ASX closes at 8-mth high on broad rise
ASX closed at an 8-month high as Pfizer’s vaccine trial continued to cheer global investors, and as Nasdaq futures turned up after taking a hit from an EU antitrust probe of Amazon.
That’s all from Trading Day. Australian shares have surged to close at an eight-month high as markets continue to react to positive vaccine news. Trading was mixed on Wall Street overnight, with the Nasdaq down 1.4 per cent, but futures on that index have surged 0.6pc in APAC trading. CBA shares surged after its 1Q update, but NAB continues to lead the banks after its results last week. Fortescue, Computershare and Newcrest had their AGMs.
Joyce Moullakis 7.05pm: Judo ramps up 2021 IPO plans
Challenger bank Judo is preparing a $1.5bn-plus ASX listing in 2021’s latter half, hinging on prevailing market conditions and navigating the COVID-19 fallout.
The Australian understands Judo has appointed Goldman Sachs to work a potential float next year, after fielding approaches from a handful of investment banks.
A Judo spokesman wasn’t immediately able to comment.
Ahead of next year’s mooted initial public offering, Judo is currently conducting its fourth funding round seeking $200m to $300m from investors. That capital raising - if successful - would give the bank a valuation of more than $1.5bn, and comes after a third funding round ruled off in May elevated it to unicorn status.
Judo - which focuses on small and medium businesses - has a loan book of about $2.5bn and a medium-term target of hitting more than $10bn.
But potential investors in an ASX listing will closely monitor how Judo manages loans that are coming off repayment pauses due the pandemic. The favourable capital treatment from the banking regulator for loan repayment deferrals is due to expire at the end of March.
6.03pm: AUD/USD 0.3pc stronger
CBA Global Markets Research saw AUD/USD lift back over 0.73 with the lift in NZD/USD. Australian consumer sentiment increased solidly by 2.6% in November after a very strong lift in October. The consumer sentiment index now sits at 107.7pts, and well above the 100 level that separates optimists from pessimists. The good news from the consumer sentiment survey is RBA rate cuts supported sentiment rather than undermine it as has been the case in recent years. The NAB’s business survey also showed an improvement in both confidence and conditions in October.
Robyn Ironside 5.58pm: Qantas to reopen domestic lounges
In preparation for a significant increase in air travellers, Qantas is reopening most of its domestic airport lounges in the coming weeks.
By December 2, 30 of the airline’s 35 lounges across the country will be open for business, following an eight-month shutdown.
These will include the currently closed Qantas Clubs in Brisbane, Hobart, Perth and Sydney, the Melbourne business lounge, as well as a number of regional lounges including Coolangatta, Devonport and Launceston.
Some lounges reopened on July 1 with significant changes for members, such as caps on the number of people allowed inside at a time, additional cleaning protocols and sanitising stations.
Gone was the self-serve food and drink buffet in the interests of hygiene, with an all-day hosted “snacking station” in its place, along with a tray service.
Qantas chief customer officer Steph Tully said they were delighted to be able to open most lounges in time for Christmas.
Perry Williams 5.49pm: Woodside drops Scarborough stake sale
Woodside Petroleum has dropped a plan to sell a 25 per cent stake in its $16bn Scarborough gas project due to oil market volatility, in a decision analysts fear increases the likelihood it will be forced into an equity raising to fund the development.
“The market ran away from us to be quite frank and the pricing ran away and we decided that we weren’t getting the value in the marketplace at the moment so we’ll hold onto it,” Woodside chief executive Peter Coleman told analysts.
Woodside owns 75 per cent of Scarborough with BHP holding the balance. “It’s just simply not a good time in the market to be selling that.”
The Perth producer has instead switched focus to selling a 50 per cent share of its planned expansion of the Pluto LNG plant which it controls outright.
Woodside said it has fielded strong interest from infrastructure investors in the facility known as Pluto 2, which will be supplied with gas from the Scarborough field.
“That’s where the best place is for co-investors to come into the project. Our view of course is that Woodside investors want to be exposed to the commodity risk. That’s what our cost of capital is based on and so at this point we’ve said we want to keep as much of the upstream as we possibly can,” Mr Coleman said, referring to Scarborough.
Still, that decision has implications for its funding with Woodside facing having to write a $US1.5bn equity cheque to fund its expansion of the Pluto LNG plant, according to Citi.
“We think this further pressures the balance sheet. Our equity raise expectation was $US1.1bn at a 50 per cent working interest, but the increased Scarborough capex at 75 per cent is a considerable $US1.5bn. We also think the lack of buyers for the project is a concern; why should shareholders support the project when Woodside’s peers in industry are not willing to do so?,” Citi analyst James Byrne said.
Woodside rose 6.3 per cent to $20.90 on Wednesday after another jump in oil prices.
Lachlan Moffet Gray 4.38pm: No ‘irreparable harm’ caused in information sharing: inquiry
Noel Hutley HC has said that if the inquiry finds there had been a regulatory breach through James Packer’s sale of Crown shares to Melco, it would be of “the most innocent character”, as CPH executives on the Crown board had legal advice that led them to believe the transaction was above board.
He said that if there was no finding of a regulatory breach, there should be no effect on suitability arising from the transaction as the CPH executives Michael Johnston and Guy Jalland had “good reason” to keep the transaction confidential.
Mr Hutley said it should not be accepted that the pair had cause to know of Dr Ho’s proximity to Melco as the head of the company, Lawrence Ho, had given repeated assurances that his father, Dr Stanley Ho, had no involvement in the business.
Mr Hutley said that a draft financial plan that was presented to Mr Packer and Mr Johnston by then Crown CFO Ken Barton that was shared with Melco did not have an impact on suitability, as the figures were compiled before the Melco transaction was “contemplated.”
He also said that a services agreement between Crown and CPH allowed CPH to use financial information for its own purposes.
Commissioner Patricia Bergin said that “own purposes” could be constructed as referring to sharing information so that CPH executives could execute their services for Crown under the agreement, not for “going off and using it for any purpose you like, at any stage, at any time in your life.”
But Mr Hutley maintained that no “irreparable harm” was caused by the sharing of the information and it had no implications on the suitability on Mr Packer and Mr Johnston.
The inquiry has resumed until tomorrow.
4.30pm: ASX closes at 8-month high
Australia’s share market closed up 1.7pc at an eight-month high of 6449.7 after hitting an intraday high of 6451. Unlike Tuesday, dips were very shallow and the index closed near the high of the day as Nasdaq futures rose 0.5pc and S&P 500 futures gained 0.2pc.
Value and cyclical stocks in the Energy, Real Estate, Financials and Industrials sectors outperformed, and COVID-winners in the Consumer Discretionary sector underperformed along with growth stocks in the Health Care sector. But the Tech sector also outperformed as the Nasdaq turned up, with strategists questioning how long the rotation from growth to value and cyclical stocks can continue in the absence of further positive developments in regard to COVID vaccines and the US fiscal policy outlook.
Meanwhile, a further 1pc rise in WTI crude oil helped Energy, with Woodside up 6.3pc and Santos up 6.4pc. And a 7-basis point rise in the 10-year bond yield and curve steepening helped banks with ANZ up 3.2pc, while Westpac rose 0.3pc ex-dividend.
