ASX adds $68bn as Trump weighs new $1tn stimulus

Reports of a new $1tn US stimulus package and further support from the US Fed sparked a 3.9pc rally on the ASX, with all sectors higher.

David Rogers and Melissa Yeo

34 min read

8:44PMJune 16, 2020

Shares have shot up on reports US President Donald Trump is mulling a further $1tn stimulus hit. Picture: AP Photo/Evan Vucci.

US mulls further $1tn stimulus hit
Jobs recovery slow but steady: ABS
Viva joins LNG import race
Monetary stimulus propping up asset prices: RBA

That’s all from Trading Day for Tuesday, June 16. ASX finished higher by 3.9pc after gaining as much as 4.4pc in afternoon trade on reports Trump was weighing a further $1tn in stimulus, and after the US Federal Reserve announced it would buy corporate bonds to provide support for commercial borrowing.

Locally, ANZ’s weekly consumer confidence index showed confidence was climbing higher while the RBA warned that central banks were propping up asset prices at its June meeting.

US futures suggest a jump to come overnight.

8.43pm: EU lauches Apple antitrust probes

European Union antitrust authorities launched two probes into Apple’s potential violations of competition laws, focused on its Apple Pay service and its App Store for software that runs on its mobile devices.

If found guilty, Apple could face a fine of up to 10pc of its annual revenue and be forced to adjust its business practices.

The probes follow complaints from Apple rivals including music-streaming service Spotify Technology, which last March filed an antitrust complaint with the EU against Apple over allegedly restrictive rules for developers that use its App Store.

Separately, the EU has fielded complaints that Apple has abused its control over the Apple Pay payments service to force app developers into using Apple’s system rather than rivals’. In its announcement on Tuesday, the EU said it would examine how Apple allows only its own Apple Pay to use the contactless payment system built into Apple devices.

Apple defended its practice of taking a 30pc cut of sales through the App Store. The company denied hurting rivals and said it wants apps that compete with its services to thrive.

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Melissa Yeo 8.24pm: Orora says it has little to no debt

Packaging manufacturer Orora says it has little to no debt left after the $1.55bn sale of its Australian Fibre segment to Nippon Paper, as it hands $600m back to shareholders in dividends.

Shareholders were asked to approve a capital return of $150m at Tuesday’s extraordinary general meeting, with a $450m special dividend already approved by the board.

As previously flagged, the company said its preference was to keep the rest of the proceeds for growth “should the right opportunity present itself”, but “directors will of course consider additional return of excess capital to shareholders”.

Damon Kitney 8.14pm: Supply chains under review

The supply chains of the post-COVID world will not be driven by products and processes but by customer needs, and companies may look to appoint chief logistics officers as part of their leadership teams to extend the “Uberisation of transport” solutions, according to KPMG.

The firm’s ASPAC head of supply chain, Peter Liddell, said it was seeing multiple requests by clients for support in upgrading their supply chains to make sure their systems supported a renewed customer focus.

“It really is the customers’ determination on how they purchase something, where they purchase it and the form in which the want it. We are seeing the emergence of demand-driven supply chains. COVID-19 has highlighted those companies that haven’t been prepared to pivot to online,” he said.

In a post-COVID world companies would not depend on capital-intensive fixed assets and linear flows but “on an ecosystem of modular capabilities, delivered through a network of trusted third parties, that can be scaled and recombined as needed”.

John Durie 7.47pm: Bain, Cyrus down to the wire on Virgin

Bain Capital’s Mike Murphy presents as the safe pair of hands with a team on the ground and at least $25bn in capital to apply should it win next week’s contest for Virgin.

Rival bidder Cyrus Capital is said to be still looking for partners, and while the two have similar plans, supporting management’s own ideas for the $7.1bn debt-burdened carrier, the ability to execute holds the key.

Cyrus’s primary $US4bn fund would normally only support a bid of about $400m, well short of the expected $700m to $1.2bn final bid, but administrator Vaughan Strawbridge was clearly satisfied to let it reach this level.

The circa $1bn bid would cover some creditors but the reality for the $2bn owed to unsecured bond holders is they will get at very best the 10c in the dollar the bonds are now trading at, and probably less.

Some of the 9500 staff would probably lose their jobs, but union support is key to get the deal over the line and then run the airline with the old-style more relaxed culture.

Bids for Virgin close next Monday with a decision expected mid-week and then a frantic month for the winning bidder to negotiate deals with the myriad debt holders, such as the expensive contracts with GoGO for the in-flight Wi-Fi, caterers Gate Gourmet and Boeing.

The final deal is due to go to creditors for approval on August 22.

Eli Greenblat 7.16pm: Market backs Super Retail strategy

The market has backed Super Retail Group chief executive Anthony Hegarty’s strategy to accelerate the retailer’s digital and online shopping platforms to harness the renewed interest in leisure activities from jogging to fishing, by taking up 95 per cent, or $158m, in an institutional offer.

Investors also liked what they heard on Monday during a presentation for the capital raising where Super Retail provided an upbeat trading update for its retail arms - Supercheap Auto, BCF, Macpac and Rebel - that showed rocketing sales in May, sending shares in the company almost 10 per cent higher.

Shares in Super Retail hit a high of $8.79 when the shares came out of a trading halt and later closed up 77 cents, or 9.85 per cent, at $8.58.

The company said on Tuesday it had raised $158m, strongly supported by institutional investors, with a further underwritten entitlement offer to retail investors to raise another $45m for Super Retail.

“We are very pleased with the strong support for the entitlement offer shown by both our existing shareholders and other institutional investors,’’ Mr Hegarty said.

“We are very focused on continuing to invest in our growth agenda, delivering excellence in omni-retail execution which will enable us to benefit from the changing consumer trends that are already providing tailwinds for our core four brands.

