Trading Day: ASX closes higher for sixth straight session

Stocks have ticked higher with the post-election rally driving the bourse to a fresh 11.5-year high.

The ASX has notched up several days of gains. Pic: Bloomberg

That’s it for the Trading Day blog for Wednesday, May 22. BHP has held a strategy briefing to flag an about-face on nickel, APRA has issued a damning review of self-assessments undertaken by big banks, and Fortescue is going ahead with a new mine.

Eli Greenblat 4.50pm: Domino’s pizza checker app in place

The chief executive if Domino’s Pizza Australian and New Zealand arm, Nick Knight, said its new Pizza Checker app — a camera that sits above the store bench and can quality check all the pizzas sent out to customers — should be launched across its store network next week with it rolled out to 670 stores and more than 1 million pizzas analysed so far.

He said some franchisees had been transitioned out of the business as part of an improvement of stores and store performance with no franchisees who have left the business as yet launching any legal action against the company.

At the webcast of regional heads of the pizza chain this afternoon, Josh Kilimnik, the CEO of its Japan pizza chains, said a new menu option launched in April was still in early stages but there had been positive customer feedback.

4.45pm: Hikvision dives on US blacklist reports

Shares of China video-surveillance firm Hangzhou HIK Vision Digital Technology Co. fell nearly 6 per cent in Shanghai on Wednesday after reports the US was considering adding the company to a blacklist.

Citing sources,The New York Times said US officials may look to punish the Chinese company for its role in the monitoring and detention of a largely Muslim ethnic minority in the country’s northwest region of Xinjiang. If the ban goes through, the Commerce Department would force American companies to get approval to sell components to Hikvision. Bloomberg reported that US officials were looking to add as many as five Chinese video surveillance firms to a blacklist. Trade tensions got small relief Monday by reports that the Trump administration will offer 90-day exemptions for some U.S. companies doing business with Huawei Technologies.

Dow Jones

Bridget Carter 4.22pm: Telstra dials up property sale

The sale of Telstra’s $1.5 billion property portfolio is ramping up, with first round bids for the collection of telephone exchange buildings due at the end of June.

Already lining up to acquire a 49 per cent of the portfolio on offer is believed to be Charter Hall and Dexus Property Group, while infrastructure funds could also be likely to enter the frame for what is effectively a bond-like investment.

Australian Super, which recently vied for Healthscope which owned a lucrative property portfolio, is also thought to be a contender.

Other parties expressing interest are high net worth investors looking for a safe haven for their family wealth.

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Samantha Bailey 4.15pm: ASX rally rolls on

The local sharemarket finished the higher for the sixth straight session, extending its rally in the wake of the federal election and APRA’s easing of lending rules.

At the close of trade, the ASX benchmark S&P/ASX200 had gained 10.556 points, or 0.16 per cent to 6510.699 points. The broader All Ordinaries index had lifted 13.716 points, or 0.21 per cent, to 6598.102 points.

After a negative start, the ASX 200 clawed its way back to close out Wednesday’s session modestly higher.

The gains came after minutes from the latest Reserve Bank meeting released on Tuesday suggested a near-term rate cut.

“It was a continuation of what we’ve seen all week, I think the market has generally reacted quite well to things like the surprise election result, the Reserve Bank flagging potential interest rate cuts and also APRA, which made some comments suggesting it may ease mortgage serviceability rules,” CommSec market analyst Steven Daghlian.

“These things have been seen as a potential positive for the property market and that’s why even though they are down today, the big banks have been shooting the lights out all week.”

BHP added 0.3 per cent to $38.07 while Rio Tinto put on 0.4 per cent to $101.70. Fortescue was the biggest weight on the index after slumping 8.1 per cent to $8.27 as it traded ex-dividend.

Westpac rose 1.1 per cent to $28.81 while Commonwealth Bank was unchanged at $79.00. ANZ inched down 0.2 per cent to $28.38 while NAB edged 0.2 per cent lower to $26.15.

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Eli Greenblat 4.10pm: Domino’s spruiks Danish addition

The head of Domino’s Pizza European operations, Andrew Rennie, said the recent acquisition of the Domino’s franchise in Denmark would help bring further synergies into the group as it links arms with its existing pizza chains in France, Belgium and the Netherlands. He said Domino’s would “go slowly” in Denmark as its first move into Scandinavia.

Domino’s bought the franchised chain in Denmark last year for $4 million after the former owner closed down the business last year due to a number of health and hygiene scandals.

Mr Rennie said Domino’s was looking for further acquisitions in Europe, but that it also would lean heavily on organic growth. He said in Germany the conversion of the Hallo Pizza stores to Domino’s was now complete, with Domino’s gaining on board strong franchisees into its company. The comments were made at a webcast by regional heads of Domino’s to investors and analysts today.

