BusinessNow: Live coverage of financial markets and companies, plus analysis and opinion
Domino’s hits a record high as investors push BHP’s valuation up $3.5bn.
- ASX closes in the black
- Crown shares jump as execs keep cards close to chest
- QBE’s perfect storm
- Have dairy prices turned a corner?
- BHP digs itself out of a deep hole
- ASX edges lower at open
- Moody’s affirms Australia’s Aaa rating
- Analysts still bullish on BHP
- Macquarie in box seat for Alinta
Welcome to the BusinessNow blog for Wednesday, August 17. Investors continue to churn through earnings figures on the hunt for value. Domino’s Pizza has surged to a fresh record high, while BHP Billiton has jumped despite a horror full-year loss.
7.52pm:UBS joins Macquarie as adviser for Alinta IPO
Alinta Energy has appointed five investment banks for its up coming initial public offering.
Macquarie Capital will work with UBS and Goldman Sachs as global joint coordinators while Credit Suisse and Morgan Stanley will be joint lead managers.
It comes after Lazard recently tried to sell the business earlier this year.
However the process failed after front runner China Huadian walked away without lobbing a final bid.
The group is expected to be worth at least $3bn and should it list by Christmas, it will be the largest float of the year.
6.58pm:Pizza supreme: Domino’s by the numbers
With an 1100 per cent gain in five years, Domino’s is seeing investor feeding frenzy. But can it last? Watch the video.
6.19pm:Behind the market’s CSL surprise
It seems the market hasn’t come to grips with the fact that CSL doesn’t play the normal game,writes Stephen Bartholomeusz.
One of the problems in this market, but one exaggerated when you’ve got a company with a price-to-earnings ratio of around 30 times, is that you can’t afford to undershoot expectations. Even when you don’t. Read more.
4:25pm:ASX closes in the black
The Australian sharemarket has finished marginally in the black, lifting in afternoon deals on the back of a positive response to BHP’s earnings report.
At the closing bell, the benchmark S&P/ASX 200 index inched up 3 points, or 0.05 per cent, to 5,535, while the broader All Ordinaries index tacked on 2.4 points, or 0.04 per cent, to 5,628.1. Read more.
3:55pm:ANZ, Oswals back in settlement talks
ANZ Bank and Indian business couple Pankaj and Radhika Oswal are back in talks to settle a $1.5bn-plus lawsuit, after Mrs Oswal gave dramatic evidence in court today alleging strongarm tactics by the bank’s top lawyer, writes Ben Butler.
Read more
3:30pm:ASX peeks into positive territory
With just over an hour remaining in the day’s trade the local market peeked into positive territory after spending the entire session in the red.
The index dropped as much as 0.6 per cent early as CBA weighed heavily as it trades ex-dividend, but hefty 3 per cent and 2 per cent gains from BHP Billiton and Rio Tinto have kept the market afloat following a better-than-expected earnings result from BHP.
Domino’s Pizza is the best performer on the index with a 7.8 per cent gain after investors smelled a bargain following a 3 per cent loss yesterday, while Spotless Group is struggling, down 11.5 per cent.
Gold miners are peppering the worst-performers column, with Evolution, Newcrest, St Barbara and Regis Resources all giving up over 3.5 per cent.
3:20pm:BHP’s valuation surges $3.5bn
BHP Billiton has seen its valuation surge $3.5 billion after analysts welcomed the lack of any nasty surprises in its full-year results yesterday and amid hopes several key commodities may have bottomed, writes Daniel Palmer.
In afternoon trade, BHP shares added 3.4 per cent to $20.93, against a broader market fall of 0.1 per cent.
The strong showing followed the release of what was, on the surface at least, the miner’s saddest profit report in history.
2:45pm:Crown shares jump as execs keep cards close to chest
Crown’s full-year profit may have tumbled 22.7 per cent but the fact that it slightly outpaced forecasts has seen the company’s share price surge today to touch a fresh one-year high.
At 2:21pm (AEST) the casino and resort giant was 4.4 per cent higher for the day at $13.87 after earlier hitting a 12-month high of $14.06.
No real news was taken as good news by the market, with the leadership remaining tight lipped with regard to fiscal 2017 guidance and offering no update on either the international business demerger or hotel REIT spinoff.