“We see the outcome of the institutional entitlement offer as a strong endorsement of that strategy.”

Shares in the capital raising are being sold at $7.19 each, a 7.9 per cent discount to their last traded price on June 12.

The trading update issued on Monday showed a whiplash-like movement in Super Retail’s sales through the coronavirus pandemic, with like-for-like sales plunging 26.2 per cent in April but then rebounding to leap 26.5 per cent in May. During April and May, there was a strong shift to online with group online sales increasing 126.2 per cent to represent 18.2 per cent of group sales over the same period.

Citi analyst Bryan Raymond said he had retained his ‘buy’ rating on the stock but lifted his target price.

“At 12 times price to earnings ratio, with a de-geared balance sheet and earnings underpinned by the resilient (Supercheap) Auto business, we retain our Buy rating, with our target price upgraded from $8.00 to $9.70 following EBIT upgrades, a broad-based re-rating and earnings per share.’’

He said the Super Retail balance sheet would be better prepared for the current trading environment.

James Kirby 7.01pm: ASX feeding frenzy on US stimulus

The US has moved the “whatever it takes” approach on market support to a whole new level and traders can smell it, buying just about anything on the ASX on Tuesday where every single stock on the S&P/ASX 200 flashed green.

Indiscriminate buying pushed the market up 4 per cent in a single session with “growth” stocks - typified by the buy now, pay later brigade - powering ahead.

We have very little visibility on earnings at our biggest companies. We have dividends dropped in a range of blue chips. We are, in fact, in the middle of a recession, but a stimulus does what a stimulus does.

Shares automatically move higher and the price of such action remains a problem for another day.

Australian investors barely had time to digest the extraordinary decision by the US Federal Reserve to begin buying individual corporate bonds when news broke of the Trump Administration mulling a new $1 trillion stimulus plan.

The Fed has been testing the waters until now restricting its corporate bond market support to the buying of Exchange Traded Funds where at least the support did not cherrypick companies.

Mackenzie Scott 6.44pm: Pause on Brisbane development

Slow apartment sales and the weak economic environment post coronavirus has prompted Brisbane developer Don O’Rorke to pause work on his latest project.

Consolidated Properties was set to begin construction on the first phase of the Yeerongpilly Green master planned community at Yeerongpilly, south of Brisbane, in the third quarter of the year, but work on the 100 apartments and shopping centre is now unlikely to begin until next year.

Mr O’Rorke, the company’s founder and executive chairman, said off-the-plan apartment sales slowed in the wake of the coronavirus pandemic, with buyers unwilling to spend large amounts of money on an intangible asset in the current economic climate.

Bridget Carter 5.20pm: Citi working Megaport selldown

Investment bank Citi is working on a selldown of a 4.9 per cent stake out of Megaport by shareholder Digital MP.

Shares are being sold through a bookbuild with a range of between $13.10 and $13.50 in 5c increments.

At the end of the transaction, the shareholder will still hold 2m shares in Megaport.

The price is a discount of between 3.6 per cent and 6.4 per cent to the company’s last traded share price of $14.

The offer size is between $99m and $102m.

4.58pm: All but two stocks finish higher

All but two stocks from the top 200 clinched gains in Wednesday’s broad rally – led by outperformance in tech and energy stocks.

Market darling Afterpay set new record highs of $57.07 during the session and settled to a gain of 10.5 per cent at $56.52 – marking a 89 per cent year-to-date lift.

Elsewhere in the buy now, pay later sector, Zip added 9.5 per cent to $6.32 and Sezzle rose 9.1 per cent to $3.25.

Tech outfit Altium put on 4.9 per cent to $34.01 as Seek jumped 7.2 per cent to $20.51 on an upgrade from Jefferies and Carsales added 5.9 per cent to $16.95.

Energy stocks cheered a 2.3 per cent jump in WTI crude futures overnight – Woodside lifted 3.9 per cent to $21.47, Oil Search rose by 8.6 per cent to $3.42 and Santos lifted 5 per cent to $5.45.

Here’s the biggest movers at the close:

Lilly Vitorovich 4.42pm: Ad spend could be bottoming: UBS

Advertising spending continues to worsen, dropping about 48 per cent last month from a year earlier as companies continue to slash spending during the coronavirus crisis, according to UBS.

That compares to a 43 per cent drop in ad spending in April, says the broker, citing data from industry group Standard Media Index.

SMI data shows ongoing weakness across all mediums in May, with the outdoor ad sector hit the hardest, down 72.8 per cent, from a 63 per cent drop in April.

Metropolitan radio and newspapers dropped 62.4 and 50.3 per cent, respectively, last month after 48pc and 38pc drops, respectively, in April.

However, UBS media analysts led by Eric Choi see the potential for year-on-year declines to “moderate in June”, given consumer confidence data is showing a sequential improvement and NRL/AFL-related advertising returns in June.

Separately, Goldman Sachs says the revised AFL and NRL sports rights deals with broadcasters is a positive for the industry’s outlook.

Goldman Sachs has increased its FY20 earnings estimate for News Corp, publisher of The Australian, by 1 per cent, but cut its earnings forecasts for Nine Entertainment and Seven West Media by 1 and 11 per cent, respectively. The investment bank has also increased its 12 month target price on all three media companies.

For the next two financial years, Goldman Sachs has increased its earnings forecasts for all three groups.

Goldmans and UBS say the return of AFL and NRL is a positive for the media industry. Picture: Sarah Reed.

4.15pm: Stimulus boost sends ASX up 3.9pc

New pledges of fiscal and monetary support sparked a $68.2bn surge on the local market – to make back more than half of the previous three-day drop.

