ASX hits two-week low as rising virus tally hits travel stocks

BP has announced plans to sell off its petrochemicals business, as local shares finished firmly lower as virus concerns sap optimism.

David Rogers and Melissa Yeo

30 min read

6:01AMJune 29, 2020.

Updated 9:39PMJune 29, 2020

BP has announced plans to exit its petrochemical business.

Shares sink 1.5pc
Rising virus cases pressure travel stocks
Rex to fly domestic from March 2021
Ampol interim chief goes permanent
Infigen bidding war heats up

Welcome to the Trading Day blog for Monday, June 29. The ASX fell to a two-week low as rising coronavirus tallies in Victoria pushed out expectations of a quick recovery. In company news, Regional Express laid out plans to start domestic flights by March 2021, while Infigen fielded an upgraded bid from Iberdrola.

The Aussie dollar is mildly higher while US futures suggest a further decline to come in the session overnight.

9.37pm: Gilead puts price on virus drug

The maker of a drug shown to shorten recovery time for severely ill COVID-19 patients says it will charge $US2,340 for a typical treatment course for people covered by government health programs in the United States and other developed countries.

Gilead Sciences announced the price for remdesivir, and said the price would be $US3,120 for patients with private insurance. The amount that patients pay out of pocket depends on insurance, income and other factors. “We’re in uncharted territory with pricing a new medicine, a novel medicine, in a pandemic,” said Gilead’s chief executive, Dan O’Day. “We believe that we had to really deviate from the normal circumstances” and price the drug to ensure wide access rather than based solely on value to patients, he said.

The 250,000 treatment courses that the company had donated to the US and other countries will run out in about a week, and the prices will apply to the drug after that.

In the US, federal health officials have allocated the limited supply to states, but that will end in September.

“We should have sufficient supply ... but we have to make sure it’s in the right place at the right time,” O’Day said In 127 poor or middle-income countries, Gilead is allowing generic makers to supply the drug; two countries are doing that for around $600 per treatment course.

Remdesivir’s price has been highly anticipated since it became the first medicine to show benefit in the pandemic, which has killed more than half a million people globally in six months.

9.35pm: Thales wins $1bn ADF munitions contract

France’s Thales says it has signed a contract worth more than $A1 billion to supply Australia’s military with strategic domestic munitions over a 10-year period.

Thales said the contract would secure hundreds of jobs in NSW and Victoria and enable its operations in Australia to secure more than $A450 million in exports plus orders from clients other than the Australian Defence Force.

Reuters

7.53pm: BP sells off petrochemicals

British energy group BP, hit hard by the coronavirus pandemic slashing demand for oil, announced Monday the sale of its petrochemical business to rival Ineos for $US5bn.

“The agreed sale... will further strengthen BP’s balance sheet and delivers its target for agreed divestments a year earlier than originally scheduled,” a statement said.

BP chief executive Bernard Looney added: “I recognise this decision will come as a surprise and we will do our best to minimise uncertainty. I am confident however that the businesses will thrive as part of Ineos, a global leader in petrochemicals.” BP said that 1,700 staff employed by its petrochemical business worldwide were expected to transfer to Ineos on completion of the sale that meets a $15-billion divestment target one year early.

“Today’s agreement is another deliberate step in building a BP that can compete and succeed through the energy transition,” Looney added.

The Irish national, who became CEO of BP in February, is targeting “net zero” carbon emissions for the company by 2050.

In the immediate future, BP must rebuild its finances, having said earlier this month that it would take a hit of up to $17.5 billion in the second quarter.

With the coronavirus fallout ravaging global oil demand, BP has decided also to axe around 10,000 jobs, or 15 percent of its global workforce.

After companies worldwide closed their doors and airlines grounded planes at the height of the COVID-19 outbreak towards the end of the first quarter, oil prices dropped off a cliff, causing them to briefly turn negative.

Prices have however rebounded sharply in recent weeks as governments ease lockdowns and businesses slowly reopen

AFP

Perry Williams 6.53pm: Seven Group boosts Boral stake

The Kerry Stokes-controlled Seven Group has boosted its stake in Boral, using a dip in the share price to lift its ownership in the embattled construction materials giant to over 12 per cent.

After amassing an initial 10 per cent stake over the last few months, the conglomerate controlled by one of Australia’s richest men said it had acquired an extra 27m shares from June 18 to June 29 to hand it a 12.2 per cent stake.

Seven’s success in gradually building up a 30 per cent stake in Beach Energy, where it holds two board seats, may prove a blueprint for its strategy on Boral. After buying its initial 10 per cent holding, there were expectations it would creep up the Boral register to gain both influence on strategy and expected growth from an Australian infrastructure boom.

Seven Group indicated earlier in June it would push for changes at Boral. A “screening process” identified Boral as a leading industrial business, with “challenges around leadership, strategy, litigation and execution”, Seven Group said in an investor presentation, noting recent price dislocation had been the trigger for its move.

Boral’s new new chief executive Zlatko Todorcevski, appointed on June 15, said he expected the housing materials player will make a final decision by October over the fate of its struggling US division, amid investor pressure to sell its North American operations to accelerate a business turnaround.