Virgin Money surged 14pc on vaccine euphoria but COVID winners fought back with Afterpay up 3.1pc and Goodman Group up 4.6pc, while Xero surged 6.7pc.
Domestic consumer confidence surged to a seven-year high in November and spending intentions pointed to a “normal” Christmas, according to Westpac.
It’s Veteran’s Day in the US tonight with the Bond market closed but stocks open.
Lachlan Moffet Gray 3.40pm: Packer just a shareholder during Melco deal: inquiry
Noel Hutley SC has told the NSW Inquiry into Crown Resorts’ suitability to operate the Barangaroo casino that regulatory issues arising out of James Packer’s sale of Crown shares to Melco international, as put by counsel assisting last week, do not impact on his suitability.
A VIP Agreement between Crown and the NSW government prevents the late Dr Stanley Ho from gaining an interest in the licensee of the Barangaroo casino.
However, Mr Hutley said that Mr Packer was not party to that agreement as a shareholder of Crown, even if he had recalled the risk of Dr Ho gaining an interest in Crown through his interest in Melco.
“The only issue with Mr Packer would only arise if you found that he was a de facto director,” Mr Hutley said, having argued earlier in the day that Mr Packer could not be considered as such.
Commissioner Patricia Bergin noted that the morning of the share sale Mr Packer informed CPH executive and Crown Director John Poynton about the deal - but Mr Hutley said Mr Packer did not have knowledge at the time of Dr Ho’s stake in Melco through a holding company called Great Respect.
“Although he was aware of Great Respect shares in Melco International at one point in time he’d forgotten that fact by the 30th of May 2019,” he said.
Mr Hutley said that the list of Stanley Ho related companies amounted to more than 50 companies and that no directors could be expected to recall each one of them.
Ms Bergin accepted this, but said on a corporate level there should have been a way by which CPH executives on the Crown board could have been made aware of Dr Ho’s adjacency to Crown.
“There may have been some form of...system failure within the structure of Crown, not to find some means of - as it were - making sure that everybody was aware of things, uh, but that’s not the way it’s put,” Mr Hutley replied, saying the Counsel assisting’s submissions relate only to the actual knowledge of CPH-aligned Crown directors at the time.
Eli Greenblat 3.25pm: Trade tensions won’t dampen demand for Aussie goods: Alibaba
The chief executive for the Australian operations of the world’s biggest online marketplace, Alibaba, says she does not believe the increasingly icey trade relationship between Bejing and Canberra will impact the sale of Australian-made products during the site’s “double 11” shopping festival.
Maggie Zhou told The Australian that the ‘singles day’ shopping event kicked off around the world and she didn’t expect demand for Australian brands, especially across beauty, healthcare and pet care, to be soured by current trade tensions.
“According to the data from our platform we still see very strong demand from Chinese consumers about Australian products, especially after COVID people are seeking good products for their family and themselves,’’ Ms Zhou said.
Alibaba is hoping that its e-commerce sales bonanza will top last year’s November 11 record sales day of $50bn, with COVID-19 further accelerating online sales among digital-savvy Chinese consumers, and Australian products still in high demand among savvy Chinese shoppers.
Read more: China’s Double 11 fest to be next trade test
Lachlan Moffet Gray 3.10pm: Crown inquiry resumes
The NSW gaming regulator’s inquiry into the suitability of Crown Resorts has resumed with counsel for James Packer and his private company, Noel Hutley, arguing for Mr Packer’s suitability to be associated with the company if it continues to operate the Barangaroo casino.
Last week counsel assisting suggested that James Packer and CPH executives, Crown Directors Guy Jalland and Michael Johnston may have breached the VIP Agreement clause of the Crown’s agreement with the NSW government to operate Barangaroo due to their knowledge of the “Melco deal.”
The “Melco deal” refers to the since aborted sale of 19.9 per cent of Mr Packer’s Crown shares to Melco Resorts and Entertainment, a Hong Kong gaming company which was founded in 2004 as a joint venture between Melco International and Crown before Crown later sold out.
The VIP agreement with the NSW government prevents controversial and late gaming mogul Dr Stanley Ho from gaining a direct or indirect interest in Crown.
Dr Ho had a 20 per cent interest in Melco International, the parent company of Melco Resorts, through convertible notes and a holding company named Great Respect, controlled by a family trust of which Dr Ho was a beneficiary.
Mr Packer went through with half of the planned sale to Melco last year.
Mr Hutley said it was arguable that the VIP agreement was breached when considering the construction of the phrase “indirect interest.”
“We submit...that (the) Melco transaction did not cause Crown Resorts to be in breach because a Stanley Ho associate did not acquire any direct or indirect interest in Crown or a subsidiary of Crown,” he said.
Crucially, Mr Hutley said Mr Packer could not be impugned for any knowledge he might have had of Dr Ho’s interest because the VIP agreement was between the NSW government and Crown, not CPH - and Mr Packer was not on the Crown board at the time.
Nick Evans 3pm: Fortescue to be world’s biggest energy player: Twiggy
Mining billionaire Andrew Forrest wants to turn Fortescue Metals Group into one of the biggest energy companies in the world, outlining ambitious plans at the company’s annual shareholder meeting for Fortescue eventually produce 235 gigawatts of renewable energy, or five times the current capacity of Australia’s National Energy Market.
Mr Forrest told Fortescue shareholders on Wednesday Fortescue plans to challenge global energy majors such as Chevron as he tours the world trying to stitch up early stage deals with national governments to put Fortescue’s foot on the best renewable energy opportunities.
Fortescue Future Industries, a subsidiary of the WA iron ore miner, has already signed early stage agreements in Papua New Guinea, Indonesia and beyond for potential hydro electric and other renewable energy projects, and Fortescue itself has been investing heavily in plans to partly power its iron ore mines through a mix of solar and wind generation.
In addition the company has cut deals with Australia’s CSIRO to commercialise hydrogen and ammonia technology.
Mr Forrest said Fortescue had now engaged with 25 governments across the globe to talk about potential energy projects, flagging an ambition to eventual rival Chevron as a global energy producer, targeting total production of 235GW of renewable energy a year - or five times the capacity of the NEM.
“After scientific and personal analysis of the renewable energy resources of our little planet, I can assure you that there is more than enough renewable energy to sustainably and economically supply every person on this planet, from this time forth,” he said.
2.45pm: Aussie 10-year bonds up 8bp to 2-month high
Australia’s 10-year bond yield jumped 8bp to a two-month high of 1.00% and the yield curve steepened with the 3-10 spread hitting an 8-month high of 87bp as 3s remain anchored by the RBA’s 0.10pc target. The 30-year yield rose 5bps to an 8-month high of 2.00pc.
Rising bond yields are helping the banks with three of the banks up more than 2pc while Westpac is down just 0.1pc ex-dividend.
2.30pm: Credit cards on the decline
The number of credit cards on issue has fallen to the lowest level since 2007, according to latest figures from the Reserve Bank.
There are 17.1m credit cards on issue in Australia in September, this is down from 17.2m in August and is the lowest level since October 2007.
