Trading Day: ASX slides as trade war escalation rattles markets

Australian stocks slipped amid global weakness, led by BHP and CSL while Boral tanked on disappointing results.

US President Donald Trump and France's President Emmanuel Macron at the G7 Summit. Picture: AAP

• Markets take early $32.5bn tumble
• Twiggy rakes in $1.24bn dividend haul
• Boral strikes Asian plasterboard deal
• IOOF profit down 68pc

That’s it for the Trading Day blog for Monday, August 26. Australian shares made back some ground by the close, but still finished 1.3 per cent lower to 6440 after the latest escalation in US-China trade tensions. Locally, Boral was pummelled after its results missed estimates, while Fortescue came under selling pressure despite record earnings and dividends. Results from IOOF, G8 Education and Monash IVF were also in focus.

Samantha Bailey 4.24pm: Investors sell-off as trade war escalates

The ASX 200 sold off sharply on Monday after the US-China trade war escalated at the weekend, with the US raising tariffs on Chinese goods to 30 per cent, after China lifted its tariffs on the US.

“There is an ever-growing belief that Trump has no fear of risk assets declining and the market feels vulnerable,” said Pepperstone research head Chris Weston.

“The fact that many are now seeing the division between Xi and Trump as something more sinister than just a trade war has seen calls for a global recession increase.

“With calls that what we are see unravelling is more of an economic war, and while the further 5 percentage point increase in tariffs will not help the perception of growth and US consumption, the concern traders have here is whether this even opens the top level of tariffs to over, say 50 per cent.”

Miners were under pressure amid fears of weakening iron ore demand - BHP gave back 2.1 per cent to $34.69 while Rio Tinto lost 2.6 per cent to $82.78.

Fortescue sank 5.3 per cent to $7.17 despite posting a record annual earnings figure and boosted its dividend payout.

In financials, Westpac slid 0.7 per cent to $27.62 while Commonwealth Bank was cut by 0.8 per cent to $76.76. NAB lost 1 per cent to $27.06 while ANZ turned down 1.4 per cent to $26.27

AUDUSD last at US67.36c.

4.12pm: Stocks drop $25bn on tariff threat

The local market has finished the session off its lows, after China moved to allay fears of all-out tariff turmoil

Stocks fell 1.7 per cent early after both China and the US raised their respective tariffs on imports, marking the latest escalation in their trade war.

But by the afternoon, the market had trimmed its losses somewhat thanks to comments from Chinese Vice Premier Liu He that Beijing was still willing to negotiate “calmly”.

By the close of trade, the benchmark ASX200 was lower by 83 points or 1.27 per cent to 6440.1 while the All Ords closed down 1.3pc or 83.3 points to 6531.0.

Perry Williams 3.06pm: Pollies, don’t tell us what to do: Boral

Boral boss Mike Kane has rejected a call from Treasurer Josh Frydenberg to prioritise investment over capital returns to shareholders, warning the nation’s political leaders should not tell corporate Australia how to run their business.

Mr Frydenberg today questioned whether Australia’s biggest businesses had been too focused on returning extra capital to shareholders or sitting on piles of cash at the expense of aggressively chasing growth.

However, the $5 billion construction materials giant said companies were already juggling the twin demands and did not need direction from the government on how to run their businesses.

“I don’t wait to be told by politicians what we’re supposed to do,” Mr Kane said after delivering the company’s annual results.

“We’ve always paid a dividend and an attractive dividend and will continue to do that. We don’t think that inhibits the ability to grow the business.”

Boral’s $3.5 billion takeover of US building manufacturer Headwaters in 2016 marked at the time the biggest US deal by an Australian company in five years although the scale of the transaction and the hefty capital raising to fund it irked some shareholders.

Mr Kane emphasised such deals showed it can juggle the competing demand of investment and returns and should be viewed with a long-term lens.

Read more

2.55pm: China still wants trade talks: Liu

Chinese Vice Premier Liu He, the country’s lead trade negotiator, signaled Monday that Beijing still wants to continue trade talks with the US following heightened bilateral tensions.

“We are willing to resolve the problems through negotiation and cooperation in a calm manner,” Mr Liu said in a speech, according to transcripts posted online by Chinese state media.

The Chinese government “strongly opposes an escalation of the trade war” as it harms the interests of China, the US and the world, Mr Liu said.

China on Friday said it would impose retaliatory tariffs on additional US products. In response, US President Trump said he would raise levies on Chinese goods. The latest round of tit-for-tat tariffs has roiled global markets.

Dow Jones Newswires

2.22pm: Zip outperforms on $500m debt deal

Buy now, pay later provider Zip Co is outperforming the market after completing a “landmark” debt funding deal.

The group secured funding of $500 million in an oversubscribed deal, representing a significant upsize from its original $400m mandate.

According to the company, the issuance is the largest of its nature by a fintech in Australia.

“It provides strong validation for our proprietary credit and fraud decision platform, and our utilisation of significant amounts of data to deliver compliant and responsible lending decisions,” co-founder Peter Gray told the market.

“The Zip Master Trust is the perfect structure to support Zip’s funding requirement as we continue to scale, and it will deliver material cost benefits in the medium to long term.”

Settlement is expected on September 5.

Z1P shares last up 2.22pc to $3.45.

2.06pm: Motorcycle Holdings buys Harley dealer

Motorcycle Holdings is set to expand its reach in the Harley-Davidson market, with the acquisition of a Melbourne dealership.

The dealership and accessories group today announced its proposed acquisition of Northside Harley Davidson in Brunswick, Victoria, expected to settle in October.

Land and buildings are not included in the deal, but expected to be earnings accretive in 2019/20.

