As it happened: ASX ends week at a new high, despite COVID gloom

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The Australian sharemarket was unconvincing but still managed to drift to a new record closing high on Friday, capping a volatile week that again revolved around the coronavirus.

The S&P/ASX 200 edged 0.1 per cent ahead to finish at 7394.4 - topping Thursday’s record close of 7386.4 - with gains for biotech giant CSL helping the healthcare sector lead the pack.

Buy-now-pay-later firms Afterpay and Zip Co also rose, while retail and industrial giant Wesfarmers gained 0.8 per cent to set a new closing high of $61.93.

The ASX 200 added 0.6 per cent for the week to close at a new record high. Credit: Louie Douvis

Woolworths, Coles, ResMed, and Fisher and Paykel also finished in front.

Miners BHP and Rio Tinto weighed the market down, while the major banks were also weak.

The local benchmark added 0.6 per cent for the week despite heavy losses on Monday and Tuesday, with investors seemingly shrugging off worsening COVID numbers in Sydney, new border closures, increasingly strict curfews, and a burst travel bubble with NZ.

AMP Capital Head of Investment Strategy and Economics Dr Shane Oliver said a strong set of US earnings figures and dovish guidance from the European Central Bank helped markets look through the COVID gloom, with strong gains in lockdown winners like health and IT offsetting weakness in resources stocks.

Dr Oliver did however note that shares remain vulnerable to a short-term correction, with possible triggers being the upswing in global cases, and continued concern over inflation figures and US taper talk.

“But looking through the inevitable short-term noise, the combination of improving global growth and earnings helped by more fiscal stimulus, vaccines allowing reopening once herd immunity is reached, and still-low interest rates augurs well for shares over the next 12 months,” Dr Oliver said.

Wall Street led the way again for local stocks as US earnings continue to impress and fears subside over the spread of the Delta variant and the future of economic growth.

Second-quarter inflation data on Wednesday is the key economic focus in Australia next week with NAB tipping a 0.6 per cent quarterly rise in headline numbers.

The year-through CPI should jump to 3.7 per cent as the sharp decline a year ago drops out of the calculation.

The Australian sharemarket drifted ahead on Friday to finish a volatile week at a new record high.

The S&P/ASX 200 edged 0.1 per cent higher to close at 7394.4 - topping yesterday’s record close of 7386.4 - with gains for biotech giant CSL helping the healthcare sector lead the pack.

The local market added 0.6 per cent for the week despite heavy losses on Monday and Tuesday, with investors seemingly shrugging off worsening COVID numbers, new border closures, and increasingly strict curfews.

Wall Street’s lead was a positive one today as earnings continue to impress and fears subside over the spread of the Delta variant and the future of economic growth.

US futures were pointing to gains tonight, with the E-Mini for the S&P500 and Nasdaq up 0.3 per cent, and the Dow gaining 0.1 per cent.

Colourful soccer identity Bill Papas has been joined by his girlfriend in Greece as Westpac starts to expand its investigation into an alleged $400 million fraud orchestrated by the Sydney man, which the bank now believes may have started long before 2018.

Sources aware of the couple’s travels who requested anonymity for legal reasons say Mr Papas and his girlfriend Louise Agostino are holed up in Mr Papas’s seaside apartments in Thessaloniki. Ms Agostino has worked for several years at the Forum group of companies and Mr Papas’ waste business Orca.

Bill Papas on signing a sponsorship deal between his waste company iugis and Liverpool FC. Credit:

Mr Papas has been in Greece since June, while Ms Agostino recently joined him. Ms Agostino has not been accused of any involvement in the alleged Forum Finance fraud.

This week The Age and The Sydney Morning Herald revealed Mr Papas owned two apartments on Alexander the Great Boulevard in Thessolinki overlooking the Aegean Sea.

Multiple sources aware of the couple’s movements confirmed Ms Agostino recently left Sydney for Greece. Ms Agostino did not answer her phone this morning but the dial tone indicated she was overseas. Calls to Mr Papas’s mobile also went through to the message bank.

Ms Agostino answered the door when press photographers went to the couple’s home in Rozelle earlier this month.

The fraud was revealed when Westpac took emergency court action to freeze assets and begin a civil claim after discovering more than 100 suspect transactions over a three-year period from 2018 to 2021.

Westpac has accused Forum Finance and Mr Papas of orchestrating a fraud on Westpac where false invoices and forged signatures were used to obtain Westpac loans without the consent of at least seven of the major bank’s corporate clients.

Read the full story here

For over a decade, Deepinder Goyal’s Zomato has delivered soul food from spicy dosa crepes to soft bread Pav Bhaji with curried vegetables to millions across India.

Now, investors get a taste of the fast-growing food delivery giant. The startup soared more than 70 per cent in its Friday debut following a $US1.3 billion initial public offering.

Zomato, the first of a generation of internet unicorns to tap India’s capital markets, has generated a seldom-seen frenzy among the local investment community.

Zomato soared more than 70 per cent in its Friday debut following a $US1.3 billion initial public offering.Credit: Louie Douvis

Investors bragged on Twitter about snagging shares in the startup, yearning for the sort of returns Facebook and Alibaba Group generated.

