SolarWinds faces SEC lawsuit after 2020 hack

© AFP via Getty Images

SolarWinds, the IT company breached by Russian hackers as part of a sprawling espionage campaign in 2020, has been sued by the US Securities and Exchange Commission.

The SEC on Monday filed a complaint accusing the company and chief information security officer Timothy Brown of misleading investors by not disclosing “known risks” and not accurately representing its cyber security measures.

“We allege that, for years, SolarWinds and Brown ignored repeated red flags about SolarWinds’ cyber risks, which were well known throughout the company and led one of Brown’s subordinates to conclude: ‘We’re so far from being a security minded company,’” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.

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S&P upgrades Ford as cost cuts expected to offset new labour contract

© REUTERS

S&P has upgraded Ford to investment-grade territory, citing the carmaker’s improving margins and expectations that its cost reduction programme would “more than offset higher labour-related costs”.

In a Monday update, the rating agency moved Ford up to triple-B minus from double-B plus.

Ford reached a tentative agreement last week with the United Auto Workers union that would increase member wages by 25 per cent over four years, following a historic 40-day strike against the traditional Big Three domestic car manufacturers.

S&P’s move comes after Fitch raised the company to investment grade status in September.

Moody’s lifted the company to the highest notch of junk territory in July.

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Bank of Canada rate-setting group ‘has not started’ discussing when to cut

Bank of Canada governor Tiff Macklem and senior deputy governor Carolyn Rogers © Bloomberg

A top Bank of Canada official has said that the central bank’s monetary policy setting body has not yet discussed when to start cutting interest rates.

Once the bank is confident that inflation is coming down and remains at those levels, “we would start thinking about lowering interest rates, but we’re just not there yet,” senior deputy governor Carolyn Rogers told the country’s House of Commons on Monday.

The BoC’s “governing council has not started talking about when we’ll reduce interest rates”, she said.

The bank held its key interest rate at 5 per cent last week because officials want to give monetary policy time to cool the economy and relieve price pressures, BoC governor Tiff Macklem told lawmakers.

“But further easing in inflation is likely to be slow, and inflationary risks have increased,” he said.

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Elon Musk’s X says it is worth $19bn one year after $44bn acquisition

© REUTERS

Social media platform X, formerly known as Twitter, is now valued at $19bn, the company told employees, marking a steep drop from the $44bn price that Elon Musk paid when he bought it just over a year ago.

In an internal note on Monday, X said it was awarding equity, or restricted stock units, to employees at $45 a share, according to two people familiar with the matter. Based on the employee equity plan, that gives it a valuation of $19bn, the document said.

The new valuation, first reported by Fortune, comes after Musk, the billionaire entrepreneur and Tesla chief executive, acquired the company in October 2022, agreeing to pay $54.20 a share just before a tech stock sell-off.

Read more here.

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S&P 500 notches biggest gain in two months as Fed meeting looms

Wall Street stocks closed higher and oil prices dropped at the start of a week of closely watched economic data, with the upcoming Federal Reserve rate decision front and centre.

The benchmark S&P 500 closed 1.2 per cent higher for the gauge’s biggest one-day gain since late August. The tech-heavy Nasdaq Composite also gained 1.2 per cent.

In government debt markets, Treasury yields also edged up — signalling a drop in prices. Brent crude oil fell roughly 3 per cent to remain below $90 a barrel.

Markets are currently pricing in the likelihood that the Fed will keep rates unchanged in a range of 5.25 to 5.5 per cent when it announces its policy decision on Wednesday.

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US Treasury to borrow $76bn less than forecast in fourth quarter

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The US Treasury department has announced that it expects to borrow $776bn in the October to December quarter, less than the $852bn initially forecast, and lower than the $1tn borrowed the previous quarter.

The Treasury on Monday attributed the lower borrowing needs to “higher outlays”, suggesting higher tax income.

More details about the department’s borrowing plans, including changes to auction sizes, will be released on Wednesday morning.

The 10-year and 30-year Treasury yields dropped following the news, though the move was within recent ranges. The Treasury’s last borrowing cycle included big jumps in 10- and 30-year auctions, helping boost yields to 16-year highs.