Credit cards on issue peaked at 22.8m in July 2016, but falls have accelerated in recent years on the take –up of buy now pay later products such as Afterpay or Zip. Since February the number of credit cards on issue have fallen a massive 1.5 million. This also takes into account cards that have expired, but not renewed. The value of purchases on credit cards increased slightly during September, rising to $24.2bn from $23.3bn in August. Monthly spending on cards hit a year low of $18bn in April.
2.20pm: Value rotation maybe done; bull market to continue: JPM
Whether this week’s rotation from growth to value stocks proves short-lived like last June, or becomes more sustained or extended, doesn’t change the big picture that shares remain in a strong bull market in global equities with a lot of equity upside from here, according to J.P. Morgan.
The US investment bank’s most holistic measure of equity positioning metrics - based on global non-bank investors’ holdings of bonds, equities and cash (M2), points to an equity allocation of 41.81 per cent - just below the post-Lehman period average of 42.3 per cent and well below the cycle high of 47.6 per cent in early 2018.
The equity appreciation needed to shift the implied equity allocation of non-bank investors globally from the current 41.81 per cent share to the post Lehman high of 47.6 per cent in January 2018 is 34.7 per cent for the MSCI AC World index and 40.2 per cent for the S&P 500, according to JPM’s chief global markets strategist, Nikolaos Panigirtzoglou. His calculations assume the stock of cash or money supply rises by another 7.5 per cent from here and the stock of debt by another 5 per cent from here.
“In other words, the upside for equities over the medium to longer term depends more on debt and liquidity creation and thus central bank QE than on vaccine news or fiscal stimulus,” he says.
Mr Panigirtzoglou notes that the prospect of an effective and approved vaccine, albeit initially in limited quantities, should reduce risks of continued outbreaks requiring aggressive responses.
But once relative short interest has normalized, for investors to shift to establishing long positions in previously unloved value oriented stocks could require continued positive news on the vaccine front or positive news on fiscal stimulus prospects.
Moreover, the ongoing resurgence in infection rates in Europe as well as in the US continues to pose a near term risk to the growth outlook, and by extension to the value trade.
“How sustained or extended this shift away from Momentum to Value stocks would be is an open question,” he says.
“Arguably, a simple comparison with last May/June could suggest that this rotation is largely done and if anything it could be susceptible to short-term reversal.
And a reversal, like the one we saw last June, would be natural if the main force of the original rotation is short covering.
Once shorts are covered there might be little flow impetus left for those previously unloved value oriented stocks to rally further.”
2pm: ASIC extends financial reporting deadlines
ASIC has extended financial reporting deadlines for listed and unlisted entities to lodge financial reports by one month for certain balance sheets up to and including January 2021.
The extension will assist entities whose reporting will take more time due to the impacts of COVID-19.
Private companies will be able to take one additional month to lodge financial reports for year ends from 31 December 2019 to 7 January 2021. Listed entities will now be able to take one additional month to report for full year and half-year financial reports for 21 February 2020 to 7 January 2021 balance dates.
The corporate watchdog also said today that it has adopted a ‘no action’ position, where public companies do not hold their annual general meetings within five months of the end of the financial year, but do so up to seven months later.
“ASIC will continue to monitor how market conditions and COVID-19 developments are affecting financial reporting and AGM obligations for balance dates after 7 January 2021,” the commission said in a statement.
“At present, there is no indication that further extensions of time will be necessary.”
1.55pm: ASX up 1.7pc
Australia’s S&P/ASX 200 index rose 1.7pc to an eight-month high of 6447.4.
There’s been no meaningful pullback since it broke Monday’s high at 6438.2 as traders buy the break.
The US tech sector is up to its old tricks with Nasdaq futures up 0.5pc versus 0.3pc for S&P 500 futures and just 0.1pc for Russell 200 small cap index futures.
And the US bond yield curve continues to bear-steepen, with the 2-10 spread hitting a 33-month high of 77bp, with 10s up 1.6bps to 0.96bps.
But crude oil remains strong with WTI futures rising as much as 2.2pc to a 9-week high of $42.27 a barrel.
“Beyond a successful rollout of a covid vaccine or the expectation thereof, the extent to which tech underperforms from here depends on the Fed’s willingness to cap higher US Treasury yields,” says Stephen Innes, chief global markets strategist at Axi.
“And given the logistical delays in rolling the vaccine out, it’s debatable just how much juice is left in the tank over the short term for those most unloved sectors.”
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1.05pm: ASX jumps 1.6% to 8-month high
Australia’s share market resumed the rally as US futures turned up again.
The S&P/ASX 200 broke Tuesday’s high at 6438.2, rising 1.6pc to a fresh eight-month high of 6444.7. Energy, IT, Real Estate, Industrials and Financials are strongly outperforming the index. It came as Nasdaq futures turned up 0.3pc after falling 0.3pc.
An afternoon surge toward the next chart resistance around 6500 points is possible as laggard investors chase performance.
Lachlan Moffet Gray 1.01pm: Packer’s influence ‘didn’t harm’ Crown: inquiry
The counsel of James Packer and his private company CPH has told a NSW Inquiry that the idea that Mr Packer’s influence caused harm to Crown Resorts and the public has no merit.
“There’s no evidence that Mr Packer’s activities...caused any harm to Crown Resorts or the public interests,” Noel Hutley SC said.
“The extent to which you’ve been taken to his activities in this period there’s no suggestion that anything he advised upon caused one ounce of harm to Crown Resorts.”
The inquiry, conducted by the NSW Independent Liquor and Gaming Authority, is set to determine whether Crown is a suitable company to operate the Barangaroo casino in Sydney.
Mr Hutley said that there is no evidence Mr Packer or any CPH figure unduly pressured any independent director - despite Jane Halton last month telling the inquiry she felt pressured by former chair and Packer confident John Alexander to sign a board rebuttal to media allegations about the company.
“There is no evidence of any CPH officer, representative, or the like, pressuring any director.”
“That’s the sort of discussion that will happen and certain people will feel pressured...but it doesn’t in any way redound to a conclusion...that a reasonable bystander would question the independence of the directors of Crown Resorts,” he said in regard to Ms Halton’s evidence.
“And her evidence doesn’t suggest that CPH was applying pressure.”
Mr Hutley also said the submission by counsel assisting that Crown director Harold Mitchell’s independence was impacted by an interest-free loan he received from Kerry Packer had no merit.
The inquiry then moved into a confidential session to discuss threats Mr Packer made to a private equity figure in respect to privatisation discussions in 2015 - but not before Mr Hutley again insisted the incident did not prove Mr Packer was unsuitable.
“My client’s dealing with it showed and demonstrated a man of character, honesty and respect,” he said.
“Dealing with that redounds, we would say to his complete credit and should be a matter of respect rather than criticism of a man that was quite clearly in profound distress.”
Ben Wilmot 12.31pm: Evans Dixon cops first strike
Under pressure financial services firm Evans Dixon has suffered a first strike against its remuneration report in a move driven by corporate raider Tony Pitt, who has built up a 19.55 per cent stake in the company.
Mr Pitt’s 360 Capital last month lodged a takeover proposal for the company but he did not ask questions at the annual meeting on Wednesday.
He is seeking control of the firm via a cash and scrip proposal and has reached out directly to staff, who dominate the register, inviting them to make contact about his plans.