Sarah-Jane Tasker 4.07pm: PM ready to talk climate: AACo

Australian Agricultural Company boss Hugh Killen says he’s of the view that the Morrison government is ready to engage with industry on climate change.

Mr Killen said there was a strong climate change and sustainability platform run during the federal election.

While he supported markets determining prices on things like carbon, Mr Killen said there needed to be more thought around how industries transition to that, and how industries adopt and change in these worlds.

“There is an emerging narrative around climate change and sustainability. It’s a conversation that the government appears ready to engage on,” he said.

Mr Killen, who today released full year results that included a more than $100m hit from extreme weather events, said AACo had decided to lean into the conversation and be a leader in sustainable beef production.

“Our customers, the most premium purchasers of beef we deal with around the globe, demand it,” he said. “It’s the first question they ask, above quality,” he says of the growing interest in sustainable produce.

“As an industry we need a coalition of the reasonable that can work together to educate and listen to the changing external dialogue around this.

“We need to be able to explain ourselves better as an industry.”

He adds there was a growing narrative on sustainability and environmental concerns around agriculture.

“When you think about the stewards of the land, the best people are the people that operate the land and we have been operating these assets for nearly 200 years,” he said.

“Sustainability is deeply ingrained in everything we do each day.”

Ben Butler 4.00pm: UBS warns on wealth manager profits

Swiss bank UBS says profits wealth managers reap from their platforms could drop more than 30 per cent as the industry’s vertical integration model collapses and clients flee for more modern options.

Analyst Kieren Chidgey said recent administration fee cuts were “a band aid solution” that could accelerate the exodus from legacy products and increase pressure on revenue.

He cut earnings targets for AMP and IOOF, both of which were savaged over their misbehaviour at last year’s banking royal commission, and slapped a “sell” recommendation on IOOF.

The flood of money quitting the for-profit retail super sector in favour of the member-profit industry super sector, together with the loss of market share experienced by wealth management platforms, together with fee cuts, “could see revenues fall 25% over 5 years”, Mr Chidgey said.

“To cushion profit impacts, major platforms will in our view need to cut costs by considerably more than the -2.1% pa average over the last 3 years,” he said.

“However, our review of Royal Commission cost data suggests the prize from consolidating legacy platforms could be limited with benefits likely to lag revenue compression.

“Even if major platforms cut costs 20 per cent over 5 years, WM profits could still decline over 30 per cent.”

Supratim Adhikari 3.45pm: LiveTiles bounces on Microsoft tie-up

Listed digital workplace software vendor LiveTiles has seen its shares surge over 20 per cent after being picked by Microsoft as a key partner in its latest major product launch.

LiveTiles, led by expat Melburnian co-founder Karl Redenbach, listed on the ASX in 2015. It offers workplace management software and works closely with Microsoft in the commercial, government and education markets,

The company has been picked as a launch partner for Microsoft’s latest SharePoint ‘home sites’ feature, which was launched overnight. SharePoint is Microsoft’s browser-based collaboration and document management platform.

Pharmaceuticals giant Novartis, a Microsoft and LiveTiles customer, will be the first to use the ‘home sites’ feature.

The news boosted LiveTiles shares, which were trading 21 per cent higher at 49 cents in late trading.

Mr Redenbach said that Microsoft’s commitment to the evolution of SharePoint aligned perfectly with LiveTiles roadmap.

“This launch and new customer announcement have further strengthened the relationship between Microsoft and LiveTiles, and will drive even stronger joint sales and marketing activities to enterprise customers across the globe,” he said.

3.38pm: Xi fires new trade shot

Chinese President Xi Jinping has pinpointed a source of leverage his government has over high-technology industries critical to the US economy, touring a region of China that calls itself a rare-earths kingdom with his top trade negotiator.

Mr Xi’s visit this week to one of the world’s largest suppliers of rare earths — natural elements used for wind turbines, electric cars and jet fighters — is a reminder of the world’s dependence on China for their production.

“It sends the message: ‘Keep in mind we have the ability to affect the production of many major products in the United States,’” said Anthony Marchese, chairman of Texas Mineral Resources Corp, which hopes to produce rare earth elements near El Paso. “To the people who follow the industry, to the Trump administration, they see the symbolism,” he said.

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The Wall Street Journal

Sarah-Jane Tasker 3.32pm: Ag takes trade war hit

The US-China trade war has set the global trading environment back decades and undermined Australian agricultural exports, new research shows.

John Harvey, managing director of AgriFutures, which funded the new report, said the analysis gave Australian exporters the knowledge they needed to take a leadership role in attempting to restore stability for agricultural commodities in the current global trading environment.