The US Federal Reserve on Wednesday morning detailed a new corporate bond buying program to support the US economy, then speculation of a further $1tn in US infrastructure stimulus served to pump up the market’s optimism.

The S&P/ASX200 built to a gain as much as 4.4 per cent in afternoon trade before settling up 223 points or 3.89 per cent to 5942.3 as US futures climbed by 1.2 per cent.

Banks were a key driver of support, led by a 4.2pc jump in Commonwealth Bank and 4.1pc jump in Westpac while BHP added 2.9pc and Afterpay jumped by a massive 10.5pc to finish just shy of its new record high of $57.07.

Nick Evans 3.47pm: Fortescue ramps up green push

Fortescue Metals Group has pulled forward plans for producing net-zero carbon emissions by at least a decade, saying on Tuesday it plans to now reach the target by 2040.

Fortescue had previously said it expected to be a net-zero carbon emitter by “the second half of the century”, but said on Tuesday it now expected to achieve the milestone within 20 years.

The company also toughened up its near-term emission targets, saying it wants to reduce its scope 1 and 2 carbon emissions – those directly attributable to its own operations and those of its power providers and major suppliers – by 26 per cent (from 2020 levels) by 2030.

FMG last traded up 4.4 per cent to $14.93.

Read more: Fortescue ramps up green push

3.09pm: Farm exports to lift, value little changed

National agriculture bureau ABARES today lifted its forecast for Australian farm exports by 9.3pc to $47bn for 2019/20, but warned gross value of production is forecast to be little changed as a result of falling prices.

Drought remains the dominant theme for farmers, even as recent rainfall spurs a resurgence in production.

The department expects meat and live animal exports for the year to hit record highs of $17.5bn, up 13.1pc from a year ago but that won’t be enough to offset the hit from the global pandemic.

“A global recession in the wake of COVID-19 is expected to result in reduced demand and lower world prices for many agricultural commodities in 2020–21. For Australia, this will be compounded by domestic grain prices falling back to export parity – and fodder crop prices falling – as the effects of drought subside,” ABARES said.

“Price falls are expected in most grains, oilseeds, pulses, fibres, fodder and milk. Partially offsetting these falls are modest forecast price rises for red meat, due primarily to African swine fever-induced demand.”

2.53am: BNPL stocks gain more than 10pc

Buy now, pay later stocks are soaring on rising risk sentiment, as central banks pledge further stimulus and Trump mulls an extra $1tn to support the economy.

Market darling Afterpay has set new records of $57.07 and is higher by 10.6pc in afternoon trade to $56.60 while rival Zip is higher by 10.4pc to $6.37.

Across the rest of the sector, Sezzle is up 6.4pc as Openpay adds 15.4pc and FlexiGroup jumps by 8.7pc.

2.40pm: Healius poised to take on Sonic: CS

Following Healius’ divestment of its medical centres and dental clinics, the group is better placed to take on rival Sonic health, according to Credit Suisse.

The broker upgraded its rating on the stock to Outperform after news of the $500m sale to BGH Capital yesterday.

Post the sale, analyst write that Healius’ pathology business will have the scale to match Sonic, “and with further investment and cost control, it should become more efficient and close the margin gap to Sonic”.

At present, they say that Healius operates at a 300 basis point lower earnings margin versus Sonic, but that could improve by 100 basis points to FY23.

HLS up 3pc in afternoon trade to $3.10 after a near 20pc jump yesterday.

1.56pm: BOJ easing sends Nikkei up 3.9pc

The Bank of Japan left its ultra-easy monetary policy on hold Tuesday while it observes the effects of its recently-introduced lending program to help companies affected by the new coronavirus.

Since the pandemic became more widespread in March, the Japanese central bank has introduced additional credit-easing steps in line with the Federal Reserve and European Central Bank.

The BOJ said the total amount of its support for corporate financing would reach 110 trillion yen ($1.47tn) from an earlier total of Y75 trillion, in line with an expansion in government programs that the central bank is supporting. The figure includes purchases of corporate bonds and commercial paper.

Japan’s Nikkei has jumped on the news, last up 3.91pc – aided by the US Fed’s similar bond buying scheme.

The BOJ’s policy board maintained its annual target for purchases of stock exchange-traded funds at Y12 trillion and kept its limit for commercial paper and corporate bond holdings at a total of Y20 trillion. The BOJ has lifted both of those targets since the coronavirus pandemic began to stimulate the economy.

It also decided to maintain its targets for short-term interest rates at minus 0.1pc and the 10-year Japanese government bond yield around zero. The bank reiterated that it would set no limit on the amount of JGBs it is ready to buy to maintain the targets. In April, it dropped its previous guidance that it would buy around Y80 trillion in JGBs annually.

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Pedestrians stand in front of an electronic quotation board displaying share prices of the Tokyo Stock Exchange in Tokyo. Picture: Kazuhiro Nogi / AFP.

1.42pm: US futures lift 1.6pc on new stimulus

US futures are pushing higher in afternoon trade, as reports of a further $1tn in US stimulus add to optimism after the US Fed’s plans to buy corporate bonds.

Bloomberg is reporting Trump is preparing a $1tn proposal to support infrastructure, citing people familiar with the matter, with roads, bridges and 5G wireless infrastructure the likely beneficiaries.

S&P 500 futures are up by 1.6pc, supporting a 3.8pc jump on the ASX while the Aussie dollar benefits from rising risk-on sentiment, last up 0.7pc to US69.68c.

S&P

What virus #COVID19 ? E-minis are +1.6% reports that the Trump administration is weighing a $1 trn infrastructure proposal. Democratic presidential candidate Joe Biden is 8.1 points over President Trump, according to RealClearPolitics and if that narrows #SPX500 #stocks ðŸš€ pic.twitter.com/dJ6993QW9r
— Stephen Innes (@steveinnes123) June 16, 2020

Bridget Carter 1.32pm: Suitors circle oOh!Media

DataRoom | oOh!Media is once again under the spotlight as a takeover target, with groups circling amid questions about whether the business may be keen to further boost its liquidity levels.