A separate resolution to grant Evans Dixon staff rights and options packages, that Mr Pitt indicated he opposed, was passed at the AGM.
Executive chairman David Evans faced questions about the company’s response to 360 Capital’s take over proposal but said it was yet to even be formalised via the bidder’s statement.
The company also declined to comment on action by the corporate regulator against its Dixon Advisory arm, which relates to the selling of its under-performing US property fund. It is defending the action.
Lachlan Moffet Gray 12.28pm: Packer’s counsel insists he was not a ‘de-factor director’
The legal counsel of James Packer and his private company have continued to submit to the NSW inquiry on Crown Resorts’ suitability to operate the Barangaroo casino that he did not act as a de-facto director after stepping down from the board.
Commissioner Patrica Bergin asked CPH’s counsel Noel Hutley SC to address an email Mr Packer sent to former Crown chair John Alexander to “go hard my friend, you have my blessing” in regards to financial discipline, implying he may sell out of the company if financial targets are not reached.
“He’s saying if this organisation can’t receive desired returns, I will leave it. Not take control of it,” Mr Hutley said.
Mr Hutley said the fact that the Crown Board rejected a takeover offer from US gaming giant Wynn Resorts in 2019, despite Mr Packer vocally supporting the proposal, further demonstrated that Mr Packer was not running the company.
But Ms Bergin said the board was not “rejecting engaging with Wynn,” choosing instead to try and pursue a better deal.
Mr Hutley said this was in effect still the board exercising its independence.
“We say that can only be viewed as the fundamental expression of independence,” he said.
Mr Hutley also said that unknown but serious threats Mr Packer made to an individual believed to be private equity figure Ben Gray in 2015 during email discussions over a potential privatisation of Crown did not amount to his unsuitability.
Mr Hutley said that Mr Packer’s behaviour was influenced by a “profound psychiatric condition” and that the incident would be further discussed during a confidential session as the content of the emails remain private.
“There is no basis to suggest that any such conduct is likely to be repeated,” he said.
Mr Packer previously told the inquiry that he was suffering from bipolar disorder at the time he made the threats, which he said were “shameful.”
12.10pm: ASX up 1.1% as tech, value shine
Australia’s share market continues to react to positive COVID-19 vaccine developments and lessening US political uncertainty but hasn’t yet broken Tuesday’s peak.
The S&P/ASX 200 was up 1.1pc at 6413 in early afternoon trading after rising 1.4pc to an intraday high of 6431.3, just below an 8-month peak of 6438 on Tuesday.
Rotation to stocks that will benefit from economic reopening continues with the Energy, Real Estate, Industrials and Financials sectors outperforming.
Standouts in those sectors include oil and gas producers, with Woodside up 3.2pc, as well as property trusts, with Goodman up 4.8pc - after diving with other COVID winners on Tuesday - toll operators, with Transurban up 3.7pc and banks, with NAB up 2.4pc and Virgin Money up 14pc. Interestingly, the tech sector is leading with Xero up 12pc, Computershare up 2.7p, NEXTDC up 3.2pc and WiseTech up 1.7pc after diving yesterday as COVID losers were sold.
But the Consumer Discretionary sector continues to lag, with Wesfarmers down 0.6pc, JB Hi-Fi down 4.7pc and Domino’s down 1.5pc after Macquarie downgraded.
Wespac’s consumer sentiment index for November hit a 7-year high and pointed to “normal” Christmas spending.
Lachlan Moffet Gray 11.51am: Packer advice ‘raises wider issues’: inquiry
Commissioner Patricia Bergin raised an email where former Crown chairman John Alexander was told by James Packer that he was wasting money by travelling around the world and suggested it was more than the advice of an interested shareholder.
“What is it? Telling the chairman not to do something, really,” she said.
Mr Hutley said Mr Packer had a right to criticise corporate expenses as a shareholder.
“So this communication was a shareholder as opposed to an advisor,” Ms Bergin replied, before saying that Mr Alexander’s reply to the effect that he wanted to make Mr Packer “proud” raised issues.
“There are many characteristics to this, and I understand you are making submissions on the legal issue of directorship,” she said.
“But there is explanation needed to what happened with all these serious corporate failures in Crown during this period.
“One of the things your client discussed was his powerful personality...and you’ve got the chairman saying he really just wants to make Mr Packer proud.
“There is a wider issue of what was the real relationship and whether the board was supined to wanting to make Mr Packer proud.”
Mr Hutley maintained that Mr Packer’s comments were appropriate and there was “not a shred of suggestion of harm” arising from his advice.
Lachlan Moffet Gray 11.45am: Counsel defends Packer’s ‘forceful’ tone
Commissioner Patrica Bergin has pushed back at the suggestion that James Packer was a “benign” interested shareholder in his discussions with Crown executives on financial results under a special controlling shareholder protocol.
In reference to an email where Mr Packer asked then CFO Ken Barton for “conservative” financial forecasts figures, Ms Bergin suggested that Mr Packer was doing more than offering the advice his counsel submits he was entitled to do under the protocol.
“As you presented in this benign way, Mr Hutley, but he did remind Mr Barton that he had to make the figures conservative because he was getting angry,” she said.
“This was the sort of evidence that needs to be weighed up with your submission.
“It does seem that you need to deal with those sorts of these communications that suggests it was a little bit more than just prophering some business acumen.”
Noel Hutley SC said that just because Mr Packer was “forceful” in his views did not mean he was making decisions about how Crown was run.
“That doesn’t mean he was in a position of control. None of this was decision making,” he said.
“The characterisation of this in a way it’s sought to be done is simply misconceived.”
Ms Bergin asked Mr Hutley how he would characterise Mr Packer in one communication warning Mr Barton that the company must make budget, “for your own sake”.
“There’s nothing unique about this sort of communication,” Mr Hutley said, saying anyone would warn an executive that they for their own standing must meet targets.
“What he’s really saying is: ‘for your own sake, do this’ - you’ve got to assume your conclusion to give this the content that the counsel assisting is submitting it has.”
11.32am: ASX fades after early rise
Australian shares are fading after an early rise in similar fashion to yesterday.
The S&P/ASX 200 was up 1pc at 6405 after rising 1.4pc to 6431.3.
This intraday pullback was again driven by a reversal of early gains in US index futures as well as selling of COVID winners after the vaccine news this week.
After a 9.1pc bounce in the past seven days, matching highs (almost) and a close near opening would not be great for the short-term outlook.
Such price action would give hope of a dip to the former resistance level around 6200.
But the Australian share market has lagged Wall Street on the bounce this year.
Moreover, domestic trends in COVID, reopening and stimulus are better than Europe and the US.
Lachlan Moffet Gray 11.30am: Packer had no undue influence: counsel
James Packer and CPH’s counsel, Noel Hutley, is telling the NSW inquiry into Crown Resorts’ suitability that a shareholder protocol agreement which for a time allowed Mr Packer to receive financial information about the company despite not being on the board, did not allow Mr Packer to exert undue influence over the company.
Counsel assisting submitted last week that Mr Packer, through the protocol, acted as a de-facto director of Crown and gave instructions to management and other board members.
