Retail sales surge sends ASX to six-week highs
Shares faded to a 6 point gain at the close but finished up 1.6pc for the week, as UBS revised up its GDP forecasts after strong retail numbers.
- May retail sales soar by record 16.3pc
- Woodside may raise for NW Shelf buy
- Evolution trims production guidance
- Nick Scali reinstates payout as sales rebound
That’s all from Trading Day for Friday, June 19. Shares climbed as much as 1.2pc to six-day highs as preliminary retail sales data showed a 16.3pc surge last month, but settled to a six-point gain at the close as major banks went backwards. Retailers outperformed on the retail surge, which added to strong momentum after Nick Scali reinstated its interim payout and Adairs tipped a full year profit jump. S&P 500 futures suggest further gains to come tonight.
8.26pm: Ansell surcharges a response to price gouging
Protective glove maker Ansell has reacted to cost increases of as much as 1000 per cent from suppliers by imposing temporary surcharges on affected products, with chief executive Magnus Nicolin likening the move to airline fuel surcharging.
Mr Nicolin said Ansell had no option but to pass on some costs to customers as suppliers, particularly in Asia, profiteered from unprecedented demand for personal protective equipment created by the coronavirus.
He said some suppliers without brand reputations to protect had raised the cost of items such as cloth, laminate and zippers by between 200 per cent and 1000 per cent.
“There may be one or two exceptions, but that’s not driven by cost increase,” Mr Nicolin said. “In almost all cases, it’s driven by price gouging. People who are less serious are seeing a chance to make a quick buck.”
European carriers introduced fuel surcharges in about 2008, a year in which oil prices jumped past $US100 ($145) a barrel. Those surcharges have since morphed into carrier fees, but Ansell has assured customers its surcharges are proportionate and temporary, Mr Nicolin said.
Ansell anticipates the coronavirus pandemic running another 18 months “in some form or another”, and intends to wind back the charges once cost inputs normalise, he said.
Gerard Cockburn, Joyce Moullakis 8.05pm: AMP Capital appoints Boe Pahari
AMP Capital has appointed Boe Pahari as its new chief executive to spearhead increased growth overseas in the real estate and infrastructure division, as he takes the reins from Adam Tindall.
Mr Pahari was most recently the global head of the group’s infrastructure equity and director of AMP’s northwest regional investments, which include the UK, Europe and the Americas. He begins his new role from the start of the new financial year.
The unexpected retirement of Mr Tindall from AMP comes after a strong period of growth at the real estate and infrastructure unit, with assets under management increasing by $43bn during his five years of leadership. Operating earnings rose more than 43 per cent over the same period.
Terry McCrann 7.45pm: A future without coal?
Our esteemed duo of twittering twerps — former prime ministers Kevin Rudd and Malcolm Turnbull — were deliciously and entirely unknowingly inanely beside themselves with joy this month: they had separately seen the future and it was a future without coal.
Rudd tweeted: “For anyone who thinks it cannot be done: the UK has not produced any electricity from coal for the last two months — the longest period since the Industrial Revolution. Let that sink in,” he concluded with all the deadening portentousness he could muster.
Interestingly, Rudd chose to link to an article in Turnbull’s favourite newspaper, The Guardian; while Turnbull in contrast linked to a written piece by the BBC’s chief environment correspondent, merely repeating the piece’s headline: “Could the coronavirus crisis finally finish off coal?”
The piece, in all its long, long desperately hopeful stupidity tried every which way to avoid arriving at an utterly undeniable simple, single word, answer, that should have rendered the 1000 or so words unwritten in the first place and so was not actually stated: “No”.
“Some industry observers are even saying that coal may never recover from the coronavirus pandemic,” it started hopefully.
But if you wound your way through all the bromidic generalisations about declining coal and booming so-called “renewables”, you arrived at this unpalatably stated reality: “Coal plays a big part in China’s latest five-year plan, with a potential 20 per cent increase in the size of the coal sector.”
Gerard Cockburn 7.15pm: ACCC changes tack on Newcastle
The competition regulator has granted interim permission for 10 coal companies in NSW to collectively negotiate the terms and conditions for accessing the Port of Newcastle for exporting operations.
The Australian Competition & Consumer Commission has released a proposal that will allow producers to undertake joint negotiations with the port, in order to reach an agreement on the terms of use, which will include the price of access.
Since December 2019, the Port of Newcastle has been negotiating with individual coal producers regarding a 10-year agreement for port access.
The ACCC said the collective bargaining was voluntary and did not include any intended collective boycott activities.
ACCC commissioner Stephen Ridgeway said collective negotiations with the port were likely to provide wider public benefits and ultimately support the Hunter Valley coal industry.
“Collective negotiation gives coal producers an opportunity to reduce uncertainty and achieve more timely outcomes,” he said.
Perry Williams 6.59pm: BP to consider carbon emissions
Energy giant BP, owner of stakes in the North West Shelf and Browse LNG projects in Western Australia, plans to carefully consider carbon emissions as it weighs up future investment decisions in oil and gas projects.
BP signalled a gloomy outlook for the global energy industry this week after taking a writedown of as much as $US17.5bn ($25.7bn) on Monday and warning it may leave oil and gas in the ground, amid a fast-moving transition away from fossil fuels due to climate change.