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Sundar Pichai acknowledges Google search default deals were ‘very valuable’

Sundar Pichai
Sundar Pichai © AP

Sundar Pichai conceded that agreements making Google’s search engine the default on smartphones and browsers can be “very valuable”, as the Alphabet chief executive took the witness stand in the most significant monopoly trial in 25 years. 

Pichai told the court on Monday that deals the company had struck with technology groups, smartphone makers and mobile telecoms companies — worth billions of dollars annually — when “done correctly . . . can make a difference”.

He added: “There are scenarios where defaults are very valuable,” and that users also stand to benefit.

The US government has accused Google of illegally maintaining a monopoly by paying for agreements that ensure its search engine appears prominently on smartphones and browsers.

Read more here.

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Exxon appoints new shale boss following arrest of former executive

ExxonMobil has appointed a new head of its shale business, after the unit’s leading executive was charged with sexual assault earlier this month.

Bart Cahir will return as senior vice-president of upstream unconventionals — a position he previously held — replacing David Scott who was suspended following his arrest.

The role will be central to the completion of Exxon’s biggest transaction in decades: a $60bn deal for shale operator Pioneer Resources that was announced this month.

Exxon said Cahir would assume the role effective November 1 and that its position on Scott — who it previously said “will not continue work responsibilities as the investigation proceeds” — remained the same.

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First Quantum Minerals shares dive after Panama calls referendum on deal

Shares in First Quantum Minerals have plunged as much as 28 per cent after Panama’s government pledged a public referendum on a deal struck with the Canadian mining group following a week of protests.

The stock price slide, which has wiped off C$5.4bn ($3.9bn) of the company’s market capitalisation, comes after Panama’s president said on Sunday that a national vote would be held on December 17 to decide whether to revoke licences for its Cobre Panama mine.

First Quantum reached an agreement in March to extend its mining licence for 20 years after a heated dispute with the Panama government over tax payments. But unrest broke out after the contract was signed into law.

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Dutch PM reconfirms his commitment to Ukraine amid Israel conflict

Mark Rutte, prime minister of the Netherlands, assured Volodymyr Zelenskyy that Ukraine will not be forgotten, as its allies grow more preoccupied with the Israel-Hamas conflict.

“We have to make sure that the world is able to focus both on Ukraine and of course . . . what is happening now in the Middle East,” Rutte said on video call with Ukraine’s president.

Zelenskyy published the video conference to his social media channels on Monday, an uncustomary move and one that may have marked an effort to lure attention back to the war in Ukraine.

US congressional support for further military backing of Ukraine has weakened since the conflict in Israel began. Mike Johnson, the new Speaker of the US House of Representatives, said he expected Congress to pass an Israel-only funding package, resisting the call by President Joe Biden for an aid package that includes Ukraine.

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Venezuela’s top court suspends opposition primary election results

María Corina Machado speaks in Caracas, Venezuela, on October 24, 2023
María Corina Machado speaks in Caracas, Venezuela, on October 24, 2023 © AP

Venezuela’s top court has suspended the results of this month’s opposition primary election, despite promises from the socialist government of Nicolás Maduro to allow the opposition to choose its own leader.

The Supreme Justice Tribunal, over which the government wields influence, ruled on Monday that “all effects [of the primary] are suspended” and demanded that organisers hand over all documentation relating to the vote won by market-friendly former lawmaker María Corina Machado.

Monday’s announcement came as organisers of Venezuela’s primary appeared at the attorney-general’s office as part of a criminal probe into the primary that opposition members and analysts have described as politically motivated.

Read more here.

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Yen strengthens ahead of Bank of Japan rate decision

The yen strengthened 0.5 per cent against the dollar to ¥148.8, its strongest level since October 10, as the Bank of Japan convenes for its policy meeting on Tuesday.

The moves followed reports from Nikkei that Japanese policymakers are considering letting the yields on 10-year government bonds push above 1 per cent, in a further relaxation of its yield curve control policy.