6.45pm: Honda production slumps

Honda Motor Co. said that its global car production fell 52% in May from a year earlier, with all reported regions posting a drop.

The Japanese car maker said production fell 39% in Japan and declined 1.4% in China. Meanwhile, Honda Motor said car sales in Japan fell 45% in May from a year earlier.

6.35pm: HK, Shanghai stocks start week with loss

Hong Kong stocks ended one percent down Monday, in line with a sell-off across Asia following a steep drop on Wall Street as investors fret over an increase of new virus cases around the world.

The Hang Seng Index shed 1.01 percent, or 248.71 points, to 24,301.28. The benchmark Shanghai Composite Index slipped 0.61 percent, or 18.03 points, to 2,961.52 while the Shenzhen Composite Index on China’s second exchange dropped 0.44 percent, or 8.60 points to 1,939.12

AFP

Eli Greenblat 4.56pm: Seafolly sinks into administration

Swimwear brand Seafolly has become the latest victim of the economic shockwaves caused by the coronavirus, falling into voluntary administration, and adding its name to a growing list of businesses to fail.

It was announced Monday afternoon that Scott Langdon and Rahul Goyal of KordaMentha Restructuring had been appointed voluntary administrators, with the appointment including the entities relating to the Sunburn business.

Seafolly made the appointment because of the crippling financial impact of the COVID-19 pandemic, a statement from the administrators said.

4.37pm: Gold miners lift, travel takes hit

Gold miners provided some support in Monday’s session, buoyed by defensive buying. Newcrest added 0.8 per cent to $31.39, Evolution jumped 4.1 per cent to $5.57 and Northern Star edged higher by 0.8 per cent to $13.23.

Meanwhile, travel took a fresh hit on potential for borders to stay closed for longer – Qantas shares lost 5 per cent to $3.62, now below the offer price of $3.65 in its latest placement while Flight Centre lost 5 per cent to $10.75 and Webjet dropped 5.3 per cent to $3.20.

Regional Express bucked the downturn with a 17 per cent jump to $1.10 as it set out plans to start its own domestic services by March next year.

Here’s the biggest movers at the close:

4.12pm: Shares sink 1.5pc

Sentiment was decidedly pessimistic on the local market on Monday, as a blow out in Victorian COVID-19 cases spurred fears of a new round of lock down measures.

The state’s worst daily rise in virus cases since March followed new records on the global tally at the weekend, with some US states ordering new public health restrictions.

Shares hit two-week lows of 5773.2 but finished the session down a more moderate 91 points or 1.53 per cent at 5813.6.

On the All Ords, shares lost 96 points or 1.6 per cent to 5915.

Global mkts start the week on the back foot following heavy losses on Wall St on Fri as virus threatens econ reopening. Virus fatalities exceed half a million people worldwide. Bonds slightly lower w/US 10y at 0.65%. Oil prices down -2% w/Brent $40.19. Gold $1771. Bitcoin $9.1k. pic.twitter.com/iSehwFBKD9
— Holger Zschaepitz (@Schuldensuehner) June 29, 2020

Cliona O’Dowd 3.09pm: REST appoints Lill as new CIO

Industry super fund REST has named Morningstar’s Andrew Lill as its new chief investment officer.

Mr Lill replaces interim CIO George Zielinski and joins the $53bn fund from Morningstar Investment Management, where he was the CIO of its $US25bn Americas mutual fund, based in Chicago.

Mr Lill’s appointment comes after the super fund last August announced plans to restructure its investment operations, including folding its investment arm, Super Investment Management, into the fund’s internal investments team.

“The appointment of our first Chief Investment Officer for the whole fund is the culmination of more than 12 months’ work to refine our investment structure and governance and position the fund for further growth,” REST CEO Vicki Doyle said.

“Andrew’s experience and expertise will be a valued addition to Rest. We are well placed to pursue attractively priced assets in investment markets on behalf of our members as a result of our active management approach.

Mr Zielinski will retire from the interim CIO role once Mr Lill joins the fund in August.

2.35pm: Iberdrola may raise bid again: RBC

Infigen’s Spanish suitor Iberdrola will have to do more than just raise its price in order to keep the recommendation of the renewable energy group’s board, according to RBC.

Rival UAC this morning raised its offer to match Iberdrola’s prior offer of 86c apiece, only to be countered by a higher 89c per share bid.

But RBC analyst James Nevin points out that the certainty of UAC’s bid, with fewer conditions and FIRB approval, is more attractive than additional conditions from Iberdrola and may require an even higher bid to maintain board approval.

“Infigen’s bid implementation agreement with Iberdrola gives Iberdrola rights to match any competing offer and to retain the Infigen Board’s recommendation if Iberdrola makes a counter proposal that is “more favourable or no less favourable” to a competing proposal,” Mr Nevin writes.

“It is not clear to us that the 3.5pc premium between the two offers makes Iberdrola’s offer necessarily superior or “no less favourable”.”

He notes a number of risks to the Spaniards offer, namely FIRB approvals and a 50pc minimum acceptance condition versus the certainty of UAC’s offer with payment terms in T+10 days.