Parties are sounding out the company about whether there could be interest for a takeover bid for oOh!Media or for an investor buying an equity stake.

oOh! Media raised $167m of fresh equity on March 26 in the grip of the coronavirus pandemic as it remained under pressure to reduce what was then a $354.5m net debt pile.

But some believe the company may be eager to gain even more funds, as billboard operators and media companies more broadly remain among the hardest hit from the COVID-19 pandemic disruptions.

Brendon Cook, managing director, said the company did not need more equity, while other sources close to oOh! Media say the business is well capitalised and not in need of fresh funds, with its share price now at around $1.04 – up 9.5pc in today’s trade.

If it was, an equity raising is likely to be off the cards, as it would test the patience of investors.

1.02pm: Further US stimulus powers ASX jump

The local share rally is accelerating at lunch, on reports US president Donald Trump is weighing a further $1 trillion in infrastructure stimulus.

It comes after the US Fed last night announced it would buy corporate bonds to provide support for commercial borrowing.

The news has sparked a 1.5pc jump in US futures, and sent the ASX to its best levels of the day – up 209 points or 3.7 per cent at 5929.1.

Just one of the top 200 stocks is trading in the red, Minerals Resources, while Viva Energy leads the market gainers on its plans for a LNG import terminal.

Here’s the biggest movers at lunch:

12.44pm: Westpac warns of payroll volatility

Westpac has warned of the volatility of weekly payrolls data, noting signs of recovery were promising, but should be read with caution.

The ABS data of weekly payrolls, which earlier today indicated a 1pc lift for the end of May, was introduced at the onset of the coronavirus crisis, as a means of gauging the immediate hit to the economy using ATO online payrolls data.

As such, Westpac cautioned that the data was only new, with little history and “being weekly it is likely to be quite volatile”.

Senior economist Justin Smirk describes the recovery as “patchy”, noting classifications of unemployment could skew the data but the top-line result was promising.

“By industry we are starting to see some recovery in the hardest hit sectors with accommodation and food services lifting 5pc in the month but arts and recreation continued to decline down 2.8pc in May,” he says.

“We are also watching for the second round effects with construction down -0.8pc in the month and information & technology down -2.2pc.”

Read more: Jobs recovery continuing: ABS

Bridget Carter 12.38pm: Ardent gets strong price for US deal: Citi

DataRoom | Ardent Leisure has achieved a strong price for its US entertainment business Main Event, say Citi analysts.

This is particularly so in the current COVID-19 environment, they say, but add that the proceeds cannot be repatriated to Australia, leaving Dreamworld burning cash with limited liquidity and having no clear pathway to reopening.

Ardent Leisure announced on Monday that it had sold a 24 per cent stake in Main Event for $US80m to RedBird Capital Partners.

The sale by Ardent Leisure of Main Event comes after DataRoom foreshadowed sale plans on September 3 and first reported in January that Goldman Sachs was working on a potential selldown.

ALG shares last traded up 8.8pc to 49.5c.

Jared Lynch 12.32pm: Drug wholesalers get funding boost

Pharmaceutical wholesalers will receive an additional $92m, or 5 per cent, funding from the federal government to meet its community service obligations and combat years of tumbling prices for essential drugs.

Health Minister Greg Hunt announced the additional funding on Tuesday, as well as a new floor price for drugs sold under the pharmaceutical benefits schemes (PBS).

Currently, pharmaceutical wholesalers including Sigma Healthcare, Australian Pharmaceutical Industries, Symbion and National Pharmacies receive 7.5 per cent of the value of PBS medicines from the government.

Given the price of PBS drugs has fallen steadily in recent years, to the point now where 85 per cent of all medicines under the scheme are priced at less than $15, wholesaler margins have fallen dramatically. For example, if a PBS drug is priced at $1, they receive 7.5c.

But Mr Hunt has introduced a $5.50 floor price under the new five-year agreement, which expires in 2025. This means wholesales will receive 7.5 per cent of $5.50 for any drug that falls below that price.

Sigma health shares are trading up 0.9pc to 59c as API adds 3.2pc to $1.15.

12.21pm: Jobs recovery continuing: ABS

Total payroll jobs increased by 1 per cent through May, gaining ground after a wipe-out from coronavirus shutdowns in March.

The Australian Bureau of Statistics found that payroll jobs had recovered to a 7.5pc loss by the end of May, from a drop of 8.9pc at its worst in mid-April.

Data also showed jobs worked by females were increasing at a faster pace to those by males, but female job losses were still greater at 8pc, compared to 6.3pc for males.

Payroll jobs in the accommodation and food services industry increased by 5 per cent through May, but remained 29.1 per lower than in mid-March.

During the COVID-19 crisis, payrolls for women have fallen by more than men across every age group. One-in-five women U20 and one-in-eight women 20 - 29 have lost their jobs since March 14 #ausbiz #auspol @IndeedAU pic.twitter.com/h2CEvLPrbD
— Callam Pickering (@CallamPickering) June 16, 2020

12.19pm: ASX heads for best day in 10 weeks

Australia’s S&P/ASX 200 is rising 3.5pc to a fresh 2-day high of 5918.

It comes as S&P 500 futures extended their intraday rise to 1pc.

Still bearish traders were caught out after the S&P 500 rose 0.8pc overnight despite expectations of a 3pc fall.

The S&P/ASX 200 is heading for its best one-day gain in 10 weeks.

