ASX closes up 0.7pc, COVID winners tumble
ASX trimmed early gains to finish 0.7pc higher as investors picked their vaccine winners and losers.
That’s all from Trading Day. After rising as much as 2.2 per cent in early trade, Australia’s share market pared its early gains as US futures retreated, to finish up 0.7 per cent. Markets globally rallied on very encouraging results from a large-scale phase 3 trial of a COVID vaccine by Pfizer and partner BioNTech, as well as positive sentiment generated by Joe Biden’s success at the polls.
Jared Lynch 8.14pm: Will a vaccine change the world?
The finish line is nearing in the race to deliver a COVID-19 vaccine, with Pfizer announcing it has completed phase-three trials with 90 per cent effectiveness, but challenges remain in restoring Australia and the world back to some kind of normality.
The Pfizer results sent markets worldwide into a frenzy, with the S&P/ASX 200 Index gaining as much as 2.2 per cent intraday on Tuesday, and double-digit gains for dozens of stocks.
Pfizer chairman and chief executive Albert Bourla said the completion of the company’s phase-three trials for its COVID-19 vaccine, and the fact that it was 90 per cent effective, was a “great day for science and humanity”.
The 90 per cent effectiveness exceeded not only Pfizer’s expectations but also investors. The market was expecting a vaccine to be 50-60 per cent effective, with a minimum rate of 30 per cent.
“With [Tuesday’s] news, we are a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis,” Dr Bourla said. But the pending arrival of the vaccine won’t replace the need for rapid testing and one key question remains: do we have enough freezers?
Pfizer’s vaccine needs to be transported at as low as -70C, which is colder than the average temperature of the South Pole in winter.
Ultracold freezers are not common across most logistics companies and in hospitals because most drugs and vaccines don’t need them. The chickenpox vaccine is one of the few vaccines that needs to be stored frozen.
Lisa Allen 7.30pm: Further capital raising at Flight Centre
Flight Centre has announced a further capital raising offering $400m worth of unsecured convertible notes to investors in a bid to repay $100m of its existing debt and to further strengthen its liquidity.
Mr Turner said the travel agency was seeing a gradual improvement in revenue trends albeit at a modest level.
“The recent easing of lock down restrictions in Australia, our largest market, gives us confidence of further improvement in the near term,” he said.
As a result of the offering total liquidity will increase to $1.3bn with total cash increasing to $2bn. September 2020 sales were 12 per cent of normal levels.
Ben Wilmot 6.49pm: REA boosts Asia footprint
The REA Group has bolstered its coverage of the Asian market after 99 Group, in which it holds a 27 per cent stake, acquired the Singapore Real Estate Exchange.
The online real estate company has come through the worst of the coronavirus crisis and is stealing a march on its rivals by expanding into the fast-growing Asian markets.
REA, operator of 99.co and iproperty.com.sg in Singapore and rumah123.com in Indonesia, is also lifting its stake in an Indian property portal.
REA chief executive Owen Wilson said 99 Group’s acquisition of SRX strengthened the company’s footprint in Asia and supported its global growth strategy. “It also complements our recent announcement that REA will acquire a controlling interest in Elara Technologies, India’s fastest-growing digital real estate business in terms of audience,” he added.
Set up in 2009, SRX’s digital platform gives customers access to extensive property listings and is recognised as one of Singapore’s leading property data businesses. REA Asia chief executive Henry Ruiz said 99 Group’s acquisition of SRX would “significantly increase” the businesses’ competitive position, with the market “ripe for disruption”.
SRX would enable 99.co to combine digital advertising solutions and analytics and insights to help customers in Singapore.
REA will provide 99 Group interim funding for the acquisition by way of a three-year, interest-bearing convertible note for up to $S14m. The transaction is due to be completed in the coming months.
REA also owns leading portals in Malaysia and Hong Kong, a prominent portal in China and a leading property review site in Thailand. It also holds a significant shareholding in property website realtor.com in the US.
The Singapore move positions 99 Group to become the market leader in the city state in the medium term. It is seen as following the company’s strategy in Indonesia, where it acquired UrbanIndo and merged with rumah123.com to become the country’s largest property platform.
In a nod to the expanding range of technologies being added to the REA range, 99 Group noted that SRX came with best-in-class data capabilities and flagged further innovations. Property searches are shifting further online across Asia as part of a broader demographic shift.
Ben Wilmot 6.27pm: Unibail investors reject €3.5bn equity raising
A dramatic day real estate markets has been capped by investors in Unibail-Rodamco-Westfield rejecting management’s call for it to raise €3.5bn in fresh equity.
The capital raise was part of a broader €9bn turnaround plan that has been rejected as overnight reports about successful early testing of a coronavirus vaccine emerged.
As part of the process for a general meeting to be held in Paris this evening the company was required to announce the results of the vote.
In a repudiation of the company’s plans for what would have been the largest ever capital raising in the real estate sector, the resolution delegating authority to the management board for the purpose of issuing shares in the company was rejected.
The plan had sparked a rebellion by a powerful block of minority investors and they garnered enough support to avoid the capital raising and are now likely to push for the sale of the company’s US assets, essentially reversing the Westfield takeover.
Dissident investors including former Unibail chief Léon Bressler and French telecoms billionaire Xavier Niel were appointed to the company’s supervisory board, along with Mrs Susana Gallardo.
Unibail chief executive Christophe Cuvillier said the company took note of the shareholders’ votes expressed, “notably regarding the proposed capital increase, which did not gather the required two-third majority”.
“The group and our industry are going through a period of uncertainty and disruption; the announcement of a possible first global vaccine against COVID-19 is the most recent illustration of this,” he said.
Unibail said the breakthrough marked a major step in the global fight against the pandemic and could have a significant positive impact on retail real estate in general, especially on the company’s operations and the completion of our disposal plan.
However, the company warned its leverage remains high and it would have to review all possible alternatives to rapidly strengthen the group’s financial structure.
The company will keep up other parts of its plan which will see it undertake asset disposals, reduce its cash dividend and capital expenditure.
The supervisory board will reconvene in the coming days with the newly appointed directors and the management board, at which time they may push their stated plan of selling the Westfield malls in the US.
Nick Evans 6.07pm: Glencore wins on transfer pricing
The full Federal Court has upheld a landmark ruling in favour of mining giant Glencore over transfer pricing, throwing out a Tax Office appeal over a $92m disputed tax bill on copper sales dating back more than a decade.
The ruling largely upholds a decision made by Federal Court judge Jennifer Davies a year ago setting aside taxes levied against Glencore over claims for the costs of processing copper from its CSA mine in western NSW.
The ruling was seen as a blow for the Australian Taxation Office’s ongoing war on so-called transfer pricing arrangements, in which multinationals use complex transactions between members of the same corporate group to reduce their tax bills.
The ATO had objected to changes made by Glencore in 2007 to the way it calculated the costs of treating and refining CSA concentrate at a Glencore-owned refinery, hitting the group with a $92m bill for a three-year period until 2009, arguing the transactions were not done at “arm’s length”.
Rather than using benchmark rates to calculate treatment and refining charges, CSA and the Glencore refinery moved to a “price sharing” arrangement which charged CSA about 23 per cent of the prevailing copper price.
The ATO argued that Glencore would not have entered such an arrangement with an independent refinery, but lost the first round in the Federal Court.
Now the courts have upheld the original decision from a year ago, ruling against Glencore on only a minor part of the decision, covering about $2m worth of shipping charges dating back to shipments made in 2009.
Glencore welcomed the decision on Friday, and the ATO is believed to be considering its options for a High Court appeal.
With several similar transfer pricing cases afoot in the courts, the Glencore case and appeal have been closely watched.
The ATO this year hit aluminium giant Alcoa with a $1bn-plus bill including penalties and interest over alumina sale to Bahraini aluminium giant Alba between 1989 and 2009.