Its IPO is India’s biggest since March 2020, and got about 35 times more bids from anchor investors than shares it intended to sell.

Zomato’s listing comes on the heels of strong food-delivery debuts, including DoorDash Inc. and China’s Meituan.

It’s the culmination of a 13-year journey for co-founder Goyal, 38. He and Pankaj Chaddah, who has since left, started Zomato as a delivery service in 2008 for their Bain & Co. colleagues.

Last week, Goyal tweeted about stress-eating and pinned a clenched-teeth emoji to his Twitter account.

He can be forgiven for an attack of nerves.

Zomato’s first-day performance will serve as a barometer for India’s budding tech scene of unprofitable unicorns, which has produced a coterie of up-and-coming giants from Ant Group Co.-backed Paytm to Walmart’s Flipkart Online Services Pvt.

Also backed by Jack Ma’s Ant, Zomato’s debut comes amid investor concern that India’s markets are a bubble waiting to burst and valuations have outstripped fundamentals.

Optimism about India is tempered by one of the worst coronavirus outbreaks in the world, which threatens to erode decades of economic gains. Investors also have to contend with political risks, with Narendra Modi’s government clamping down on foreign retailers, social media giants and streaming companies.

For many others, the potential outweighs the downsides. With almost half its 1.3 billion people accessing the internet via smartphones, a bet on Zomato represents optimism that India’s tech upstarts could go the way of the US or China, particularly as India’s internet infrastructure remains nascent and consumers are just getting used to buying online.

“This is how it is supposed to work. Nine out of 10 will fail,” Goyal, who is barred from commenting in the run-up to the listing, said in an earlier interview.

“But the one that thrives will be a spectacular success.”

Bloomberg

Fresh lockdowns and restrictions across Asia brought on by the faster-spreading delta coronavirus variant are making the region’s pursuit of travel bubbles look like an increasingly fruitless endeavour.

Air-travel bubbles, corridors that allow movement between countries without the need for quarantine, have largely been a letdown as nations pull up the drawbridge again to contain outbreaks.

A travel link between Singapore and Hong Kong, first mooted last year, has never actually gotten underway.

NZ today cancelled the quarantine-free travel bubble between in and Australia for at least eight weeks. Credit: SMH

Talks between Australia and Singapore are still ongoing while an arrangement between Australia and New Zealand has been stop-start at best and on Friday was halted for at least eight weeks.

The patchy track record underscores how tough it will be for Asia to return to normal, with some economies clinging to a Covid-zero strategy, or a desire to stamp out the virus at all cost.

Governments’ reliance upon strict movement controls to fight waves of infection — Melbourne last week entered its fifth lockdown while Tokyo is under a state of emergency as the Olympics dawns — is in contrast to the approach in Europe and the US, where the delta variant is spreading but where higher rates of vaccination mean travel is beginning to recover.

“Inter-regional travel is so important in Asia Pacific and everyone is watching each other at the moment,” said Gary Bowerman, director of travel and tourism research firm Check-in Asia.

“Generally there just seems to be low levels of trust, very different rates of vaccination, very different rates of managing Covid-19.”

That, in turn, makes forward planning extremely hard for airlines in Asia, he said.

“The government regulations, the rules, the border issues — they keep changing all the time.”

The correlation between higher rates of inoculation and foreign travel is already starting to show up in the data.

International capacity remains weak in countries where vaccination rates are low, such as Vietnam and Indonesia, according to flight-tracking firm OAG.

With several nations in Asia unable to secure sufficient vaccine supply, containment via strict lockdowns has become many governments’ default response.

A poll last week by OAG found that about half of respondents think a travel recovery in Asia will only happen by July 2022, another full year away.

“Personally, I think that’s verging on the optimistic,” said John Grant, chief analyst with OAG. “Asia is a real worry. Summer 2023 is a more realistic assessment.”

Bloomberg

Asian markets were mixed on Friday after major indexes edged higher on Wall Street, preserving their gains for the week.

Hong Kong and Shanghai fell while Sydney and Seoul advanced. Tokyo was closed for a holiday.

Surges in coronavirus cases around the region are prompting governments to tighten pandemic restrictions that are expected to slow business activity and keep travel to a minimum.

The Hang Seng slipped on Friday. Credit: AP

Thailand reported a daily record of 14,575 cases, with 114 deaths, as a stricter set of limits went into effect in many areas. The central bank, meanwhile, has said this latest, worst outbreak could cause the economy to contract by 2 per cent this year, instead of the recovery it had earlier forecast.

The SET in Bangkok edged 0.1 per cent lower. In Seoul, the Kospi was 0.2 per cent higher, while the S&P/ASX 200 was flat.

Regional trading was muted, with markets in Japan closed for a holiday ahead of the opening ceremony for the Tokyo Olympics.

The Hang Seng in Hong Kong lost 1 per cent to 27,438.68 and the Shanghai Composite index gave up 0.7 per cent to 3,551.55.