“Northside Harley-Davidson is a strong and successful Melbourne dealership and this acquisition enables us to enhance our business footprint and expand the dealership network in Victoria, providing further revenue growth opportunities and geographical diversification and strengthening the resilience of the company,” chief David Ahmet told the market.

Northside Harley-Davidson has an annual turnover of approximately $9 million, employs 14 staff and sells 226 new and used motorcycles per annum.

MTO shares last up 0.28pc to $1.77.

Motorcycle Holdings CEO Dave Ahmet. Picture: Lyndon Mechielsen/The Australian.

1.37pm: Landmark White halves market cap

Property valuer Landmark White has as much as halved its market value on its return to trade, after a cyber security breach prompted a halt in the stock’s trade in June.

In an update to the market this morning, the group said it had raised $5.44 million and was implementing a business optimisation strategy but that seemingly hasn’t eased investor concerns.

The stock is lower by 45.6 per cent to 9.8c, after hitting new lows of 8.6c.

The company said it had enhanced its digital security platform and “will imminently achieve international information security standard compliance”.

“LMW has, over the last 2 months, been reinstated as a panel valuer by several lenders and anticipates reinstatement by others in the coming weeks and months. Our valued Government and private clients have continued to support LMW through these challenging times,” it said.

1.29pm: CSL, BHP drag on trade

Market heavyweights CSL and BHP are taking the most points off the local market, amid a global sell-off on US-China trade tensions.

At lunch, the benchmark is lower by 1.3 per cent or 88 points to 6435 after shedding as much as 1.7 per cent early in the session.

CSL is lower by 1.82pc and BHP by 1.81pc, together taking 14 points off the index while the major banks together are dragging 20 points off.

Gold stocks are the only saving grace - Newcrest is up by 5pc, Evolution higher by 9.71 despite trading ex-dividend, and Northern Star is higher by 9.08pc.

ASX200 last at 6435.6.

1.21pm: ‘Gloves coming off’ in trade war

Asian equity markets tanked and the yuan hit an 11-year low Monday after Donald Trump ramped up his trade war with China by imposing more tariffs on more than half-a-trillion dollars worth of imports.

The decision on Friday stunned investors, who ran for the hills, hammering European and Wall Street stocks, while safe havens such as the yen and gold -- go-to assets in times of turmoil and uncertainty -- surged.

The move, which also came with an outburst against China by the American president and a call for US firms to leave the country, overshadowed a broadly dovish speech by Federal Reserve boss Jerome Powell but one that fell short of Trump’s demand for deep interest rate cuts.

On Monday, China’s yuan currency fell to 7.1487 to the dollar, its weakest level since early 2008 at the height of the global financial crisis. The drop is likely to ire Trump, who has labelled Beijing a currency manipulator.

“The gloves are coming off on both sides and as such yuan depreciation is an obvious cushion against US tariffs,” Mitul Kotecha, a senior emerging markets economist at Toronto-Dominion Bank, told Bloomberg News.

“As long as China can ensure that yuan weakness is well controlled i.e. it does not provoke strong outflows, expect to see further depreciation in the currency.”

On equity markets, Hong Kong led losses, slumping more than three percent, with investors also spooked by fresh violent protests in the city that saw police use water cannon for the first time.

Shanghai lost 1.3 percent and Tokyo ended the morning more than two percent off. Sydney, Seoul, Wellington, Jakarta and Taipei all sank more than one percent.

AFP

12.56pm: China willing to resolve dispute calmly

China’s vice premier Liu He says China is willing to resolve its trade dispute with the US via calm negotiations, according to reports.

Speaking at an industry expo, Mr Liu said “we are resolutely opposed to an escalation of the trade war which is not beneficial to the US or China”.

The Australian dollar seems to be taking some solace in the headline, trimming its daily drop to 0.2 per cent from earlier 0.44pc. AUDUSD last at US67.40c.

12.31pm: Viva profit drops 43pc

Viva Energy Group has posted a 43 per cent drop in first-half underlying profit, hurt by skinny refining margins and weak consumer spending in its fuel marketing business.

Rival Caltex Australia also recently warned its profit is set to slump as the company battles slowing economic growth and margin pressure. The petrol retailers are being hit like other retailers in Australia, which is growing at its slowest pace in a decade, with unemployment on the rise and consumer spending under pressure.

Viva said on Monday that underlying pre-tax earnings for its refining business fell 62 per cent to $18.4 million, coming in at the upper end of the zero to $20 million forecast provided by the company.

The company’s retail segment, which makes up the bulk of its earnings, dropped 8.0 per cent from the previous year to $283.3 million but fell within its revised guidance range.

Overall underlying profit after tax attributable at replacement cost basis for the six months ended 30 June came in at $50.9 million down from $90.0 million a year ago on a pro-forma basis.

The company, which listed on the Australian bourse last year, declared an interim dividend of 2.1 cents per share.

VEA shares last down 7.24 per cent to $2.11.

AAP

12.23pm: Korvest slumps as customer goes under

Infrastructure provider Korvest is shedding 16 per cent in Monday’s trade, after warning of a $1 million bill outstanding to under-administration group EC&M.

Korvest said in a note this morning that EC&M had gone into administration today, and that the group had been one of a number of customers working for a major NSW infrastructure project.

As yet, Korvest said it was not in a position to comment on whether it would be able to recover the debt, but said it would not have any impact on future revenues as the project was completed in July.

KOV shares last down 17pc to $3.11.

Joyce Moullakis 12.15pm: IOOF earnings ‘a messy result”

Investors and analysts exercised caution on IOOF’s results as concerns abounded over its estimated remediation charges and dividends.

