Stock Market News Today 2018/08/09
US to sanction Russia over Skripal poisoning
Washington escalates action over UK novichok attack.
The US is imposing new sanctions on Russia over allegations that Moscow tried to assassinate former Russian spy Sergei Skripal in the UK using the nerve agent novichok.
A spokesperson said the sanctions would take effect on August 22 after a 15-day Congressional notification period.
Mr Skripal and his daughter Yulia were found unconscious on a bench in the centre of Salisbury in southern England in March, and were critically ill for weeks after they came into contact with the nerve agent, which police believe had been smeared on Mr Skripal’s front door handle.
Yulia Skripal was discharged from hospital in April, while her father left hospital a month later. They are now being kept at a secret, secure location.
Lira tumbles nearly 3% to fresh record low in turbulent trade
Investors focused on meetings of Turkish delegation in Washington.
The Turkish lira dropped sharply in early London trade amid a fresh jolt of volatility on Thursday, leaving the embattled currency at a new historic low.
The lira was down as much as 2.9 per cent for the day, with one dollar buying 5.4364 units of the currency. At its low on Monday, it had slumped to TL5.4253.
Turkish officials held meetings on Wednesday with US state department officials, following a move by the US to hit two senior Turkish government ministers with sanctions over the detention of an American pastor. However, there was no indication of a resolution by Thursday morning.
Adidas forced to amend 2016 report after fresh Reebok hit
Adidas has been forced to retrospectively tweak its 2016 financial report after an accounting watchdog took issue with the book value of Reebok’s brand, in the latest embarrassment related to the German company’s botched 2006 acquisition of the US sportswear maker.
Adidas on Thursday said it booked an impairment “in the mid-triple digit million euro range” to its 2016 financial results after the Financial Reporting Enforcement Panel concluded that “the historical book value related to the Reebok trademark was not sufficiently proven by the annual impairment test conducted at the time”.
Adidas acquired Reebok in 2006 and since then has been struggling with weak sales and lacklustre profitability at the US division. Chief Executive Kasper Rorsted rebuffed shareholder calls to sell brand and kicked off another restructuring plan. In the second quarter of 2018, Reebok sales fell by 3 per cent due to weak demand for its training and running kit.
Thyssenkrupp posts Q3 net loss despite sales growth
Thyssenkrupp posted a net loss in the third quarter but said that with sales and orders each growing by 7 per cent it could “unlock” potential in the years ahead.
The German maker of elevators, submarines and car components posted a net loss of €131m last quarter, versus a gain of €254m one year earlier. Its Industrial Solutions unit recorded a loss of €213m, versus a gain of €6m a year before.
Adjusted EBIT, the main focus for analysts, fell 36 per cent from a year earlier to €332m. Operating margins were 3 per cent, down 2 percentage points from a year ago.
Mazda, Suzuki and Yamaha Motor admit false emissions testing in Japan
Mazda, Suzuki and Yamaha Motor joined a growing list of Japanese manufacturers admitting to improper testing of vehicles for fuel economy and emissions in a fresh blow to the country’s reputation for product quality.
The findings on Thursday came after Japan’s transport ministry ordered automakers to review their testing procedures in the wake of admissions by Nissan and Subaru that they had falsified fuel economy readings in conducting final inspections on cars sold in Japan.
In the case of Suzuki, Japan’s fourth-largest automaker, about half of the 12,819 sample cars tested for fuel economy and emissions were inspected under invalid conditions. Similar improper tests were found for 72 of Mazda’s sample vehicles and 7 of Yamaha’s sample motorbikes.
Suzuki said it was not planning to issue any recall since the actual emission and fuel economy readings were not significantly affected.
“The checking mechanism was insufficient. We regret that we left the inspections to factories,” chief executive Toshihiro Suzuki said at a news conference in Tokyo, after expressing his apology with a deep bow.
Danish energy group Orsted strikes deal for US onshore wind developer
Danish energy company Orsted will acquire US-based Lincoln Clean Energy, a developer of onshore wind projects, in a deal that values the American company at $580m.
For Orsted, formerly known as Danish Oil and Natural Gas, the acquisition marks a fresh push into onshore wind, a market that has seen new installations decline globally during the past two years.
However Orsted chief executive Henrik Poulsen said that the US was a “strategic growth market” for the company.
“The global market for onshore wind power is expected to grow significantly in the coming years, and the US is a leading onshore wind market,” he said.
Lincoln Clean Energy, based in Chicago, was the largest non-utility developer of wind projects in the US last year, and has developed wind projects in California, New Jersey and Texas. It also owns significant wind assets in Texas.
The move marks a shift in strategy for Orsted, which has so far focused primarily on its offshore business, becoming the largest developer of offshore wind farms in the world.
The deal also comes as the company is simultaneously trying to sell its Danish utility unit, an asset that analysts believe could fetch as much as $1.6bn, as it focuses its business on renewable energy.
Global Market Overview
Russia’s rouble is at its lowest level against the US dollar since November 2016, down 0.7 per cent in early London trading to 66 per dollar, after the US government announced tough new sanctions on the country late on Wednesday.
Futures trade suggests major European equity markets — with the exception of the CAC 40 — are set to follow Asia-Pacific bourses upwards.
Equities were mostly higher in the region despite energy stocks falling along with oil prices, which were weaker after a smaller-than-expected decline in US reserves.
The New Zealand dollar fell as much as 1.2 per cent against the US dollar on Thursday, bringing the currency to $0.6664, its lowest level in almost 29 months. It is now around $0.6674.
The sharp move came after the country’s central bank kept rates at 1.75 per cent, as expected. However, Adrian Orr, the bank’s governor, surprised investors and pushed back its timetable for raising the record low rate. The dollar index was fractionally higher at 95.109.
Equities and fixed income
In Hong Kong, the Hang Seng index was up 1.2 per cent, while the Hang Seng China Enterprises index of large-cap Chinese companies was up 1.4 per cent.
China stock benchmarks were up as well, with the CSI 300 index of Shanghai and Shenzhen-listed stocks rising 2.7 per cent. Meanwhile, Sydney’s S&P/ASX 200 index gained 0.5 per cent.
Tokyo’s Topix index broke ranks with a fall of 0.2 per cent, however, as Japanese energy stocks fell 2.1 per cent.
Yields, which move in the opposite direction to prices, on 10-year Japanese government bonds were up 1 basis point at 0.105 per cent while those on 10-year US Treasuries were little changed at 2.95 per cent.
Oil prices are recovering after dropping more than 3 per cent on Wednesday following data that showed US crude inventories fell by less than half the expected amount in the week ended August 3.
Brent crude, the international benchmark, is up 0.4 per cent at $72.57 a barrel, while US marker West Texas Intermediate was up 0.2 per cent at $67.03.
Gold rose 0.2 per cent to $1,216.02 per ounce.