A separate action against Rio Tinto, over $447m worth of profits made by its Singapore marketing hub for iron ore sales and $86m in profits on aluminium sales, is destined to be settled without recourse to the courts, with Australian and Singaporean authorities agreeing to negotiate the tax split under a double-taxation treaty.
Perry Williams 5.45pm: Grid issues causing renewable energy slowdown
Australia’s renewable industry faces a big slowdown amid grid connection issues and regulatory constraints with new supplies of utility scale solar slashed by half in 2020 and further falls tipped in the next two years, an International Energy Agency report shows.
Large-scale solar additions will fall to 1.3 gigawatts in 2020 from 2.6GW in 2019 while Australia’s overall solar capacity — combining utility, commercial and residential panels — is estimated to decline by about a third, even with installations of rooftop solar on household homes outstripping 2019 figures so far this year.
“Delays in grid connection approvals and new operational requirements have lowered project outputs, making the business case for multiple PV projects less attractive and reducing investor confidence,” the IEA says in its annual renewables report.
After a period of rapid growth, the completion of the 2020 renewable energy target will see solar face a more downbeat next few years before picking up again after 2023.
“Australia has already met its 2020 renewable energy target, resulting in an oversupply of generation certificates which reduces revenues and undermines the business case for new developments. Consequently, utility scale additions are expected to shrink further in 2021 and 2022.”
The nation’s wind generation also paints a mixed picture. While 2020 is forecast to be a record year with a 35 per cent jump in capacity to 2000 megawatts, a hefty drop in income and curtailment concerns will weigh on sentiment and lead to lower projected investment in 2021 and 2022.
Lisa Allen 5.28pm: Travel and leisure rally on vaccine hopes
Travel and leisure stocks surged on the prospect of a faster then expected recovery in their business models after drug giant Pfizer’s said its COVID-19 vaccine may be 90 per cent effective in stopping the virus.
Flight Centre stocks jumped 8.3 per cent to $15.56 on the back of the pharmaceutical group’s vaccine revelations, after closing the previous day at $14.37.
Webjet shares rose 11.9 per cent to $4.79, while Helloworld surged 19.2 per cent to $2.22. Corporate Travel Management shot up 16.1 per cent at $19.89.
Flight Centre managing director Graham Turner said a vaccine efficacy of 90 per cent is probably good news but there was still a way to go.
“If it is 80-90 per cent efficacious as people get vaccinated they will be able to travel,” Mr Turner said. “The virus will still be around for years, and I presume you will have to be vaccinated to travel to most countries.”
He believes the leisure sector will move quicker than corporate travel to return to profit because there is so much pent-up demand for a holiday in Bali or Phuket.
“It will move quickly but it will take two to three years … there will be a lot of corporates struggling from the economic fallout and some businesses will have learnt to communicate without travel.’’
Due to pent-up demand, Mr Turner said trips to Bali and South East Asia will be the first ports of call for Australian travellers, followed by the United Kingdom and Europe, as soon as people can get vaccinated.
4.24pm: ASX closes up 0.7%
Australia’s share market gave up most of a strong intraday rise that followed encouraging coronavirus vaccine trial results from Pfizer.
After opening up 2.2pc at an 8-month high of 6438.2 then retreating to 6331 intraday, the S&P/ASX 200 closed up 0.7pc at 6340.5.
The pullback came as US stock index futures lost ground with S&P 500 futures down 0.5pc.
COVID losers soared, with Energy, Financials, Industrials and Real Estate outperforming.
Among them, Unibail rose 44pc, Oil Search rose 17pc, Fletcher Building rose 17pc and Corporate Travel jumped 16pc.
COVID winners dived, with Tech, Consumer Staples, Consumer Discretionary, Materials, Health Care, Utilities and Communications underperforming.
Among them, NEXTDC dived 14pc, Afterpay fell 11pc, Coles fell 5.3pc, Domino’s Pizza lost 11pc, Evolution Mining lost 10pc, Ansell lost 9.5pc, AusNet Services declined 3.4pc.
Perry Williams 4.09pm: Santos jumps on oil price lift
Santos has cheered the jump in oil prices overnight along with the potential vaccine breakthrough but cautioned new investment in the energy sector would still hinge on a sustained lift in crude coupled with government stimulus to ensure the industry can meet new demand.
Shares in the Australian producer jumped 12 per cent in Tuesday’s trade after oil prices surged 8 per cent overnight Monday, their biggest daily gain in five months.
“Certainly the positive vaccine news is welcome as are higher oil prices overnight,” Santos chief executive Kevin Gallagher said.
“But as always I’m focussed on the things we can control – reducing our cost of supply and sticking to our disciplined, low cost operating model so that Santos is resilient throughout the commodity price cycle.”
The industry’s other big names also benefited with Oil Search up 17 per cent, Woodside Petroleum rising 7 per cent, Origin Energy lifting 8 per cent and Beach Energy up 15 per cent.
Oil fell during Tuesday trading as concerns over crude demand in big consuming countries outweighed the initial Covid-19 vaccine-led rally.
Oil has more than doubled from lows of less than $US20 a barrel during the onset of the pandemic earlier this year but at $US39 a barrel remains at levels where many producers would be reluctant to sign off on big capital investments.
“It will take a period of sustained improvement in oil prices and Government stimulus to incentivise the capital investment required to grow supply to meet future demand and of course provide the secure, skilled, well-paying jobs that are going to be needed as our society recovers from the economic downturn caused by the pandemic,” Mr Gallagher said.
Santos last up 12 per cent to $5.61.
3.47pm: Lenders slash rates below 2%
A record 31 lenders are now offering a mortgage rate below 2 per cent according to analysis by comparison site RateCity.com.au.
“At the beginning of this year, no one would have predicted there would be more than 30 lenders with rates under 2 per cent,” said RateCity research director Sally Tindall.
“It’s no longer just online lenders with low rates. The bigger banks are now starting to steal their thunder offering up fixed rates under 2 per cent.”
CBA, Westpac and NAB now have fixed rates under 2 per cent.
Only five lenders have passed on variable rate cuts to their existing customers, RateCity said.
Ben Wilmot 3.40pm: Tony Pitt pulls back from Evans Dixon board tilt
Just days after laying out his plans for a privatisation of financial services firm Evans Dixon, corporate raider Tony Pitt has withdrawn his nomination to be elected to the company’s board.
Mr Pitt, the 360 Capital managing director, had been invited to join the board but his nomination was later opposed by incumbent directors, led by David Evans, after he lodged a takeover proposal.
Mr Pitt’s 360 Capital already controls a 19.55 per cent stake in the firm and has proposed a privatisation as a means of turning around the company’s ailing operations and bringing a fresh management approach.
Evans Dixon is being closely watched as its annual meeting is on Wednesday and it could face a strike against its remuneration report if Mr Pitt opposes it. He may also vote against an options package for staff but he is yet to show his hand on either motion.
The raider has provided a vision for the company that would see it lead consolidation in the financial services sector.
The 360 Capital funds manager last week revealed he had made approaches to privatise the company last year.
The moves had not been previously disclosed to the ASX although his attempts to take control of the company‘s struggling US property fund, alongside with US manager Oaktree, have been made public.
Evans Dixon has been weighed down by the poor performance of its US property fund and other satellite funds and is also fighting a civil case against the Australian Securities and Investments Commission relating to the selling of the offshore property fund to Dixon clients.
3.35pm: Bank of Queensland cuts fixed rates
Bank of Queensland has reduced its fixed interest rate but left variable rates on hold.
From Friday, the lender will offer 1.99 per cent, per annum on four-year fixed rates for new owner occupier principal and interest borrowers.
The Bank’s Chief Product Officer, Mr Chris Screen, said:
“As the Australian economy recovers, BOQ is here to help our customers re-focus on their goals,” said Bank of Queensland chief product officer Chris Screen.