When the company made those announcements back in June the shares soared over 13 per cent, so the market seems content leaving the premium in place today despite the lack of update.
Today’s gain brings the year-to-date rise to 10.2 per cent and according to Bloomberg data, three analysts rate the stock ‘buy’, four recommend ‘holding’ and only one rates it a ‘sell’.
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2:32pm:Crown urges stable regulation
The boss of James Packer’s listed casino company, Rowen Craigie, has called for a stable regulatory environment for Australia’s online wagering sector, writes Sarah-Jane Tasker.
The Crown Resorts chief executive — who delivered a 22.7 per cent decline in annual profit today to $406.2 million — said the company and its wagering subsidiary, CrownBet, were supportive of a regulatory environment that provided certainty to operators, customers and the general public.
Read more
2:15pm:Optus scores $20m shopping centre Wi-Fi deal
Optus continues to flex its Wi-Fi muscle, with the mobile operator signing up a $20m deal to roll out a high-speed service across retail landlord Vicinity Centres’ entire shopping centre portfolio.
The five-year deal will see Optus deliver a free service to shoppers in premium sites such as Chadstone Shopping Centre and Emporium Melbourne in Victoria, Chatswood Chase in Sydney and Queens Plaza in Brisbane.
1:55pm:Another Australian food brand gets snapped up
Australians opening their kitchen cupboard looking for an Australian-owned food brand will now have far less to choose from after Snack Brands Australia, maker of some of the nation’s favourite salty chip snacks such as CC’s, Thins, Kettle, Cheezels and Samboy, is to be sold to a Philippines multinational, writes Eli Greenblat.
Going the way of Tim Tams, Vegemite and iced VoVo’s, Universal Robina Corporation, one of the largest branded consumer food and beverage product companies in the Philippines, has agreed to buy Snack Brands Australia for $600 million.
Read more
1:40pm:Spotless shares dive
Shares in cleaning and catering business Spotless have plunged more than 11 per cent after the group confirmed the planned sale of its laundries business had fallen over.
The ASX-listed group (SPO) first declared its $400 million-plus laundries business was on the market on May 30 after it had received unsolicited offers for the group.
Read more
1:30pm:QBE’s perfect storm
Interest rates forecast to be lower for longer are a challenge for insurers like QBE’s John Neal, who in more normal times can use higher rates to lower the gap between paying out claims and receiving premiums, writes John Durie.
To compound the issue in Australia a relative lack of catastrophes has seen commercial line insurance premiums either flat or falling, at the same time as the lower Australian dollar has sent the cost of repair up by around 7 per cent — costing the company big time.
Some analysts have suggested QBE woke up too late to a trend others have previously called out.
Read more
1:10pm:Have dairy prices turned a corner?
There are renewed hopes dairy prices may have turned a corner, boosting sentiment in the beaten-down local sector, writes Daniel Palmer.
Fonterra’s latest GlobalDairyTrade auction found the broad price index surging 12.7 per cent to $US2,731, outstripping market expectations and coming on the back of a 6.6 per cent recovery in the previous auction.
The result was driven by a sharp 19 per cent rally in whole milk powder prices, which are seen as crucial to the global industry.
Read more
12:55pm:‘Both the children could be orphans’
ANZ’s chief legal officer, Bob Santamaria, threatened Indian businesswoman Radhika Oswal that both she and her husband would go to jail and their young two daughters become orphans if she did not pledge her stake in the couple’s business empire to the bank, a court has heard.
Radhika Oswal told the Victorian Supreme Court she met with Mr Santamaria at the end of a long day of negotiations over close to $1bn the couple owed the bank on Sunday, December 20, 2009 amid allegations of fraudulent documents, Ben Butler writes.
She said that at the meeting, her lawyer, Grant Pestell, told Mr Santamaria she did not want to pledge her stake in the couple’s Burrup Fertilisers - some 32.5 per cent - to the bank.
Read more
12:30pm:Domino’s surges to record high
The disappointment, or at least uncertainty, that followed Domino’s Pizza’s huge profit result yesterday certainly didn’t last long, with shares in the company rocketing to a record high today.