Mr Hutley said that only six emails out of hundreds seen by the counsel assisting gave rise to this question and denied that Mr Packer was involved “in any substantial way” in the decisions of management of the board.
“Mr Packer was simply not a de-facto director,” Mr Hutley said, who added that the shareholder protocol was established to both share information with Mr Packer and receive advice from him.
Mr Hutley said the protocol was established for “profit maximisation reasons” due to the valuable nature of Mr Packer’s advice, and was not a “gift” to CPH.
Commissioner Patrica Bergin noted that this view represented a change in CPH’s argument.
“This is the first time really that there has been an indication that Mr Packer was in fact in an advisory role,” she said.
Perry Williams 11.25am: Woodside sticks with Pluto facility
Woodside Petroleum has rejected a push to process gas from its $16bn Scarborough gas project through the North West Shelf LNG plant, sticking with an expanded Pluto facility amid strong interest from infrastructure investors in a planned selldown of its ownership.
The West Australian producer had planned to process gas from its remote Scarborough field to prop up an expansion of its Pluto LNG project with gas from the long-delayed Browse field to fill the NW Shelf plant.
However, this year’s oil price crash has forced Woodside to delay both Scarborough and Browse, with some investors now making the case for Scarborough gas to help fill NW Shelf given the looming available capacity.
Citi has been pushing Woodside to go with the NW Shelf option saying Woodside would have to write a $US1.1bn equity cheque to fund its expansion of the Pluto LNG plant.
However, Woodside said Pluto Train 2 will be 30 per cent cheaper than the NW Shelf and has a shorter development time with plans to make a final investment decision on Scarborough by the second half of 2021 and first production by 2026.
Woodside shares last up 3.2 per cent at $20.30.
Read more: Woodside sticking with Pluto LNG processing
11.10am: Clime CEO resigns
Clime Investment Management is on the hunt for a new chief executive after Rod Bristow resigned, effective today.
The company’s board thanked Mr Bristow for his contribution to the company since 2018 in a statement to the ASX.
Clime shares last unchanged at 59c each.
Eli Greenblat 11.03am: Coopers unveils sales lift
The largest Australian-owned brewer, South Australia’s Coopers Brewery, has posted a 3.9 per cent lift in beer sales for the year at a time when the broader beer market is flat.
Coopers reported full-year profit before tax 2020 of $34.3m, in line with the profit posted in 2018, but a strong recovery from the $23.1m recorded in the 2019 financial year.
Like other Australian brewers, Cooper’s faced issues including the protracted shutdown and slow opening up of bars, clubs and other licenced venues at a time when beer consumption before the COVID-19 pandemic had hit lows not seen since World War II.
“In a time of such uncertainty, Australian beer drinkers appear to be choosing brands they feel they can trust,” Coopers chief executive Tim Cooper said.
“The pandemic has had a significant impact on Australia’s hospitality industry and our keg sales in particular suffered as a result. To have emerged in an overall strong position is testament to the loyalty of beer drinkers, the sheer resilience of hoteliers and publicans and the determination of our team at Coopers Brewery.
“We’re looking to the year ahead with cautious optimism.”
Lachlan Moffet Gray 10.57am: Packer not ‘de-facto Crown director’
Mr Packer and Consolidated Press Holdings counsel Noel Hutley have submitted that between November 2018 and May 2019, the billionaire shareholder in Crown did not act as a “de-facto” director or have undue influence over the company, despite no longer being a director.
“We acknowledge that this inquiry has heard evidence that are matters of significant concerns that could be characterised as failings within Crown Resorts,” Mr Hutley said.
“We respond to counsel assisting’s approach whereby they seek to attribute at least some of the blame to the apparent failings of Crown Resorts to Mr Packer and CPH.
“We submit, Madame Commissioner, that this is unwarranted and unfair characterisation of Mr Packer’s role which is simply not supported by the evidence.
“You heard honest and candid evidence by Mr Packer who acknowledged a lot of the things he has seen or heard in this inquiry have been a total shock to him.”
Throughout this period Mr Packer received financial information about Crown through a services agreement between Crown and CPH, and a seperate controlling shareholder protocol that allowed Mr Packer to request information.
Crown Resorts last month terminated both of these agreements.
Mr Hutley said that the submission from counsel assisting that Michael Johnston was present at a board meeting in 2018 that discussed the establishment of the shareholder protocol and did not absent himself from the discussion should not be accepted.
The inquiry adjourned shortly for a minute of silence in honour of remembrance day.
Nick Evans 10.54am: Newcrest finds second COVID-19 case at Lihir
Newcrest Mining says it has detected a second case of COVID-19 in a worker returning to its Lihir Mine in PNG, saying the case was detected whilst the employee was in quarantine and there is no danger to the rest of its workforce.
Speaking at the company’s annual shareholder meeting on Wednesday, Newcrest chairman Peter Hay said the worker was staying in a designated isolation camp when they returned a positive test on November 7 and have been moved to a treatment facility as they recover from the virus.
“The operations remain unaffected by the positive case as the individual did not attend any workplaces and did not interact with the workforce,” he said.
The case is the second positive test at Lihir, after a worker tested positive in July, again in isolation facilities with no impact to the rest of the workforce.
10.45am: Consumer confidence at 7-yr high: Westpac
Australian consumer confidence surged to a seven-year high in November.
The Westpac-Melbourne Institute Consumer Sentiment index rose from 2.5pc to 107.7 points, the highest since November 2013.
Westpac chief economist Bill Evans notes that the most important developments since last month have been the significant unwinding of restrictions across Victoria and the reopening of the Victoria-NSW border. The survey was conducted over the period of November 2–8 before the second round of easing restrictions had been announced for Melbourne, but Mr Evans notes that with Victoria’s stunning recent success in containing the virus, expectations for this second round were buoyant.
It also preceded the recent encouraging developments around Pfizer’s Coronavirus vaccine, which will no doubt have a positive impact on confidence.
“During the survey week the Reserve Bank announced further interest rate cuts,” Mr Evans says. “While relatively modest, the cuts came with a commitment to keep rates on hold for at least three years.
Subsequently, banks have further reduced the rates on fixed rate mortgages – some going below the psychologically uplifting rate of 2 per cent.”
He also notes that for 2020, 11.5 per cent of people expected to spend more and 32.3 per cent expected to spend less for Christmas.
“Over the full history the average net balance (proportion planning to spend more minus proportion planning to spend less) has been -20.9 per cent with a high of -12.7 per cent recorded in 2015 and a low of -26.1 per cent in 2014.
“For 2020 the net balance is -20.8% – around the long run average since 2009. Given the high degree of uncertainty this Christmas, and the headwinds from the high unemployment rate it is a very encouraging sign, that Australians are planning for a ‘normal’ Christmas.”
Ben Wilmot 10.44am: Charter Hall fund snaps up Adelaide building
The Charter Hall Social Infrastructure REIT will buy the new South Australian Emergency Services Command Centre and adjacent multi-deck carpark that is currently under construction in a $103m deal.
The property near the Adelaide CBD was bought in an off-market deal from the developer, Axiom Properties.
The Charter Hall fund will buy the land and works completed to date for $23m and fund the remainder of the development on a progressive basis for a total of $85m.