“Whether they’re looking to buy their first home, buy their next home or grow their business, we’ve got some great solutions available and a dedicated team of bankers ready to lend a hand.”
The rate cut comes after the RBA lowered the official cash rate to 0.1 per cent last week.
3.25pm: Best shares backdrop for years: JPM
J.P. Morgan says the share market has one of the best outlooks for sustained gains in years.
“After a prolonged period of elevated risks - global trade war, COVID-19 pandemic, US election uncertainty - the outlook is significantly clearing up, especially with news of a highly effective COVID-19 vaccine,” says JPM’s chief US equity strategist, Dubravko Lakos-Bujas.
After very encouraging phase three trial results from Pfizer-BioN-tech, Mr Lakos-Bujas sees a rotation out of COVID-19 beneficiaries/momentum and into epicenter/value stocks including vaccine tactical short and COVID recovery baskets. And confirmation of a Biden White House with legislative gridlock is a “goldilocks outcome for equities, a market nirvana scenario”.
“With an even balance of power in the legislature, major tax increases and regulatory changes will be difficult to pass, while at least some easing of the global trade war should be expected,” Mr Lakos-Bujas says. “Global central bank policy remains very supportive with rates to remain at zero with ongoing QE. The prospect for another round of fiscal stimulus has improved as well, though scope and size should be narrower. Corporate earnings and labour market recovery continue to come in ahead of expectations. This recovery process should remain underpinned by easing of COVID-19 restrictions (and) the US dollar continues to normalize, acting as an earnings tailwind for US multinationals.”
He also notes that the S&P500 cash balance is almost back to record highs, with potential for increasing buyback and M&A activity in 2021 and equity positioning remains at below-average levels with ample room for “mechanical re-leveraging” as volatility levels subside.”
Thus he now sees the S&P 500 surpassing his 3,600 target before year-end and reaching 4,000 by early next year, with a good potential for the market to move even higher to about 4,500 by the end of next year.
He has revised his 2021 EPS estimate for the S&P 500 up $8 to $178 versus a consensus of $168.26) and sees 2022 EPS of $200 versus consensus of $194.69.
Mr Lakos-Bujas also sees further room for Equity Risk Premium to compress towards the mean from current elevated levels.
The most significant short-term risk we see for equity markets remains the Georgia Senate races, where the loss of both Republican seats could result in a “blue sweep” outcome.
But this risk is likely overstated, as Republicans are expected to capture at least one of the two senate seats in the 5 January runoff.
Ben Wilmot 2.51pm: Unibail—Rodamco-Westfield up more than 40pc
French shopping centre owner Unibail-Rodamco-Westfield, which has a secondary listing on the ASX, has locked in its position as the standout winner from the positive testing of a coronavirus vaccine.
It emerged this morning as the strongest performing and the shares had jumped by 42 per cent to hit $4.08 at 2pm even as a vote on the company’s future direction loomed at a meeting due to be held in hours in Paris.
The company’s shares had leapt by 23.3 per cent to $3.54 in early morning trade ahead of a meeting to approve a dramatic €3.5bn capital raising by the company as part of its broader €9bn turnaround plan.
The initial jump in the share price caught out hedge fund managers that were shorting the stock on the expectation of both turmoil at today’s meeting and they were also punting that the group would be forced to raise capital at a deeply discounted price.
The advance on a vaccine is considered a boost as it will also give the company a way out of the depths of the coronavirus recession in Europe and the United States.
2.20pm: ASX pares most of Tuesday’s surge
The Australian share market has given up most of Tuesday’s strong rise as US futures retreat.
The S&P/ASX 200 was up 0.8pc at an intraday low of 6351.8 after opening up 2.2pc at an 8-month high of 6438.2. It comes as S&P 500 futures turn down 0.6pc in APAC trading.
2.00pm: Vaccine supports “catchup” rally: GS
Investors wanting to position for a positive vaccine outcome after the Pfizer breakthrough should look at stocks that most correlated to vaccine optimism and where the consensus expectations for an earnings recovery are most subdued, according to Goldman Sachs.
The style factors that have correlated most positively with positive vaccine developments have been Value, Weak Balance Sheets and ‘Out-And-About’ stocks, says Goldman Sachs Australia equity strategist, Matt Ross. In terms of sectors, he notes that Infrastructure, REITs and Gaming have been the biggest beneficiaries of increasing optimism this year.
That’s certainly evident today with Sydney Airport up 14pc, Unibail-Rodamco up 34pc Centres up 15pc and Star Entertainment up 7.8pc, although the Energy sector is by far the strongest, but sharp falls in “COVID winners” are trimming an eary rise in the index.
Given Australia’s ‘aggressive suppression’ strategy has been more successful in combating the virus than many other nations, Mr Ross also notes that other economies have more to gain from a vaccine. But beyond an improvement in sentiment and domestic consumption, an effective vaccine would allow an earlier removal of international border restrictions which have weighed heavily on education, tourism and housing demand.
At the other end of the spectrum, there has been little evidence this year that Growth, Strong Balance Sheets and ‘Stay-At-Home’ names - the more defensive pockets of the market through this crisis - have fallen in absolute terms on improving vaccine news.
“So far at least, this suggests that a better vaccine outlook will support a ‘catch-up’ rally for the laggards lifting the market as opposed to a large sell-off in those pockets that have gained the most during the pandemic,” Mr Ross says.
But Growth, Strong Balance Sheets and ‘Stay-At-Home’ type stocks getting pummeled today.
NEXTDC, Domino’s Pizza and Ansell are down more than 10pc, while Afterpay, Goodman Group, Super Retail, Appen, Zip Co, JB Hi Hi, Premier Investments, Sonic Health Care and Coles are down 5-10pc.
Lilly Vitorovich 1.30pm: Nine’s sport strategy ‘not without risk’: GS
Goldman Sachs says Nine’s launch of Stan Sport and rugby broadcast deal is aimed at increasing Stan’s active subscribers numbers above its 3-4 million target vs 2.2m in August, but the strategy is “not without risk”.
Assuming a Stan Sport subscription will cost $5 a month, Stan will either need around 460,000 existing subscribers, or 21 per cent, to add-on the sports product or acquire around 120,000 new subscribers, equivalent to a 5.5 per cent increase, to offset just the Rugby Australia content costs, or some combination of the two.
Goldman values Stan at $898m and forecasts 1H21 active subscribers of 2.32 million.
The broker expects an update on current Stan trading at Nine’s AGM on Thursday.
Goldman has a buy rating on Nine and 12 month target price of $2.25.
Ben Wilmot 1.25pm: REA Group lifts Asian footprint
The REA Group has bolstered its coverage of the Asian market with the 99 Group that it backs buying the Singapore Real Estate Exchange.
The online real estate company has come through the worst of the coronavirus crisis and is stealing a march on its rivals by expanding into fast-growing Asian markets.
REA, which holds a 27 per cent stake in the 99 Group, operator of 99.co and iproperty.com.sg in Singapore and rumah123.com in Indonesia, is also lifting its interest in an Indian property portal.
REA Group chief executive Owen Wilson said 99 Group’s acquisition of SRX strengthened the company’s footprint in Asia and supported its global growth strategy.
“It also complements our recent announcement that REA will acquire a controlling interest in Elara Technologies, India’s fastest growing digital real estate business in terms of audience,” he said.
Set up in 2009, SRX’s digital platform gives customers access to extensive property listings and is recognised as one of Singapore’s leading property data businesses.
REA Asia chief executive Henry Ruiz said 99 Group’s acquisition of SRX would “significantly increase” the businesses’ competitive position, with the market “ripe for disruption”.
SRX will allow 99.co to combine digital advertising solutions and analytics and insights to help customers in Singapore.
REA will provide 99 Group interim funding for the acquisition by way of a three-year, interest-bearing convertible note for up to S$14m.
The transaction is due to be completed in the coming months.