Macquarie Group analyst Brendan Carrig said IOOF’s second half dividend, inclusive the special payment, came in below expectations.

“The full year dividend has been reduced to allow for balance sheet flexibility,” he said.

Dividend payments for fiscal 2019 amounted to 44.5 cents per share, including the special dividend, down from 54 cents per share a year earlier.

Macquarie also expects IOOF may try to renegotiate the terms of its purchase of ANZ’s pensions and investments business ahead of a date in October which allows parties to walk away from the deal if they choose to.

Citigroup analyst Nigel Pittaway labelled the IOOF earnings “a messy result”.

“The higher remediation costs at least sees IOOF partly recognize legacy issues, but this estimate could still trend higher while the challenges from a new advice model remain,” he said.

IFL shares last down 8pc to $4.78.

Read more

IOOF chief Renato Mota. Picture: Aaron Francis/The Australian.

Nick Evans 12.10pm: Newcrest dispute delays Macmahon results

Mining contractor Macmahon Holdings has pushed back delivery of its annual financial results, telling shareholders it can’t deliver its earnings report until the conclusion of negotiations with Newcrest Mining over a toxic contract at the Telfer gold mine.

Macmahon has been brawling with Newcrest over the underwater contract for several years, and said in early August mediation hearings between the pair had failed to deliver a result and it was looking to launch legal action against the gold major.

At stake is who will wear the costs of changes to the mine plan at Telfer, which Macmahon argues are outside the scope of its agreement with Newcrest and should allow it to negotiate better rates.

The Telfer life-of-mine contract, first signed in February 2016, has at least another three years to run, and Macmahon has estimated it will need to take a $25 to $35 million onerous liability provision in its financial accounts to reflect the likelihood it will keep bleeding cash until the contract expires.

Macmahon suspended its trading this morning, however, saying it is back in discussions with Newcrest, and has delayed the release of its annual accounts until the conclusion of negotiations.

Newcrest has been contacted for comment.

Macmahon shares last traded at 17.5c.

11.58am: Hong Kong tumble worst since Oct

Asian markets have been rattled on the latest escalation of US-China trade tariffs, adding to weakness across the region.

Less than an hour into the session, China’s Shanghai Composite is lower by 1.13 per cent, but its Hong Kong’s market that’s falling hardest - down 3.43 per cent for its worst loss since October.

At these levels, the Hang Seng is close to wiping out all gains for the year after ongoing protests at the weekend.

Meanwhile, the ASX remains 1.5pc lower to 6427.5.

11.33am: Yuan weakest since GFC

The Chinese yuan has been hit by the tariff fear, weakening by 0.7pc against the US dollar to to the weakest levels since the GFC.

After a fixing of 7.0570 this morning, the USD/CNY rate has jumped by 0.71pc to 7.144, its highest level on record.

The offshore yuan is higher by 0.41pc to 7.16.

It comes as China issued retaliatory tariffs on the US on Friday, and US President Trump responded by raising US tariffs on China.

That move hasn’t had much effect on the Australian dollar, holding 0.38pc lower at US67.28c.

11.26am: Gold miners clock double-digit gains

Australian gold miners are surging amid a rush to safe havens, after the gold price surged 2 per cent on Friday.

Bucking the broad market negativity, gold miners are clocking up double-digit gains.

Evolution Mining is up by 10pc to $5.38, Northern Star is gaingin 11pc to $12.65 while Saracen Minerals is up by 12.5pc to $3.90.

Newcrest is higher by 6.2 per cent to $36.59.

The boost from gold has buffered the drop in Materials stocks, the sector down just 1pc versus as much as 3pc losses in Energy.

Gold futures are trading higher by 1.13pc to $US1554.85.

11.12am: Boral drops to 5-year low

Shares in building and construction materials group Boral have sunk to a five-year low on its full year results, after it warned of continued weakness in its Australian business.

Weakness comes despite the group unveiling a long awaited $US441 million deal with Germany’s Knauf to resume full ownership of its local USG Boral business along with the creation of a new Asian plasterboard joint venture.

UBS analysts say the result was a 6pc miss, with forward guidance 10pc to 15pc below consensus.

BLD shares last down 17.6pc at $4.08.

10.52am: The early moves of reporting companies

The results rushed has eased somewhat, with the bulk of companies reporting last week.

Here’s how today’s results are trading in the first hour:

• Fortescue Metals is lower by 3.9 per cent to $7.27 as trade tensions overshadow a record profit result and bumper dividend
• IOOF is off by 8.27pc after higher remediation costs hit its bottom line
• Boral is losing 16pc to $4.16, after touching 1-year lows of $4.09 after warning of slowness in the Australian market as it takes back its USG business
• McGrath is lower by 2pc to 23c despite trimming its annual loss, saying it was optimistic on the future
• oOh!media is lower by 3.3pc to $2.95 following its weak results, warning of a slowdown in advertising spend
• G8 Education is lower by 15pc to $2.34
• Monash IVF is down 3.5pc to 96c
• Adairs is trading higher by 6.4pc to $1.67 as it posted above-market growth in sales performance

10.46am: Bond yield retreats to new lows

Worrying signals are emerging from the bond market, as Australia’s 10-year bond yield pulls back to a fresh record low of 0.866 per cent after it had been pushing back toward 1 per cent barrier.

Trade tensions have brought about a downbeat view of the global economy with bonds shifting on the back of that.

The Aussie dollar fell as much as 1 per cent to US67.04c with focus to remain on weakness in China’s yuan during the session.

AUDUSD last down 0.43pc to US67.25c.