Not long after the open the stock surged as much as 6.6 per cent to an all-time high of $79.06 after slumping 3 per cent yesterday as investors questioned whether the red-hot result could possibly warrant a PE multiple of 55x.
Investors have dived back into the market darling today, with shares trading 4.2 per cent higher at 12:20pm AEST, compared with an ASX200 slide of 0.2 per cent.
12:20pm:RBA interview highlights China as the main risk - ANZ
RBA Governor Glenn Stevens’ exclusive interview with The Australian and the Wall Street Journal highlights that the central bank is more worried about the outlook for China than Europe and the UK, according to ANZ economists. Housing risks remain present despite marginal success with macro-prudential policy, they add.
ANZ says household leverage and the Australian dollar also appear to be sticking points for the RBA, while it feels the domestic growth outlook is reasonable and the government can afford to do more on infrastructure in light of low interest rates
Read the full interview.
12:10pm:BHP shares surge 3.2% after earnings report
BHP Billiton shares have surged 3.2 per cent to a three-month high of $20.90 after the world’s biggest miner indicated that the worst is over.
As Stephen Bartholomeusz writes, commodity prices are volatile and, as recent years have demonstrated, unpredictable.
The prices of the commodities most important to BHP are either directly influenced by the ability of China’s authorities to maintain economic growth or hostage to the market share aspirations of the Saudi-led OPEC.
Thus CEO Andrew Mackenzie’s confidence is borne out of both a belief that at least 2016-17 won’t be a worse year for commodity prices than 2015-16, which seems like a very reasonable assumption, and his own understanding of the implications of what BHP is doing within its portfolio to the things that it can control.
Read more
11:50am:Crown gets a tick from UBS, and the market agrees
Crown has got a tick from UBS, and the market for that matter, with the stock up 5.3 per cent at a 12-month high of $13.99 after its full-year results.
FY16 NPAT beat consensus by 4 per cent, according to UBS, with stronger-than-expected EBIT driven by better-than-expected performance in Aspinalls, wagering and corporate costs.
The dividend was another positive surprise as the casino operator appears to have paid out 116 per cent of FY16 normalised EPS, UBS analyst Matt Ryan says.
Domestic casinos had a mixed result with strong Melbourne main floor gaming revenue offset by weak VIP turnover, he adds.
11:45am:BHP digs itself out of a deep hole
It often takes a crisis to transform a company but BHP’s transformation has required two major reversals. In the past two decades, we have almost twice lost The Big Australian, writes Robert Gottliebsen.
But this week’s $US6.4bn headline loss is a small fraction of the loss that would have been incurred had some of the expansion strategies the company attempted during the boom succeeded.
The BHP of 2016 is a totally different company to the old BHP. And if it has called the commodity game correctly it will make a fortune. Even if there are tougher times than expected, it will still achieve good returns because its costs of production are now so much lower.
Read more
11:35am:Wages data mostly in line with expectations
Domestic wages data are mostly in line with expectations, with quarterly growth inching up to 0.5 per cent as expected, and year-on-year growth remaining at a record low of 2.1 per cent versus the 2.0 per cent expected.
11:20am:Coming up at 11:30am: domestic wages data
ABS wages data due at 11:30am (AEST) today are expected to show quarterly wages growth edging up from 0.4 per cent to 0.5 per cent, but year-on-year growth is expected to hit a new record low of 2 per cent, according to Bloomberg consensus data.
It’s not usually a market mover, but it highlights the downward pressure on inflation that’s driving interest rate cuts, which are ultimately forcing more investors to shift from cash and bonds to equities.
The bigger question is whether rate cuts are now causing a negative feedback loop by retarding investment, wages and inflation. Credit Suisse recently made this point.
11:15am:Property rethink needed: Glenn Stevens
APRA’s attempts to tame the housing market have been more successful than Glenn Stevens expected, but he is still not convinced “macroprudential” tools can be effective in the long term, writes David Uren.
In an exclusive interview with The Australian and The Wall Street Journal, Mr Stevens, who stands down as Reserve Bank governor next month, said the unconventional methods applied by central banks worldwide had also failed to provide the long-term boost to demand that was sought.
While he does not think the nature of those unconventional strategies has added to financial stability risks, the length of time they have been applied raises the likelihood of financial disruption when they are eventually withdrawn.