Adam Creighton 12.10pm: Stimulus propping up prices: RBA

Central banks are propping up asset prices, the Reserve Bank Board has heard in a meeting that painted a grim picture of the outlook for business investment.

The minutes from the June meeting of the Reserve Bank Board, released on Tuesday, also revealed businesses were delaying investment decisions but some households were better off as a result of the pandemic responses.

“In some instances, households had received more income than usual,” the minutes said, referring to the significant increase in government welfare payments including JobKeeper and the supercharged jobless benefit, JobSeeker.

“Lower fuel prices, free childcare and other initiatives, as well as more limited consumption opportunities during the period of restrictions, had also reduced living expenses for many households,” they added.

The minutes were released in the wake of a decision by the Federal Reserve to expand its multi-trillion dollar government bond buying program to corporate bonds, a decision that underpinned a rally on Wall Street overnight which has continued into the Australian session today.

Lilly Vitorovich 11.56am: Property platforms lift media sector

The media sector is up strongly, led by online property listing firms REA Group and Domain Holdings.

REA, which counts News Corp as its biggest shareholder with a near 62 per cent stake, is up 4.6 per cent to $105 just before lunch on Tuesday. Domain is up 5.2 per cent to $3.24.

News Corp is up nearly 4 per cent to $17.36.

In contrast, Village Roadshow is down 2.8 per cent to $2.11 after the cinema and theme park owner announced it had extended the exclusivity period for its takeover talks with private equity group BGP for two weeks. The extension suggests there’s still interest in completing a deal, but the parties may be butting heads over the financial details.

11.32am: Orora debt-free after Paper sale

Packaging manufacturer Orora says it has little to no debt left after the $1.55bn sale of its Australian Fibre segment to Nippon Paper, as it hands $600m back to shareholders in dividends.

Shareholders were asked to approve a capital return of $150m at today’s extraordinary general meeting, with a $450m special divided already approved by the board.

As previously flagged, the company said its preference was to keep the rest of the proceeds for growth “should the right opportunity present itself” but “Directors will of course consider additional return of excess capital to shareholders”.

Shareholders will also vote on a consolidation of Orora shares by converting every one share for 0.8 shares, “to adjust Orora’s number of shares for the quantum of the cash return”.

Orora said its teams had performed “extraordinarily well” in response to the impact of COVID-19 and its strategy review was progressing well, with further details to be provided later this year.

ORA shares last traded up 3.1pc to $2.65.

David Swan 11.19am: Afterpay, Seek follow Nasdaq leap

Australia’s technology stocks are surging on Tuesday, up across the board following a strong performance by the tech-heavy Nasdaq overnight.

US video conferencing software maker Zoom zoomed up 9 per cent, with the company now up 300 per cent since the start of the year. Chipmaker Nvidia was up 3 per cent, while Facebook, Netflix and Intel were all up 1 per cent. The Nasdaq closed up 1.4 per cent.

Australian tech has followed suit Tuesday morning, with market darling Afterpay (APT) up 7.6 per cent to a new high of $55.05.

Seek (SEK) has also climbed by 7.6 per cent, to $20.58, while IT service management provider EML Payments (EML) is up 6.8 per cent to $3.64.

Nearmap (NEA) is also performing strongly, up 6.31 per cent to $2.19.

Follow the latest breaking tech news at The Download

11.05am: Viva Energy surges 15pc

Viva Energy is leading the charge in morning trade, after joining the race to build Australia’s first LNG import terminal.

The group this morning laid out plans for its Geelong plant to become an “energy hub”.

Amid intense pressure in the refining sector due to tough margins and tepid demand due to COVID-19, the owner of the Coles Express service station network will battle with high profile and deep pocketed rivals, including AGL Energy’s Crib Point terminal on Victoria’s Mornington Peninsula and the Andrew Forrest-backed Port Kembla facility in NSW.

Viva shares are up 15.5pc to $1.75.

10.42am: Shares hit two-day high on tech lift

Australia’s S&P/ASX 200 share index is lifting 3.1pc at 2-day high of 5905.3 as US futures jump, after stronger than expected US manufacturing business confidence and a broadening of the Fed’s corporate bond buying program.

After falling 2.9pc to a 2-week low of 5791.8 on Monday, the S&P/ASX 200 is now heading for its best day in the past 10 weeks.

But it’s not yet accounting for further gains in US stock index futures this morning. S&P 500 futures are currently up 0.7pc.

Technology is the standout sector with Afterpay and EML payments both up more than 7pc. Energy is also outperforming with Oil Search up 5.1pc after crude oil bounced.

Viva Energy is up 16pc after joining the race to build a LNG import terminal at Geelong. Real Estate, Communications, Consumer Discretionary, Financials and Industrials stocks are also outperforming.

Ben Wilmot 10.29am: APN sets guidance for FY21

Petrol station owner APN Convenience Retail REIT has tapped Moelis to raise $50m via an institutional placement. The placement was struck at a fixed price of $3.20 per share and will be used to fund the trust’s $10m of acquisitions, and an additional $40m it has in due diligence.

Oil major Chevron is buying Puma Energy for $425m and is targeting a transaction completion date of June 30, and the property trust expects a valuation uplift on its Puma stations once the Chevron transaction completes.

The trust gave distribution guidance for fiscal 2021 of “not less than fiscal 2020” which equates to a 6.8 per cent distribution yield at the placement price.

Puma service station staff member Jack Sibley. Picture: Zak Simmonds.

10.20am: Village Roadshow extends BGH talks

Theme park operator Village Roadshow says it has extended the exclusivity period for its takeover discussion with private equity group BGH for two weeks.

The two first entered discussions for a takeover in January, but the offer was revised from $4 per share to $2.40 per share in May in the wake of the disruption caused by coronavirus.