“Infigen’s share price is again trading above the Iberdrola’s 89cps offer price, indicating that the market expects this to go higher again.

“We think that Iberdrola may need a reduce the conditions in its offer or offer a higher offer price in order to make its offer clearly superior and retain the Infigen recommendation.”

IFN last traded up 3.1pc to 91.2c.

2.20pm: Discretionary spending boom not done yet

Household holiday spend will continue to shift to homewares and home improvements as bans on travel are pushed out further, according to Macquarie.

The broker notes that the strength in home categories is “not done yet”, citing third party sales data, including a 42pc increase in household purchases from the same time last year.

“We retain Outperform on +Wesfarmers, +JB Hi-Fi and +Harvey Norman. We think the materially elevated levels of growth we are seeing are unsustainable post-September, but note with travel bans increasingly pushed out further, we think household holiday spend will at least partially continue to be redirected to homewares and home improvement, providing support for sales here,” the broker said.

Adding to that, it says while consumers are eating out again, order in spend still remains elevated, prompting its outperform rating on Domino’s.

2.04pm: Shares at two-week low

Australia’s S&P/ASX 200 share index dived 2.1pc to a 2-week low of 5779.1 after bouncing from 5786 to 5843.5 this morning.

The Energy, Real Estate, Utilities, Industrials and Financials sectors are underperforming, with Woodside down 3.5pc, Stockland down 7.3pc, APA Group down 4pc, Qantas down 5pc and Virgin Money down 7pc.

The intraday break below the 100-day moving average at 5786 suggests the June low at 5720 could soon be retested.

It comes as S&P 500 futures turn down 0.2pc after recovering from -0.6pc to +0.5pc intraday.

Nick Evans 1.55pm: First resource a boom for Centaurus

Shares in ASX-listed minnow Centaurus Metals jumped on Monday after the company released its first resource from its Jaguar nickel project in Brazil.

Shares in the company were last up 9c, or 274 per cent, to 43c, amid big volumes for the exploration junior, after the company said its nickel sulphide deposit included 48 million tonnes at 1.08 per cent nickel for 517,500t of the metal – including high grade sections near to the surface.

At about $US12700 a tonne, the nickel price is still well below its 2020 high of close to $14,300/t, but the surge in Centaurus shares comes amid a wave of interest in WA nickel sulphide plays as the sector positions itself for a potential surge in demand for the metal as a key battery ingredient later in the decade.

Mincor Resource just closed a $50m institutional placement to back the development of its high-grade Cassini mine in WA’s Kambalda region – backed to the tune of $8.3m by Andrew Forrest’s Wyloo Metals. BHP recently closed an estimated $US30m deal to buy Norilsk Nickel’s Honeymoon Well project, and Western Areas shares surged last week on early-stage drilling results from a nickel project in South Australia.

Bridget Carter 1.50pm: Cyrus proposed $500m for Virgin bondholders

Cyrus Capital Partners is understood to have put forward a proposal for Virgin Australia that would have seen unsecured bondholders paid between $400m and $500m, say sources.

It is understood that the amount equates to between about 14c and 16c in the dollar and involves cash and a future share of equity.

However, exactly what bondholders will receive under the winning Bain Capital proposal still remains unclear.

Virgin’s unsecured bond holders were owed about $2bn when Virgin Australia collapsed in April, with debts of up to $7bn.

The group of bond holders have grown nervous about receiving little back on their investment and have threatened to vote down the winning bid for the airline if they are unsatisfied with the outcome.

Gerard Cockburn 1.39pm: Early super withdrawals top $17bn

The country’s retirement pool has been drained of more than $17bn from Australians claiming financial hardship due to COVID-19.

Weekly figures published by the Australian Prudential Regulation Authority shows 2.4 million requests for the early release of super have been lodged with the Australian Taxation Office.

As at June 21, total funds paid to account holders stood at $17.1bn, with the average payment claim being $7492.

1.18pm: Aussie flying intentions sharply lower: JPM

A JP Morgan-commissioned survey of 500 Australians across age, gender and employment status has found nearly 50 per cent expect to fly less, both domestically and internationally after restrictions ease, and 68 per cent will not fly internationally without a vaccine.

“A driving holiday or staying at home were preferred to flying domestically or internationally for the next vacation,” says JPM Australia’s head of research, Jason Steed.

“We see these results as negative for air travel and supportive of our Underweight rating on Sydney Airport, and a positive for driving holidays, which is supportive of our Overweights on Ampol, Super Retail Group and Viva Energy Group.”

1.01pm: Health stocks shine as ASX falls

All sectors are trading in the red at halftime, though losses in the health sector are more moderate thanks to a jump in two key names.

At 1pm, the benchmark ASX200 is lower by 97 points or 1.6pc to 5807.6 – from lows as much as 5786.5.

Financials and energy stocks are the worst performing, while health stocks trade lower by just 0.8pc as strong trade in PolyNovo and Fisher and Paykel offsets some of the drag.

Major banks are lower by between 2pc to 2.5pc, while gold names head higher in defensive trade.