John Durie 10.45am: ACCC probes Ashai, CUB deal

The ACCC has launched a formal investigation into the $16 billion Asahi acquisition of CUB as it is poised to become the biggest beer producer wth a 50 per cent market share.

The next nearest competitor is Lion with a 37 per cent stake.

Asahi already sells Peroni, Mountain Goat and Asahi beer in Australia and some 90 per cent of its global earnings come from beer.

In Australia is also sells soft drinks including Schweppes.

The ACCC said a decision on the deal is due on October 31.

Lilly Vitorovich 10.38am: oOh!Media slumps near four-year low

oOh!Media shares have dropped to near four year lows, down 6.6 per cent to $2.86, after reporting disappointing first half results, marred by a slow down in advertising spending during the federal election and softer economy.

The group has booked a 4 per cent fall in first half underlying earnings to $56 million, despite pro forma revenue rising 5 per cent to $304.9m, 10 days after its profit warning, which triggered a big share sell-off.

The difficult market conditions particularly hit the performance of its Road division, which saw its 1H revenue drop 9 per cent to $67.5m.

oOh!Media expects 2019 underlying earnings to come in between $125-$135m million, excluding integration costs and the impact of changes to the accounting rules, down from its guidance of $152-162m

Outdoor billboard by oOh!media at the Sydney Airport. Picture: Supplied.

Bridget Carter 10.33am: AusUnity suitors finalising due dilligence

DataRoom | Australian Unity Office Fund says that the suitors of the business, Charter Hall and Abacus Property Group, are about to finalise their due diligence on the real estate owner following its $495 million bid for the company.

While delivering its annual results today, Australian Unity Office said that the four week due diligence period for the group ended on August 13.

The trust’s manager said that it was finalising remaining due diligence information to the Abacus-Charter Hall consortium including details relating to a development at Parramatta.

However, Australian Unity is yet to offer any recommendation to shareholders on the bid.

“The independent board committee established by AUIREL (Australian Unity Investment Real Estate Limited) to consider the proposal, along with its advisers, is finalising terms of a Scheme Implementation Agreement with the consortium in relation to the proposal,” it said in a statement.

It came as Australian Unity Office Fund posted a $52.5m fall in its net profit to $44.8m for the 2019 financial year

Its net tangible assets is $2.79 and Charter Hall and Abacus have offered $3.04 per share in cash.

AOF shares last up 0.33pc to $3 amid a 1.5pc slump in the broader market.

10.23am: Shaver Shop posts strong sales growth

Shaver Shop has lifted full-year profit 1.7 per cent to $6.67 million and says its strong sales growth has continued into the current financial year.

The retailer reported like-for-like sales growth for the 12 months to June 30 of 4.8 per cent, subsequently improving to 9.5 per cent through to August 18, as total revenue jumped 8.0 per cent to $167.4 million.

The company opened six new stores, refitted or relocated another six, and bought back one franchise store in what managing director and chief executive Cameron Fox said was “a key investment period for Shaver Shop”.

AAP

10.16am: Markets takes early $32.5bn tumble

The local market has taken a $32.5 billion hit at the open, as shares dive after the lastest tit-for-tat escalation in the US-China trade war.

The benchmark ASX200 tumbled by 1.7 per early, to lows of 6409.8, wiping out almost all of the market’s gain last week.

Energy stocks are leading the slide, after China said it would put tariffs on oil for the first time, while tech stocks are down by 2.6pc.

ASX200 last at 6425.2.

John Stensholt 10.03am: Twiggy rakes in $1.24bn in dividends

Billionaire Andrew Forrest will break the $1 billion barrier mark in dividend income this year, after his Fortescue Metals Group declared a 24c per share fully franked dividend today.

Mr Forrest, the Fortescue chairman and major shareholder, will receive about $261 million from the final dividend, which is payable on October 2, to total a whopping $1.24 billion for the entire year.

Fortescue paid a 30c per share interim dividend in February, including an 11c special dividend, when the iron ore giant announced its financial results for the six months to December 31. That saw Mr Forrest receive $327 million.

It then followed up with a special 60c per share out of cycle special dividend to shareholders in May ahead of the federal election, before which the Labor opposition had pledged to overhaul the dividend franking system.

The special dividend resulted in Mr Forrest receiving about $654 million.

Mr Forrest and his family revealed in that same month that a further $655 million had been donated to their Minderoo foundation, which has now received more than $1.5 billion since it was established in 2001.

Mr Forrest owns about 1.09 billion shares in the iron ore miner.

His stake in Fortescue is worth about $8.25 billion ahead of today’s trading.

Mr Forrest placed eigth on The List – Australia’s Richest 250 with a fortune of $7.57 billion when it was published by The Australian in late March.

9.58am: Woodside produces first oil at Enfield

Woodside Petroleum has produced its first oil at its Greater Enfield Project in Western Australia, through its Ngujima-Yin floating production storage and offloading vessel.

Chief executive Peter Coleman said the first oil from its 60pc owned joint venture with Mitsui E&P had been produced on schedule and under cost, but a significant undertaking with mroe than five million work hours logged.

Production from the Greater Enfield reservoirs is an important contribution to Woodside’s targeted annual production of approximately 100 MMboe in 2020.

“The delivery of Greater Enfield is further demonstration of Woodside’s capacity to execute the major projects that will underpin our next phase of growth. The technical and project leadership capabilities applied on the Greater Enfield Project will be carried forward as we progress our plans to develop the Scarborough and Browse offshore gas resources through the proposed Burrup Hub,” Mr Coleman said.

Eli Greenblat 9.49am: GMT retreats from damning Treasury report

A Hong Kong research firm that earlier this month issued a scathing report on Treasury Wine Estates has retreated from the bulk of its claims after the release of the winemaker’s full year results.