The energy operator plans to hit net zero carbon emissions by 2050, repositioning its business away from fossil fuels to a wider array of energy sources and raising questions over its appetite to proceed with a carbon intensive project like Browse.
Eli Greenbalt 6.34pm: Shopping spree in May
A shopping spree in May taking in most categories in the $320bn retail sector, from fashion and shoes to cafes and takeaways, has helped drive the biggest leap in monthly sales in the 38-year history of collecting shopping data, with industry insiders suspecting stores have been the beneficiary of a “sugar hit” from pent-up spending during lockdowns.
The rising revenue tide is also being reflected in updates from retailers themselves, which have reported that with people spending more time locked down at home or away from their work they are spending big on items such as hardware, consumer electronics, furniture, homewares and fashion.
According to preliminary retail trade figures released on Friday by the Australian Bureau of Statistics, retail turnover rose 16.3 per cent in May, seasonally adjusted, marking the largest seasonally adjusted rise ever published in the 38 years of the Retail Trade survey. It also follows the largest ever seasonally adjusted fall of 17.7 per cent in April.
These preliminary figures show rises in every industry, with large gains in particular for clothing, footwear and personal accessory retailing and cafes, restaurants and takeaway food services, as restrictions on trade were lifted during May.
However, despite the rises, both these industries remain well down on the levels of May 2019. May retail sales rebounded to be 4 per cent higher than pre-virus levels in February, elevated by a resurgence in clothing sales and eating out.
Australian Retailers Association chief executive Paul Zahra said the anticipated spike in trading in the latest ABS Preliminary Retail Trade Figures reflected suppressed consumer demand following the first month of returned trading after lockdowns.
Gerard Cockburn 5.35pm: ATO crackdown on early super rorters
The Australian Taxation Office says it is cracking down on people rorting the early release of super scheme by using system loopholes to dodge paying tax.
A document released by the ATO highlights a weakness within the country’s tax framework in relation to the federal government’s COVID-19 financial assistance measure, which was initially designed to assist Australians facing financial hardship due to the pandemic.
According to the ATO, a super fund member is able to request payment through the scheme at a tax free rate, and in the same financial year make a voluntary contribution from their income at the superannuation tax rate of 15 per cent, which would result in a certain amount of income avoiding the marginal tax rate.
5.01pm: UBS more optimistic on economy
UBS has revised up its forecasts for annual GDP after a boom in retail sales in May.
Economist George Tharenou now sees GDP slipping by 4.2 per cent, from previous estimates of 5 per cent.
The brokerage notes that second quarter consumption is likely to be “much less weak than seemed plausible a few months ago”, tipped to drop by 4.5pc from earlier forecasts of a 7pc slip.
Mr Tharenou counts several factors as drivers for his revisions – the one-off boost from early super and loan deferrals were bigger than first thought, the support to consumer sentiment, and evidence that cash was spent rather than saved.
“We estimate the household savings ratio probably lifted much less than we expected, from 5.5pc in Q1, to ~7pc in Q2 (vs our prior view of ~10pc),” Mr Tharenou says.
“Overall, this sees Q2 real GDP also revised up to fall ‘only’ 7.1pc q/q (instead of -8.5pc q/q), albeit still clearly a recession given it’s the worst quarter on record (and -6.4pc y/y).
“Meanwhile, amid the poor global backdrop and high uncertainty about COVID-19, causing still very weak business confidence, we did not lift other forecasts for business investment etc.”
4.54pm: WAAAX stocks outperform
Tech stocks were the standout in the session, holding gains of 1.8 per cent by the close as several heavy hitters notched fresh record highs.
Accounting software platform Xero jumped to highs of $91.80 before settling up 0.5 per cent to $89.29 while Appen soared to $34.03 before closing up 4.1 per cent to $33.83.
WiseTech shares jumped 7.8 per cent to $23.40 while Afterpay added 1.5 per cent to $58.69.
Buy now, pay later rival Splitit was a standout with intraday gains as much as 39 per cent intraday, before fading to a 6.9 per cent lift to $1.47 by the close. That’s after more than doubling its market value in the previous session after inking a deal with Mastercard.
Here’s the biggest movers at the close:
4.50pm: Weekly lift tops 1.6pc in ‘tug of war’
ANZ head of FX research Daniel Been described recent market moves as a “tug of war” between reflation and contagion thematics.
“While the continued progress towards reopening is positive, the news that China is enacting a fresh set of lockdowns after nearly two months of containment is much less positive and a reminder of how difficult the road to recovery could be,” he wrote.
“In a lot of ways, however, asset markets showed a willingness to ignore the second-wave threat in a boisterous reaction to the US Fed’s previously announced program of buying individual corporate bonds.
“With the central bank put still in place, the sustainability of the recovery depends on the ability to track and contain the virus.”
The Aussie dollar benefited from optimism at the local close, adding 0.2 per cent to US68.63c as US futures lift by 0.5pc.
4.11pm: Shares fade to 6 point gain
Shares have capped a rocky week with minor gains after heavy selling on earlier fears of a second wave of coronavirus infections.
Despite gaining as much a 1.2 per cent intraday on Friday, the benchmark ASX200 finished the day higher by just 6 points or 0.1 per cent to 5942.6.
For the week, the index closed higher by 1.6pc.