The yen has weakened by 11.9 per cent against the dollar this year as the gap between US and Japanese borrowing costs have widened. Economists still expect the BoJ to keep interest rates at minus 0.1 per cent.

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McDonald’s says consumer spending ‘remains pressured’

© Bloomberg

McDonald’s said consumer spending remained “pressured” in the third quarter and that it had observed signs of “trade down” as diners sought to stretch their food dollars further.

The burger chain, which on Monday reported better than expected third-quarter results, said industry traffic was down in recent months, causing its own traffic to be “marginally down” in the three months that ended in September.

“The consumer is more discriminating because of all the price pressures that they’re facing as well as interest rates, things like that,” chief executive Chris Kempczinski told analysts during a call. “That the pressure is felt more on the lower-income consumer.”

McDonald’s gained share with middle- and high-income consumers who are looking for cheaper options amid higher prices at other restaurants, he added.

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Financial strains at UK businesses lead to surge in insurance payouts for unpaid debts

UK insurance payouts for unpaid business debts topped £100mn in the first half of 2023, the worst start to the year in half a decade, reflecting troubles in the construction and retail sectors.

A spate of collapses such as discount retailer Wilko and construction firm the Buckingham Group led to a surge in non-payments, the Association of British Insurers said.

Insurers covering suppliers against the risk of non-payments paid out £101mn in the period, up 23 per cent on the same period last year, and the worst first half since 2018. 

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General Motors in tentative deal to end UAW strike

Striking UAW workers outside a Ford assembly plant in Wayne, Michigan, on September 19 © REUTERS

General Motors has reached a tentative deal with the United Auto Workers union to end a six-week strike that also hit Ford and Stellantis, in what was the first co-ordinated walkout by workers at the three largest US carmakers.

GM agreed to increase hourly pay by 25 per cent, according to people familiar with the matter. The four-year deal also includes higher cost-of-living allowances, the people added.

The terms are similar those agreed between Ford and the union last week. Stellantis reached its own deal over the weekend.

GM declined to comment.

Hours after announcing a deal with Stellantis, the UAW escalated its action against GM over the weekend, hitting its plant at Spring Hill, Tennessee.

Read more on GM here

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US stocks and bond yields rise ahead of Fed decision

US stocks and Treasury yields rose on Monday as investors geared up for a busy week of economic data releases and the Federal Reserve’s monetary policy announcement on Wednesday.

Wall Street’s benchmark S&P 500 rose 1 per cent and the tech-heavy Nasdaq Composite added 1.2 per cent in early New York trade. The two indices last week entered “correction” territory, having dipped just over 10 per cent since their latest peaks in July.

The yield on the 10-year Treasury yield rose 0.05 percentage points to 4.89 per cent, reflecting falling prices. A measure of the dollar’s strength against a basket of six other currencies lost 0.2 per cent.

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PwC picks Mohamed Kande as global chair

© PWC

PwC has picked the head of its international advisory business, Mohamed Kande, to be its next chair, putting the Big Four accounting firm in the hands of a consulting partner.

Kande’s selection by PwC’s global board was revealed to the firm’s partners on Monday, according to people familiar with the internal message. It will need to be ratified by member firms in individual countries in the coming weeks, after which Kande would take over from current chair Bob Moritz next June.

Read more on PwC here

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German inflation drops to lowest level since June 2021 at 3%

Shoppers at a market in Nuremberg: Germany’s October inflation reading was forecast to come in at 3.6 per cent
Shoppers at a market in Nuremberg: Germany’s October inflation reading was forecast to come in at 3.6 per cent © Bloomberg

German inflation has fallen faster than expected to 3 per cent, its lowest annual rate since June 2021, as a sharp slowdown in prices in many areas brought some relief to consumers in Europe’s largest economy.

The drop in the harmonised index of consumer prices in Germany from 4.3 per cent in September was mainly due to falling energy prices and lower food inflation, the federal statistical agency said on Monday. Economists had forecast a rate of 3.3 per cent in a poll by Reuters.

The core rate of inflation, excluding more volatile energy and food prices, fell from 4.6 per cent to 4.3 per cent. Month-on-month inflation turned negative for the first time since May as prices fell 0.2 per cent.