Robyn Ironside 12.50pm: Virgin sale receives court approval
A court has approved the transfer of all shares in Virgin Australia to Bain Capital, in a move that will finalise the airline’s sale to the US private equity firm.
In a short hearing on Tuesday, Federal Court judge John Middleton granted an application by the administrators Deloitte, to make the transfer after an independent expert found the shares were worthless.
The move was opposed by two shareholders, Anthony Collopy and Rebecca Chen, who were unhappy about receiving nothing in return for their investment.
Mr Collopy asked the court how the shares could be worthless, if Bain saw value in the company.
“I find it difficult to accept that shareholders must hand their shares across at nil value when there is obviously some value in the company,” Mr Collopy said.
“I’m very disappointed that from the beginning we were not invited to take part in the process and it seemed to be rushed through very quickly.”
Lilly Vitorovich 12.47pm: Nine overhauls radio station line-up
Nine has overhauled the on-air line-up of its 6PR radio station in Perth ahead of the departure of breakfast co-host Basil Zempilas, who was recently elected the new lord mayor of his hometown.
The media group, which took full ownership of its radio business a year ago, has promoted its morning host Gareth Parker to its key breakfast program with Zempilas’ breakfast co-host Steve Mills moving to 6PR’s afternoon program.
60 Minutes journalist Liam Bartlett will rejoin 6PR as its new morning host, and will continue to file stories for the television current affairs program on Nine. Oliver Peterson will continue in the 3-6pm Drive shift, while 6PR’s afternoon host Simon Beaumont will move to a new weekend morning program.
6PR content manager Emily White says the group is “very excited” about 6PR’s new on-air line-up for next year following similar changes at Nine’s radio stations in Sydney, Brisbane and Melbourne in recent months.
“Gareth Parker is perfectly placed to lead our talk radio format through the next decade with his great style of broadcasting and journalism he has honed in the mornings slot.”
Zempilas has been one half of 6PR’s popular breakfast since 2014 but will be leaving on December 11 after declining to renew his contract. He is also a sports broadcaster, an AFL caller and Olympics anchor who presents the sport on Seven Network in Perth on weeknights.
Eli Greenblat 12.30pm: Wesfarmers names BOAB recipient
Wesfarmers has named an Aboriginal owned and operated supplier of stationery and office products as the first business to get access to unique fund established by Wesfarmers to support the growth of Aboriginal and Torres Strait Islander businesses.
Cultural Choice, located on the NSW Central Coast, and a supplier to Wesfarmers business Officeworks, was on Tuesday announced as the first recipient of $100,000 funding from the new Wesfarmers BOAB Fund.
The funding will assist with product development for Cultural Choice’s private label Indigenous range and the purchase of plant and equipment for its first dedicated warehouse in Tuggerah, NSW.
The funding is the first from the Wesfarmers BOAB (Building Outstanding Aboriginal and Torres Strait Islander Businesses) Fund, which has been launched to provide funding and business support to small to medium Indigenous businesses who are existing suppliers to the conglomerate, to support them to develop and scale.
“Increasing the diversity of our supplier base is an important area where we can make a real difference to the economic prosperity of Indigenous people and communities, while also enhancing our own businesses,” Wesfarmers Chief executive Rob Scott said.
Ben Wilmot 12.15pm: Unibail-Rodamco-Westfield gains more than 20pc
French shopping centre owner Unibail-Rodamco-Westfield, which has a secondary listing on the ASX, has emerged as the strongest performing stock on the back of advances towards a coronavirus vaccine.
The company’s shares had leapt by 23.3 per cent to $3.54 in morning trade ahead of a meeting to approve a dramatic €3.5bn capital raising by the company as part of its broader €9bn turnaround plan
The scheme has attracted criticism from dissidents, that have backing of up to 5 per cent of the register worried that the raising, the largest in real estate investment trust history, would dilute the company’s asset base and future earnings.
They instead proposed selling the entire US portfolio, essentially undoing the purchase of Westfield.
The company had been reeling from the re-imposition of lockdowns in Europe and fresh restrictions in the United States ahead of a meeting planned to vote on the scheme later today.
However, the advances on a vaccine have prompted the share price rise, which seems unlikely to change the strategy, even as it eases the pressure on the company’s balance sheet.
It will, however, change the metrics of any raising.
12.13pm: Bluescope lifts earnings guidance
Bluescope Steel shares have lifted 1.5 per cent after the company lifted its earnings guidance by $40m, following the sale of an industrial warehouse property in the US.
The company said last month that it expected earnings before interest and tax for the first half to be about $340m, up about 30 per cent on the second half of last financial year.
12.08pm: ASX up 1.6% on vaccine breakthrough
Australia’s share market was holding most of a strong intraday rise in early afternoon trading after Pfizer’s coronavirus vaccine breakthrough overnight.
A sharp retreat in stocks that have benefited from COVID-19 has been strongly outweighed by a surge in stocks that were hurt by the disease.
The Energy, Industrials, Finanicials and Real Estate sectors are strongest as they were in offshore markets. Within those sectors are double digit percentage gains in Oil Search, Virgin Money, Sydney Airport, Beach Energy, Scentre, Flight Centre, Credit Corp and Qantas.
And the list of ASX200 companies up 5-10pc includes such heavyweights as Westpac, NAB, ANZ, Macquarie, Transurban, Woodside, Ramsay Health Care and QBE Insurance.
Double-digit falls have been seen in Domino’s, Northern Star, Saracen Mineral, Ramelius Resources, NextDC, ARB, Evolution and Fisher & Paykel Health Care
12.03pm: Miners backtrack on gold price slump
The major goldminers are lower in Tuesday’s trade after gold prices fell on a lift in US 10-year yields which gained ground on news that Pfizer and BioNTech may have developed an effective COVID-19 vaccine.
“A vaccine offers hope that monetary and fiscal policy doesn’t need to be so accommodative for so long to help the global economy recover,” said Commonwealth Bank commodities analyst Vivek Dhar.
Newcrest was last down 5 per cent while Northern Star had plummeted 11.6 per cent and Evolution was down 10.3 per cent.
Gold slumped by more than 100 USD, the biggest day drop in seven years
— Reo Liao (@ReoL_IG) November 10, 2020
The negatively-correlated DXY surged
Pfizer's vaccine news should drop risk aversion, and the DXY usually sink under a reduced risk aversion after the pandemic, but this time it soared
Interesting to watch pic.twitter.com/UZpMLDXQ8B
Ben Wilmot 11.54am: Domain shares fall despite ‘improved trading’
Nine-controlled online property portal Domain Holdings Group dipped in morning trade despite saying that its performance had improved in the first quarter.
The company said in an update that trading from the start of July to the end of October had improved from the June quarter, despite the impact of the COVID-related lockdown in Victoria.
The company said digital revenue was up by around 4 per cent and total revenue was down around 7 per cent, reflecting the pause on print during the Victorian lockdown.
It shares were off by 4.4 per cent to $4.42, after a running up earlier in the month.
Domain highlighted in August that the outlook for this half would be determined by the duration of the Victorian lockdown and a return of more typical seasonality patterns for the Spring selling season.
“While the lockdown has eased, seasonal patterns remain atypical, with a stronger performance in July, and a less pronounced peak in October,” Domain said.
The company pointed to continued investment in growth initiatives, including developing new products development, marketing, and driving sales performance, which it said was supported by ongoing cost discipline.
For this half costs are expected to reduce by around 12 per cent from a base of about $96.5m in the first half of fiscal 2020.
This includes the benefits from the federal government’s Jobkeeper scheme and Domain’s Project Zipline employee program. Excluding these two items, costs are expected to drop by 1 per cent.
Domain last down 4.5 per cent at $4.41.
11.50am: Tokyo opens up over 1.5% on vaccine news
Tokyo’s key Nikkei 225 index opened up over 1.5 percent on Tuesday, tracking rallies on global markets after news that a coronavirus vaccine had shown 90 percent effectiveness.