Tech and consumer discretionary stocks were the top performers, but a reversal in the major banks the greatest drag – three of the big four finishing in the red.
Standout performers were Splitit, finishing up by 6.9pc, while Afterpay gained 1.5pc and WiseTech jumped 7.8pc.
3.54pm: Ansell adds surcharges amid price gouging
Protective glove maker Ansell has reacted to cost increases of as much as 1000pc from suppliers by imposing temporary surcharges on affected products, with chief executive Magnus Nicolin likening the move to airline fuel surcharging.
Mr Nicolin said Ansell had no option but to pass on some costs to customers as suppliers, particularly in Asia, profiteered from unprecedented demand for personal protective equipment created by the coronavirus.
Mr Nicolin said some suppliers without brand reputations to protect had raised the cost of items such as cloth, laminate and zippers by between 200pc and 1000pc.
“There may be one or two exceptions, but that’s not driven by cost increase,” Mr Nicolin said in an interview with The Wall Street Journal. “In almost all cases, it’s driven by price gouging. People who are less serious are seeing a chance to make a quick buck.”
European carriers introduced fuel surcharges in about 2008, a year in which oil prices jumped past $100 a barrel. Those surcharges have since morphed into carrier fees, but Ansell has assured customers its surcharges are proportionate and temporary, Mr Nicolin said.
WSJ
3.13pm: ASX erases 1.2pc gain
Australia’s share market has erased a strong intraday rise alongside a similar loss of strength in US futures.
The S&P/ASX 200 was flat at 5935 after rising 1.2pc to a 6-day high of 6006.3 in early trading.
It came as S&P 500 futures went from up 0.6pc to up 0.1pc.
The Australian dollar is little changed.
Wall Street may be volatile due to tonight’s “quadruple witching” – the simultaneous expiry of single-share options, single share futures, share-index options and share-index futures.
2.59pm: Records fall as tech rallies
Even as the local market rally fades, listed tech names are pushing to new record highs.
The sector is higher by 1.2 per cent, supported by strength in key WAAAX names, including a 3.4pc jump in Appen to new highs of $34.03.
Accounting software platform Xero is higher by 0.9pc to $89.70 after hitting as much as $91.80.
Elsewhere, WiseTech is one of the benchmark’s top performers with a 6.9pc lift while Afterpay defies the lift with a 0.6pc slip.
Junior buy now, pay later stock Splitit is adding 14.2 per cent to $1.57 after hitting $1.92 in early trade.
2.41pm: Retailers benefit from travel spend shift
The lift in retail sales for May will likely continue through June as retail spend stabilises after the pandemic, according to ANZ.
Economists Adelaide Timbrell and David Plank note that the bank’s own observed data shows household spending is still modest, “retailers are benefiting from a shift in spending from travel and entertainment into home-related goods”.
They estimate that in the week to June 12, household goods remained the highlight of retail growth – furniture up by 44pc year-on-year while electronics jumped by 55pc.
Read more: Iso-shoppers an encouraging sign
John Durie 2.30pm: ABA is inflating loan deferrals: CS
The Australian Bankers Association has inflated figures on bank loan deferrals according to a note released today from Credit Suisse analyst Jarrod Martin.
“We encourage the ABA and banks to publish a data series that nets off those that have started to repay. We understand that this may be more difficult to collate but from an investment community perspective this is a more valuable data point,” Mr Martin said.
The ABA said this week total loan deferrals from banks were $236bn with $176bn in home loans and $60bn in business loans.
Mr Martin said the figures didn’t square with comments from bankers like NAB’s Ross McEwan who said 10 to 15 per cent of NAB customers had starting paying back their loans again. This should mean the total loan deferral figures should be falling not increasing.
Mr Martin noted APRA boss Wayne Byres’ said in a recent speech that banks should err on the side of more disclosure than less so analysts, investors and rating agencies do not assume the worst.
“It is very important that we continue to promote transparency, and not be tempted to panic and switch the lights off in the mistaken view that it’d be better for everyone to operate in the dark … Even without regulatory prompting, banks should err on the side of revealing more rather than less,” Mr Byres said at the time.
Separately the bank loan deferrals are not loans forgiven which means the people who defer the loans still have to pay them back and their interest costs are capitalised in a longer loan term.
It is the bank who are making money from the deal not the customers except of course if people can’t pay the money back in which case the banks take the property.
Perry Williams 1.58pm: Woodside may raise for NW Shelf buy
Woodside Petroleum may be forced to tap shareholders for equity if it decides to buy Chevron’s stake in the North West Shelf LNG venture, raising the prospect of whether it should still proceed with a $US1.5bn expansion of its neighbouring Pluto plant, Citi says.
Chevron has put its 16.7 per cent stake in NW Shelf on the market following interest from buyers and analysts are running the numbers on Woodside making a play given it controls the Scarborough and Browse gas projects which could both use the plant to process their supplies.
Woodside has $US5.3bn in balance sheet headroom prior to any expansion at WA’s Burrup gas hub.
If it bought the Chevron stake and also proceeded with the $US2.35bn of net costs for Scarborough and $US1.53bn for expansion Pluto, it may require a capital raising, Citi reckons.
Regardless of whether it buys the Chevron stake, Woodside should look to process Scarborough through NW Shelf rather than expanding Pluto. That move would ease balance sheet pressure, boost Scarborough’s break-even LNG price given lower NWS tolls and improve returns for BHP, its Scarborough partner.