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Western Digital to split in two after abandoning Kioxia merger talks

Western Digital hard drives on sale at an Office Depot store in Encinitas, California © REUTERS

Western Digital, the US chipmaker, plans to split in two by spinning its flash memory unit off from its hard drive business.

Shares in Western Digital, which fell as much as 16 per cent on Thursday after news broke that it had abruptly abandoned merger talks with Kioxia of Japan, rose by 12 per cent in pre-market trading on Monday in New York.

Western Digital said the plan to form two independent public companies would “unlock significant value” for shareholders and “also provides strategic optionality for both businesses”. The transaction is expected to complete in the second half of 2024.

Read more on Western Digital here

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Former Spain boss Luis Rubiales banned from football for three years

Luis Rubiales © AP

Fifa has banned former Spanish football boss Luis Rubiales from the sport for three years over his behaviour at the Women’s World Cup final, where he forcibly kissed Spain player Jenni Hermoso.

World football’s governing body said its disciplinary committee had found that the former Spanish Football Association president had breached Fifa’s disciplinary code.

Fifa, which had previously suspended him for a provisional 90 days, said the decision remains subject to a possible appeal.

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BYD books record quarterly profit of $1.4bn

© FRANCK ROBICHON/EPA-EFE/Shutterstock

Chinese electric vehicle maker BYD’s net profit rose to a record high in the third quarter, although it marked a slower pace of growth as rising competition and falling demand weigh on the world’s largest car market.

BYD, China’s top-selling car brand, recorded a net profit of Rmb10.4bn ($1.4bn) for the July-September period, up 82.2 per cent from a year earlier, it said in a Hong Kong exchange filing on Monday. That compared with the company’s 144.7 per cent profit increase in the second quarter.

The Warren Buffett-backed automaker’s third-quarter earnings came in roughly the middle of its forecast range of between $9.5bn and $11.5bn. 

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McDonald’s beats expectations on higher prices

© REUTERS

McDonald’s beat earnings estimates in its third quarter as customers continued dining at the restaurant chain despite higher prices. 

The burger chain reported that comparable sales rose 8.8 per cent, driven by strong demand for burgers and fries despite higher prices. That beat analysts’ expectations of a 7.4 per cent increase. 

Overall revenue rose 14 per cent to about $6.7bn from the same quarter last year, also beating analysts’ expectations.

Earnings per diluted share increased by 49 cents to $3.17 a share, topping expectations for earnings of $3.00.

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Broadcom-VMware $69bn merger delayed

© REUTERS

US chipmaker Broadcom and cloud software company VMware have delayed the completion of their $69bn merger, which had been scheduled to close on Monday.

The companies said in a joint statement that they maintained their “expectation that Broadcom’s acquisition of VMware will close soon, but in any event prior to the expiration of their merger agreement”.

The Financial Times reported this month that Chinese regulators were considering holding up the deal, announced in May 2022, after Washington toughened rules to block Chinese access to high-performance semiconductors.

Broadcom and VMware’s statement did not mention China but said there was “no legal impediment to closing under US merger regulations” and that they expected to “close [the] transaction promptly following satisfaction of remaining condition”.

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What to watch in North America today

Google: Sundar Pichai, chief executive of Google’s parent Alphabet, is scheduled to take the stand in the search engine’s antitrust trial. The US government has alleged that Google illegally paid $10bn to other companies such as Apple to ensure it would be the default search engine and maintain its dominance.

AI: US president Joe Biden is expected to sign a sweeping executive order aimed at curbing the risks of artificial intelligence.

McDonald’s: The fast-food chain is expected to report an increase in revenue and profits as consumers continue to buy Big Macs despite higher menu prices. Analysts anticipate the company earned $3 per share on revenue of $6.6bn in the July to September period, up from $2.68 a share on revenue of $5.9bn a year earlier.

Pinterest: Analysts expect the image-sharing social platform to report a boost in revenue and trim its losses in its latest quarterly earnings. The company is projected to have lost 4 cents a share on revenue of $743.5mn in the third quarter, compared with a loss of 10 cents a share on revenue of $684.5mn during the same period last year.