The Nikkei was up 1.52 percent or 377.79 points at 25,217.63 in the first minutes of the trading day, with the broader Topix index up 1.51 percent or 25.33 points at 1,707.23.
“Japanese stocks are seen rallying for the sixth straight session, after the US market rocketed on news that a vaccine Pfizer and BioNTech are developing was 90 percent effective in protecting against Covid-19 infections,” Okasan Online Securities said in a commentary.
“It’s big news amid worries about the virus infection spreading in Europe and in the US,” it said.
A cheaper yen was also supporting Japanese shares, analysts said. The dollar fetched 105.10 yen in early Asian trade, against 105.31 yen in New York, but well up from 103.52 yen in Tokyo late Monday.
In New York, the bellwether Dow Jones Industrial Average jumped more than 830 points or 2.95 percent to finish the day at 29,157.97, With spiking coronavirus cases worldwide forcing millions of people to face new restrictions, news that a vaccine might be coming soon offered hope the economy could begin to return to normal in coming months.
Among major shares in Tokyo, Toyota was up 2.16 percent at 7,328 yen, Uniqlo casual wear operator Fast Retailing was up 2.21 percent at 80,040 yen, and industrial robot maker Fanuc was up 3.30 percent at 23,655 yen.
SoftBank Group was down 0.51 percent at 7,047 yen despite announcing late Monday that its first-half net profit more than quadrupled, and after a report the firm is considering selling robotics company Boston Dynamics to South Korea’s Hyundai.
AFP
11.48am: Buy now, pay later platforms slump
The listed buy now, pay later players have lost ground in today’s trade following news of a major breakthrough in a COVID-19 vaccine, which could indicate a return to normal retail trade is ahead.
Afterpay is down 7 per cent while Zip Co is 6.1 per cent lower and Sezzle has lost 5.9 per cent.
Perry Williams 11.42am: Transurban gains on missed deal
Transurban’s rival Abertis paid a huge price for the Virginia toll roads in the US meaning it was a positive the Australian operator missed out on the asset, Macquarie said.
Abertis and its consortium paid $US2.28bn including $US1.03bn of debt for the Elizabeth River Tunnels toll road suggesting an EBITDA multiple of 43.6x for a 50-year concession or an internal rate of return of about 5.5 per cent.
“We think this is a huge price and see it as positive that Transurban has missed out on the asset,” Macquarie analyst Ian Myles said. “Transurban may be disappointed as it is a platform for growing in the region, albeit we expect that any sale of the major asset I-64 HOT lanes will be a tender, in which Transurban can participate.”
Transurban said in October it will consider selling minority interests in its three US toll roads to strengthen its balance sheet, potentially boosting its share price according to the broker.
“Transurban assets offers growth through the Fredricksburg extension (I-95) and American Legion Bridge and I495N extensions and with concession life of 68 years. Transurban realising part of the value of these asset in the coming 6-12 months would see a demonstration of the value which should get reflected in the share price,” Mr Myles said.
Transurban last up 4.6 per cent to $15.10.
11.35am: ASX halves early gains
Australia’s share market has almost halved a big intraday gain as a dive in COVID winners starts to offset a surge in COVID losers after the vaccine breakthrough overnight.
While 42 stocks in the ASX200 are up by at least 5pc today, about 27 stocks in the index are down more than 5pc.
Those substantial decliners include such heavyweights as Goodman Group, Afterpay, Newcrest, Coles and Fisher & Paykel Healthcare.
The S&P/ASX 200 was last 1.2pc higher but at an intraday low of 6372.3 after opening up 2.1pc at an 8-month high of 6438.2.
11.30am: Victoria leads business confidence rebound
Ahead of the major breakthrough on a COVID-19 vaccine announced overnight, Australian business confidence hit a 16-month high in October, led by a large gain in Victoria as falling COVID-19 case numbers indicated Melbourne lockdowns would end.
Business confidence rose to 5 points from -4 points and business conditions rose to 1 point from zero, with notable rises in recreational and personal services and construction, according to NAB’s monthly business survey.
Confidence regained its long-term average since 1997, while conditions remained below the long-term average.
But while Vic saw a significant improvement in conditions, there were notable declines in SA, Qld and WA, notes NAB chief economist, Alan Oster.
And while trading conditions and profitability drove the marginal improvement in conditions, the employment index remains weak at -5 index points, suggesting the labour market is lagging the recovery in activity.
Forward orders and capacity utilisation improved in the month, but the former remains negative and the latter is still below pre-COVID levels.
“Nonetheless, the survey continues to show that the economy has rebounded from the sharp fall in activity in H1 2020 and will likely continue to recover as the economy reopens,” Mr Oster says.
“However, it will likely take some time for activity to fully recover, with capacity utilisation restored and the pipeline line of work replenished.
The improvement in confidence is encouraging but remains fragile, and it will likely remain that way until a vaccine is available.
In the interim, confidence will be an important factor for how quickly businesses expand employment and capex as demand normalises.”
Eli Greenblat 11.17am: Online retailers hit on vaccine breakthrough
Shares in pureplay online retailers such as Kogan.com and Temple & Webster have been slapped down by news overnight of a major breakthrough in the search for a COVID-19 vaccine, with investors pivoting out of the sector on the view that normal retail activity could soon return.
These pureplay retailers had enjoyed a stellar run since the COVID-19 pandemic emerged, many of them doubling or trippling their share prices, as online shopping became hugely popular during prolonged lockdowns and social distancing.
But if a vaccine is closer, it could see a retreat by online retailers as shoppers once again venture out to shopping centres and suburban strips to search for goods.
Kogan.com. Whose share price has almost quadrupled through the pandemic, on Tuesday morning slid almost 10 per cent and were down 8.9 per cent at $21.77 in early trade. Shares in online furniture retailer Temple & Webster were down 18 per cent to $10.30 on Tuesaday morning. The recently floated online makeup site Adore Beauty is down 2.35 per cent to $6.24.
Among other retailers that have witnessed a booming share price since COVID-19 emerged, Adairs on Tuesday is down 10 per cent to $3.39 and JB Hi-Fi is down 2.75 per cent to $48.80.
Ben Wilmot 10.46am: Retail property stocks lead the way on vaccine news
Shares of local Westfield landlord, the Scentre Group, jumped by 14.5 per cent to $2.76 in early trading and rival Vicinity Centres was also up strongly by 11.76 per cent to $1.62.
Even diversified property stocks that hav been hard hit by the coronavirus crisis were up with GPT jumping 14.2 per cent to $4.90.
All of the stocks, particularly Vicinity, that is half owner of Melbourne’s landmark Chadstone Shopping Centre, had been hammered by pandemic related lockdowns. GPT, which owns Melbourne’s Highpoint, has also been hurt by the virus.
Scentre was less exposed to Victoria, but still had a large exposure to discretionary retail and department stores.
10.45am: ASX trims early gains
Profit taking in “COVID-winners” and safe haven stocks in a range of sectors including Technology, Real Estate, Consumer Staples, Consumer Discretionary and Materials have trimmed an early advance in the Australian sharemarket.
After opening up 2.2pc at an eight-month high of 6438.2, the S&P/ASX 200 trimmed its rise to 1.6pc at 6400.
Afterpay fell 8pc, Zip Money lost 6.3pc, NextDX dived 6.5pc, Goodman Group fell 4.7pc, Coles fell 3.7pc, Woolworths lost 1.2pc, Domino’s Pizza lost 6pc, Northern Star and Saracen dived 11pc and Evolution lost 10pc.
S&P/ASX 200 last up 1.7pc at 6407.
Adeshola Ore 10.36am: Travel stocks soar on vaccine news
Listed travel and tourism stocks are on a tear this morning after promising vaccine news from Pfizer and BioNTec raised hopes of a possible easing of travel bans.
Overnight, Pfizer said its experimental vaccine was more than 90 per cent effective in phase three trials involving more than 40,000 participants.