“With Woodside trading below our base business valuation of $24.64 per share, we think a pivot in strategy to this more credible and higher returning concept would be a very positive outcome for shareholders,” Citi analyst James Byrne said.
Woodside is likely one of the bidders, Macquarie said, after Chevron indicated it had already been approached by suitors.
“All partners have pre-emptive rights, allowing WPL (and potentially its JV partners as well) to match an outsider’s bid in proportionate share,” Macquarie said. “Woodside’s target gearing range is 15-35 per cent, and while currently below range, we expect it would raise equity for an acquisition of this size, given development capex that lies ahead (and the importance of dividend).”
Woodside last up 0.55 per cent to $21.87.
Read more: Chevron to sell stake in NW Shelf
1.33pm: Consensus earnings rebounding
The rebound in consensus earnings estimates has continued despite the recent dip in share prices.
Encouragingly, the 12-month forward EPS estimate of the S&P/ASX 200 as of Thursday had risen 1.5pc after hitting an 11-year low on June 5th.
A rising trend of earnings estimates will help limit overvaluation of the index. The index hit a record 12-month forward PE ratio near 20 times early last week.
S&P/ASX 200 last up 0.7pc at 5978.9.
1.01pm: Retail boost sends ASX past 6000
Shares are trading near daily highs at lunch, after a boost from better-than-tipped retail sales.
At 1pm, the ASX200 is higher by 65 points or 1.1 per cent to 6001.1, again breaking through the 6000 level to hit 6006.
All sectors are trading higher, led by a surge in tech and retail stocks.
The retail boost is boding well for buy now, pay later stocks – Afterpay is adding 0.1pc, FlexiGroup by 10.1pc but its Splitit who is leading the lift after yesterday’s announcement of a deal with global powerhouse Mastercard. The stock doubled yesterday and is today up by 28pc to $1.76.
Elsewhere, Orora is under pressure as it trades ex-dividend while Corporate Travel and Flight Centre are getting a boost from increased travel appetite.
Here’s the biggest movers at 1pm:
12.47pm: Goldmans more optimistic on 2020 GDP
Goldman Sachs Australia chief economist Andrew Boak has upgraded his domestic GDP forecasts, tipping calendar year 2020 growth of -2.75pc, at the optimistic end of market expectations, and up from a previous forecast of -4.5pc.
That’s based on his new forecasts of a smaller fall of 7.5pc Q/Q in the June quarter followed by a 4.5pc rebound in the September quarter.
The upgrade reflects the net effect of relatively resilient consumption but a weaker path for business investment.
He says a 10pc fall in hours worked over April/May is “further evidence that Australia is navigating the coronavirus crisis materially better than initially feared – and considerably better than many global peers”.
“Given ongoing improvements in the high frequency economic data, health outcomes and the scheduled reopening, we have again pivoted incrementally more positive on the nearer term outlook.”
He now expects the unemployment rate to peak at 7.6pc, down from a previous forecast of 8.5pc, the peak of which he pushes out to October after assuming “a relatively hard stop to the Government’s JobKeeper wage subsidy” at the end of September.
Mr Boak’s calendar year 2021 growth forecast is for an increase of 4.5pc.
12.35pm: Retail sales exceed pre-virus levels
May retail sales rebounded to be 4pc higher than pre-virus levels in February, elevated by a resurgence in clothing sales and eating out.
NAB market economist Kaixin Owyong notes that the data well exceeded the bank’s own forecasts of 5.5pc, as well as the RBA’s feedback that sales had risen “somewhat”.
She adds that sales of food and household goods continues to rise, even after the panic buying jump in March.
“Food sales rose a further 7pc in May from already high levels to 10pc above February levels. Demand was strong across grocery goods. Household goods sales rose strongly to record levels, to be 30pc higher than a year ago. This suggests these two components contributed around 7pp to growth in total sales in the month,” Ms Owyong says.
Gerard Cockburn 12.28pm: Coal miners cleared for collective talks
The competition regulator has granted interim permission for 10 coal companies in New South Wales to collectively negotiate the terms and conditions of accessing the Port of Newcastle for exporting operations.
The Australian Competition and Consumer Commission has released a proposal that will allow producers to undertake joint negotiations with the port, in order to reach an agreement on the terms of use which will include the price of access.
Since December 2019, The Port of Newcastle has been negotiating with individual coal producers regarding a 10-year agreement for port access.
The ACCC said the collective bargaining was voluntary and did not include any intended collective boycott activities.
ACCC commissioner Stephen Ridgeway said collective negotiations with the port will likely provide wider public benefits and ultimately support the Hunter Valley coal industry.
“Collective negotiation gives coal producers an opportunity to reduce uncertainty and achieve more timely outcomes,” he said.
Mr Ridgeway also noted the proposal will still give coal producers the ability to individually negotiate with the port.
A final decision on the proposal will be made in August or September.
Robert Gottliebsen 12.17pm: Spending drive encouraging for recovery
A new drug addiction is sweeping US, Australia and other developed countries: isolation in the home. The isolation drug creates a desire to spend larger sums on certain retail goods and is fanned by the ability to buy online.