Here’s the biggest movers at 1pm:

Lilly Vitorovich 12.51pm: Southern Cross, Prime get grant boost

A $50m funding injection for regional news outlets is being promoted by the Morrison government to help offset “catastrophic drops in advertising revenue” triggered by the coronavirus pandemic.

Communications Minister Paul Fletcher announced the grants on Monday as part of a Public Interest News Gathering program to throw a lifeline to local and regional news providers. Mr Fletcher said the government would provide “specific and time-limited support” for 2020-21 to “assist the continued provision of quality news and information”.

The $50m program is to be divided among 107 regional publishers and broadcasters who applied for the scheme, including listed Southern Cross Media and Prime Media as well as Australian Community Media. Five television applicants will receive $20m, 13 radio applicants will receive $12m and the 92 publishers who applied are set to receive $18m.

SCA and Prime Media will receive $10m and about $4.7m, respectively.

SCA chief executive Grant Blackley welcomed the announcement, saying “regional communities and businesses have been hit hard by COVID-19”.

Southern Cross shares are lower by 4.2pc as Prime trades down by 1.1pc.

Eli Greenblat 12.37pm: Woolies ramps up online capability

Woolworths is ramping up its infrastructure to cope with the leaps in demand for online shopping during the coronavirus pandemic and will transform one of its stores in Melbourne that was slated to close into a ‘dark store’ that is wholly dedicated to fulfilling online orders.

Woolworths’ Cranbourne Park supermarket in Melbourne’s southeast, will permanently close to in-store customers this Friday but will then be converted to a dedicated home delivery store for the next two months to support the online grocery needs of Victorians.

The conversion to a home delivery store will allow Woolworths to pick and dispatch thousands more weekly online orders to customers in southeast Melbourne in the coming months, Woolworths said.

Demand for online groceries has increased significantly in Melbourne as more customers seek to limit their community outings in COVID-19 hot spots. Woolworths opened a replacement store at Cranbourne West on June 12.

Last week Woolworths said there had been a 40 per cent increase in online shopping orders in the wake of the COVID-19 spike in Victoria and had put on extra delivery teams to cope

Nick Evans 12.26pm: Management shake-up at South32

South32 boss Graham Kerr has reshuffled his executive ranks at the mining major, with chief operating officer Paul Harvey set to depart the company, to be replaced by Illawara metallurgical coal boss Jason Economidis.

Mr Harvey joined South32 as its chief transformation officer when it was spun out of BHP, having previously run BHP’s Nickel West division, and became Sout32’s chief operating officer in 2017.

The company runs a joint chief operating officer model, with Mr Economidis to take overall charge of the company’s Australian operations – including its local manganese operations, the Cannington base metals mine, Illawarra Metallurgical Coal (IMC) and Worsley Alumina in WA.

Its second COO, Mike Fraser, will maintain his role in charge of the Cerro Matoso nickel mine in Colombia and South32’s African operations – including Hillside Aluminium, Mozal Aluminium, South Africa Energy Coal and South Africa Manganese.

Mr Kerr said Mr Harvey was leaving the company to “pursue other opportunities”, praising his former lieutenant.

South32 shares last were down 0.5pc to $1.99.

South32 boss Graham Kerr. Picture Colin Murty / The Australian.

David Ross 12.03pm: Scooter maker wins in commuting shift

Electric scooter maker Vmoto has reported strong sales for the first five months of the year, with sales of its vehicles up 42 per cent from the same time last year.

Sales have been booming on international markets, with 7,770 of its 8,453 scooters sold from January 1 to May 31 outside of Australia.

The company said its manufacturing and distribution have been unaffected by COVID-19 lockdowns, with the shift away from public transport accelerating the take up of its vehicles, along with a boost from a rise in door-to-door delivery services

The good news has seen shares in the company spike, up more than 21 per cent to hit 29c.

Subsidies from European governments on electric vehicles are also expected to provide a boost to already booming sales.

Vmoto has already delivered 2000 scooters for scooter-share service Go Sharing in the Netherlands, with another 1200 on the way in July-September. Vmoto has also struck a deal to sell 60 of the scooters into the Czech Republic via ride-sharing platform re.volt.

Deals to sell into Japan, Costa Rica, Panama and Thailand have been signed, with discussions underway to sell into several other growing overseas markets.

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#SuperSoco #SuperSocoAround #vmotosoco #vmotosocoeurope #electricvehicles pic.twitter.com/VyZ9HCJ8iR
— Vmoto Soco (@vmotosoco) June 26, 2020

11.51am: ASX pares intraday fall to 1.1pc

Australia’s S&P/ASX 200 bounced from 5786.5 to 5837.3, paring its intraday fall from 2pc to 1.1pc.

It came as S&P 500 futures bounced from 2984 to 3017.8 points intraday, for no obvious reasons.

Baring extreme volatility this afternoon, it looks like the S&P/ASX 200 will stay above its 100-day moving average at 5786.5 this afternoon.

However, the COVID pandemic is still worsening in many US states and Victoria in Australia.

S&P/ASX 20 last down 1.2pc at 5834.2

11.37am: Rising virus cases pressure travel stocks

Potential for the reinstatement of lockdown measures in Victoria is putting pressure on listed travel agents in morning trade.