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UK pushes ahead with crypto regulation plans

The UK is pushing ahead with plans to regulate the crypto industry, unveiling measures which would force companies to be authorised by the regulator in order to operate in the country.

The Treasury on Monday published its response to an industry consultation, saying it would push for legislation next year. It said companies operating in the UK would have to be authorised by the Financial Conduct Authority.

Westminster wants to protect investors while also attracting crypto businesses to London. Calls for crypto regulation have accelerated over the past year following the collapse of high profile exchange FTX, in which thousands of investors lost their money.

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UK mortgage approvals sink to lowest level since January

© Bloomberg

UK mortgage approvals fell more than expected in September to the lowest level since January, according to data from the Bank of England that reflects the impact of high interest rates on lending.

Net mortgage approvals for house purchases fell to 43,300 last month, down from 45,400 in August and the lowest level this year, new data showed on Monday. Economists polled by Reuters had forecast mortgage approvals to be largely unchanged at 45,000.

Net approvals for remortgaging fell to 20,600 in September, the lowest level since January 1999.

The Bank of England’s next interest rate decision is due on Thursday, with markets expecting the Bank to leave rates unchanged at 5.25 per cent.

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German economy shrinks in third quarter

The German economy contracted 0.1 per cent in the three months to September as weaker household consumption offset a pick-up in investment.

The federal statistical agency also revised up gross domestic product figures for the previous two quarters, indicating that Europe’s largest economy did not shrink as initially indicated.

The slight third-quarter contraction in German output marked a deterioration from upwardly revised 0.1 per cent growth in the second quarter and stagnation in the first.

The IMF this month predicted that Germany would be the worst-performing major economy this year, slashing its forecast for GDP to shrink by 0.5 per cent. By contrast, the US economy is expected to grow by 2.1 per cent.

Column chart of  showing Germany's economy has struggled to grow in recent months
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Risers and fallers in Europe

Big share price moves in Europe today include German life sciences group Merck, Germany’s Siemens Energy and UK-based education group Pearson: 

  • Merck: Shares in the German life sciences and electronics group slipped 5 per cent after it announced a partnership with Chinese drugmaker Jiangsu Hengrui to expand its work on so-called “DNA damage response” drugs to treat cancer. Merck will pay the Chinese company €160mn upfront as part of the deal. Broker Jeffries cut its target price for Merck to €173 from €201.

    Line chart of Share price (€) showing Merck dips as broker cuts target price
  • Siemens Energy: Shares in the German company recovered 8 per cent on Monday, making it the biggest riser on the Stoxx 600 index, after plunging as much as 34 per cent on Thursday after the wind turbine maker said it was in talks with banks and the German government over strengthening its balance sheet.

  • Pearson: Shares in the London-listed education group rose 1.2 per cent as it raised its profit guidance after reporting strong growth in its assessment and qualifications business.

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Biden issues executive order on AI standards

US president Joe Biden has issued an executive order on artificial intelligence which aims to “ensure that America leads the way in seizing the promise and managing the risks of artificial intelligence”.

The order promises new standards for AI safety and security including measures to protect privacy, prevent abuses in justice, healthcare, and housing, ensure benefits for consumers, and ensure “responsible and effective” government use of the technology.

Read the full story here.

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AfD politician arrested for incitement to racial hatred

German far right politician Daniel Halemba has been arrested in Stuttgart for sedition and incitement to racial hatred.

The 22-year old AfD politician was due to take up his seat in Bavaria’s state parliament today. Had he done so he would have been granted immunity from prosecution.

Police issued a warrant for his arrest on Friday.

Halemba is a member of the student fratentiy Teutonia Prag, in the city of Würzburg. The fraternity’s premises were raided last month on suspicion that the fraternity and its members possessed Nazi memorabilia and extremist literature.

The AfD, which massively increased its share of the vote in Bavaria’s state elections this month, said the charges against Halemba were “flimsy” and “politically motivated”.

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European stocks edge up ahead of UK interest rate decision

European stocks rose early on Monday while UK gilt yields slipped to a four-month low as investors geared up for the Bank of England’s interest rate decision later this week.