And, like other drugs, somehow people find the money to satisfy the addiction to spending created by isolation. In Australia, JobKeeper, loan relief and superannuation drawdowns help raise the money.
In both the US and Australia isolation has aroused a desire to buy home improvements and appliances. In the US, once restrictions on going to restaurants and other activities were relaxed, their isolation driven consumption moved into clothing. People needed the right gear as they ventured out of their home.
In contrast, in Australia outdoor activities have been restricted, so clothing has remained very depressed.
But just as in the US, Australian sharemarket analysts have not understood the impact of isolation on consumer spending.
Read more: Shopping the only option as bars, leisure locked down
12.00pm: Retailers surge as sales jump
Consumer discretionary stocks are surging by 2.5 per cent in midday trading, outperforming the broader market after a record surge in retail sales last month.
A lift in both Nick Scali and Adairs had supported the sector early, but the data drop at 11.30am AEST has sparked a lift across the rest of the sector.
Premier Investments is up by 4.4 per cent to $17.04 as Breville adds 2.7pc to $23.53 and JB Hi-Fi adds 1.5pc to $40.41.
Domino’s Pizza is higher by 3.9 per cent, as the data showed spend on takeaway food services had jumped by 30pc.
Read more: May retail sales post record 16.3pc jump
David Ross 11.50am: ahm to rollover extras after shutdown
Medibank owned private health provider ahm will rollover unused extras for customers on July 1 in recognition of the economic shutdown wrought by the coronavirus outbreak.
The rollover, valued at $10mn, would cover dental, psychology and physiotherapy, which many were unable to access during the lockdown period imposed in a bid to avert a viral pandemic.
The move comes after the private health industry introduced relief measures in March expanding access to treatment for those infected or affected by COVID-19 or who experienced financial hardship.
ahm Chief Customer Officer David Koczkar said any unused annual limits on an ahm customer’s extras cover this financial year, excluding optical and non-annual limits, will automatically be added to customers’ limits.
“The COVID-19 pandemic made it challenging for ahm customers to use some of their extras cover as normal by 30 June, with some face-to-face health services reduced during the peak COVID-19 lockdown,” he said.
11.42am: May retail sales jump by record 16.3pc
Retail turnover rose by 16.3 per cent in May, the largest rise in the 38-year history of the survey, according to the latest preliminary data from the ABS.
It follows a record 17.7pc drop in the survey in April.
“There were large rises for clothing, footwear and personal accessory retailing and cafes, restaurants and takeaway food services, as restrictions on trade were lifted during May. Despite the rises, both these industries remain well down on the levels of May 2019,” the ABS said.
Turnover in household goods was a standout, confirming reports from Adairs and Nick Scali earlier today. The segment is up 30pc compared to the same time last year.
All subgroups in the index, that is houseware, textiles, building and garden supplies etc, recorded large lifts from April to May.
A third consecutive monthly record for retail trade. In May, retail rose by 16.3% - following April's record decline of 17.7 and March's then record 8.5% increase. The y-axis on my graph weeps #ausbiz pic.twitter.com/0owLfdgHVD
— Callam Pickering (@CallamPickering) June 19, 2020
Ben Wilmot 11.35am: Primewest deepens ag interests
Property funds manager Primewest has forged deeper into the agriculture sector, buying the manager of the listed Vitalharvest Freehold Trust and taking an 11.8 per cent strategic interest in the fund.
The move will see Primewest boost its assets under management by 7 per cent to $4.4bn and position it for further growth in rural property, where it is already building up a $100m fund.
The John Bond-chaired Primewest has $43m in cash and flagged it would also explore further growth initiatives after the $10m deal to buy GoFARM Asset Management that runs the Vitalharvest Freehold Trust.
“This transaction is an exciting step forward for Primewest and consistent with the strategy to expand our distribution capability into listed A-REITs. Importantly, Primewest will co-invest along with other VTH investors as its largest investor,” Mr Bond said.
In addition to the 11.8 per cent interest, Primewest has also acquired a right of first refusal over a further 6.2 per cent stake in the fund.
The trust has about $275m in investment properties with a market capitalisation of about $143m. It owns Australia’s largest aggregation of berry and citrus farms which are leased horticultural company, Costa Group Holdings.
Primewest said the agriculture sector had a low correlation to market shocks driving consistent returns while offering an inflation hedge.
11.19am: No stopping Splitit rally
After doubling its market value in yesterday’s trade, recent buy now, pay later entrant Splitit is tearing higher again in morning trade.
In the second hour of trade, shares are up by 26 per cent to $1.73, after hitting heights of $1.92. More than $112.8m of stock has changed hands so far.
It comes after the group announced a new partnership with Mastercard yesterday, what chief Brad Paterson said was “years in the making”.
“It’s important that we partner with the card networks, and this is an important piece to help us accelerate instalment payments throughout the world,” he told The Australian.
Read more: Mastercard deal lifts Splitit
Gerard Cockburn 10.57am: St George cuts fixed rates
St George Bank has cut a number of fixed rates applicable to its residential investor and owner occupier home loan products.
The Westpac subsidiary has cut 15 to 25 basis points from its fixed rate owner occupier interest only loans, with a two-year standard interest only loan attracting a fixed rate of 3.84 per cent.
Residential investment fixed rates for principal and interest loans have been shaved by 10 basis points and are available to new and existing customers.