GMT Research had accused it of channel stuffing and engaging in fraudulent accounting behaviour, triggering a 7 per cent dive in its share price.

In response, Treasury Wine referred the group to the Australian Securities and Investments Commission, just a week out from the release of its 2019 results.

But in a new report issued after Treasury Wine’s results, GMT said most of its concerns have been allayed, there was no evidence of channel stuffing, and that Treasury had demonstrated a major improvement in cash flow. The report author again raised unsubstantiated concerns about the winemaker’s performance.

Treasury Wine said it considers this second report to be also misleading, given GMT has essentially backed down from claims made in their original report.

Read more

Samantha Bailey 9.45am: Monash IVF returns to earnings growth

Australian healthcare provider Monash IVF says it returned to earnings growth in the second-half of fiscal year 2019, as it delivered an annual net profit after tax down 7 per cent to 19.8 million on the prior year.

As a result of earnings momentum gained in the second half, Monash said it was well positioned to optimise future earnings, as it progresses its strategic initiatives, including the expansion of its footprint as well as a number of cost management plans.

“Strong underlying demand fundamentals for assisted reproductive services remains domestically and abroad,” Monash told investors this morning.

The company said that it was working to minimise the financial impact of five Victorian-based fertility specialists exiting the brand, which could hit fiscal year 2020 profit by between $1.5m and $2.5m.

Monash IVF declared a fully-franked final dividend of 3 cents per share in line with last year.

Eli Greenblat 9.41am: FX, economic headwinds hit Adairs

Bedding and homewares company Adairs warmed that continued headwinds in the economy such as the lower Australian dollar and volatile trading conditions will impact earnings in the year ahead, as it forecast flat to little growth in pre-tax earnings for fiscal 2020.

However, the retailer posted above market growth in sales performance in 2019 and is investing in its supply chain and logistics capabilities which should help reduce costs, pave the way for further growth and improve efficiency from 2022.

Shareholders were also rewarded with a higher dividend which is up 7.4 per cent for the year.

Adairs this morning posted a 1.3 per cent fall in net profit to $29.6 million as sales rose 9.7 per cent to $344.4 million.

The company said like-for-like sales growth was 7.2 per cent while online sales rise 41.7 per cent. Online now contributes 17 per cent of total sales.

The same store sales growth was within guidance of 7 to 8 per cent increase provided in a trading update in June.

Adairs recorded EBIT of $43.4 million, down 2.4 per cent, which was at the top end of the June update and guidance.

9.35am: Trade escalation to hit shares by 1.3pc

The latest escalation of trade tariffs is set to hit the local market by 1.3 per cent at the open, after a slide on US markets on Friday.

Futures relative to fair value suggest Australian stocks will open near the 6400 level, wiping out most of last week’s gains.

It comes after Beijing on Friday announced retaliatory tariffs on US imports, and US President Trump quickly followed suit to ratchet up his tariffs on China to 30pc from 25pc on $260 billion worth of Chinese imports.

For the first time, oil and soybeans are included in China’s tariffs, what prompted a $1 or 2pc drop in WTI crude on Friday.

Weakness in the US also followed Fed chair Jerome Powell’s Jackson Hole speech, which prompted Trump to tweet that the Fed was “weak”.

“There is an uneasy feeling that the very fragile negotiations are spiralling out of control. Equities sold off and bonds rallied as uncertainty surged. The S&P 500 was off 2.6pc, the DAX was down 1.2pc and the FTSE was off 0.5pc,” ANZ said in a note this morning.

“The yield on the US 10-yr note was 11bp lower at 1.54pc. Oil was also weaker as the growth outlook deteriorated, with WTI down 2.4pc to USD54.2/bbl.”

Looking locally, and the final stretch of results are trickling in - most notably Fortescue, IOOF and Boral today.

ASX200 last at 6523.1.

....My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?

— Donald J. Trump (@realDonaldTrump) August 23, 2019

9.31am: What’s impressing analysts, what’s not

• Ardent Leisure raised to Buy - Baillieu
• Costa Group cut to Hold - Morgans
• ERM Power cut to Hold - Morgans
• Hansen Tech cut to Sector Perform - RBC
• Rhipe raised to Buy - Blue Ocean Equities

Samantha Bailey 9.22am: Japara occupancy slide hits earnings

Aged care service provider Japara Healthcare has flagged lower earnings for the year ahead as it slashed its final dividend and delivered a net profit figure down nearly 20 per cent on the prior year.

Unveiling its full-year results this morning, Japara said that earnings before interest, tax, depreciation and amortisation for the year ahead would be between 5 per cent and 10 per cent lower compared to fiscal year 2019.

Lower expected earnings in the year ahead were as a result of the removal of the Federal Government’s temporary subsidy increase that applied from 20 March to 30 June this year

“The funding environment continues to present challenges and occupancy remains below historic levels,” Japara told investors this morning.

Still, recently completed developments were expected to help mitigate industry headwinds as they contribute a full year of earnings.

The company declared a final dividend of 3.35 cents per share 50 per cent franked, compared to 3.75c a share last year.

Net profit after tax fell 29.6 per cent to $16.4m for the full-year through June.

9.13am: Fortescue posts record earnings, payout

Fortescue has boasted record annual earnings and returns to shareholders, buoyed by a solid rally in the iron ore price.

While ore shipped remained steady at 167.7 million tonnes, the miner received $US65 per dry metric tonne, a 48 per cent increase on last year’s average.

Strong market conditions helped the miner post record underlying net profit of $US3.2 billion, 195 per cent higher than the previous year, and earnings per share of $1.47 apiece.