Read more
11:05am:Buy more CSL - Marketmatters.com.au
Marketmatters.com.au has just sent out a buy alert on CSL.
“We’re in the market now putting an additional 5 per cent into CSL after the stock has dropped around 7 per cent following its full-year result this morning,” the stock recommendation service says.
“The underlying result was in line, the dividend was above expectations and they are likely to launch a new $500m on market buyback. The sell-off today seems overdone and we are averaging into our existing position – which was bought around $110 on the 17th June.” CSL is currently down 5.6 per cent at $110.24.
11:00am:CSL forms a bullish price pattern
CSL is bouncing strongly after falling sharply on disappointing earnings guidance today.
It looks to be forming a dragonfly doji pattern on daily candlestick charts.
If sustained at the close, this pattern will be particularly bullish because the intraday low at $107.35 is close to key technical support at $105.8. That’s the June trough and a weekly uptrend line that’s been in place for the past two years. CSL was last down 6.1 per cent at $109.48.
10:50am:ASX edges lower at the open
Daniel Palmer
The Australian sharemarket has edged lower in early trade, hurt by lacklustre offshore moves and a sell-off in Commonwealth Bank shares as it went ex-dividend.
At 10.25am (AEST), the benchmark S&P/ASX 200 index dipped 18.2 points, or 0.33 per cent, to 5,513.8, while the broader All Ordinaries index gave back 18.4 points, or 0.33 per cent, to 5,607.3.
The materials sector is one bright spot in the market, with BHP Billiton leaping 2.3 per cent to $20.71 after it said the worst was over following the release of its heaviest loss on record last night, while Rio Tinto added 1.4 per cent to $49.13 and iron ore miner Fortescue lifted 0.89 per cent to $4.56.
In energy, Santos slid 0.3 per cent to $4.885 despite crude prices rising for a fourth day, while rival Woodside lifted 0.36 per cent to $27.75.
In finance, there was deep red at CBA as it traded ex-dividend, with shares tumbling 3.2 per cent to $73.55.
The remainder of the big four enjoyed a strong start in contrast, all advancing around 0.5 per cent.
The reporting season returned to top gear, with a flurry of big names drawing a wide spread of responses from traders.
Healthcare giant CSL tanked the most in 18 months as investors fretted about the strength of its guidance, with its shares tumbling 5.8 per cent, while insurer QBE plunged 9 per cent after detailing a 46 per cent dive in profit and property group Stockland slid 0.7 per cent despite beating forecasts.
There was better news for Crown Resorts as it surged 3.9 per cent on a modest earnings beat, while property group Dexus edged up 0.2 per cent after doubling profit and Sonic Healthcare bounded 5.8 per cent as it booked a 30 per cent lift in earnings.
Among blue chips, Telstra rallied 0.28 per cent to $5.445, while Qantas lost 0.15 per cent to $3.335.
10:40am:BHP shines amid a sea of red
BHP shares have rocketed higher this morning while blue chips tumble all around it.
Stock in the world’s biggest miner jumped as much as 3 per cent in early trade to its highest level since May, despite unveiling a horror earnings update after the market close yesterday.
At 10:30am (AEST) BHP shares had cooled off slightly to be 2 per cent higher against a benchmark ASX slide of 0.4 per cent, while banking giant CBA had dropped 3 per cent as it trades ex-dividend and CSL tumbled 6.2 per cent as it revealed a 10 per cent drop in profit.
Analysts have widely come out in support of BHP’s mind-blowing full-year loss, with Macquarie upgrading its rating on the stock to ‘neutral’ from ‘underperform’.
Meanwhile Credit Suisse, Morgan Stanley and UBS reiterated their ‘buy’ or ‘outperform’ ratings and Deutsche Bank maintained its ‘hold’ recommendation.
10:30am:QBE’s investment yield, margin forecasts look a stretch - CLSA
After pouring over QBE’s disappointing results, CLSA is quick to point out that the insurer assumes an investment yield of 2.7 per cent for 2016 versus 1.65 per cent for the first half, and is still targeting an 8.5-10 per cent insurance margin for the full year despite a reported margin of 5.8 per cent for the first half.