Completion is expected in October 2021. The purchase price reflects a passing yield of 4.8 per cent.
The development will comprise an office building, a warehouse and an adjacent hardstand. The project will also have a six-level multi-deck car parking station.
“Adelaide is a market Charter Hall knows well with a long history of developing in the city, most recently having completed the $251 million development of the GPO Exchange. We continue to see good opportunities to partner with Government and enterprise in South Australia, continuing our long involvement in the state,” Charter Hall managing director David Harrison said.
Lachlan Moffet Gray 10.35am: CPH downplays Packer’s future Crown involvement
Consolidated Press Holdings’ counsel Noel Hutley has moved on to address the fact that counsel assisting the inquiry questioned CPH executive and Crown director Michael Johnston’s evidence during their submissions last week.
The inquiry heard that Mr Johnston refused to accept responsibility for the 2016 arrest of Crown staff in China, that he gave incorrect evidence in regard to his attendance at crucial board meetings, and for his knowledge of how the Melco transaction could have placed Crown in a position where it voided its NSW casino licence.
“His credit was imputed at least directly, in respect of two matters and perhaps indirectly in respect of a third,” Mr Hutley said.
“You will accept Mr Johnston as a witness of truth, honesty and integrity.”
Mr Hutley also said that the counsel assisting’s criticism of Mr Packer was limited.
“The only ways in which CPH and Mr Packer are said to make Crown Resorts or the licensee unsuitable in this relevant, forward-looking sense is what is put in the section entitled ‘the influence of Mr Packer since November 2018’,” he said, adding that the assertion Mr Packer acted as a de facto director during that time had no effect and did not impute his evidence.
It was also put to the inquiry that Mr Johnston, Mr Packer, or fellow CPH, Crown figure Guy Jalland did not act incorrectly in pursuing the purchase of 19.9 per cent of Crown Shares by Lawrence Ho’s Melco, despite reasonably knowing that Dr Stanley Ho, with whom Crown was not to associate under the terms of the NSW licence, had an indirect interest in Melco.
10.20am: ASX up 1.4% on broad gains
Australia’s share market has had a very positive start again today.
The S&P/ASX 200 has surged 1.4pc to 6426.2 on broad-based gains as global markets continued to react to encouraging COVID-19 vaccine developments.
Value stocks that will benefit most from economic normalisation are strongest again with the Real Estate, Industrials, Energy and Financials sectors outperforming.
Among large cap standouts in those sectors, Dexus is up 2.5pc, Transurban is up 2.7pc, Woodside is up 2.1pc, Santos is up 2.5pc, NAB is up 2.6pc and CBA is up 1.8pc.
The consumer sectors are lagging on downgrades from Macquarie, with JB Hi-Fi down 2.2pc, Super Retail down 4.2pc and Domino’s down 0.4pc.
Tech is surprising positively with Xero up 6pc and Computershare up 4pc.
10.12am: CPH before NSW casino inquiry
The lengthy NSW inquiry into the suitability of Crown Resorts to operate Sydney’s Barangaroo casino has resumed to hear the submissions of James Packer’s private company, Consolidated Press Holdings (CPH.)
CPH is the vehicle through which Mr Packer owns approximately 37 per cent of shares in Crown, with executives of the company occupying seats on Crown’s board.
Counsel Assisting last week drew a line between the influence Mr Packer has via CPH and Crown’s numerous failings in corporate governance, culture and risk management.
The inquiry heard that CPH should restrict itself to exercising no more than 10 per cent of its voting rights, that it should have no more than one nominee director and that a “service agreement” which allowed executives of CPH to provide managerial services to Crown should cease permanently.
CPH is being represented by Noel Hutley SC, who began by submitting that in regards to suitability, relevant persons at CPH including Guy Jalland, James Packer and others are arguably of “good repute.”
“There is a difference between a person’s character and a person’s reputation or repute,” Mr Hutley said.
“If it’s to be said of any witness that he or she should not be believed, or lying, it was necessary for that to be put to the witness.
“In the light of that it is notable that counsel assisting made no attack on the credit or evidence or Mr Packer or Mr Jalland.
“That is a matter which is highly relevant to any assessment of their character, honesty or integrity.”
NSW’s Independent Liquor and Gaming Authority will make a determination on whether to allow Barangaroo to open ahead of the inquiry’s February reporting date on November 18.
10.10am: Bingo touts solid waste volumes
Waste collection company Bingo has flagged an increase in rubbish volumes for the year so far and said “solid momentum” has been maintain in the first four months of the 2021 financial year.
Still, the company said a softening in its addressable market is expected in FY21 as construction activity weakens, though initiatives announced in the federal budget should provide positive stimulus to the recycling and construction sectors in the near-to-medium-term.
In a statement released to the ASX ahead of the company’s annual general meeting, Bingo said earnings before interest, tax, depreciation and amortisation margin is expected to decline in fiscal year 2021 by approximately 200 to 300 basis points, before rebounding to its longer-term target of 30 per cent.
“FY22 and beyond has the potential to offer significant upside and is expected to provide the foundation for sustained future growth underpinned by regulatory and market tailwinds increasing the addressable market size and the ability to better utilise our network capacity,” the company said.
10.00am: Macquarie downgrades several consumer stocks
Macquarie has downgraded Wesfarmers, JB Hi-Fi, Metcash and Domino’s Pizza and lowered its target prices for those companies as well as Coles and Woolworths after the COVID-19 vaccine trial results from Pfizer this week.
“Consumer durable retailers should have a strong calendar 2020,” the broker notes.
“However we see normalised consumer behaviour dragging on sales for 2021.”
In retail, it says a significant and likely permanent acceleration of online spend has occurred over the past nine months.
“We see online spending remaining elevated for groceries, with Woolworths best placed in the short term to capitalise on new behaviours,” the broker says.
“Consumer durable spending has also been elevated over 2020 as consumers swap services and travel spend for upgrading appliances at home.
We see this trend reversing as people look forward to getting out of their house and socialising in public again.”
Wesfarmers, Metcash and JB Hi-Fi were cut to Neutral, and Domino’s to Underperform.
9.55am: Woodside narrows guidance
Woodside Petroleum has narrowed its full-year output guidance ahead of its investor day, saying the company has delivered an “exceptional operating performance” even through the challenges of 2020.
“Despite the constraints imposed by the pandemic, throughout this year our teams have met the highest standards of safety, reliability and production, allowing us to narrow our full-year output guidance to 99 to 101 million barrels of oil equivalent,” chief execut8ive Peter Coleman will tell investors at a briefing today.
“We’ve made excellent progress at Sangomar Field Development Phase 1 offshore Senegal and expect to complete our acquisition of Cairn’s interest in the joint venture before year-end.
“Sangomar is an attractive, de-risked asset and, as previously flagged, we are looking to sell down our equity to the right partner at the right price over the course of 2021.”
9.40am: What’s impressing analysts?