The board declared a fully franked dividend of 24 cents per sahre, taking total dividend for the year to $1.14.

“Fortescue’s unwavering determination to deliver shareholder returns through dividends and investment in growth was evident in FY19 with record fully franked dividends of A$1.14 per share declared, a significant increase on FY18 dividends of A$0.23 per share,” chief Elizabeth Gaines told the market.

“The ability to deliver increased returns to our shareholders is underpinned by the successful execution of our strategy, through balance sheet strength, enhanced product mix, sustained cost and efficiency focus, as well as demand for iron ore.”

Samantha Bailey 9.11am: G8 occupancy, revenue higher

G8 Education had delivered a 20 per cent drop in first-half net profit to $19 million, while revenue grew 9 per cent on the prior year and like-for-like occupancy was up 1.5 per cent.

The childcare centre operator said the lower net profit figure was impacted by the new accounting standards.

“G8 has achieved a solid result for the first half of 2019, in line with expectations, while making pleasing progress on the Group’s strategic program to ensure sustainable long-term value,” managing director Gary Carroll said.

Mr Carroll said that while the company’s acquisition performance was mixed, it was confident that the acquired centres were on the right growth trajectory.

“The long-term fundamentals of the sector are very attractive, and we are committed to providing a high-quality differentiated service offering to our families,” he said.

Revenue for the first half lifted 9 per cent to $429.88m, while underlying earnings before interest and tax lifted to $51.56m, up from $48.11m in the first half last year.

9.09am: Boral strikes Asian plasterboard deal

Australian building materials company Boral has struck a deal with Germany’s Gebr. Knauf KG to rework a joint plasterboard business, as it reported a 38 per cent fall in annual profit and projected a further decline in earnings in the year ahead.

The company said it has agreed with Knauf to expand their 50-50 plasterboard joint venture in Asia, and for Boral to buy the German company out of their Australian and New Zealand operations. Boral’s total net investment in the agreed plan is $US441 million ($658m), it said.

Boral on Monday separately reported a net profit of $272.4 million for the year through June, down from $441.0 million a year earlier. Profit before significant items fell by 7 per cent to $440.1 million.

It projected profit before significant items would fall a further 5pc to 15pc in fiscal 2020, largely tied to a slowdown in Australian home building.

Dow Jones Newswires

The Boral concrete plant in Botany. Picture: AAP/Image Matthew Vasilescu.

Samantha Bailey 9.05am: amaysim warns of more mobile competition

Challenger telco and energy company amaysim says it is well positioned to take advantage of growth opportunities in the year ahead as it flagged materially lower earnings in fiscal year 2020 compared to the prior year.

The company said that underlying earnings before interest, tax, depreciation and amortisation for the year ahead was expected to be within the range of $33 million and $39m, down from $47.3m in the 2019 fiscal year.

The lower guidance reflected a competitive mobile market and a softer performance in the company’s energy business, due to no expected price rises in the year ahead.

Still, amaysim said it was focussed on growth, and that it would continue to focus on increasing awareness of its subscription plans in energy and mobile.

“Despite the challenges in mobile and energy, the board and management are optimistic for the medium to long term outlook for the business,” the company told investors this morning.

The company delivered an after tax loss of $6.5m for the full-year through June, compared to a net profit after tax of 14.8m last year.

8.52am: oOh!media profit plunges 94pc

oOh!media has posted a 94 per cent plunge in profit for the half year, after warning of a slow down in advertising spend at the start of earnings season.

The advertising group posted net profit attributable to members of $515,000, down from $9.27 million in the prior corresponding period.

That was despite a 59 per cent boost in revenue to $304.9 million, from $192m last year.

Its late profit warning just two weeks ago, sent shares plunging by more than 28pc.

Today, chief executive Brendon Cook blamed a slowdown before the May federal election and softer macroeconomic environment and said the softness in the market would be temporary, but significant.

“While the recent adjustment to our earnings forecast for the year due to current market conditions is disappointing, the Company has tested a number of potential scenarios for future trading and has concluded that no equity raising is required, excluding the Company’s dividend reinvestment plan. This conclusion is, in part, because of the highly cash generative nature of the business,” Mr Cook said.

Read more

Samantha Bailey 8.45am: McGrath optimistic despite $16m loss

McGrath chief executive Geoff Lucas says he’s optimistic about the future, despite blaming difficult real estate market conditions for lower sales volumes and prices for the 12 months through June.

The real estate agency delivered an after tax loss of $15.6 million, partly due to $3.4m impairment charges.

That compared to a $63.1m after tax loss a year ago.

The company said that sales volumes were down 17.5 per cent nationally for the year through June, while prices were down 6.9 per cent on the prior year.

“Despite the challenging conditions, we have gained market share based on sales transactions data published by CoreLogic,” chief executive Geoff Lucas said.

“We continue to re-invest into our operations to create the best possible environment to list, sell and manage real estate, ensuring our agents are best placed to efficiently deliver the best possible results to our clients.”

McGrath did not declare a final dividend.

8.34am: IOOF profit down 68pc

Embattled financial group IIOF holdings has reported annual net profit down 67.7 per cent to $28.6 million as the cost of its customer remediation program hit home.

IOOF said it had undertaken an external review of its advice operations and made a $182.7 million provision for remediation costs, with $40.4 million in costs for running the program.

The company expensed $12.1 million in remediation costs in the 2019 year.

IOOF reported a fully franked final divided of 19c per share.

More to come

8.10am: SPI points to sharp ASX fall

The SPI200 futures contract was down 86 points, or 1.33 per cent, at 6,400.0 at 0800 AEST, suggesting a steep fall for thebenchmark S&P/ASX200 on Monday.