“The findings show that unilateral moves by the Trump Administration to renegotiate existing trade agreements have threatened World Trade Organisation principles of a rules-based trading system, creating uncertainty for Australian agriculture,” he said.

AgriFutures Australia senior manager, business development, Jen Medway, said some industries would prosper while others could feel the pressure from the trade wars.

“Australia’s dairy industry is one industry that could potentially benefit from trade opportunities with China on the back of additional tariffs imposed on US dairy products,” she said.

“On the flip side, a prospective US — Japan free trade agreement could negatively impact the dairy industry as US producers disadvantaged in the Chinese market could gain improved access to Japan.”

The aim of the report is to give policymakers, industry peak bodies and primary producers a road map on how a less predictable trading environment could impact export markets.

Mr Harvey said the take-away from the research was that trade wars bred uncertainty.

“The longer this period of uncertainty lasts, the more commercial decisions will need to be made by Australia’s agricultural stakeholders facing the prospect of sudden and unpredictable policy changes at the global level,” he said.

Damon Kitney 3.30pm: Atomos guidance pumps shares

Shares in the Melbourne video manufacturer Atomos have soared more than 20 per cent after the company upgraded its revenue and earnings guidance following better than expected sales of its monitor and recording devices.

Atomos, which backed by Ellerston Capital and other high net worth investors, floated on the ASX in late December last year at an issue price of 41c. Shares soared over the $1.20 mark in morning trading before cooling to around $1.15 later in the afternoon.

The company said it had upgraded guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) to $700,000 for the second half, in line with the result in the first half.

The IPO prospectus forecast EBITDA of $300,000 for the entire year.

Atomos is also expecting its financial year revenue to be in excess of $50 million, up 18.5 per cent on its prospectus forecast of $42.2 million.

“The improved revenue and pro-forma EBITDA expectations reflect the strong customer response to both existing and new Atomos products and we are particularly pleased to exceed expectations in our first year as a public company,” Atomos chief executive officer Jeromy Young said.

3.29pm: Bids for Anbang’s US hotels, reports

Chinese authorities have got offers of up to $US5.8bn for Anbang Insurance’s US luxury hotels, The Financial Times reports.

Blackstone and Brookfield are among 17 potential bidders for Chicago-based Strategic Hotels, the report said.

Other potential bidders include South Korea’s Mirae Asset Management, SoftBank-owned Fortress, and Singapore’s sovereign-wealth fund GIC, it said.

The portfolio of 15 luxury hotels include the Fairmont Scottsdale, several Ritz-Carlton properties including those in Half Moon Bay near Silicon Valley, several Four Seasons hotels, the JW Marriott Essex House on Central Park South in NYC, the Intercontinental in Chicago and the Westin in San Francisco, the report said.

Dow Jones

3.12pm: Aussie dollar slumps

The Australian dollar is near a five-month low as investors piled into wagers for two interest rate cuts this year, and even the chance of a third in 2020. The Aussie was pinned at 68.83 US cents on Wednesday, just a whisker above its recent rough of 68.65 and well off the 69.34 top briefly reached at the start of the week.

Markets are almost certain the Reserve Bank of Australia will cut its 1.5 per cent rate by a quarter point when its policy board meets on June 4, the first easing since mid-2016.

RBA Governor Philip Lowe all but said as much in a speech on Tuesday, prompting all four of Australia’s major banks to tip a June move.

Futures imply a 93 per cent probability of a cut next month, and are fully priced for 1.0 per cent by November.

“The governor has indicated in about the clearest possible language that a rate cut is likely imminent,” said Nomura analyst Andrew Ticehurst.

“We look for a total of 50 basis points of easing this year, with a second cut perhaps most likely in August,” he added. “The most likely direction for AUD/USD again appears lower, at around 67-68 cents over coming months.”

Adding to the case for stimulus were data showing construction work done fell a real 1.9 per cent in the March quarter, led by home building and engineering.

Citi economist Josh Williams said the disappointing figures reinforced expectations of another poor reading for gross domestic product (GDP), following surprising weakness in the previous six months.

He forecast growth of just 0.4 per cent for the first quarter, which would see the annual pace slow sharply to 1.7 per cent from an already sub par 2.3 per cent.

Reuters SC

Sarah-Jane Tasker 1.52pm: Morgans initiates coverage on PME

Pro Medicus has been given a tick of approval by Morgans, with the investment bank initiating coverage on the company, with a view to its growth potential.

The Australian-listed stock (PME), which was sitting at $8 at the start of last year, is up 4.3 per cent today at $21.36.

The Melbourne-based company, which was originally formed in the early 1980s, makes software that allows large healthcare ­institutions to store and transport images.