After a hit on Friday, Qantas is again lower, this time by 5.1pc to $3.61 – after offering shares in its institutional placement at $3.65 apiece.

Flight Centre is lower by 5.9pc to $10.65, as Corporate Travel slips by 2pc to $9.54 and Webjet is down 4.4 per cent to $3.23.

Rachel Baxendale 11.26am: Victoria confirms 75 new cases

Victoria has now had 2099 cases of COVID-19 since the pandemic began.

The reclassification of four cases means there has been a net increase of 71 cases since Sunday.

Just one of Monday’s new cases is in a patient in hotel quarantine, while 14 have been linked to known outbreaks.

There are 37 cases in Monday’s results which were detected through routine testing, while the remainder are under investigation.

There have been six more cases from unknown sources added to Victoria’s community transmissions tally, which now stands at 271.

There are currently 288 active cases of COVID-19 in Victoria. Nine Victorians are in hospital with COVID-19, including one in intensive care.

Read more at our live coronavirus blog

11.08am: Tax loss selling accelerates ASX drop

A number of Australian shares that are potential candidates for tax-loss selling are getting hit today.

The 10 worst-performing ASX200 stocks since June 30 include Virgin Money, Oil Search, Corporate Travel, Unibail-Rodamco, Whitehaven, Webjet, G8 Education, Flight Centre, Ooh!Media and Southern Cross Media.

Notwithstanding the fact that many of these stocks are exposed to the coronavirus pandemic which worsened over the weekend, all are underperforming today with falls of 3.0-6.3pc versus 1.7pc for the S&P/ASX 200.

Bridget Carter 11.05am: Metlifecare pushed to re-engage with EQT

DataRoom | Pressure is believed to be mounting on the board of Metlifecare to re-engage with its suitor EQT Infrastructure which walked away from a $NZ1.5bn deal to buy the company.

EQT offered $NZ7 per share, but announced it would not move forward with the planned acquisition, claiming material adverse changes to the business linked to COVID-19.

After the board recommended the offer, it is now engaged in legal action to ensure that EQT follows through with its original approach.

However, on the company’s register are hedge funds, which collectively own more than 25 per cent, and will soon call for the resignation of the company’s chairman Kim Ellis.

The shareholders apparently sent a letter to Mr Ellis expressing concerns.

He could not be reached when contacted by DataRoom.

Jared Lynch 11.01am: Jumbo dives on Tabcorp deal

Gaming giant Tabcorp has extended its reseller agreement with Brisbane-based Jumbo Interactive for another seven years, netting it an immediate $15m and up to 4.65 per cent of lottery ticket sales.

Jumbo – which was one of the ASX’s runaways last year hovering around $7.70 before rising to a high of almost $28 – is reliant on reselling lottery tickets, including Tabcorp’s Oz Lotto and Powerball.

On Monday, Tabcorp signed a binding term sheet to extend its agreement with Jumbo to 2030 – or a further seven years, following its current expiry.

Under its new agreement with Tabcorp, Jumbo will pay a fixed extension fee of $15m when the deal begins. It will pay additional service fees rising from 1.5 per cent of ticket sales in FY21 to 4.65 beyond FY23.

Jumbo shares fell 17pc early to hit $9.49 and last traded down 8.7pc to $10.42. TAH meanwhile is up 1.8pc to $3.37.

Eli Greenblat 10.51am: ACCC probes Metcash tools buy

The competition regulator has opened an investigation into wholesaler Metcash’s proposed acquisition of a controlling stake in hardware business Total Tools, and is seeking industry submissions on the potential impact to competition in the sector.

In a letter sent to industry players, the Australian Competition and Consumer Commission said it is seeking their views on the proposed acquisition of a majority stake in Total Tools Holdings by Metcash.

Metcash announced last week it had forged a deal to buy a 70 per cent stake in Total Tools for around $57m. Total Tools has been operating for 30 years and has 81 bannered retail stores that in calendar year 2019 pulled in revenues of $555m.

Metcash is a wholesaler and retailer of hardware and home improvement products whose brands include Mitre 10, Home Timber & Hardware, Thrifty-Link Hardware, True Value Hardware, and Hardings.

“The ACCC’s investigation is focused on the impact of the proposed acquisition on competition. In particular, we are seeking your views on: how closely IHG branded hardware stores and Total Tools compete with each other, and for which products/services; and the likely impact of the proposed acquisition on prices and/or service quality,” the regulator said.

Interested parties need to submit their response to the ACCC by July 13.

MTS last traded down 0.4pc to $2.74.

The ACCC is asking for submissions on Metcash’s proposed Total Tools purchase.

10.37am: Shares dive to two-week low

Australia’s S&P/ASX 200 share index dived 2pc to a 2-week low of 5786.5 in early trading.

The fall exceeded a 1.4pc drop indicated by futures as US share index futures fell 0.4pc and WTI crude futures fell 2.1pc as the pandemic worsened in the US.

The 100-day moving average may offer support at 5786. Below that point, the June low at 5720 marks the bottom of the 5720-6200 trading range of the past 5 weeks.