Some have gone so far as to tag the revised offer as a “bargain bid”.

In a note today, Village Roadshow said it was extending the period of exclusivity to June 30, with potential for a further two-week extension past that date “if the parties continue to actively pursue the potential transaction”.

VRL last traded up 0.5pc to $2.18.

Read more: Rivals eye Village Roadshow

Bridget Carter 10.17am: APN Convenience REIT raising $50m

DataRoom | The APN Convenience Retail REIT is raising $50m through a placement at

$3.20 per share.

Shares last closed at $3.36 and the raise is a 4.8 per cent discount to last close.

Moelis is working on the transaction.

The funds will be used to strengthen the group’s balance sheet, repay debt and fund acquisitions.

More to come

10.12am: Shares bounce back with 3pc jump

Local shares have exceeded expectations at the open, surging by 3pc with gains in all sectors as the US Fed pledged further stimulus overnight.

At the open, the ASX200 is up by 164 points or 2.87 per cent at 5883.9 – after hitting as much as 5892.8.

That’s after futures relative to fair value had projected a jump of 2.7pc, likely due to a surge in US futures which are now up by 0.7pc.

Tech and energy are gaining the most, but its banks that are doing most of the heavy lifting – the majors up between 3.3pc and 3.8pc.

Heavyweight miners too are gaining ground, BHP is up by 1.9pc as Rio Tinto adds 2.5pc.

10.06am: Future confidence at March levels: ANZ

Consumer confidence of future financial condition is now back to early March levels, before the onset of the coronavirus downturn, according to ANZ.

In its latest weekly survey of confidence the bank found confidence to be back on the upward path, albeit with only a modest gain of 0.5pc.

Perceptions of current finances were up just 0.5pc, while future finances gained 1.4pc.

“Confidence in future financial conditions is now back to the early March level, which is a solid turnaround given the impact the pandemic lockdowns have had on employment and wages,” ANZ head of Australian economics David Plank says.

“The contrast we expect to see between the May labour market and retail sales data may confuse the picture somewhat, but the continued easing in the lockdowns seems likely to be a positive force for sentiment for now.”

Time to buy a household item rose by 1.3pc, compared to a decline of 5.7pc in the previous week.

ANZ-Roy Morgan Aus Consumer Confidence: Confidence in future financial conditions is back to early March levels, which is a solid turnaround given the impact the lockdowns have had on employment and wages. #ausecon #ausretail @DavidPlank12 @roymorganonline pic.twitter.com/w06MrsKT4H
— ANZ_Research (@ANZ_Research) June 15, 2020

9.58am: $A jumps in line with US futures

The Australian dollar is tracking a 0.7pc rise in S&P 500 futures.

AUD/USD rose 0.5pc to a 3-day high of 0.6957, making it the best performing G10 currency so far today.

9.36am: Shares to jump on US rebound

Australian shares are set to jump after Wall Street surged on a stronger-than-expected Empire State Manufacturing Survey and a further broadening of quantitative easing by the Federal Reserve.

These events will offset coronavirus jitters today and may lead to a retest of recent highs on the US and Australian shares, barring a major second wave of coronavirus.

Valuations remain stretched after hitting a record high last week, but consensus 12-month EPS has risen 1.3 per cent after hitting an 11-year low on June 5.

Overnight futures relative to fair value suggest the S&P/ASX 200 will open up 2.7pc at a 2-day high of 5874 after diving 2.9pc to a 2-week low of 5949.6 on Monday.

On the US markets, the S&P 500 initially fell 2.5pc to a 3-week low of 2965.66 but recovered to close up 0.8pc at 3066.59. Importantly on a technical basis, the S&P 500 remained above its 200-day moving averages at 3015 on a closing basis.

The Empire State manufacturing business conditions index bounced from -48.5 to -0.2pc versus -29.6 expected. Significantly, the Business Conditions 6-months ahead index rose 27 points to 56.5, the highest in a decade, a much faster pace than after the GFC, when it took 2 years for the index to recover.

More importantly, the Fed expanded its Secondary Market Corporate Credit Facility to include individual corporate bonds, and removed a requirement for companies to certify their eligibility.

Bloomberg now says it expects the BoJ to double its corporate loan facility today to JPY60 trillion.

9.26am: Super Retail completes $158m offer

Super Retail Group will return to trade this morning after completing its $158m institutional entitlement offer.

Shares were offered at $7.19 apiece, and 95pc of eligible institutional shareholders took up the offer, including founder and major shareholder Reg Rowe.

“We see the outcome of the Institutional Entitlement Offer as a strong endorsement of that strategy.”

In addition, the group has launched a $45m retail offer to open from next Monday.

Super Retail Group owns retail chains BCF, Supercheap Auto, Macpac and Rebel Sport. Picture: AAP Image/Steve Pohlner.

9.13am: Plant-based meat developer taps CSIRO

Wide Open Agricultre, a self-described regenerative food and agriculture company, has tapped the national research organisation to help scale up its lupin-seed protein products.

The WA-based group has been working with research from Curtin University on extracting protein from legumes, to be used as alternatives to meat, eggs, milk and gluten-free products, and CSIRO has been tasked with scaling the laboratory process.

“The outcomes from this project will assist WOA to establish a viable commercial product which can compete with today’s leading plant-based proteins,” managing director Ben Cole said.

WOA last traded at 39c.

8.48am: What’s on the broker radar?

Arena REIT rated new Positive – Evans and Partners
Charter Hall Social Infrastructure rated new Positive – Evans and Partners
Crown upgraded to Overweight, target price raised 82pc to $12 – Morgan Stanley
Healius raised to Outperform, price target raised 32pc to $3.25 – Credit Suisse
Seek raised to Hold – Jefferies
Star Entertainment cut to Underweight, target price raised 32pc to $3.30 – Morgan Stanley
Super Retail price target raised 70pc to $8 – Bell Potter

Max Maddison 8.42am: Beijing new virus cases climb

The surge of coronavirus cases linked to a Beijing wholesale food market has surpassed 100 new cases, as authorities race to find the source of the outbreak.