The Chinese government announced retaliatory tariffs on $US75 billion of US goods on Fridayand US President Donald Trump countered by saying his country would raise its existing tariffs on $US250 billion worth of Chinese imports to 30 per cent from the current 25 per cent beginning on October 1.

On Wall Street on Friday, the Dow Jones Industrial Average finished down 2.37 per cent, the S&P 500 was down 2.59 per cent and the tech-heavy Nasdaq Composite wasdown 3.00 per cent.

The Aussie dollar is buying 67.36 US cents from 67.53 US cents on Friday.

AAP

7.55am: Copper takes a tumble

Copper cable scrap metal recycled

Copper prices fell to the lowest in more than two years on Friday as an escalating trade conflict between China and the United States, faltering Chinese economic growth and a weakening yuan undermined theoutlook for demand. Benchmark copper on the London Metal Exchange (LME) closed down 0.9 per cent at $US5,632 after touching $US5,624.50 - the lowest since June 2017. It was down nearly 2 per cent over the week and more than 20 per cent from a peak in June last year.

Capital Economics analyst Ross Strachan said prices were unlikely to keep falling.

“We are expecting (copper) mine production to fall slightly this year,” he said. “You don’t need a lot of demand growth ifyou’re in that situation, so I think we are well supported at these levels.” China’s government said it will impose retaliatory tariffs on about $US75 billion worth of US goods, ramping up a dispute that has weakened growth in China, the world’s biggest metals buyer, and beyond.

US President Donald Trump responded by saying US companies should “immediately start looking for an alternative to China”.

Global stocks fell alongside oil prices and US bond yields while China’s yuan weakened to a fresh 11-and-a-half year low against the US dollar. The weaker yuan makes metals priced in the US currency more expensive for Chinese buyers, potentially damaging demand.

China’s imports of scrap metal in July dived by 27.5 per cent from the previous month to 290,000 tonnes, the lowest monthly total since March. LME nickel ended unchanged at $US15,660 a tonne but was down about 3.0 per cent this week, eating intoa rally that had pushed up prices of the stainless steel ingredient by about $US4,000.

7.53am: Gold surges on Fed, trade

Gold surged 2 per cent on Friday as investors interpreted US Federal Reserve Chair Jerome Powell’s speech as leaning toward a dovish monetary policy stance and US President Donald Trump’s latest comments exacerbated trade tensions with China.

Spot gold rose 1.9 per cent at $US1,526.60 an ounce, shaking off slight headwinds ahead of the Fed Chair’s speech.

Prices earlier rose to $US1,528.79, the highest since August 13, when spot gold had scaled a six-year peak of $US1,534.31.

US gold futures settled up 1.9 per cent to $US1,537.60.

“The fact that he (Powell) said that they (the Fed) will act appropriately to sustain expansion is pretty bullish for gold. The two primary tools they have are quantitative easing (QE) or lower rates - both those tools will cause gold to go higher,” said Bob Haberkorn, senior market strategist at RJO Futures. “The move this morning is just more people buying gold simplywith the expectations that interest rates will be lower by year-end.” Powell said the US economy is in a “favourable place,” but gave few clues about interest rate cuts at its next meeting. However, he listed a series of economic and geopolitical risks the Fed is monitoring, noting these were linked to the trade spat.

“We shouldn’t be surprised if we see the Fed deliver a full percentage point in rate cuts over the next 12 months and a newQE program as we may only need a couple of the following macro events to blow up: trade uncertainties, weakness in China andGermany, Brexit, Hong Kong and the dissolution of the Italian government,” Edward Moya, a senior market analyst at OANDA,said in a note.

Reuters

7.48am: Oil prices slide

Oil prices fell on Friday after the Chinese government unveiled retaliatorytariffs against about $US75 billion worth of US goods including crude oil, another escalation of a protracted trade disputebetween the world’s two largest economies.

Brent crude futures fell 58 US cents, or 1.0 per cent, to settle at $US59.34 a barrel.

US West Texas Intermediate (WTI) crude futures fell $US1.18, or 2.1 per cent, to settle at $US54.17 a barrel.

WTI lost 1.3 per cent for the week while Brent rose 1.2 per cent during the week.

China’s commerce ministry said it would impose additional tariffs of 5.0 per cent or 10.0 per cent on a total of 5,078 productsoriginating from the United States including crude oil, agricultural products such as soybeans and small aircraft.

In retaliation, US President Donald Trump said he was ordering US companies to look at ways to close operations in China andmake products in the United States.

“We still view the US-Chinese trade standoff as a major bearish consideration that will likely be requiring additional downwardoil demand adjustments as this year proceeds,” said Jim Ritterbusch, president of Ritterbusch and Associates. Investors alsofocused on a speech by US Federal Reserve chair Jerome Powell at an annual economic symposium in Jackson Hole, Wyoming.

The US economy is in a “favourable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansionon track, Powell said. The remarks gave few clues about whether the central bank will cut interest rates at its next meeting.

Reuters

Alan Kohler 7.35am: Business drafted into Trump’s war

It’s been a weird week, even for Trump, and has brought it home to investors and business people that they have no idea what’s happening.

The President of the United States might declare a national emergency and invoke the powers of a 1977 Act that, in the event of an “unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States”, gives him the power to block international transactions, freeze assets and confiscate assets.

Or maybe he won’t because, you know, he has second thoughts about everything.

Actually, on second thoughts, those business people and investors who are thinking clearly about things, as opposed to running around in circles with their hair on fire, probably do know what’s happening.

They are engaged in a great battle with the conservative culture warriors in the United States who see China not as a market, but as a philosophical threat.

