulting in cost increases for goods and services in parts of the world where we operate.’
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A California regulator has accused Tesla of misleading consumers about its driver assistance systems, and has filed complaints that could potentially prevent the automaker from selling its cars in the state, US media reported. In its filing, the Department of Motor Vehicles said Tesla advertised its Autopilot and Self-Driving technologies as more capable than they actually are, according to the Los Angeles Times.
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MARKETS
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Shares were mostly higher at the start of the new week, after positive employment figures from the US on Friday and export growth from China on Monday, while tensions over Taiwan continued to simmer between the two. Earnings season continues this week, including Walt Disney on Wednesday, while merger and acquisition activity provided further market interest. Veolia Environnement shares were up 0.5% in Paris, while BHP was down 0.6% in London. In the New York pre-market, Pfizer was quoted down 0.1%, having shed 1.2% on Friday.
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CAC 40: up 0.5% at 6,507.19
DAX 40: up 0.3% at 13,613.38
FTSE 100: up 0.3% at 7,462.58
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Hang Seng: closed down 0.8% at 20,045.77
Nikkei 225: closed up 0.3% at 28,249.24
S&P/ASX 200: closed up 0.1% at 7,020.60
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DJIA: called up 0.1%
S&P 500: called up 0.2%
Nasdaq Composite: called up 0.3%
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EUR: up at $1.0180 ($1.0165)
GBP: up at $1.2082 ($1.2060)
USD: soft at JP¥135.11 (JP¥135.20)
GOLD: soft at $1,775.70 per ounce ($1,776.71)
OIL (Brent): down at $94.21 a barrel ($96.23)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Despite its initial announcement that Chinese manoeuvres around Taiwan would end on Sunday, the People’s Liberation Army continued its large-scale sea and air drills on Monday. China’s state television reported that the exercises were focussing on ‘anti-submarine and sea assault operations’. In announcing the manoeuvres to the north, south-west and east of self-ruled island last Tuesday, China had originally promised their conclusion on Sunday. No new formal end date has been announced. Some commentators on Chinese media expressed the view that the military exercises could become the new normal. Defence Ministry spokesman Wu Qian on Monday said the drills are a ‘necessary warning’ to the US and Taiwan, describing them as an ‘entirely reasonable and appropriate’ response to their recent ‘provocations’. He said the tensions were ‘deliberately’ stoked by Washington, with US House of Representatives Speaker Nancy Pelosi travelling to Taipei last week in the face of fierce opposition from Beijing.
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Taiwan will hold live-fire military drills this week simulating a defence of the island against a Chinese invasion. The island’s forces will hold anti-landing exercises in the southernmost county of Pingtung on Tuesday and Thursday, the Taiwanese army said.
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China’s foreign trade continued to grow unexpectedly strongly in July, with an 18.0% rise in exports compared to the same period last year, the Chinese customs authority said. Analysts had actually predicted a slowdown in Chinese export growth after a similarly large increase of 17.9% was recorded last month. By contrast, imports to China increased by just 2.3%. China’s trade with Russia in particular saw a huge rise, increasing by 37% overall. China’s imports from its neighbour - which is under international economic sanctions for its invasion of Ukraine - rose by 49%, while Chinese exports to Russia grew by 22%. According to Beijing’s figures, Europe continued to see a decline in exports to the world’s second largest economy. While China’s exports to the EU rose by 23%, its imports from the EU fell by 7.4%.
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After 18 months of arduous negotiations and a marathon night of debate, the Senate on Sunday passed Joe Biden’s ambitious US climate, tax and health care plan – a significant victory for the president ahead of crucial midterm elections. Voting as a unified bloc and with the tie-breaking vote cast by Vice President Kamala Harris, Democrats approved the $430-billion spending plan, which will go to the House of Representatives next week, where it is expected to pass before being signed into law by Biden. The plan, crafted in sensitive talks with members on the right wing of his Democratic Party, would include the biggest US investment ever on climate – $370 billion aimed at effecting a 40% drop in greenhouse gas emissions by 2030. That would give Biden a clear victory on one of his top agenda items and go some way toward restoring US leadership in meeting the global climate challenge.
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Biden was out of isolation on Sunday, after testing negative for Covid for a second day in a row, the first time he was able to leave the White House since July 20. Biden, 79, had tested positive for Covid and returned to isolation on July 30, in a result doctors attributed to ‘rebound’ positivity from his earlier bout of the illness. ‘I’m feeling good,’ the smiling president told pool reporters at the White House as he boarded a helicopter which then flew him to his beach home in Delaware. He was also optimistic about a sweeping climate and health care bill that was being debated in the Senate overnight Sunday, telling reporters: ‘I think it’s going to pass.’ The president ‘will safely return to public engagement and presidential travel,’ his physician Kevin O’Connor said in a statement announcing the negative test. According to Biden’s official schedule he is set to travel to the southern state of Kentucky, the scene of devastating floods, on Monday.
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Switzerland’s jobless rate was steady in July. According to the State Secretariat for Economic Affairs, the Swiss unemployment rate was unchanged at 2.0% in July. The jobless rate has steadily declined so far in 2022, ending January at 2.7%, before declining in successive months to hit 2.0% in June. The figures came after the nation’s chief economist ruled out a recession. The Swiss economy is ‘doing well’ despite the impact of the war in Ukraine on energy prices, Eric Scheidegger told the SonntagsZeitung newspaper. ‘We may have to revise our economic forecast downwards for next year. The revised forecast will be published on September 20. However, we do not expect a recession for this year,’ Scheidegger said.
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