In a statement, the World Health Organisation said the size and connectivity of Beijing meant the outbreak was a “concern”, but claims that the outbreak may have been caused by imports or packaging of salmon were not the “primary hypothesis”.

Chinese authorities in several districts of Beijing closed security checkpoints, closed schools and increased testing regimes.

On Saturday, the WHO said 87 new cases had been reported – 41 infectious cases had been linked to the Xinfadi market – increasing fears of a second wave.

Follow the latest at our coronavirus live blog

Perry Williams 8.20am: Viva joins LNG import race

Viva Energy has joined the race to build Australia’s first LNG import terminal with plans underway to transform its Geelong refinery in Victoria into a major energy hub after the facility fell to a loss due to falling margins and a COVID-19 demand hit.

Amid intense pressure in the refining sector due to tough margins and tepid demand from COVID-19, the owner of the Coles Express service station network with battle with high profile and deep pocketed rivals including AGL Energy’s Crib Point terminal in Victoria’s Mornington Peninsula and the Andrew Forrest-backed Port Kembla facility in NSW.

Viva said the project is in a pre-engineering and design stage with an expression of interest process to shortly kick off to ascertain interest from potential partners for gas supply, gas demand, power generation and LNG floating storage management.

The company faces severe pressure on its refinery, one of only four remaining in Australia.

Underlying earnings at Geelong before interest, tax, depreciation and amortisation are expected to show a first half loss of $32.5m-$42.5m due to COVID-19 and the transition to new IMO shipping standards and compared with an $18.4m profit in the same period a year ago.

8.18am: US hit by major mobile outage

T-Mobile US users in several American states reported problems making and receiving phone calls on Monday, a widespread service disruption for the newly enlarged wireless provider.

The network issues began in the afternoon at T-Mobile, which is taking early steps to integrate its April purchase of Sprint Corp. The transaction left the combined company with more than 100 million customers, including those running atop its infrastructure under other carriers’ brands.

T-Mobile technology chief Neville Ray said in a tweet Monday afternoon that the carrier’s engineers were “working to resolve a voice and data issue that has been affecting customers around the country,” and apologised for the inconvenience.

Representatives of T-Mobile competitors AT&T and Verizon Communicationsreported no apparent problems with their networks, though some customers were unable to reach T-Mobile lines.

Separately on Monday, major T-Mobile shareholder SoftBank Group confirmed it is in talks to potentially sell most of its stake in the U.S. wireless company and give up board seats.

Dow Jones Newswires

7.43am: ASX set for solid lift

Great gains are projected for the ASX early after US investors turned positive when the Federal Reserve revealed it will buy individual corporate bonds to help prop up the economy.

The local SPI 200 futures contract was higher by 141 points, or 2.46 per cent, to 5,876.0 at 7am on Tuesday, indicating gains in share values early. The Federal Reserve’s purchases will be part of its program to keep lending markets running smoothly, which allows big employers to get access to cash. They are also the latest reminder that the US central bank is doing everything it can to help support markets during the coronavirus pandemic, analysts said

In Australia, New South Wales Treasurer Dominic Perrottet is expected to tell Australia’s most populous state its economy will shrink by 10 per cent this financial year due to the virus crisis. Unemployment is tipped to reach 7.5 per cent.

The Australian dollar was buying 69.19 US cents at 0700 AEST, higher from 67.88 US cents at the close of trade on Monday.

7.14am: Europe borders reopen

European countries reopened borders Monday after a three-month coronavirus shutdown, although international visitors are still being kept away and there was uncertainty over whether many Europeans will quickly embrace travel outside their home countries.

Reopening continued in Mexico and Brazil despite cases climbing in the two largest nations in Latin America, where authorities struggled to handle the pandemic’s effect on already-weak medical systems.

The need for constant vigilance came into sharp focus as China, where COVID-19 first emerged late last year, rushed to contain an outbreak in the capital of Beijing.

The head of the World Health Organisation said more than 100,000 confirmed cases of coronavirus have been reported globally each day in the last two weeks, and countries that have curbed transmissions “must stay alert to the possibility of resurgence.”

6.10am: Fed moves lift Wall Street

US stock markets shook off a weak start and ended broadly higher after the Federal Reserve announced its latest measure to support markets. The S & P 500 closed up 0.8% Monday. It was down as much as 2.5% in the early going. Markets turned higher immediately after the Federal Reserve said it would begin buying individual corporate bonds, the central bank’s latest move to prop up volatile financial markets through the economic fallout of the coronavirus pandemic. Stocks have been volatile over the last week as worries about upticks in infections create cracks in the furious rally. Bond yields rose.

6.02am: Virus cases climb across the US

New coronavirus cases have accelerated in more than a dozen U.S. states as summer weather and reopenings have prompted throngs of people to gather across the country and officials to weigh next steps.

The U.S. coronavirus death toll passed 115,000 while reported cases topped 2.1 million Monday, according to data compiled by Johns Hopkins University. Confirmed cases worldwide exceeded 7.9 million, and more than 434,000 people have died. Experts say the exact tally might be higher, as testing capabilities and reporting standards differ across U.S. states and countries.

New York Gov. Andrew Cuomo threatened to reverse reopening in parts of the state that aren’t following or enforcing coronavirus safety rules. He said the state had received 25,000 reports of reopening violations, predominantly in Manhattan and the Hamptons.