The declines came as Bloomberg reported regulators were planning more penalties for ride-sharing giant Didi, whose shares in New York sank 11.3 per cent on Thursday.

Didi’s shares have declined more than 25 per cent since they began trading in New York last month, amid a crackdown by the Chinese government on technology companies.

“Asian equities traded sideways on Friday, mirroring choppy price action on Wall Street overnight,” Anderson Alves of ActivTrades said in a commentary.

“However, pandemic concerns continue to weigh on the market.”

On Thursday, the S&P 500 rose 0.2 per cent to 4,367.48. The Dow Jones Industrial Average added 0.1 per cent to 34,823.35. The Nasdaq composite gained 0.4 per cent to 14,684.60.

All three indexes remain close to the all-time highs they set early last week.

Wall Street’s smallest companies lost ground. The Russell 2000 index fell 1.5 per cent, to 2,199.48.

Gains by Apple, Microsoft and other big technology stocks helped offset declines for banks, energy companies and industrial stocks.

AP

Lorna Jane has been fined $5 million for claiming its ‘anti-virus activewear’ could stop the spread of the coronavirus.

The women’s exercise and fashion retailer launched a marketing campaign in July last year that said its LJ Shield Activewear “eliminated”, “stopped the spread” and “protected wearers” against “viruses including COVID-19″.

The Australian Competition and Consumer Commission said co-director Lorna Jane Clarkson authorised and approved the LJ Shield Activewear promotional material, was involved in crafting the words and developing the imagery used in the marketing campaign, and personally made some of the false statements contained in a media release and an Instagram video

Lorna Jane co-director Lorna Jane Clarkson.

The claims were made on in-store signage, on its website, on Instagram, in emails to consumers and in media releases.

ACCC Chair Rod Sims this afternoon said the marketing campaign was exploitative, predatory and potentially dangerous and based upon consumers’ desire for greater protection against the global pandemic.

The Federal Court has ordered the company to pay a $5 million fine.

Lorna Jane also admitted that it had falsely represented it had a scientific or technological basis for making the ‘anti-virus’ claims about its LJ Shield Activewear, when no such basis existed.

An example of some of the 'anti-virus' marketing.

“This was dreadful conduct as it involved making serious claims regarding public health when there was no basis for them,” Mr Sims said.

“This type of conduct is particularly harmful where, as here, consumers cannot easily check or monitor the claims made.”

Before the start of a hearing on liability, Lorna Jane cooperated with the ACCC, making admissions and agreeing to make joint submissions regarding the imposition of penalties totalling $5 million.

The Court also ordered by consent that for a period of three years, Lorna Jane is restrained from making any “anti-virus” claims regarding its activewear clothing unless it has a reasonable basis for doing so, must publish corrective notices across the mediums utilised in the marketing campaign, must establish a consumer law compliance program, and must pay the ACCC’s costs.

Evolution was the best performer in an otherwise lacklustre gold mining sector today, with the firm rising more than 6 per cent after resuming trade this morning.

Evolution halted yesterday to raise $400 million in order to buy Northern Star’s Kundana operations in Western Australia.

The $3.85-per share raising was successful, with Evolution’s stock jumping 6.1 per cent to $4.32 by lunchtime.

Gold miners were mixed this afternoon. Credit: RNC Minerals

Brokers at Jefferies raised their price target on Evolution from $5.30 to $5.40 and have kept their ‘Buy’ rating on the stock. Citi remains neutral on the stock and has kept a $4.70 price target.

The price of gold was holding above $US1800 this afternoon, relatively unchanged, on mixed economic data overnight from the US.

Meanwhile, Northern Star was down 5.9 per cent at $10.14 despite retaining a buy rating at Citi.

The ratings firm trimmed Northern Star’s price target from $13.60 to $12.90 but maintains the company’s June quarter was its best yet.

Northern Star reported a 23 per cent jump in production for the quarter to 450,700 ounces, while costs fell 9 per cent to $1459 an ounce.

The market’s biggest gold producer, Newcrest, was narrowly in front at $26.205.

Citi cut its price target from $32 to $30 but retains a ‘Buy’ rating after yesterday’s quarterly production report, which showed a 5.4 per cent drop in production.

Citi also cut Newcrest’s core net profit estimate for FY 22 by 10.7 per cent and revenue by 3.6 per cent on previous estimates.

Finally, the $1.5 billion Silver Lake Resources was leading the ASX 200 for losses after delivering weak guidance.

The stock was down 9.9 per cent and earlier hit a three-month low $1.565 after guiding to FY22 group gold sales of 235,000 to 255,000 ounces, below RBC estimates and 9 per cent down on consensus.

Health and tech stocks continued to outperform, while the banks and miners trimmed losses to help the ASX into positive territory at lunchtime.

The benchmark S&P/ASX200 index was up 0.2 per cent and just shy of the 7400 mark.

It has only topped 7400 twice in history, both times coming during a march to record highs last month.

US futures were in positive territory and pointing to gains on Wall Street tonight. The E-mini for the S&P500 and Nasdaq was up 0.3 per cent and the Dow was 0.2 per cent higher.