The bank is now offering two and three year fixed rates for residential investment loans at 2.84 per cent.
Fixed rates on Interest only residential investment and portfolio loans have also been cut by 10 basis points.
10.52am: Euroz to buy Hartleys
Euroz confirms it’s buying unlisted West Australian broking peer, Hartleys, as consolidation of the domestic broking sector continues amid declining margins and volumes.
Under the proposed transaction, Euroz will issue up to 33 million shares at $0.915 a share for 100pc of Hartleys and Hartleys shareholders will own about 17pc of the combined group.
Key Hartleys staff will be subject to appropriate staff retention measures, with a portion of the share consideration provided by Euroz subject to forfeiture if those retention arrangements are not satisfied.
On completion of the transaction, two Hartleys nominees will be appointed to the Euroz board. Non-binding terms have been reached with a formal binding pact expected July 10.
Euroz reported an unaudited net loss of $4m and underlying cash profits after tax of $6.7m for the 11 months to May 31, 2020.
Underlying cash profits after tax of $6.7m are offset by $2.7m in “non cash” after tax losses from the mark to market on investments and $8m from the previously reported costs associated with the closure of the Prodigy businesses.
It reports “good recent trading conditions, resulting in solid brokerage and corporate revenue” since the last business update.
10.50am: Shares hit six-day high
Australia’s S&P/ASX 200 share index is up 0.68pc at 5976 after rising as much as 1.1pc to a 6-day high of 6000.7.
The larger than tipped early jump came as S&P 500 futures rose 0.6pc before paring that rise to 0.3pc.
Gains are being led by the Consumer Discretionary, Communications and Energy sectors while Real Estate, Materials, Financials, Technology, Consumer Staples and Utilities are lagging behind.
Transurban, Wesfarmers and Commonwealth Bank are the biggest contributors to strength with gains of 1.4pc, 1.1pc and 0.4pc respectively.
Orora fell 17pc ex-dividend while Seek is up 2.8pc after being upgraded by UBS.
Neither the share market or the Australian dollar are reacting to news of a major cyber attack on Australia from a foreign state. But if the attack is coming from China, it would be another bad sign for Australia’s relationship with its biggest trading partner.
Ben Wilmot 10.43am: Aventus buys ex-Kaufland site
The break up of the Kaufland property portfolio has begun with the Brett Blundy-backed Aventus Group buying a development site in the Melbourne suburb of Epping.
Kaufland put nine properties on the block earlier this year when it announced its exit from the market, tapping Colliers International to sell them off.
The site Aventus has bought for $11.5m adjoins Epping Home that the company already owns. “Epping is one of the fastest growing catchments of Melbourne, with the main trade area due to grow by 100,000 people by 2024,” Aventus chief executive Darren Holland said.
The corner site is positioned between the Epping train station and Epping Plaza; a major shopping centre anchored by Woolworths, Coles, Costco and over 230 specialty shops.
The land is located in an Activity Centre Zone which allows mixed use, retail, residential, office, medical and large format retail, Mr Holland said.
Read more: Departing Kaufland flags huge property sell-off
10.35am: Furniture retailers rally as sales jump
The reinstatement of Nick Scali’s interim dividend has sparked a 23 per cent jump in the listed furniture retailer, adding to the rebound in the broader market.
Nick Scali said this morning its sales had bounced in May and June, as it tipped a profit jump of 15pc to 20pc in the second half.
That’s helping its shares to jump to highs of $7.14, before settling to a 22pc gain at $7.
Meanwhile, rival Adairs said its online sales had jumped by 90pc, as it set out guidance for full year profit as much as $390m.
Its shares are higher by 12.4pc to $2.35.
Read more: Nick Scali dividend back after sales rebound
10.12am: Shares rebound with 1.1pc lift
The local market is bouncing back from heavy selling in the previous two sessions, with gains across all sectors.
At the open, the benchmark ASX200 is higher by 64.2 points or 1.1 per cent to 6000.7.
Energy and telco stocks are leading the lift, while financials and miners are adding to the momentum.
After doubling its market value yesterday, Splitit is again on a tear – up by 36pc to $1.87 while the major banks all add between 0.5pc to 1pc.
Gerard Cockburn 10.07am: Pahari promoted to AMP Capital chief
AMP Capital has appointed Boe Pahari as its new chief executive, taking over from Adam Tindall who retires after five years leading the group’s investment division.
Mr Pahari is currently the global head of the group’s infrastructure equity and director of AMP’s north west regional investments, which includes the UK, Europe and Americas, and will begin his new role from the start of the new financial year.
AMP chief executive Francesco De Ferrari said Mr Pahari had been at the helm of the firm’s international investment expansion for the past six years.
“As incoming CEO, Boe’s mandate will be to continue to grow the business, capitalising on its strengths and the opportunities in infrastructure and real assets,” Mr De Ferrari said.
In a release to the ASX on Friday, AMP Capital said its assets under management had grown by $43bn under Mr Tindall’s leadership.
“We have substantial scope to expand globally, further leveraging our strengths, particularly in infrastructure and real assets,” Mr Pahari said.
Mr Pahari has been with AMP Capital since 2010 and has prior work experience at Commonwealth Bank and Citigroup. He will continue to oversee the infrastructure equity business.