With what appears to be a hint of sarcasm, CLSA analysts Jan van der Schalk and Swati Reddy say the outlook is “surprisingly strong”. Perhaps the market agrees, judging by the share price reaction. QBE shares have crashed 9.1 per cent to $10.14 in early trade.
10:20am:Crown profit hit by weakness in Macau
James Packer’s Crown Resorts has edged full-year forecasts as it continues to weigh the merits of a potential split of its international operations and a float of a stake in its local property assets, writes Daniel Palmer.
The gaming empire booked a 22.7 per cent decline in normalised net profit after tax to $406.2m for the year to June 30 as weak market conditions hit its Macau operations.
However, it still edged expectations for a reading of $405m, helping its shares advance 3 per cent in early trade.
Read more
10:10am:CSL and QBE both casualties of earnings season
CSL and QBE have become casualties of earnings season, with CSL shedding a huge 6.9 per cent to $108.70 at the market open and QBE diving 11.4 per cent to a 6-week low of $9.89.
Key technical support for CSL lies at $105.88, the June trough and weekly uptrend line. Meanwhile, for QBE the June trough at $9.83 is the key support on the charts ahead of major support from the Februrary low at $9.50. QBE was last down 9.6 per cent at $10.11.
10:02am:QBE’s 1H result a “low-quality beat”: UBS
UBS has labelled QBE’s 1H result a “low-quality beat” with underlying deterioration in Australia & NZ offset by large reserve releases.
It notes that claims deterioration in Aus/NZ impacted group margins by 2.5 per cent, offset by 3.9 per cent of reserve releases.
“While slightly reduced FY16E top-line targets are unsurprising (3 per cent lower), achievement of unchanged margin guidance is now more dependent on ongoing reserve releases,” UBS analysts James Coghill and Scott Olson say.
They currently have a buy rating and $13 target on the stock.
9:57am:CSL’s guidance implies 8% downgrade to consensus - CLSA
CSL’s guidance for FY17 NPAT growth of 11 per cent in constant currency terms compares to a market consensus of 19 per cent, implying that the consensus could be downgraded by about 8 per cent, according to CLSA.
This suggests the share price could dive by a similar magnitude at the open today.
9:52am:Aveo launches $125m equity raising
Gretchen Friemann
Morgan Stanley has launched a $125m equity raise for aged care owner Aveo Group as it hands down its full-year results. Morgans and Sun Hung Kai investment services are also joint lead managers to the placement, which has been set at a floor price of $3.37 per share.
That marks a 2.6 per cent discount to the last close.
Investors have been asked to bid up in 1c increments, according to a termsheet sent to investors.
Aveo has launched the raise to purchase the remaining 27 per cent it does not already own of Retirement Villages Group as well as repay debt racked up from previous investments in the fund.
RVG was formed prior to the global financial crisis and was held by a collection of superannuation funds.
Aveo, formerly known as FKP Property Group, is backed by the Malaysian real estate tycoon, Seng Huang Lee.
Books on the deal close at 4pm Sydney time.
9:50am:CSL profit takes a hit
CSL has revealed a 10 per cent drop in annual profit in its centenary year as the costs associated with its purchase of the Novartis influenza vaccine hamper its headline results, writes Michael Roddan.
CSL (CSL) today booked a net profit for the year through June of $US1.24bn, a slide of 10 per cent year-on-year.
Read more
9:45am:Earnings season scoreboard
You can’t quite say ‘far so good’ as we roar through the quarter-way mark of this earnings season, according to AMP’s chief economist Shane Oliver, who just tweeted an update for the earnings-season scoreboard.
Of the companies that have reported so far, 43 per cent have beaten expectations — slightly below the 45 per cent norm, while dividends are being increased or maintained almost across the board.
Aust June half reporting season 28% done. 43% beat (norm 45%); 70% have profits up yoy;93% raised or maintained divs pic.twitter.com/Bc16qDqAn2
— Shane Oliver (@ShaneOliverAMP) August 16, 2016
9:32am:Moody’s affirms Australia’s Aaa sovereign rating
Moody’s has affirmed Australia’s Aaa sovereign credit rating in the wake of the Federal Budget.