“Compliance is hard. Why? Because people have been cooped up for a long time and want to do what they want to do,” Mr. Cuomo, a Democrat, said Monday. “I get it. But we have to stay smart. If the local governments don’t enforce compliance, they aren’t doing anyone a favour.” New York on Sunday reported its lowest number of hospitalisation and deaths in a single day since the pandemic accelerated.

More than a dozen U.S. states, meanwhile, have seen confirmed cases increase in the past week at a pace faster than in the week prior, according to a Wall Street Journal analysis of Johns Hopkins data. The pick-up in infections rattled investors Monday, though U.S. stocks pared some of their early losses.

Dow Jones Newswires

5.59am: Hollywood delays Oscars

The Oscars will be delayed by nearly two months, the body that presents the awards said, after few new films have been released and most theatres have remained closed in recent months because of the coronavirus pandemic.

The Academy of Motion Picture Arts and Sciences now plans to hold the 93rd Oscars ceremony next April 25, instead of February. 28 as originally planned.

Films released as late as next February 28 now can qualify for contention in the next instalment of the movie industry’s biggest awards show. The eligibility deadline had been December 31.

The change announced Monday represents one more way Hollywood is adapting to a marketplace up-ended by the coronavirus. As the numbers of infections around the world grew, movie theatres closed amid lockdown measures aimed at limiting the spread of the disease. Major movie studios have for the most part halted distribution of high-profile projects. Some, like Comcast Corp.’s Universal Pictures, have resorted to releasing some films directly online, hoping to supply more viewing options for would-be moviegoers stuck at home.

Dow Jones Newswires

5.58am: US oil prices rise

Oil prices climbed Monday, shooting higher after the Federal Reserve said in the afternoon that it will update its purchases of corporate bonds to include individual bonds in addition to exchange-traded funds.

U.S. crude futures for delivery in July ended the day up 2.4% at $37.12 a barrel on the New York Mercantile Exchange, extending a recent stretch of volatility after they approached $40 last week. Prices had fallen more than 4% in morning trading before rising in the afternoon. Oil has staged a powerful recovery in recent weeks since dropping below $0 for the first time ever in late April, lifted by the return of drivers to the roads and record supply cuts by large producers.

Monday’s announcement by the Fed was an update to its corporate-credit facility designed to keep vital bond markets functioning and support borrowing by large companies. It is the latest step by the central bank to support markets, fuelling wagers by traders that the unprecedented support will help the economy recover and lift fuel demand.

Still, analysts caution that new concerns about the coronavirus threaten to send prices falling again. Chinese health authorities recently shut parts of Beijing and adopted tight controls after the capital confirmed a record number of new COVID-19 infections, a major setback for commodities because China is the world’s largest consumer for raw materials.

Dow Jones Newswires

5.50am: BP cops $US17.5bn oil and gas writedown

BP says it will cut the value of its oil and gas assets by as much as $US17.5 billion and review plans for some oil wells as the COVID-19 pandemic reduces demand for oil and gas and forces major energy companies to speed up the shift away from fossil fuels.

The London-based company said on Monday it was taking the steps because demand for energy is likely to remain weaker for “a sustained period” as countries respond to the shock of the pandemic by accelerating efforts to reduce carbon emissions. As a result, BP cut its long-term forecast for Brent crude, a benchmark for world oil prices, to about $US55 a barrel from $US70. Brent oil traded for about $US39 a barrel on Monday.

“All that will result in a significant charge in our upcoming results,” chief executive Bernard Looney said in a statement. “But I am confident that these difficult decisions – rooted in our net-zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition.” BP in February pledged to become a “net-zero” company by 2050, meaning it will eliminate or offset all carbon emissions from its operations and products by that date. But oil companies are being forced to move faster than planned because the pandemic is already squeezing the profits they are counting on to finance the transition.

BP said the actions announced on Monday would result in after-tax impairment charges and write-offs of between $US13 billion and $US17.5 billion when the company reports second-quarter earnings.

The structural shift in the energy industry combined with unusually high oil and gas supplies to create a perfect storm on global energy markets at the start of the coronavirus outbreak. With storage facilities filling up and demand plunging as economies were locked down, the U.S. price of oil went below zero in April for the first time ever. Only a week ago BP announced it would cut 10,000 jobs to reduce costs and adapt to lower prices and plummeting global demand. Monday’s announcement makes clear that the pandemic has hastened the move away from fossil fuels.

“This is the energy transition happening,” said David Elmes, an energy expert at Warwick Business School in northern England. “The question is who can do it and how fast they can do it.”

5.44am: Fed will buy corporate bonds

The US Federal Reserve said on Monday that it will begin purchasing corporate bonds as part of a previously-announced plan to ensure companies can borrow through the bond market during the pandemic.

The program will purchase existing bonds on the open market, as opposed to newly-issued debt. The central bank said will seek to build a “broad and diversified” portfolio that will mimic a bond-market index. The bonds will have to be from highly-rated, investment-grade companies, or firms that fit that description before the viral outbreak struck.

The announcement boosted the stock market, which was already rebounding from early losses. The Dow Jones rose 0.8% in afternoon trading.

The Fed’s purchases should hold down corporate bond yields, making it cheaper for companies to borrow. But by also lowering the return from investing in those bonds, the Fed’s actions will likely encourage investors to shift money from corporate bonds to stocks in hopes of achieving a higher return. When the Fed announced its bond-purchase program in March, few companies were able to issue bonds. Banks and other large investors were dumping assets in favour of cash. New research has found that simply by announcing the program, the Fed was able to encourage more bond trading and improve the market’s efficiency. The Fed has said it will buy up to $US750 billion of corporate bonds and exchange- traded funds made up of corporate bonds. The Treasury Department has provided the Fed $US75 billion of taxpayer funds to offset any losses that occur from the investments.

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