The region-wide Stoxx Europe 600 added 0.7 per cent shortly after the market open. But it has been a rough few months for the index, which has erased almost all of its gains for the year. London’s FTSE 100, meanwhile, gained 0.9 per cent in early trading.

The yield on the rate-sensitive two-year gilt fell 0.02 percentage points to 4.72 per cent — its lowest level since mid-June, LSEG data showed. Investors expect the BoE to leave rates unchanged at 5.25 per cent when it meets on Thursday.

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Spanish inflation rises less than expected to 3.5%

© Bloomberg

Spanish consumer prices rose at a slower annual rate than forecast in October, adding to economists’ expectations for a fall in overall eurozone inflation this month.

The Spanish statistics office said on Monday the harmonised index of consumer prices hit a six-month high of 3.5 per cent this month, up from 3.3 per cent in September, reflecting higher energy inflation. This was below economists’ forecasts of 3.7 per cent in a Reuters poll.

Core inflation in Spain, which excludes energy and fresh food prices, dipped from 5.8 per cent to 5.2 per cent. 

Eurozone inflation is expected to fall from 4.3 per cent in September to a more than two-year low of 3.4 per cent when data is released on Tuesday.

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Fast fashion group Shein buys UK brand Missguided

© Charlie Bibby/Financial Times

Fast fashion group Shein has acquired the Missguided brand in its first acquisition of a British label, as the Chinese-founded group staves off competition from a well-funded new rival.

Shein bought the brand from Frasers Group for an undisclosed amount, the British retailing group said. Frasers said it would integrate Missguided stores and employees into its fashion division.

The Chinese-founded fast fashion group, which is headquartered in Singapore, is doubling down on the UK market as it battles competition from Pinduoduo’s Temu, an ecommerce platform that has replicated Shein’s model of shipping cheap goods from manufacturers in China to consumers in the west.

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Pearson upgrades profit guidance on growth in testing business

© REUTERS

Pearson, the London-listed education and training group, has upgraded its profit guidance for 2023 on the back of growth in its computer-based testing and assessment business, and English language skills programmes.

The company, which has shifted from a traditional textbook education group to focus more on digital and workplace training, said revenues grew 2 per cent in the past three months. However, sales fell in its higher learning and virtual education groups.

Pearson on Monday raised its full-year group adjusted operating profit guidance by about £20mn to £570mn-£575mn

Andy Bird, Pearson’s outgoing chief executive, said that the group was now looking at generative AI tools to “create further opportunities”.

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Chinese equities outperform regional peers after buyback pledges buoy sentiment

China’s A-share market turned positive in afternoon trading Monday after more than 30 mainland-listed companies announced share buyback or purchase plans over the weekend, while other markets in the region fell.

The CSI 300 was up 0.7 per cent in the afternoon following a 0.3 per cent decline in earlier in the session. Hong Kong’s Hang Seng index slid 0.3 per cent and Japan’s Topix dropped 1 per cent. South Korea’s Kospi gained 0.45 per cent.

Chengxin Lithium Group, Yunnan Botanee Bio-Tech and Hainan Mining were among the Chinese listed companies which unveiled the proposals late Sunday, after Beijing called for efforts to boost its sagging stock market.

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Indian foreign minister meets families of nationals sentenced to death in Qatar

India’s foreign minister on Monday said he had met the family members of eight Indian nationals who have been sentenced to death in Qatar, as New Delhi tries to secure their release.

S Jaishankar, India’s external affairs minister, posted about the meeting on X, formerly Twitter, adding that India’s government “will continue to make all efforts to secure [the men’s] release” and would “co-ordinate closely” with their families.

The FT has reported that the eight former naval officers are charged by Qatar with spying for Israel. Qatar has not said publicly why the men were convicted, but India’s foreign ministry last week said it would “take up the verdict with Qatari authorities”.

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Senior Chinese military leader takes jibe at US but touts renewed military exchanges

China’s most senior military official delivered a veiled rebuke of the US even as he pledged to seek renewed military exchanges with Washington.