Read more

7.05am: US businesses stumped by Trump tweets

American businesses, from technology start-ups to large corporations, are displaying confusion and concern as they struggle to understand what President Trump’s latest China messages mean for their operations.

President Trump tweeted on Friday that he “hereby ordered” US companies doing business in China to explore relocating operations. He also tweeted late on Friday afternoon that he would raise existing and planned tariffs on Chinese goods by 5 percentage points.

On Sunday, after Mr Trump suggested at the Group of Seven meeting in France that he had second thoughts about ramping up the trade war with China, the White House said the president had been misinterpreted and that he regrets not raising tariffs higher.

After a tumultuous week for trade negotiations, top administration officials said the president didn’t order US companies to leave China and has no plans to invoke emergency powers to force them to relocate their operations.

“Everyone is running their business thinking: ‘This is life as we know it’,” said an adviser to chief executives of several large US companies with significant China operations. Executives are unlikely to view the president’s tweets as an edict, said the adviser who declined to be identified. Rather, they are more likely to see it as yet another salvo in the continuing tussle over trade policy and “evidence things are getting hotter now”.

Dow Jones

7.00am: Target, Disney team up

Target and Walt Disney Co. have joined forces to open dedicated Disney Stores in about two dozen Target locations in the US, the latest example of a large retailer offering a specialty shop within its walls.

The companies said Sunday they plan to open 25 Disney Stores at Target locations across the US on October 4. By the end of 2020, the companies expect to add an additional 40 Disney Stores at Target locations.

The Disney “shop in shop” locations will be run and operated by Target employees and will include more than 450 items, such as toys, games, apparel and accessories, including items that had previously been exclusive to Disney Stores.

Retailers are increasingly carving out space in their stores for other brands and concepts. JC Penney Co. and Macy’s Inc. recently said they’d set aside space within some of their stores for resale market place thredUp Inc. Also, Kroger Co. has branded sections in some stores of Walgreens Boots Alliance Inc.

Target has long collaborated with celebrities and designers for exclusive products and collections. Over the last 20 years, Target has worked with designers ranging from Anna Sui to Lilly Pulitzer on exclusive lines.

As part of the Disney partnership, Target plans to open a new store at the western entrance of the Walt Disney World Resort in Orlando.

For Disney, the move represents a major expansion of its retail-store presence. The company currently has 300 Disney Store locations in the US The new partnership will boost Disney’s store count by about 22 per cent.

Dow Jones

6.55am: Trump tweet to hit shares

Donald Trump’s latest tweet storm about the US trade war with China is expected to see the Australian share market start lower this week.

The US president fanned the trade flames by firing off a series of incendiary tweets over the weekend, ramping up tariffs against Beijing and ordering American companies to get out of China.

Wall Street suffered big falls as a consequence, with the Dow Jones finishing down 2.4 per cent.

There were even bigger falls on the Nasdaq technology index, which was down by 3 per cent.

The fallout was largely limited to the two global superpowers, with the Canadian and European markets not as badly affected. The Australian market is expected to start the week down by 86 points or 1.3 per cent.

CommSec chief economist Craig James said the trade spat between the US and China was creating uncertainty in other parts of the world.

“It’s all about the US-China trade war and it’s all about Donald Trump and his tweets on the situation,” he told AAP.

“It’s all about what it means for global growth when you have the two biggest nations in the world trading tariffs against one another.

“It creates uncertainty about new investment, new employment, and that’s the issue at hand.” There will be some bright sparks on the Australian market, with the gold price up by $29.10 an ounce or 1.9 per cent.

The iron-ore price also rose by $3.95 or 4.6 per cent. Stocks in BHP, Rio Tinto and Fortescue are expected to benefit.

AAP

Michael Roddan 6.51am: RBA’s Lowe warns on shocks

RBA governor Philip Lowe says the world has entered a new era in which “political shocks” are becoming “economic shocks” and record low interest rates risk creating housing and stockmarket price bubbles.

Dr Lowe also restated his call for governments to do more to stimulate the economy, given the limited capacity of central banks to cushion the global economy in an environment of ultra-low interest rates.

“We are experiencing a period of major political shocks,” Dr Lowe told the annual global monetary policy retreat in Jackson Hole, Wyoming, yesterday.

“Political shocks are turning into economic shocks.”

The conference draws the world’s most senior economists and central bankers. Dr Lowe called on governments to overhaul their economies, arguing that infrastructure investment and structural reform would have a greater impact than cutting interest rates. He identified the reluctance of politicians to act as a key problem.

“Monetary policy cannot deliver medium-term growth,” Dr Lowe said, according to reports by Bloomberg. “We risk just pushing up asset prices.

“With these levers (of infrastructure spending and structural reform) stuck, the challenge we face is that monetary policy is carrying too much of a burden.”

Read more

6.45am: Iran’s surprise G7 move

A top Iranian official paid an unannounced visit Sunday to the G-7 summit and headed straight toward the heart of the city where leaders of the world’s major democracies have been debating how to handle the country’s nuclear ambitions.

France’s surprise invitation of Iranian Foreign Minister Mohammad Javad Zarif was a high-stakes gamble for French PresidentEmmanuel Macron, who is the host of the Group of Seven gathering in Biarritz.

Zarif spent about five hours in Biarritz after his plane touched down at the airport, which has been closed since Friday to all flights unrelated to the official G-7 delegations.

A senior French official, speaking on condition of anonymity to discuss the sensitive talks, said Macron personally informed US President Donald Trump about the invitation to Zarif.

The official noted that Macron and Trump met for two hours Saturday and discussed Iran at length, as well as at the informal group dinner Saturday night.

AP