The ratings agency expects Australia’s “demonstrated economic resilience will endure in an uncertain global environment”.
It also points to Australia’s “very strong institutional framework” and “stronger fiscal metrics than many similarly rated peers”.
The latter point is expected to remain consistent with an Aaa rating over the medium term, even with the increase in debt from previous low levels.
Thus Moody’s is giving a big weighting to the fact that Australia’s fiscal situation is relatively better than many of its peers.
That’s not very reassuring in a long-term sense, but it’s consistent with market thinking.
Read more
9:25am:ACCC probes Link’s move on Pillar
Gretchen Friemann
Link Group has confirmed it is pursuing the state-owned funds administrator, Pillar Administration, in a move that has sparked an investigation by the competition watchdog.
Link, a share registry and superannuation funds administrator that debuted on the stock exchange late last year, has long been regarded as a top contender for Pillar.
But the company had stopped short of officially confirming its interest.
Its statement to the ASX this morning will be followed by the launch of the ACCC’s investigation into the deal as it calls for market submissions.
Pillar is one of Australia’s leading superannuation administration providers but it suffers from a high cost base and slender earnings.
Over the past several years New South Wales’s government has deliberated over how to cast off the business and in 2013, asked Deutsche to assess the exit options.
Link is competing with several other suitors, including top contender, Mercer, for the business, which is expected to fetch close to $100m.
Given that 14 of the top 20 superannuation funds run their administration services in-house, Link is expected to argue its acquisition of Pillar does not pose a threat to competition in the sector.
In its prospectus Link stated it services close to a third of the superannuation funds administration market.
The group’s declaration of its pursuit of the state-owned business, which is being handled by KPMG, comes as the market braces for a possible selldown of Pacific Equity Partners’ residual 25 per cent holding.
Any trade will occur after the results next week.
But as reported by The Australian recently, Link is also in the race for the $US800m Tricor Holdings, the back office division of Hong Kong lender, Bank of East Asia.
If the group advances to the next phase, PEP’s exit, which is being navigated by UBS, may be delayed.
Two PEP executives, Paul McCullagh and Cameron Blanks, remain as non-executive directors at Link.
9:20am:Broker rating changes
BHP Billiton raised to ‘neutral’ vs ‘underperform’ - Macquarie
Domino’s Pizza cut to ‘sell’ vs ‘outperform’; target slashed to $61 vs $72 - CLSA
Invocare cut to ‘underweight’ vs ‘neutral’ - Macquarie
Mayne Pharma cut to ‘neutral’ vs ‘buy’ - UBS
9:12am:Analysts still bullish on BHP despite its worst-ever FY loss
It probably goes without saying the morning after the world’s biggest miner releases its biggest-ever loss, but keep an eye on resources at the open.
BHP’s ADRs are pointing to a 1 per cent rise today, with the market well prepared for yesterday’s ugly numbers. A healthy rebound in commodity prices overnight will likely pour some positivity into the mix.
The price of iron ore rose 3 per cent overnight to $62.03, its biggest gain since August 1, while the oil price has now jumped over 4 per cent in the last two sessions to $46.23 a barrel (WTI).
Before the release of its results, BHP Billiton had gained 13.4 per cent year to date, to close yesterday at $20.25. Analysts remain fairly bullish on the stock, with Bloomberg data showing seven ‘buy’ ratings, nine ‘holds’ and only two ‘sells’.
Meanwhile Fortescue Metals has roared 142 per cent higher in the year to date to $4.52, touching a two-year high earlier this month.
Quite a contrasting view from analysts on the pure-play iron ore miner, which is seeing three ‘buy’ recommendations, six ‘holds’ and 10 ‘sell’ ratings.
9:07am:Macquarie in box seat for Alinta float
Bridget Carter
Investment bank Macquarie Capital is understood to be in the box seat to be joint lead manager for the prospective float of TPG Capital’s Alinta Energy, according to sources.
Should the business head to the boards, it will be the largest float this year, although sources believe a listing in 2017 is more likely.
A source close to Macquarie this morning suggested that the investment bank had not yet been mandated.
It follows a so-called ‘beauty parade’ for investment banks last week for roles to float Alinta after a sales process for the business run earlier this year recently collapsed.