The remarks by Zhang Youxia, deputy chair of the Central Military Commission, at the Xiangshan Forum security conference in Beijing on Monday, highlighted the challenges the two global powers face in their efforts to restart dialogue amid growing tensions.

“We will deepen strategic co-operation and co-ordination with Russia, and we are willing to develop military relations with the US based on mutual respect, peaceful coexistence and win-win co-operation,” Zhang said.

But Zhang also accused “certain countries” of “continuing to stir trouble around the world”, a criticism widely seen as aimed at the US.

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Oil falls as concerns over escalation of Israel’s ground offensive in Gaza ease

Crude oil prices dropped on Monday as concerns over the potential for Israel’s ground offensive in the Gaza Strip to escalate into wider conflict eased.

Brent crude, the global benchmark, slid 1.2 per cent to trade at $89.37 per barrel while US marker West Texas Intermediate fell 1.6 per cent to $84.22.

Brent and WTI rose 2.9 per cent and 2.8 per cent on Friday, respectively, after Israel’s military said it was expanding its ground operations in Gaza.

But Israel’s offensive in Gaza over the weekend has been more limited than some had expected, with current and former officials saying the country was seeking to minimise its own casualties and avoid drawing other adversaries into the war.

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HSBC announces up to $3bn in buybacks as elevated interest rates boost growth

HSBC announced up to $3bn in additional share buybacks on Monday, taking its total buybacks to $7bn this year, as it said higher interest rates were helping fuel its growth.

The move came even as the lender reported lower-than-expected profits for the three months to September. Pre-tax profits were $7.7bn, less than the $8.1bn analysts had estimated, though far higher than the $3.2bn figure a year earlier.

“We have had three consecutive quarters of strong financial performance”, the bank’s chief executive Noel Quinn said. “We are pleased to again reward our shareholders.”

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Hong Kong court gives Evergrande deadline for fresh restructuring plan

© REUTERS

A Hong Kong judge gave indebted Chinese property developer Evergrande one last chance to come up with a revised restructuring plan or face liquidation.

In a winding-up hearing on Monday, High Court Judge Linda Chan said that Evergrande will be granted “one last opportunity” to formulate a new restructuring proposal, or else a liquidation order will “very likely” be granted in the next hearing date on December 4.

Evergrande’s lawyer proposed “monetising” its Hong Kong-listed property services and electric vehicle units, arguing such a plan would avoid regulatory hurdles.

The winding-up petition, brought by offshore investor Top Shine Global in June last year, accuses Evergrande of failing to honour claims worth HK$863mn (US$110mn).

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Chinese state-owned gold group offers $400mn for Sydney-listed miner

Zhaojin Mining Industry, a Chinese state-owned gold miner, has offered to buy Sydney-listed Tietto Minerals in the latest sign of consolidation in the mining industry.

Hong Kong-listed Zhaojin has agreed to pay A$629mn ($400mn) for Tietto which operates in the Cote d’Ivoire. Shares in Tietto gained 35 per cent following the offer.

The deal has been preapproved by Australia’s foreign takeover board and comes a week ahead of a state visit to China by Australia’s prime minister. It is the second significant gold mining takeover in Australia this year after Newmont’s $19bn buyout of Newcrest.

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Australia-EU trade talks end without a deal

Don Farrell, Australia’s trade minister, said that he remained ‘hopeful’ a trade deal with the EU would be struck ‘one day’ © Phil Blenkinsop/Reuters

Talks over a free trade agreement between Australia and the European Union have collapsed as the two sides failed to reach an agreement over issues including how to label products like feta cheese and prosecco. 

A last-ditch attempt to strike a deal after five years of talks took place on the sidelines of the G7 trade meeting in Japan over the weekend. 

Don Farrell, Australia’s trade minister, said that the two sides had not made progress but that he remained “hopeful” a deal would be struck “one day”.

Australian officials said that it was unlikely a new deal could be negotiated before 2025 due to the timing of elections in the country and the EU.

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Colombia’s leftist president dealt blow in local elections

Colombia’s leftist president Gustavo Petro has been dealt a blow in local elections, with opposition candidates sweeping polls for mayor, governor and councillor across the country.