In early trading, online travel agency Webjet shares were up 14 per cent, while Dreamworld parent company Ardent Leisure and Flight Centre both rose by 13.1 per cent.
Qantas shares lifted by 10.8 per cent.
10.20am: ASX surges on vaccine breakthrough
Australia’s share market has surged as expected after the Pfizer-BioNtech vaccine breakthrough boosted global markets.
The S&P/ASX 200 rose 2.2pc to an 8-month high of 6538.2 in early trading with the Energy, Industrials, Real Estate and Financials sectors outperforming as COVID-sensitive stocks surged.
Among standouts, Scentre and Unibail-Rodamco both rose 19pc, Oil Search jumped 17pc, Sydney Airport rose 14pc, Beach Petroleum rose 14pc, Qantas gained 12pc, Vicinity Centers gained 12pc and NAB rose 6.5pc.
Ben Wilmot 10.08am: Property stocks to lift vaccine news: Macquarie
Out of favour property stocks, particularly retail and office landlords, could be beneficiaries of the overnight announcement of advances in finding a COVID-19 vaccine.
Pfizer and BioNTech announced stage-3 trials of a vaccine had so far resulted in a 90 per cent efficacy rate, and the US real estate investment trust sector jumped 4.3 per cent, above the broader 2.7 per cent rise in the S&P 500.
Retail landlords were up 23.5 per cent and office stocks leapt 13.4 per cent whereas industrial REITs, seen as big winners from e-commerce, dipped 2.7 per cent.
If the same pattern is repeated on the ASX, big winners will be beaten down shopping centre stocks Scentre Group and Vicinity Centres, which have been sold off on virus-related concerns.
Macquarie Equities said office and retail stocks had been most negatively impacted by COVID, and share prices had dropped between 33 per cent and 43 per cent since February highs.
“Like the US overnight, we would expect the strongest share price reaction to a vaccine by these names. At the extreme, Scentre and Vicinity are trading at 34 per cent and 37 per cent discounts to June 20 net tangible asset backing,” Macquarie said.
10am: What’s impressing analysts?
Deterra started at Neutral: Goldman
GPT Group cut to Hold: Morningstar
Suncorp raised to Add: Morgans Financial
9.56am: Consumer confidence at 8-month high
Consistent with the surging share market since the US election, Australian consumer confidence surged to an 8-month high for the week ending November 8th, according to ANZ.
The ANZ Roy Morgan weekly consumer confidence index rose to 103.1 from 99.9 the prior week.
No doubt it will get a further lift this week from the vaccine news on Monday.
9.50am: ASX set to surge on vaccine hopes
Australia’s share market should surge to a fresh eight-month high after COVID-sensitive risk assets exploded higher Monday on a major breakthrough in coronavirus vaccine development.
Overnight futures relative to fair value suggest the S&P/ASX 200 index will open up more than 2pc and potentially test chart resistance around 6500.
NAB’s monthly business survey and China inflation data are due and James Hardie’s 2Q profit has beaten the consensus estimate by about 6 per cent.
But the focus will mainly be on any further reaction by global markets to the Pfizer/BioNtech announcement of more than 90pc effectiveness from a large-scale trial of its coronavirus vaccine.
The Australian share market should benefit from a major rotation from growth to value stocks as investors will tend to look through the current economic weakness now that an effective coronavirus vaccine seems certain.
Value stocks in the Energy, Financials, Industrials, Real Estate and Materials surged on Wall Street, while growth stocks in the Consumer Discretionary and Tech sectors fell, and defensive sectors including Consumer Staples, Communications and Health Care underperformed.
The Russell 2000 Small Caps index surged 6.2pc to a record high before paring that to 4.2pc, the S&P 500 closed up 1.2pc after rising 3.9pc to a record high intraday, and the Nasdaq closed down 1.5pc at 11713.78 after rising 2pc to a record high intraday.
While the short-term outlook for equities now seems extremely good, the medium-term question will be to what extent central banks dial bank their asset buying in response to vaccine developments.
Interestingly, the VIX volatility index rose to 25.75pc after hitting a 3-month low of 22.41pc and formed a bullish “hammer” pattern, suggesting it may have bottomed and the S&P 500 may have peaked for the short-term.
A 14pc rise in the S&P 500 Energy sector came as WTI crude oil rose 7.4pc to $US39.89, while the KBW Banks index also rose 14pc as the US 10-year bond yield surged 1bps to a 0.9235 and hit an 8-month high of 0.973pc and the yield curve steeped on better US growth prospects.
The S&P 500 Airlines index surged 15pc. Materials rose just 2.3pc as a 3.1pc rise in spot iron ore was offset by a 4.6pc fall in spot gold and a 0.5pc fall in LME copper.
While most safe-haven currencies retreated - causing AUD/USD to spike to an 8-week high of 0.7340 - it has retreated to 0.7271 as the surge in US Treasury yields supported the US dollar.
Angelica Snowden 9.46am: We shouldn’t rely on Biden to fix China relations: Westacott
Business Council of Australia CEO Jennifer Westacott says Australia must manage a trade relationship with China “on our own terms” rather than relying on president-elect Joe Biden to repair tensions between the superpowers.
“I think anything that establishes some semblance of world trade order… is a good thing,” Ms Westacott told the ABC this morning.
“But we have to manage this relationship on our own terms. We have to make sure that we don’t let it deteriorate any further, that we restore it,” she said.
After China threatened to ban on imports of Australian wine, lobster, copper, sugar, timber and coal, Ms Westacott said comments from senior Morrison government officials who advised China-exposed businesses to “find other markets” was unhelpful.
“Comments about diversification I don’t think are particularly helpful because you know it’s not realistic in many cases,” she said.
“Diversifying away from China is just an opportunity that will go somewhere else and that’s jobs and prosperity that will go to other countries.”
Ms Westacott also called for a permanent increase to the JobSeeker allowance after The Australian revealed it would be extended to March, possibly at a reduced rate of $150.
“You know we need an allowance that gives people a dignified life and does not see them fall into incredible poverty where they will not be able to get back into the labor market,” she said.
“We’ve called for it to get closer to the age pension and that’s where it used to be.
“We would like to see a permanent allowance at that rate but not just the allowance, you have to wrap around a decent skill system too.”
9.42am: Vitalharvest to ‘carefully consider’ takeover bid
Vitalharvest has told the ASX it will consider a takeover proposal by Macquarie Agriculture Fund for $1 a share or the purchase of the assets for a cash consideration of $300m.
The Trust Company, as responsible entity of Vitalharvest Freehold Trust, said this morning it would “carefully consider” the proposal to determine whether it is in the best interest of shareholders.
Vitalharvest shares last traded at 94c each.
Read more: Macquarie takes $300m tilt at Vitalharvest
9.37am: Big tech lags on Wall Street
The tech megacaps are lagging behind the broad market Monday, as investors shift their sites to reopening plays like airlines, hotels, cruise lines, movie theater and theme parks. Still, those stocks, which have led the market throughout most of 2020, face little peril from a return to a more economic environment.
The news that Pfizer is seeing positive results from its Covid-19 vaccine trials has the market flying, with the Dow Jones Industrial Average up about 4.7pc and the S&P 500 up 3.2pc. The tech-driven Nasdaq Composite is underperforming, up just over 0.7pc, as investors suddenly feel empowered to seek potential outside the small circle of tech stocks that have been driving the market this year. But the shift has more to do with portfolio reallocation than with any potential peril for the tech giants -- in fact, big tech names should all benefit from a more normal environment.
Apple has seen a surge in Mac and iPad sales during the pandemic, but investors’ focus is on the iPhone 12 rollout. Over the last few quarters, sales of iPhones and some other products have been hampered by widespread closure of the company’s retail stores. The prospect of a widespread vaccine -- and a better economic environment -- should at least potentially boost the prospects for consumer adoption of the new phones. The stock on Monday was up about 1.4pc.