Lazard is working as adviser to the business and it is expected that a number of investment banks will be recruited to work on the dual-track process.
As reported by DataRoom today, the West Australian retail operation attracted an offer from AGL Energy that was said to be five times Alinta’s earnings before interest, tax, depreciation and amortisation.
Overall, the company, which owns an eclectic mix of assets, including gas fired power stations as well as WA retail energy operation, generates about $385m of annual EBITDA.
It is known that TPG Capital has aspirations to sell the operation well north of $4bn.
8:50am:QBE could be in for a thrashing at the open
QBE could be crushed at the open today after disappointing results and outlook statements from the insurer.
It reported a 46 per cent slump in first-half net profit of $265m, and a 39 per cent fall in cash profit to $US287m. The interim dividend came in at 21c versus the 28c expected by the market. Worse still, it sees 2016 gross written premiums of $US13.7bn-$US14.1bn versus a market consensus of $US14.5bn, and net earned premiums of $US11.5bn-$US11.9bn versus the $US11.8bn expected.
It was evidently a tough first half for QBE, as gross written premium (GWP) was $US8.1bn versus the $US8.6bn forecast in February, while the net earned premium (NEP) was $US5.6bn versus the $US6.1bn forecast.
QBE still sees a FY16 combined operating ratio of 94-95 per cent and insurance profit margin of 8.5-10 per cent. But with the results today, the market will be sceptical. QBE said it expects global pricing to be under pressure in 2016.
Read more
8.36am:BHP set to rise at the open despite epic earnings blowout
BHP Billiton looks set to gain 1 per cent at the open, according to its ADRs, despite the miner recording its biggest loss ever yesterday after the close.
The huge swing from a $1.91 billion profit last financial year to a $US6.39 billion loss this time around will go down as one of the largest losses in Australian corporate history, but the market was expecting it.
Heavy writedowns at its US onshore gas business and the fallout from the Samarco dam disaster in Brazil weighed heavily on the result, and as analysts stripped back the layers of rot they saw a result that came in above expectations.
7.55am: Ford plans fully driverless car
Ford intends to have a fully driverless vehicle - no steering wheel, no pedals - on the road within five years. The car will initially be used for commercial ride-hailing or ride-sharing services; sales to consumers will come later. “This is a transformational moment in our industry and it is a transformational moment for our company,” said CEO Mark Fields.
7.00am:Australian market to open flat
The Australian market looks set to open flat or slightly weaker after Wall Street suffered its worst losses in two weeks following weak US data and comments by Federal Reserve policymakers.
At 6.45am (AEST), the share price index was down three points at 5,485.
The three key US markets slipped after weak US data and comments by Federal New York Fed president William Dudley and Atlanta Fed chief Dennis Lockhart, who both said the US central bank could raise the nation’s short-term interest rates at its September policy meeting.
Locally, in economic news today, The Australian Bureau of Statistics is scheduled to release its wages index for the June quarter.
In Australia yesterday, the benchmark S & P/ASX200 index was down eight points, or 0.14 per cent, at 5,532 points, while the broader All Ordinaries index was down 8.1 points, or also 0.14 per cent, to 5,625.7 points.
6.55am: Dollar lower after greenback recovers
The Australian dollar is lower against its US counterpart after the greenback strengthened following earlier losses.
At 6.36am (AEST), the local unit was trading at US76.95 cents, down from US77.11 cents yesterday.
The US dollar recouped the losses it suffered after New York Federal Reserve president William Dudley and Atlanta Fed chief Dennis Lockhart both said the US central bank could raise the nation’s short-term interest rates at its September policy meeting.
6.40am: Iron ore price jumps 3pc
The iron ore price has surged to a fresh three-and-a-half-month high after BHP Billiton chief executive Andrew Mackenzie effectively said the worst of the commodity cycle was over.
Iron ore jumped 3 per cent to $US61.80 a tonne overnight, according to The Steel Index, from $US60 the previous day.
Trump’s trade war tariff thaw
In a thawing of relations, the US will delay raising tariffs on Chinese goods after “substantial progress” in trade talks.
China puts heat on coal miners
Shares in pure-play coal miners pared early sharp losses as fears of China port ban eased throughout the session.