Voters in all of Colombia’s major cities, including the capital Bogotá, rejected Petro’s allies in mayoral races on Sunday, while only two of 32 provinces elected governors backed by his Historic Pact coalition.

“It’s our duty to respect the voice of the people,” Petro, Colombia’s first leftist leader, said in a speech that largely focused on the peaceful conduct of the election following the announcement of the results. “It was a day of peace in Colombia.”

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Asian stocks fall ahead of interest rate decisions in Japan, US and UK

Asian stocks declined on Monday ahead of a busy week of central bank monetary policy decisions.

Japan’s Topix shed 1 per cent, Hong Kong’s Hang Seng index fell 0.6 per cent and China’s CSI 300 declined 0.3 per cent. South Korea’s Kospi edged up 0.2 per cent.

Investors are looking ahead to interest rate decisions from the Bank of Japan, the US Federal Reserve and the Bank of England on Tuesday, Wednesday and Thursday, respectively.

The Fed is expected to leave US interest rates on hold, but economists will look for hints that rates may rise again in the coming months with hotter inflation and strong economic data.

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What to watch in Asia today

A Mitsubishi Motors concept vehicle
Mitsubishi Motors reports earnings on Monday © Bloomberg

Results: HSBC and Mitsubishi Motors report earnings. HSBC in August unveiled its second $2bn share buyback of the year, as rising interest rates helped it post bumper quarterly profits of $8.8bn and strengthened its hand against an activist campaign led by largest shareholder Ping An to break up the lender.

Hong Kong: The city’s FinTech Week begins, with speakers and delegates discussing the role of digital assets in Hong Kong’s future. FinTech Week comes shortly after a scandal over suspected fraud at JPEX, a cryptocurrency exchange operating in the city, tested Hong Kong’s crypto-friendly stance.

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The week ahead: Fed and BoE set interest rates and oil majors report

Central banks in the US and UK are both meeting to set interest rates — the Federal Reserve will announce its decision on Wednesday and the Bank of England on Thursday.

The mood music is that both will keep rates steady. Persistently high inflation and a fragile economy point to the BoE sticking, while Fed chair Jay Powell has cited a “range of uncertainties” and pledged the central bank will move carefully.

BP reports earnings on Tuesday and Shell on Thursday. BP has had a tumultuous few months following reports about chief executive Bernard Looney’s undisclosed past relationships with colleagues. For its half-year results, the oil major reported a 70 per cent drop in revenue compared with last year. Since then oil production cuts by Opec+ have pushed prices towards $90 a barrel, but weaker energy prices are expected to have taken their toll on the company.

Read the full week ahead calendar here.

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Dagestan airport mob hunts for passengers on flight from Tel Aviv

A mob stormed the main airport in the southern Russian republic of Dagestan late on Sunday, brandishing Palestinian flags and reportedly searching for Israeli passengers from a flight that had landed from Tel Aviv earlier in the day.

The angry crowds in the Caucasus region broke into the airport, stormed through the building and encircled the plane, with some attempting to board the aircraft, climbing on to its wings and roof.

Videos shared on social media showed dozens of men on the runway, with some accosting an airport worker who insisted that there were no longer any passengers on board. There are regular flights from Tel Aviv to Dagestan’s capital Makhachkala, often taken by passengers transiting to other Russian cities.

Read more about Dagestan here.

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China tech IPOs plunge as regulators turn tough on start-ups

A record number of companies have dropped plans to list on Shanghai’s tech-focused stock market, with regulators raising the bar for initial public offerings in order to pick out domestic champions that can help Beijing’s drive towards technological self-sufficiency.

Public records show 126 companies have cancelled or suspended IPO applications on Shanghai’s Star Market so far in 2023, more than in the previous four years combined.

The city’s stock exchange, acting on guidance from regulators led by the China Securities Regulatory Commission (CSRC), has set higher standards for listing applications this year, according to bankers and filings, in what amounts to a radical reversal in China’s approach to encouraging innovation.

Read more about Shanghai’s Star market here.

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