10.21am: Rex to fly domestic from March 2021

Regional Express says strong interest in its fund raising has cemented the airline’s plans to commence domestic operations, with a targeted start date from March 1, 2021.

The group last month said it was exploring the option, and had received strong interest from parties willing to participate in any associated fund raising for a minimum of $30m.

“Due to the strong interest shown by various external parties to participate in the fund raising, including lessors willing to provide $30m for 15 of Rex’s fleet of 60 unencumbered Saab 340 aircraft, the Board has now formed the view that funding will be forthcoming for the minimum target sought,” the company said.

As such, Rex said its management was preparing for a March 2021 start date, to be based out of Sydney and/or Melbourne to service the “golden triangle” of Sydney, Melbourne, Brisbane.

REX shares last up 1.1pc to 95c.

Regional Express (Rex) aircraft on the tarmac at Sydney Airport. Picture: AAP Image/James Gourley.

10.14am: Shares take 1.8pc hit

Local shares are shedding 1.8pc early, with losses across all sectors as the rising coronavirus tally globally threatens sentiment.

At the open, the benchmark ASX 200 is lower by 99 points or 1.68pc to 5804.7, after slipping as much as 1.92pc.

Financials are lower by 2.7pc, and energy stocks by 3.1pc while real estate shares are off by 2.9pc.

9.50am: Infigen bidding war heats up

Infigen suitor Iberdrola has raised its bid for the group, after rival bidder UAC this morning matched its earlier 86c per share offer.

Iberdrola said it was increasing its offer price to 89c per share.

Previously, Infigen had recommended the Spanish group’s $840.6m offer.

IFN last traded at 88.5c apiece.

9.43am: Shares to test two-week low

Australia’s share market may fall sharply to a 2-week low based on offshore leads but the US and AU markets are range trading within strong uptrends while they remain above their June lows.

Trader sentiment remains bearish and if the US pandemic continues to worsen, the Fed will undoubtedly provide more support at some point.

Friday night futures suggested the ASX200 would open down 1.4pc at 5821, erasing most of Friday’s rise after the S&P 500 fell 2.4pc to 3009.

Tax-loss selling in stocks that have performed badly in the past 12 months may be a factor before financial year-end.

On Friday, the regulatory curbs on US bank dividends and buybacks after the US close on Thursday pushed the KBW Bank index down 6.4pc. But only the Communications and Financials sectors underperformed and the curbs on US banks are irrelevant for AU banks.

The worsening COVID-19 pandemic in southern US states and some new lockdowns announced over the weekend may give some downside risk.

S&P 500 futures are down about 0.4pc after opening down 0.6pc and WTI crude futures fell 2pc to $37.69 a barrel.

But spot gold, the Australian dollar and other currencies have not reacted much so far today.

On a positive note, China’s Industrial Profits for May were out Sunday with a 6pc rise marking the first increase in 6 months.

9.41am: What’s impressing analysts?

API cut to Neutral – Citi
EBOS raised to Buy – Citi
Galaxy Resources cut to Neutral – Credit Suisse
QBE Insurance raised to Buy – Bell Potter
Sigma Healthcare raised to Buy – Citi

9.31am: Eclipx tops up exec pay on sales surprise

Car leasing group Eclipx says its total unit sales for the past three months have been better than anticipated, prompting a move to reinstate full executive salaries from July 1.

Top exec and directors took a pay cut at the onset of the pandemic, in a bid to ease some of the pressure on the group’s cashflows, but Eclipx said this morning sales were picking up.

The group said its weekly average for unit sales was 242 since the start of April, and “broadly consistent with the end of lease profit margins achieved in the first half of the year.

As such, the group said it was reprioritising its focus to new business over lease extensions, which were down 70pc to 80pc from pre-COVID-19 levels.

In addition, the group said its Right2Drive sale process was continuing to plan.

Perry Williams 9.22am: Ampol interim chief goes permanent

After a four month stint as Ampol’s interim chief executive Matthew Halliday has been tapped for the role on a permanent basis, effective immediately.

Mr Halliday, a former Rio Tinto executive, has capped a rapid rise after joining as chief financial officer in April 2019.

He replaces retiring chief Julian Segal and will be paid a $1.65m base salary along with short term incentives capped at 70 per cent of his salary.

Chairman Steven Gregg said Mr Halliday had done and “outstanding” job in the role through the COVID-19 uncertainty and disruption and that the board had “formed a view that Matthew is the right person to lead Ampol into the future”.

Ampol, previously known as Caltex, rebranded after using the name under licence from US giant Chevron which has re-entered the market through its Puma Energy acquisition.

The first Ampol sites will appear in Sydney and Melbourne in the second half of 2020 with a national rollout in 2021 and use of the Caltex name officially shelved by the end of 2022.

Caltex CEO Matthew Halliday. Picture: AAP Image/Dean Lewins.

9.12am: NAB appoints business banking head

NAB has appointed Andrew Irvine as group executive business and private banking, joining the leadership team from his most recent role with the Bank of Montreal.