9.56am: Adairs posts 27pc sales jump
Homewares retailer Adairs has posted a sales jump more than 27 per cent for the second half to date as its online sales boom during the coronavirus lockdown.
In an update to the market, Adairs said all of its stores had reopened in May, and had been trading for a least two weeks.
Store sales were up by 5.3pc for the 24 weeks to June 14, well surpassed by a 92.6pc boom in online sales over the same period.
For the year to date, like for like sales were up by 15.7pc.
As such, the group laid out expectations for full year sales in its Adairs chain, as well as online store Mocka, of $385m to $390m – a lift from the $344m in sales recorded last year.
“Since Adairs stores re‐opened we have seen strong sales across both the store network and online channel as customers return for the instore service and experience they expect from Adairs. Pleasingly, Mocka’s sales growth has also continued at high levels,” chief Mark Ronan said.
9.53am: What’s on the broker radar?
- Carsales.com cut to Hold: Ord Minnett
- Gage Roads Brewing raised to Buy: Argonaut Securities
- Nufarm restarted at Neutral: UBS
- Premier Investments raised to Outperform: Macquarie
- Seek raised to Buy; target price raised 50pc to $23: UBS
9.32am: Shares to rebound
Australia’s share market should rebound from Thursday’s fall, perhaps hitting a 6-day high before the weekend.
Overnight futures relative to fair value suggested the S&P/ASX 200 would open up 0.9pc at 5889.9 points. But S&P 500 futures are up 0.5pc, suggesting the ASX200 will break Thursday’s peak at 5991.8.
Technical indicators are currently bearish, after recent sell signals on daily MACD and RSI.
But a firm close today would suggest the price action is improving.
It comes as China says the recent coronavirus outbreak in Beijing is under control and US President Trump says restrictions won’t be reinstated despite rising cases in some states.
Perhaps complicating the expected rise in Australian shares, PM Morrison says the nation is under a cyber attack from a foreign state.
Preliminary retail trade data for May are due for release at 11.30am AEST.
S&P/ASX 200 last 5936.5
9.18am: Evolution trims Mt Carlton guidance
Gold miner Evolution has cut its production forecasts for its Mt Carlton mine by 75,000 ounces, set to hit its FY20 production by roughly 15,000 ounces.
The group said production for the current year would be 60,000 ounces, down from the 70,000 to 75,000 ounce guidance provided in January.
The downgrade will prompt a material change in the carrying value of the mine and, as such, the group will record a non-cash impairment of between $75m and $100m for the full year.
“We are disappointed to be recording an impairment at Mt Carlton. We will be working hard over the next six months to optimise the future of the operation and to further understand the size and quality of the Crush Creek project,” executive chairman Jake Klein said.
Eli Greenblat 9.03am: Nick Scali reinstates interim payout
Furniture retailer Nick Scali has witnessed a strong rebound in its sales over May and June following a dive in the early months of the coronavirus pandemic, and has decided to reward shareholders by reinstating its deferred interim dividend, to be paid by the end of the month.
Nick Scali issued a trading update Friday morning that projected the revival of its sales momentum since May would help the retailer post a 15 per cent to 20 per cent increase in its second half profit.
In February, Nick Scali was one of the first retailers to report that the then emerging coronavirus health issue in China had disrupted its supply chain out of the region, followed by the cancellation of its interim dividend as the crisis hit Australia.
On Friday in a statement to the ASX Nick Scali said sales had started to improve as health practices were put in place and its stores were reopened.
8.52am: Smash repair demand re-emerging: AMA
Smash repair group AMA says repair volumes were recovering after a collapse in March, set to return to pre-COVID-19 levels by the September quarter.
Still, the group said it had performed better in terms of profitability and cash generation than it had first thought, forecasting its net debt position at the end of June to be similar to that of the previous December.
The group said it had negotiated price rises with its major insurer partners to allow the business to recover standard operating cost inflation and the costs of increasing vehicle technology.
New arrangements come into effect from July 1.
“As restrictions continue to ease, we are seeing repair volume return across all parts of our business. I am confident we will emerge from the COVID-19 pandemic with a continued focus on operational performance and efficiency as we now set our sights on growth opportunities in the sector and on delivering shareholder value,” chief Andy Hopkins said.
7.47am: Austal wins $US43m in new US Navy work
The US Department of Defence has awarded Australian shipbuilder Austal a $US43m contract extension for work on the US Navy’s Littoral Combat Ship (LCS) class of boats.
“The contract modification exercises options for LCS Class design services, material to support LCS Class design services and the US Navy’s Integrated Data Product Model Environment (IDPME),” Austal in a statement.
Work is expected to be complete by June 2021, the company said.
7.29am: ASX following US to flat start
Shares are poised for a flat start to trade on the Australian market after rising coronavirus cases in some US states and Beijing hindered movement on US markets.
The Australian SPI 200 futures contract was lower by 5.0 points, or 0.08 per cent, to 5,922.0 at 0705 AEST on Friday.