Microsoft shares were about flat on Monday. The software giant’s shares have surged more than 40pc this year, buoyed by both strong PC demand and widespread adoption of the company’s cloud software offerings. It is unlikely that the accelerating shift to cloud computing will be slowed by a reopening of the economy. A pick up in demand from segments highly impacted by the crisis -- like airlines and hotels -- could be a boost to the company’s fortunes.
Alphabet shares were up about 1.9pc, while Facebook was down about 2.3pc. Make no mistake about it: the social media stocks are going to benefit substantially if a vaccine drives an economic revival. Both companies should get a lift from additional advertising by travel-related businesses.
Amazon.com was down about 2.4pc, a relatively muted reaction given some e-commerce stocks were down more than 10pc on Monday. With the holiday shopping season upon on, Amazon will almost certainly be a huge winner from a recently accelerated adoption of online shopping. There’s no reason to see an economic revival as a negative for Amazon Web Services business, either. In fact, AWS -- as well as Microsoft and Alphabet’s Google Cloud -- could see a boost to business from a return to normalcy in segments of the economy heavily impacted by the virus. Widespread vaccination against Covid-19 could substantially reduce Amazon’s costs related to the virus: the company has said it expects to spend $4bn for Covid-related measures in the December quarter alone. The bottom line is that there is simply no negative for these large-cap tech stocks in the arrival of a potential vaccine, aside from competition for asset allocation from reopening bets.
Dow Jones
9.23am: Sims touts cost savings amid lower volumes
Scrap metal giant Sims has told the market that intake volumes remained at 85 per cent of average fiscal year 2019 volumes for the September quarter, but said it was more “robustly structured” having achieved various cost savings measures.
In a statement released ahead of the company’s annual general meeting today, Sims said that when volumes do recover, its restructured footprint has the capacity to exceed fiscal year 2019 volumes.
“I’m pleased to say that our free cash flow for the September quarter was positive and all metal divisions and the group achieved a solid positive EBIT for the September quarter,” chief executive Alistair Field will tell shareholders at the AGM.
“There remains uncertainty regarding impacts of COVID-19, for example, the recently implemented social lockdowns in the UK.
“The balance sheet remains strong, our costs are lower, we have structurally changed to better manage buy and sell risks, and in the medium term the ERP will enable us to manage the business in a more optimal way.
“We remain in a strong position to benefit from global government infrastructure stimulus.”
Nick Evans 9.16am: Incitec Pivot scraps final dividend
Incitec Pivot has booked a $123.4m net profit for its full financial year and an improved underlying result, but has ditched its dividend payment “in light of the ongoing uncertainty due to COVID-19”.
While the company’s net profit fell 29 per cent for the year, excluding impairments and one-off costs of $64.8m after-tax Incitec’s full-year result was a $35.8m improvement on the previous financial period.
The explosives, mining services and fertiliser company said on Tuesday its annual revenue lifted marginally to $3.9bn, with earnings before interest and tax up $70.8m to $374.5m.The company booked impairments of $41m and restructuring costs worth $46.9m, weighing on its statutory result.
Managing director Jeanne Johns said Incitec’s core business performed well through a difficult year.
“Operating in two of the most attractive mining markets in the world, our explosives business has performed well,” she said.
“Our premium technology offering continues to underpin our strong margins in the US business and demand held up well in Australia where we serve some of the most sophisticated mining companies in the world.”
9.14am: Buderim halted ahead of captial raising
Shares in health foods company Buderim have been halted until at least Thursday ahead of an announcement in relation to a capital raising.
Buderim shares last traded at 24c each.
9.10am: Transurban unsuccessful in bid for Elizabeth River Crossings
Macquarie and Swedish constructor Skanska sold their Elizabeth River Tunnels toll road in the US state of Virginia for €1bn ($US1.18bn) with Transurban losing out on the deal to buy the asset after being pipped by Spanish rival Abertis.
Macquarie and Skanska, which each owned a half stake, had put the Virginia assets on the market earlier this year and the toll road was sold on Monday night Australian time to Abertis and Manulife Investment Management.
Skanska said its gross share of the proceeds was $US625m, indicating a similar payday for Macquarie which entered into the joint venture with Skanska in 2012.
Macquarie’s 50 per cent stake in Elizabeth River Crossings was owned under the bank’s Macquarie Infrastructure and Real Assets division which manages $US132bn in assets.
MIRA and Skanska had the right to operate the toll road until 2070 under the existing deal.
Still, the company said in a statement to the ASX this morning that it continues to progress several projects in the greater Washington area, while its Australian toll road pipeline was also progressing well.
“Expanding our footprint in North America remains core to Transurban’s strategy and we are actively progressing a portfolio of opportunities in the region,” chief executive Scott Charlton said.
“Good progress is being made on the opportunity pipeline in Sydney with the NSW Government recently confirming it will sell the remaining 49 per cent stake in WestConnex, and Transurban has detailed work underway as part of its unsolicited proposal for the M7 widening and M7/M12 interchange.
“Meanwhile, performance is exceeding expectations on our newest asset NorthConnex, with strong endorsement from customers and the community.
“We are getting great feedback on the benefit of the redirection of more than 5,000 trucks and buses travelling daily on Pennant Hills Road and other local streets,” he said.
9.02am: James Hardie touts stronger sales
Buildings supplies company James Hardie has delivered an interim net profit attributable to shareholders down 49 per cent to $US96.2m for the half year through September.
The company booked group net sales of $US736.8m for the second quarter while earnings margins improved, with all three of its operating regions delivering stronger financial results.
“Delivering these record results is a confirmation that the global strategy we launched in early calendar 2019 to transform James Hardie into a high-performing, world-class organisation is on track and is accelerating,” chief executive Jack Truong said.
“This is now the sixth consecutive quarter that our team has delivered growth above market with strong returns.”
The company reaffirmed its existing full-year outlook.
8.49am: AUB lifts profit guidance
Insurance broking and underwriting company AUB Group has flagged a stronger-than-expected performance in the first quarter and upped its full-year profit guidance.
The company said in a statement to the ASX that strong momentum from the last financial year had continued into the first quarter and it now expected underlying net profit after tax to be within the range of $60m and $62m, compared to its previous guidance of between $58.5m and $61m.
The company delivered an underlying net profit after tax of $53.42m for the 2020 fiscal year.
8.42am: Fletcher Building unveils earnings boost
Fletcher Building has booked an increase in earnings for the four months through October.
The company said in a market update this morning that group revenues had lifted 1 per cent for the period, while earnings before interest and tax before significant items had increased 55 per cent to $227m.
The uptick in revenue was supported by resilient trading conditions in New Zealand and Australia, particularly in the residential sector. Fletcher said it had seen a robust demand for new houses over the period.
“As we look ahead, our customers are pointing to volumes remaining at current levels through to the start of the new calendar year,” chief executive Ross Taylor said in a statement.
“However, there is uncertainty in the second half of the financial year, with the impact of broader macro-economic factors on our markets in New Zealand and Australia not yet clear.
“Also, December and January are always lower trading and earnings months for the group.”
The company said it would provide an earnings guidance at its annual general meeting later this month.
8.15am: Dow closes up 2.95%
US shares revved higher on Monday on news a coronavirus vaccine had shown 90 per cent effectiveness. But after blasting through records early in the session, Wall Street closed with more modest gains.
The bellwether Dow Jones Industrial Average jumped over 830 points or 2.95 percent to finish the day at 29,157.97, while the broader S&P 500 rose 1.1 per cent to 3,550.5, about 30 points shy of a record.
But the tech-heavy Nasdaq reversed early gains and slipped 0.7 per cent to close at 11,713.78, as firms that benefitted from the pandemic lost ground, including Zoom and Netflix.