Mr Irvine was formerly business banking lead at the Canadian bank, and will relocate to Melbourne for the role, starting September 1, as flagged last week by The Australian.

“We have an ambition to grow our market-leading business bank by helping our customers grow,” chief Ross McEwan said.

“Andrew’s deep understanding of customers developed over a career in banking and his leadership in using data, insights and technology to meet their needs will be important to achieving this ambition.”

Read more: NAB set to unveil marquee signing

Bridget Carter 8.56am: UAC lifts bid for Infigen

DataRoom | Infigen suitor UAC has this morning lifted its bid for the renewable energy group, to match an earlier offer from Iberdrola at 86c per share.

Earlier this month, the renewable energy investor UAC raided Infigen’s share register to acquire up to a 17.1pc stake in the company, but its offer was trumped by a $840.6m bid from Iberdrola.

Infigen has recommended Iberdrola’s 86c per share bid to its shareholders, previously warning that UAC’s bidder statement was outdated.

Today, UAC issued a notice declaring “that the takeover offer have been freed from all remaining defeating conditions. Accordingly, the takeover offer have no become wholly unconditional”.

8.25am: Rio in Oyu Tolgoi power deal

Rio Tinto said it has reached agreement with Mongolia’s government on domestic power supply to the Oyu Tolgoi copper mine.

Rio Tinto said Mongolia will fund and construct a state-owned power plant at Tavan Tolgoi, the location of a large coal deposit.

The revised Power Source Framework Agreement signals construction of the coal-fired power plant should begin before July 1, 2021. Commissioning of the plant is then due to happen within four years, Rio Tinto said.

“This agreement provides a potential pathway to securing a domestic power supply for the Oyu Tolgoi mine and underground project for the benefit of all shareholders and the wider community,” said Arnaud Soirat, Copper & Diamonds chief executive.

Oyu Tolgoi currently uses imported power.

Dow Jones Newswires

John Durie 8.05am: ACCC probes Refinitiv deal

The ACCC has opened competition inquiries into the London Stock Exchange’s proposed takeover of financial data group Refinitiv.

The deal was formally approved by LSE shareholders late last year and the London exchange is committed to proceeding with the takeover of the Blackstone-controlled company.

Refinitiv is 45 per cent owned by Thomson Reuters and specialises in financial and trading data, competing with Bloomberg among others.

The deal is also being examined by the EC and is timed for a decision by the ACCC in October.

7.50am: Oil lower on virus rise

Oil prices settled lower on Friday as new coronavirus cases spiked in the United States, and on growing concerns about rising US output ticking up while crude stockpiles sat at record highs.

Brent crude futures settled down 3 US cents at $US40.91, falling 1 per cent on the week. US West Texas Intermediate (WTI) crude futures fell 23 US cents to $US38.49, down 1.6 per cent on the week.

Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in US trading on fears that spiking COVID-19 infections in large gasoline-consuming US states could stall the demand recovery.

Reuters

7.45am: Boeing 737 MAX test flights to start

US air-safety regulators are set to begin key flight tests of Boeing Co.’s 737 MAX as early as Monday, amid growing expectations by industry and government officials that the planes are likely to return to service around the end of the year.

The airborne checks, slated to be conducted in conjunction with Boeing and scheduled to last three days, mark a preliminary validation and long-awaited milestone for Boeing’s technical fixes aimed at getting the MAX fleet back in the air. The planes have been grounded for 15 months following two accidents that killed 346 people, roiled the airline industry long before the coronavirus pandemic and dealt the biggest blow to the plane maker’s reputation in its 103-year history.

In an email the Federal Aviation Administration sent to congressional staffers Sunday, the agency said the effort “will include an array of flight manoeuvres and emergency procedures to enable the agency to assess” whether a series of software and hardware changes complies with safety certification standards.

But as expected, the FAA stressed agency officials haven’t even tentatively completed those evaluations yet, while the message laid out a handful of additional steps anticipated to take at least several months – some involving outside experts, foreign authorities and requests for public comment.

Dow Jones

7.35am: Fisher & Paykel profit jumps

Fisher & Paykel Healthcare Ltd. said full-year earnings jumped 37pc, boosted by demand for hospital equipment used to treat coronavirus patients.

Net profit for the 12 months ended March 31 was $NZ287.3 million the company said Monday. Revenue rose 18 per cent to $NZ1.26 billion.

The manufacturer of ventilators, medical consumables and breathing devices to treat sleep apnoea said strong sales linked to the pandemic had continued in the first quarter of its current financial year.

Sales of medical hardware to hospitals rose more than 300 per cent and sales of consumables increased by more than a third, it said. Costs, freight in particular, had also increased in the first quarter, the company said.

Fisher & Paykel, which has factories in New Zealand and Mexico, forecast net profit of between $NZ325 million and $NZ340 million for its financial year ending in March 2021.

The company declared a final dividend of 15.5 New Zealand cents a share, up 15 per cent from a year earlier.

Dow Jones

7.05am: Chesapeake files for bankruptcy protection

Chesapeake Energy, a shale drilling pioneer that helped to turn the United States into a global energy powerhouse, has filed for bankruptcy protection.