CSL raised to Overweight: JPMorgan
CSL cut to Neutral: Citi
Magellan Financial raised to Buy: Ord Minnett
Wesfarmers cut to Neutral: Macquarie
Metcash cut to Neutral: Macquarie
Incitec cut to Neutral: Macquarie
Wesfarmers cut to Neutral: Macquarie
JB Hi-Fi cut to Neutral: Macquarie
Domino’s Pizza cut to Underperform: Macquarie
Super Retail cut to Hold: Morgans Financial
Domain Holdings cut to Neutral: Credit Suisse
James Hardie cut to Neutral: Credit Suisse
Macquarie Telecom cut to Hold: Bell Potter
Pendal Group raised to Add: Morgans Financial
Ramsay Health cut to Neutral: Credit Suisse
Sonic Healthcare cut to Hold: Jefferies
Bapcor raised to Hold: Morningstar
9.30am: Value stocks to lead ASX rise
Australia’s share market should rise as offshore leads since the US election outcome and coronavirus vaccine trial results from Pfizer remain mostly positive.
Overnight futures suggest the S&P/ASX 200 will open up about 0.8pc near 6390 points.
Value stocks in the Energy, Financials, Industrials and Real Estate sectors should outperform again based on offshore leads. Those sectors may be joined by the Materials sector after gold rose 0.7pc and iron ore rose 1.2pc to $US123.30 a tonne.
Energy remained the standout as WTI crude oil rose 3.5pc to $US41.70 a barrel.
On Tuesday, the ASX 200 trimmed a 2.2pc intraday gain to 0.7pc as US futures weakened. But the S&P 500 fell just 0.1pc versus a 0.7pc fall implied by futures during APAC trading.
The Nasdaq fell a bigger-than-expected 1.4pc, with the rotation away from COVID-winners magnified by a 3.5pc fall in Amazon as the EU started an antitrust investigation.
To the extent that the Nasdaq fall was magnified by the antitrust news, Australian tech stocks may do relatively better despite a shift from COVD winners to losers and value stocks
A 3.3bps rise in US 10-year bond yields favours Financials although US banks were mixed.
CBA’s 1Q trading update is in focus domestically, along with AGMs from Computershare, Fortescue and Newcrest. Westpac’s consumer confidence index for November is due at 1030am. Westpac trades ex-dividend.
8.54am: Flight Centre prices notes offering
Flight Centre has priced its offering of $400m senior unsecured convertible notes due in 2027.
Upon conversion, the notes will be settled by the issuance of new full paid ordinary shares in the company, with an initial conversion price of $20.04 each.
Proceeds from the offering are set to repay $100m in existing debt, with the remaining proceeds applied to further strengthen the company’s liquidity position.
Goldman Sachs and Merrill Lynch are acting as Joint bookrunners.
8.16am: Nasdaq falls again amid mixed night on Wall St
US stocks on Tuesday finished on a mixed note, with the Dow Jones Industrial Average, outperforming its benchmarks counterparts and small-capitalization and value-oriented stocks performing best of all. Meanwhile, the Nasdaq Composite Index finished lower for a second straight session as investors, preparing for a future where a vaccine/and or treatment for coronavirus, sold large-capitalization technology-related stocks and those which have been buoyed by popular trends fostered during the COVID-19 pandemic.
The Dow closed up by about 260 points, or 0.9%, at about 29,420, just shy of its February 12 record high at 29,568.57. The blue-chip index handily outperformed its benchmark peers. The S&P 500 index closed down 0.1% at 3,545, weighed by a 1.9% decline in information technology and a 1.1% drop in the consumer discretionary sector; while the Nasdaq Composite finished down 1.4%, bringing its weekly decline thus far to 2.9%. Meanwhile, the small-capitalization-focused Russell 2000 index closed up around 1.8% (on a preliminary basis) and is on pace for a weekly gain of over 5%, according to FactSet data. Markets continue to focus on progress toward a coronavirus vaccine evidenced by reports from Pfizer (PFE) and the official conclusion of the presidential election, which is projected to be won by former Vice President Joe Biden.
8.10am: CBA Q1 profit drops 16%
Commonwealth banks has reported unaudited cash profit of $1.8bn for the first quarter, a figure down 16 per cent on the same period last year.
Statutory net profit for the quarter was $1.9bn, the bank said
The bank said expenses were up 2 per cent for the quarter excluding customer remediation costs, and down 4 per cent when remediation provisions were included.
CBA said household deposits grew almost $16bn for the quarter, “including significant inflows following the second round of Government stimulus packages”, but said net interest margin declined.
CBA reported impaired assets lower at $8.4bn for quarter “The movement mainly reflects lower home loan impairments due to ongoing COVID-19 support. The bank is closely monitoring those industry sectors experiencing signs of stress,” it said in a statement.
In a separate announcement, CBA said it had recorded a net reduction in total loan deferred facilities of 59 per cent during October, a net reduction in deferred balances of around $21bn for the month. Total deferred home loan balances fell by 51 per cent over the same period, representing around $18 billion in deferred balances, the bank reported.
7.16am: Battle looms over Fed loans
The success of the Federal Reserve’s emergency lending programs in stabilizing financial markets is fueling a political battle over whether the programs should be extended.
Divisions over their future are being amplified by partisan gridlock in Congress over whether to provide more economic stimulus. Democrats, looking ahead to President-elect Joe Biden’s inauguration in January, see the programs as a potential tool to deliver more aid if Congress doesn’t act, while some Republicans are worried about relying on central bank lending powers as a substitute for congressional spending decisions.
The tussle could open a divide between the Fed and the Treasury Department, which have mostly collaborated smoothly this year over providing emergency support after the coronavirus pandemic convulsed Wall Street. The Treasury launched the programs with the central bank in March and April after that turmoil threatened to freeze the flow of credit to small businesses, large companies, cities and states.
Stock markets rebounded in the days after they announced the programs and staged a rapid recovery in the following months.
Dow Jones
6.16am: MBA demand jumps in US
Applications to American M.B.A. programs rose for the first time in five years, thanks in part to loosened admissions deadlines and students seeking places to ride out a shaky job market.
US-based students fueled the surge in applications for this fall’s programs as business schools extended application deadlines and loosened their standardized testing requirements amid the Covid-19 pandemic, according to a new report on hundreds of business programs. Higher-ranked schools reported the biggest application gains, particularly among the international students who have become critical to programs’ business models, according to a report from the nonprofit Graduate Management Admission Council released on Tuesday.
Students typically flock to business schools and other graduate programs during economic downturns to sit out a tough job market and gain credentials. M.B.A. program applications had fallen for five straight years because of a hot job market and high tuition costs. In the latest cycle, applications to U.S. business schools increased 21%, according to GMAC.
“As the economy was taking a U-turn from high growth to a complete screeching halt, that led to a lot of midcareer professionals to start hedging their careers,” said Rahul Choudaha, GMAC’s director of industry insights. “They see business schools as a chance to incubate from this uncertainty.” Schools’ extended admissions deadlines -- into July for some -- gave prospective students who might have been laid off or furloughed in the first months of the pandemic a chance to apply to programs and begin classes weeks later. Some schools further eased the way by making optional the main B-school entrance exam.
Top M.B.A. programs including Columbia Business School and MIT’s Sloan School of Management reported higher application totals earlier this fall. A majority of elite programs noted rising interest from international students, with the gains less consistent for lower-ranked schools. On Tuesday, GMAC said about 75% of schools ranked in the top 50 reported growing international applications, while only 47% of schools ranked 51 to 100 and 40% of unranked programs did.