6.13am: Vaccine’s logistics challenges
With Pfizer Inc.’s Covid-19 vaccine on track to be authorized as early as next month, Western governments are facing up to an enormous logistical challenge: getting enough people shots of new vaccines.
While previous vaccination programs have spread over years and focused on specific demographics such as children or the elderly, governments are hoping to do something they never have done before and inoculate a majority of the population in a matter of months.
Even for rich nations with developed vaccination programs, that presents a host of problems ranging including building new databases to track who is getting the shot, working out ways to encourage mass uptake among younger people, ensuring adequate supply and running large-scale inoculation centers where the shots can be safely and quickly administered.
Those challenges mean that even if a vaccine is soon approved, it could be many months before it is administered to enough people to ease the need for lockdown measures that have been recently reimposed across the West.
Dow Jones
5.37am: Vaccine news brings Wall St records
US stocks jumped to fresh records on Monday after progress on a Covid-19 vaccine and Democrat Joe Biden’s electoral victory ushered in a sea change in financial markets, reordering winners and losers.
The Dow Jones Industrial Average climbed almost 1400 points, or 4.8%, in afternoon trading. The blue-chip index set its first intraday record since February and came within about 70 points of the 30000 mark before paring some gains. The S&P 500 surged 3.3%, also putting it in record territory.
Markets rallied after a vaccine developed by Pfizer and partner BioNTech proved better than expected at protecting people from Covid-19 in a pivotal study, a milestone in the hunt for shots that can stop the global pandemic.
The vaccine jolted markets, at least temporarily, reviving the fortunes of the pandemic losers, such as travel companies, retailers and banks, whose stocks rise and fall with the outlook for the economy.
Shares of Carnival surged 37%, American Airlines Group gained 17%, Kohl’s rose 16% and Bank of America climbed 14%.
Meanwhile, the pandemic’s winning stocks, such as big tech companies, lagged behind the rest of the market, a reversal of fortunes that some investors said was among the most stark they had seen.
The tech-heavy Nasdaq Composite rose about 0.9%. Netflix slumped 6%, Clorox declined 7.3% and Zoom Video Communications dropped 14%. Peloton Interactive fell 16%.
The positive, though incomplete, results bring the vaccine a big step closer to being cleared for widespread use. Pfizer said it is on track to ask health regulators for permission to sell the shot before the end of this month, if pending data indicate the vaccine is safe. Pfizer shares jumped 12%.
The news rippled through other markets as well. The yield on the 10-year Treasury note jumped to 0.961%, from 0.821% Friday. Brent crude oil rose almost 8%.
Investors also backed away from safety trades. The Japanese yen slid 2% against the dollar to 105.43. Gold fell 4.7% to $1,859 a troy ounce, on pace for its biggest one day percentage fall in seven years. The yield on the 10-year German bund rose the most since March, advancing to minus 0.51%.
Dow Jones
5.30am: Softbank profit comeback
Technology investor SoftBank Group Corp. logged a profit of more than $6 billion in the July-September quarter, driven by rising share prices and valuations for some of its portfolio companies.
The strong performance continues a remarkable comeback for the Japanese conglomerate -- best known for its $100 billion Vision Fund -- as well as its mercurial Chief Executive Masayoshi Son. Half a year ago, he said that dud investments and tanking stock prices amid the coronavirus pandemic had pushed the company into a $9 billion annual loss at the end of March, its worst ever.
Now that its investments are back on track, SoftBank’s share price has jumped and the company is sitting on a huge cash pile. Mr. Son, who spent the past half-year talking about building a strong defence against market turbulence and the coronavirus, said he was ready to play offence again.
“We can go on the attack at the same time as we keep strengthening our defences,” Mr. Son said at a news conference in Tokyo -- the first in six months where he spoke to reporters in person.
SoftBank also shook up its board, removing Mr. Son’s three deputies -- Vision Fund CEO Rajeev Misra, SoftBank Chief Operating Officer Marcelo Claure and Chief Strategy Officer Katsunori Sago. Mr. Son, who has faced pressure for change from activist investor Elliott Management Corp. and other SoftBank investors, said he wanted to increase the proportion of independent directors to provide more checks on his power and wasn’t diminishing the operational authority of the three executives.
Yasir O. Al-Rumayyan, the head of Saudi Arabia’s Public Investment Fund -- Vision Fund’s largest outside investor -- also resigned effective Monday, SoftBank said.
In the six months ended Sept. 30, SoftBank booked an investment gain of Yen2 trillion, equivalent to $19 billion, including Yen1.3 trillion from improved performance at the Vision Fund as well as its more modest successor, Vision Fund 2. The gains put both funds solidly in the black, with Vision Fund 1 valued at $1.4 billion more than the cost of the 83 investments it was still holding at the end of the quarter.
For the July-September quarter, net profit came to Yen627.5 billion, or $6.1 billion. In the July-September quarter a year ago, SoftBank logged a $6.4 billion net loss. That was caused in part by writing down the value of its investment in office-share firm WeWork, which Mr. Son described as a lapse of judgment on his part.
Dow Jones
5.18am: Global markets soar
Global financial markets soared Monday as news of a successful coronavirus vaccine trial and Joe Biden’s US election victory bolstered investor confidence, sending New York to record highs.
Already up strongly on Biden’s victory, markets massively accelerated gains after Pfizer and its German partner BioNTech said a Phase 3 trial showed that their vaccine was 90 per cent effective in preventing Covid-19 infections.
“Pfizer’s Covid-19 vaccine news has acted like a shot of adrenaline for the markets, triggering one of the biggest single day movements in global equities for a long time,” said Russ Mould, investment director at AJ Bell.
“A successful vaccine has greater significance than Joe Biden winning the US election as it would effectively pave the way to restarting economic growth globally.”
In New York, the benchmark DJIA shot more than 5 per cent higher to a peak of 29,933.83 points, beating the record set February 12 of 29,551,42.
In late morning trading it stood up 3.9 per cent.
Pfizer shares jumped more than nine per cent as analysts hailed the vaccine news as a breakthrough after months of mounting cases and deaths, especially in the US and Europe.
Gains of four and five per cent were made across the board but some of the sectors hit worst by the pandemic -- airlines and hospitality -- did even better.
Shares in British Airways parent IAG and Air France-KLM both soared more than 25 per cent and Lufthansa climbed 20 per cent.
Conversely some of the companies which have benefited massively as suppliers of goods and services sought by virus lockdown citizens around the world fell back, with Amazon losing some 5 per cent before starting to claw back losses.
AFP
5.10am: Lockdowns hurt McDonalds earnings
Fast-food giant McDonald’s saw earnings beat expectations on a US sales rebound in the most recent quarter, but the chain said Monday it remains cautious about the outlook amid a spike in Covid-19.
Nearly all of the chain’s restaurants were open during the quarter, and US sales got a boost from new offerings including Spicy Chicken McNuggets and a meal deal promoted by rapper Travis Scott.
But overseas sales were less buoyant, and “as a result of COVID-19 resurgences, since September, there have been numerous instances of government restrictions on operating hours, limited dine-in capacity in most countries and, in some cases, mandated dining room closures,” the company said.
Most of the impact is in foreign markets, including France, Germany, Canada and Britain.
“The Company expects some restrictions in various markets so long as the COVID-19 pandemic continues,” the statement said.
Global revenues at the golden arches fell two per cent in the July-September quarter to $5.42 billion, slightly better than analysts had forecast.
One highlight of the results was the increase in US comparable store sales of 4.6 per cent in the third quarter, even as guest counts were down.
Like many small restaurants suffering amid coronavirus restrictions, McDonald’s has tried to beef-up online orders, take-out or delivery, as well as their existing drive-through system.
McDonald’s posted third-quarter net income of $1.76 billion, up 10 per cent year-on-year.
That works out to $2.22 a share, beating analysts’ forecasts of $1.90. The chain’s share priced jumped at the open, but eased back and was up 0.9 per cent
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