The Oklahoma City-based company said Sunday that it was a necessary decision given its debt. Its debt load is currently nearing $US9 billion. It has entered a plan with lenders to cut $US7 billion of its debt and said it will continue to operate as usual during the bankruptcy process.

The oil and gas company was a leader in the fracking boom, using unconventional techniques to extract oil and gas from the ground, a method that has come under scrutiny because of its environmental impact.

Other wildcatters followed in Chesapeake’s path, racking up huge debts to find oil and gas in fields spanning New Mexico, Texas, the Dakotas and Pennsylvania. A reckoning is now coming due with those massive debts needing to be serviced by Chesapeake and those that followed its path.

More than 200 oil producers have filed for bankruptcy protection in the past five years, a trend that’s expected to continue as a global pandemic saps demand for energy and depresses prices further.

A Chesapeake drilling site. Picture: AP

5.50am: ASX set to open lower

Australia’s share market could be in for a “rough” week as ongoing concerns of a second wave of coronavirus cases in the United States continue to play havoc with the global economy.

The ASX is likely to open lower on Monday due to a fairly sharp fall on Wall Street from Friday, as the Dow Jones index fell 2.8 per cent, while the S&P 500 fell about 2.4 per cent, AMP Capital’s chief economist Shane Oliver said.

Dr Oliver says ongoing virus concerns in US states such as Florida and Texas have slowed down the reopening of the economy in a similar – but far less impactful way – as Victoria.

“They’re not reversing the reopening but they’re slowing it down,” he said.

Dr Oliver said the futures contracts was down 91 points, or about 1.6 per cent, pointing to a solid fall at the open “which basically reverses the rally we saw on Friday”.

“Our market rose about 86 points on Friday which is about 1.5 per cent,” he said.

“I suspect it’s going to be another rough week. Last week our market fell only slightly … but I expect as long as these concerns remain about second waves we’re going to see continued volatility in the share market and maybe some more weakness in the week ahead.”

Dr Oliver said the end of the financial year this week marks “the line in the sand” which will show the share market down for the year.

He says the sector will be looking out for business figures to be released from China and the US this week to monitor economic recovery, as well as ABS statistics on payroll employment and wages, building approvals and retail figures.

The Australian dollar “seems to be stuck”, buying at US68.6 cents on Saturday. “The Aussie dollar normally goes up when the global economy recovers but given there’s these concerns around coronavirus that recovery seems to have come to an end,” Dr Oliver added.

AAP

5.40am: Starbucks to pause social media ads

Starbucks is the latest company to say it will pause social media ads after a campaign led by civil rights organisations called for an ad boycott of Facebook, saying it doesn’t do enough to stop racist and violent content.

Starbucks said its actions were not part of the “(hash) StopHateforProfit” campaign, but that it is pausing its social ads while talking with civil rights organisations and its media partners about how to stop hate speech online.

The coffee chain’s announcement follows statements from Unilever, the European consumer-goods giant behind Ben & Jerry’s ice cream and Dove soap; Coca-Cola; cellphone company Verizon and outdoors companies like Patagonia, Eddie Bauer and REI; film company Magnolia Pictures; jeans maker Levi’s and dozens of smaller companies. Some of the companies will pause ads just on Facebook, while others will refrain from advertising more broadly on social media.

A Starbucks sign. Picture: AP

5.30am: Wall St recap

Wall Street stocks sank Friday as surging coronavirus cases prompted large US states to impose new public health restrictions, threatening the economic recovery following widespread business shutdowns.

The Dow Jones Industrial Average plunged 2.8 per cent, or 730 points, to 25,015.55.

The broadbased S&P 500 tumbled 2.4 per cent to 3,009.05, while the tech-rich Nasdaq Composite Index shed 2.6 per cent to 9,757.22.

Texas and Florida, which together are home to 50 million people, ordered bars to stop serving alcohol on site, along with other measures following huge jumps in virus cases.

“We are facing a serious problem in certain areas,” top infectious disease expert Anthony Fauci said Friday as the Trump administration’s coronavirus task force held its first public briefing in two months.

The actions by Texas and Florida will weigh on economic activity in the states, and also raised fears that business reopenings will be paused elsewhere, jeopardising the US economy’s already wobbly state.

But there were other significant factors in Friday’s rout, which pushed all three major indices into the red for the week.

Large banks including Bank of America and Goldman Sachs fell more than six per cent after the Federal Reserve late Thursday ordered the industry to suspend buybacks and limit dividend payments amid uncertainty over the coronavirus.

Facebook dived 8.3 per cent as it faced a widening boycott from major advertisers due to criticism it has not done enough to crack down on hate speech and incitements to violence.

Chief Executive Mark Zuckerberg announced new measures shortly after Unilever joined Verizon among large companies in suspending spending on the platform, saying Facebook would ban a “wider category of hateful conduct.” Dow member Nike dropped 7.6 per cent as it reported a surprise $790 million loss amid a steep drop in revenues as the pandemic forced stores closed.

But Gap surged 18.8 per cent after it announced a new venture with Kanye West that will sell West’s Yeezy brand in the chain’s stores.

AFP

Read related topics:Coronavirus