Dow Jones
5.36am: Virus rates climbing in NYC
New York City Mayor Bill de Blasio said Tuesday that the rising rate of positive test results for COVID-19 was very worrisome, but stopped short of saying the city was in a second wave of infection.
The share of New York City residents who tested positive for COVID-19 over the last week reached 2.31%, the highest percentage since June, according to city data. The daily positivity rate was 2.88% on Sunday, the data showed.
The Democratic mayor said the city still had time to drive down the rates through use of masks and social distancing.
“This is a warning sign if ever I’ve seen one,” he said at a news conference. Hitting a 3% positivity rate on a seven-day average across the city could also trigger more restrictions, such as moving public schools to all-remote instruction and closing some businesses.
Any restrictions and shutdowns would need the authorisation of Gov. Andrew Cuomo.
5.30am: Europe markets gain
Financial markets were less giddy Tuesday, but substantial gains continued nonetheless for some stocks and oil prices on strong hopes for a coronavirus vaccine.
News from the US pharmaceutical group Pfizer and Germany’s BioNTech about excellent phase-three results for their candidate vaccine “seems to have been a game changer, even if experts warn that production and distribution may take time,” remarked Fawad Razaqzada, an analyst at ThinkMarkets.
AJ Bell investment director Russ Mould noted meanwhile that “the stock market is all about pricing in what people think might happen, not what’s already happened,” as share prices continued to rise.
Pfizer and BioNTech announced Monday that their vaccine candidate was 90 per cent effective in preventing COVID-19.
The scientific community reacted positively, with US expert Anthony Fauci describing the results as “extraordinary” and World Health Organisation boss Tedros Adhanom Ghebreyesus hailing the news as “encouraging”.
But others pointed out that data from the ongoing trial still needed review, including the ages of the participants, and that distribution logistics could be challenging as well.
London’s benchmark FTSE 100 index ended the day with a gain of 1.8 per cent, after closing almost five per cent higher on Monday.
On Wall Street the Dow Jones index showed a gain of 0.6 per cent in midday trading as the country slowly emerged from its presidential election drama.
“The clearing of the election fog has permitted underlying market fundamentals to come back into focus and the most recent vaccine news suggests a ‘return to normality’ should be coming sooner rather than later,” said Seema Shah of Principal Global Investors.
Joe Biden’s apparent win provided a boost to investors looking for less chaos after four years of Donald Trump, and Republican success in holding on to the Senate could limit attempts by Democrats to push through big tax and regulatory changes.
The chances of a massive new US stimulus package seen to have receded, however.
AFP
5.28am: New lockdowns will hurt: Adidas
Sportswear giant Adidas reported a strong recovery in the third quarter of the year, but warned that renewed coronavirus lockdowns in Europe would hit sales in the final three months of 2020.
Shares in the German company fell close to 6% lower on Tuesday, after surging almost 8% as part of Monday’s wider market rally.
The backstory. The coronavirus pandemic forced Adidas to close most of its stores through the initial wave of COVID-19 in Europe, and double down on e-commerce sales.
In April, the company suspended its planned EUR3.85 ($4.54) per share dividend for 2019. Cutting the dividend was part of the terms of arranging access to an emergency EUR3 billion credit facility from Germany’s state-owned development bank, KfW, to aid the company through the coronavirus economic crisis.
After receiving investment-grade ratings on its debt in August from Standard & Poor’s and Moody’s, the company issued EUR1.5 billion in bonds in September.
Dow Jones
5.25am: Boeing facing new FAA safety action
US aviation authorities are considering new safety-related penalties or other enforcement action against Boeing Co., according to a person briefed on the details, as they prepare to allow the plane maker’s beleaguered 737 MAX fleet back in the air as soon as the middle of next week.
The Federal Aviation Administration’s move to lift the MAX fleet’s grounding, expected to be promptly followed by regulators in Canada, Brazil, Europe and elsewhere, follows extensive delays and public debate that roiled the industry and plunged Boeing into its biggest financial crisis prior to the pandemic.
Barring last-minute changes, the decision is to be announced Nov. 18, according to government and industry officials, capping a historical reassessment of pilot reaction times regarding aircraft designs. Widespread MAX operations aren’t expected to start until early next year, following required maintenance and pilot-training measures.
In a statement Monday, the FAA indicated it was in the final stages of signing off on the package of safety fixes to the MAX fleet. The agency has said it set no firm timeline for approving the MAX for passenger flights.
Boeing declined to comment. In the wake of the MAX crashes, Boeing has retooled its internal safety-monitoring systems.
Boeing’s efforts to resolve numerous problems associated with a hazardous flight-control system on the MAX have taken nearly two years, and started even before regulators grounded the fleet in March 2019. Misfires of that automated feature, called MCAS, took 346 lives in two crashes over less than five months.
Separately, according to the person briefed on the details, the agency has alerted Boeing that alleged quality-control lapses on assembly lines and undue management pressure on engineers certifying safety systems could amount to violations of a 2015 settlement of systemic safety oversight problems. The FAA is examining issues affecting several aircraft models, this official said, including production of the 787 Dreamliner.
Dow Jones
5.18am: Amazon faces new EU antitrust charges
Amazon.com Inc. faces fresh legal battles with the European Union after the bloc charged the online retailer with violating competition law in a new salvo in its scrutiny of U.S. tech corporations.
The European Commission – the bloc’s top antitrust enforcer – issued a charge sheet against Amazon alleging that the company uses nonpublic data it gathers from third-party sellers to unfairly compete against them.
In addition, the EU is opening an investigation focusing on how Amazon selects which vendor is the default seller for a given product, alleging that Amazon, and those that pay extra for its services, are more likely to be chosen.
The Wall Street Journal reported in June that the EU was planning formal antitrust charges against Amazon, and that an European Commission case team had circulated a draft of the charge sheet, citing people familiar with the matter.
A decision on whether Amazon broke competition laws is expected next year. If the company is found to be in violation, the commission can force Amazon to change its business practices and fine it as much as 10% of its annual global revenue – or up to $28 billion, based on 2019 numbers. Amazon can challenge any such decision in an EU court.
Amazon said it disagreed with the allegations and would continue to engage with the commission “to ensure it has an accurate understanding of the facts.” “No company cares more about small businesses or has done more to support them over the past two decades than Amazon,” the company said.
The EU’s charges are part of a new round of investigations against big technology companies. The targets include Apple Inc., Facebook Inc. and Alphabet Inc.’s Google, which the bloc has already fined more than $9 billion, in three decisions under appeal.
Dow Jones
ASX 200 down; Paladin smashed; Platinum cops second strike
Paladin sinks 20pc-plus on mine challenges. Platinum Asset investors vote against pay plan. New intraday records for Aristocrat, CBA. ACCC says airfares up since 'Rexit', but Qantas has a different view. Business, consumer confidence up.
ASX 200 down; what next after CBA’s $250bn milestone
Resolute Mining CEO arrested in Mali. Endeavour's profit warning weighs. Incitec rises on improving earnings, sale update. HMC hits record. CBA sets new peak at $150.35. DP World takeover fires up Silk Logistics.