In the US overnight, all three major US stock indexes oscillated through much of the day but the S&P ended the session in the black along with the tech-heavy Nasdaq. The blue-chip Dow lost ground. While several US states have reported surges in new COVID-19 cases after reopening their economies, President Donald Trump insisted the United States would not enact a new round of restrictions to curb the pandemic’s spread. Gold prices eased a bit after a Chinese medical expert said Beijing has brought a recent outbreak under control. China has found the trading sections for meat and seafood in Beijing’s wholesale food market to be severely contaminated with the coronavirus. The country’s capital has tackled a resurgence of COVID-19 cases over the past week linked to the massive Xinfadi food centre, which houses warehouses and trading halls in an area the size of nearly 160 soccer pitches. Senior market strategist for Allianz Investment Management in Minneapolis, Charlie Ripley, said: “Investors are in wait-and-see mode.
“The consensus is we’re on the road to the recovery but there could be bumps along the way and these increasing virus numbers could be one of those bumps.”
The Australian dollar was buying 68.52 US cents at 0705 AEST, lower from 68.72 US cents at the close of trade on Thursday.
AAP
7.25am: Qantas, Jetstar announce discounts
Jetstar and Qantas have announced cut-price airfares and frequent flyer points bonuses to get people flying as coronavirus travel restrictions ease. Jetstar is offering 10,000 one-way fares for $19 on 22 routes, including Melbourne to Sydney, Sydney to Gold Coast, Melbourne to Ballina, Brisbane to Whitsunday Coast and Adelaide to Cairns. Other routes have also been discounted. And Qantas is offering triple points for frequent flyers on all routes as part of a plan to reboot domestic air travel.
AAP
6.10am: Flat finish for Wall Street
Wall Street stocks finished little changed Thursday as investors weighed data showing stubbornly high jobless claims against optimism over the impact of monetary stimulus.
The Dow Jones Industrial Average ended down 0.2 per cent at 26,079.90. The broadbased S&P 500 edged up 0.1 per cent to 3,115.32, while the tech-rich Nasdaq Composite Index gained 0.3 per cent to 9,943.05.
Art Hogan, chief market strategist at National Securities, described the market as being “in a bit of a stalemate” with worrisome economic and coronavirus trends offset by reassuring support from the Federal Reserve and hopes for coronavirus treatments.
Another 1.5 million US workers filed new claims for unemployment benefits last week, the Labor Department said, a decrease of only 58,000 from the prior week and higher overall than analysts expected.
Oxford Economics warned that the data shows “significant stress remains in the labour market,” while FHN’s Chris Low said the figures “suggest claims are levelling off at a level never seen before the Lockdown Recession.” Rising COVID-19 case counts in several states have been adding to the market unease.
Hospitalisation have risen in Texas since Memorial Day, and California on Thursday required face masks face coverings in public indoor spaces following a jump in cases.
AFP
6.08am: Trump makes new China threat
President Donald Trump warned Thursday that “complete decoupling” between the deeply intertwined US and Chinese economies remains a potential policy.
“The US certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!” Trump tweeted.
It was not Ambassador Lighthizer’s fault (yesterday in Committee) in that perhaps I didn’t make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!
— Donald J. Trump (@realDonaldTrump) June 18, 2020
He wrote that he was responding to comments by his trade representative Robert Lighthizer, who has been at the forefront of trade war negotiations with Beijing.
On Wednesday, Lighthizer told a congressional committee that China was so far living up to the terms of an agreement easing the dispute and that decoupling the two economic giants was now impossible.
“That was a policy option years ago, but I don’t think it’s a policy or reasonable policy option at this point,” he said
6.01am: US virus cases decline overall
The number of deaths per day from the coronavirus in the U.S. has fallen in recent weeks to the lowest level since late March, even as states increasingly reopen for business. But scientists are deeply afraid the trend may be about to reverse itself.
“For now, it’s too soon to be reassured that deaths are going down and everything’s OK,” said Dr. Cyrus Shahpar of Resolve to Save Lives, a non-profit organisation that works to prevent epidemics.
Deaths from COVID-19 across the country are down to about 680 a day, compared with around 960 two weeks ago, according to an Associated Press analysis of data compiled by Johns Hopkins University. The analysis looked at a seven-day rolling average of deaths through Wednesday.
A multitude of reasons are believed to be at play, including the advent of effective treatments and improved efforts at hospitals and nursing homes to prevent infections and save lives.
But already there are warning signs.
For one thing, the number of newly confirmed cases per day has risen from about 21,400 two weeks ago to 23,200, the AP analysis found.
AP
5.45am: McDonalds on US hiring spree
McDonald’s said on Thursday that it plans to hire 260,000 workers in the US this northern summer as states, and dining rooms, reopen amid the coronavirus pandemic. McDonald’s says it has put more than 50 safety precautions in place including temperature checks for workers and social distancing awareness signage in the restaurant. Returning customers may also notice that some menu items are missing. Salads, bagels and yoghurt parfaits are among 100 items that have been removed for the foreseeable future, according to The Wall Street Journal.
Dow Jones Newswires
ASX 200 rises on banks; Arcadium top gainer
Rio Tinto's takeover approach lifts Arcadium Lithium appeal. West African Resources drops on Burkina Faso mining concerns. Qantas may avoid second strike after proxy backing.
Miners drag on ASX 200; Woodside, Mesoblast up
US President Joe Biden triggers oil price jump. Mesoblast top gainer. Sinopec wants price review on APLNG deal. Platinum grants Regal access for higher offer. Ratings upgrade for Cochlear. Optimism underpinning latest Bendigo Bank, UBS forecasts.