European shares higher on possible Fiat-Renault merger, EU vote in focus

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 21, 2019. REUTERS/Staff

(Reuters) – European shares rose on Monday as a possible Fiat Chrysler-Renault merger thrust auto stocks higher, while investors assessed the results of the EU parliament elections where pro-European parties are expected to hold on to two-thirds of seats.

The pan-European STOXX 600 was up 0.5% by 0715 GMT with most indices inching higher but trading volumes were thin with UK, US markets closed for market holidays.

The auto sector rose 2.5%, outperforming all other sectors, as Italian-American carmaker Fiat Chrysler confirmed it made a “transformative merger” proposal to French peer Renault in a deal which would create the world’s third-biggest carmaker and help address some of the weaknesses in both companies.

The proposed deal would be structured as a 50-50 ownership through a Dutch holding company. Shares of both companies were at top of the STOXX 600, up more than 15% each.

Meanwhile, shares of German car maker Volkswagen rose 2% after a German paper reported its intention to jointly build up battery cell production in Salzgitter with Swedish startup Northvolt.

In a rather quiet day for company news investors focused on the European Parliamentary elections where parties committed to strengthening the European Union held on to two-thirds of seats although far-right and nationalist opponents also saw strong gains.

The two-party “grand coalition” of the conservative European People’s Party (EPP) and the Socialists (S&D) losing their combined majority amid an increase in support for liberals, the Greens and nationalists means policymaking in the EU may become more complex.

In Asia, stocks inched up but remained near four-month lows on Monday amid concerns about U.S.-China tensions with U.S. President Donald Trump saying he was ‘not yet ready’ to make a deal with China.

The trade war escalation this month has hit the pan-European STOXX 600 which is looking at its first monthly decline for 2019 since a sell-off at the end of last year that knocked 15% off the index.

Hans Rausing
Image copyrightRAUSING FAMILY

Hans Rausing, the Swedish billionaire who helped build food packaging company Tetra Pak into a global giant, has died aged 93.

The invention of the now more common cube-shaped cartons and aseptic technology to preserve the contents helped Tetra Pak replace heavier, breakable glass bottles in a growing number of markets.

Tetra packs of Allen's five citrus cocktail with vitamin C stacked neatly in rows.
Image copyrightGETTY IMAGES

In the 1980s the Rausing brothers moved to the UK in order to avoid the higher rate of tax in their home country and Hans Rausing shot to the top of the UK’s rich list.

After he left the family firm in 1995, Mr Rausing, who lived in Wadhurst, East Sussex, devoted part of his time to philanthropy. More than £1bn was given to causes including innovation and research in medicine, human rights, culture and the environment, his family said.

In 2006 he was made an honorary Knight Commander of the Order of the British Empire (KBE) for his philanthropic activities.

His three children said in a joint statement: “Our father was an extraordinary man, achieving so many things in his long and distinguished career as entrepreneur and industrialist, and then as a philanthropist supporting multiple charities and foundations.

“We are very proud of that, but most of all we will cherish our fond memories of him as a loving father and devoted family man.”

Family controversies

His son, Hans Kristian Rausing, was sentenced in 2012 for delaying the lawful and decent burial of his wife.

The charge came after police discovered the decomposing body of Eva Rausing, 48, at the couple’s home in Belgravia, central London.

Police found the mother-of-four, who had been dead for two months, under a pile of clothing and bin bags during a police search following Hans Kristian Rausing’s arrest on suspicion of drugs possession.

The couple had fought a public battle against drug addiction after meeting in a rehabilitation centre in the 1980s.

Argentina’s Macri unveils economic ‘relief’ measures after poll shock

Image grab from video released by Argentina's presidency shows President Mauricio Macri speaking in Buenos Aires on August 14, 2019
Image copyrightAFP
President Mauricio Macri’s popularity has been damaged by painful austerity measures

Argentine President Mauricio Macri has announced a series of “relief” measures, days after a defeat at the polls triggered economic turmoil.

In a televised speech, he announced income tax cuts and increases in welfare subsidies. Petrol prices will be frozen for 90 days, he added.

Mr Macri said the measures would help 17 million workers.

The move comes after opposition centre-left candidate Alberto Fernández won presidential primaries  at the weekend.

The result dealt a severe blow to Mr Macri’s chances of re-election. On Monday, the Argentine peso and stock markets plunged over concerns that Mr Fernández could take Argentina back to populist economic policies.

The peso fell again on Wednesday following President Macri’s attempts to shore up support.

Mr Macri was elected in 2015 pledging to boost Argentina’s ailing economy with liberal economic reforms.

But a recovery has yet to materialise and more than a third of the population is living in poverty. Tough austerity measures have pushed up prices for public services and dented Mr Macri’s popularity.

Argentina is currently in recession and posted 22% inflation for the first half of the year, one of the highest rates globally.

What did President Macri say?

“The measures I take and that I am going to share with you now are because I listened to you. I heard what you wanted to tell me on Sunday,” he said during his eight-minute nationwide broadcast.

“These are measures that will bring relief to 17 million workers and their families.”

A supermarket employee changes products' price tags due to inflation, in Buenos Aires, Argentina, 14 August 2019
Image copyrightEPA
Argentina’s high inflation rate is hitting prices in the shops

President Macri said tax cuts would see workers in the private sector receiving an extra 2,000 pesos (£28; $33) a month until the end of the year and public sector workers an extra 5,000 pesos. He said the minimum wage would also rise.

Mr Macri said he took responsibility for the election result and recognised that many voters were “tired and angry”. He said he was willing to talk to the opposition, adding that it was “clear that political uncertainty has caused a lot of damage”.

“I understand your anger, your tiredness. I just ask you not to doubt the work we did together because there is so much, and there is too much at stake,” he said.

How did the latest crisis unfold?

The primary election, in which presidential candidates from all parties take part, was won by Mr Fernández by a wide margin. The coalition backing Mr Fernández took 47.7% of the vote while the bloc supporting Mr Macri had 32.1%.

Mr Fernández is now seen as the frontrunner for October’s presidential election. His running mate is former President Cristina Fernández de Kirchner, who presided over an administration remembered for a high degree of protectionism and heavy state intervention in the economy.

Cristina Fernández de Kirchner and Alberto
Image copyrightAFP
Alberto Fernández’s running mate is former President Cristina Fernández de Kirchner

In trading on Monday, the peso initially plunged 30% against the dollar to a record low before rallying to about 15%.

Some of the country’s most traded stocks also lost about half of their value in one day.

At end of trading on Monday, Argentina’s main Merval index closed down 31% as some of the country’s largest companies saw their market values plummet.

On Wednesday, after Mr Macri’s broadcast, the peso fell again, trading at 60.77 to the dollar – a further 4% down from Tuesday’s close