Morgans initiated coverage with an “Add” recommendation on the stock and a $23.69 price target.

“We forecast significant revenue growth, margin, and dividend expansion over the coming years as medical imaging volume continues to grow alongside new customer contract wins,” analyst Scott Power said.

He added that the key risk to the price target was delays to Pro Medicus signing new contracts due to hospital budgetary constraints and larger radiology practices internalising systems development.

He noted though that Pro Medicus, which also has offices in Berlin and San Diego, had secured long-term contracts with reputable customers, which the investment bank forecasts will deliver more than 20 per cent earnings per share growth over the next five years.

“Pro Medicus has the goal of being the single enterprise imaging platform for all medical images and multimedia within the healthcare enterprise,” Mr Power said in a client note on the stock.

Sarah-Jane Tasker 1.21pm: Ramsay inks pump tender

Australia’s largest private hospital network Ramsay Health Care has signed a national agreement for infusion pumps with device supplier Baxter Healthcare, in one of the largest tenders of its type.

The deal will see the supply of more than 5000 new Evo IQ infusion systems, to be installed across the Ramsay Health Care network.

The Evo IQ pump facilitates the delivery of routine critical infusion therapies via continuous and intermittent delivery using primary and secondary infusion modes.

“The launch of Evo IQ Infusion System in Australia furthers Baxter’s commitment to deliver innovative products and services that respond to the changing needs of our customers,” Baxter Australia and New Zealand general manager, Steven Flynn, said.

Ben Wilmot 1.17pm: Poll result stokes Stockland

Listed residential developer Stockland has emerged as one of the biggest winners from re-election of the Morrison government and a relaxation of prudential lending rules.

The group’s stock price has jumped in the last two trading days and Macquarie Equities has upgraded its rating from “Neutral” to “Outperform” as the residential outlook appears more rosy.

Macquarie also cited the new First Home Buyer Deposit Scheme and comments by the Reserve Bank pointing towards cash rate cuts, which it said provided upside risk to both prices and volumes in Stockland’s estates.

“Whilst there is likely to still be near-term attention on defaults, we believe the ability to settle will also improve in light of a potential increase in borrowing capacity,” Macquarie said.

The analyst noted that despite the recent rally in Stockland’s price it was trading at a 30 per cent discount to the A-REIT sector

“Whilst we don’t expect these spreads to completely close, it does provide support for the stock, given residential headwinds are (largely) behind,” Macquarie said.

1.10pm: Pound sinks to 4-month low

The British pound was rooted at four-month lows Wednesday after British MPs slammed Theresa May’s latest plan to push through her Brexit plan, increasing the chances of a no-deal divorce, while Asian markets drifted as dealers fret over China-US tensions.

With Wall Street providing a positive lead, regional equities were mostly on the up but analysts warned traders were on edge and any unsavoury headlines could precipitate another sell-off.

The sterling rallied Tuesday after the prime minister unveiled her revised EU divorce deal that included a promise for lawmakers to set a confirmatory referendum on whatever version of Brexit they end up approving.

However, the unit fell as quickly as it had risen as opponents of the original agreement attacked it as nothing more than a rehash.

May called the new proposals this parliament’s “last chance” to end a political deadlock but with key MPs led by arch-Brexiters still unmoved, it is likely to fall flat for a fourth time.

Failure to get the deal through parliament will more than likely see May resign and possibly replaced by a more hardline leader — most bets are on the controversial Boris Johnson — who would push for a no-deal exit, a scenario analysts warn could spell economic hardship.

“Politicians from all sides trashed her proposals, leaving the pound mired at four-month lows while the prime minister awaits her end of days,” said OANDA senior market analyst Jeffrey Halley.

AFP

Zoe Samios 12.51pm: News Corp launches Agjournal

News Corp Australia has launched a new national glossy magazine focused on the agriculture industry.

Agjournal will be published quarterly by regional newspaper The Weekly Times, and will be focused on exploring how agribusiness contributes to Australian society and the economy.

The first edition was distributed as an insert in The Weekly Times today, and will appear later this week in national, metropolitan News Corp mastheads, The Weekend Australian, The Daily Telegraph, The Sunday Mail, Herald Sun and The Advertiser, as well as Seven West Media’s The Sunday Times.

Agjournal will also be available on The Weekly Times’ digital website, and will run in rural publications, Rural Weekly and Tasmanian Country.

Ed Gannon, editor of The Weekly Times, said it was the first time there would be a national magazine celebrating farms and agribusiness.

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12.49pm: Japanese exports fall

Japan’s trade surplus dropped by around 90 per cent in April, official data showed Wednesday, with exports affected by a slowdown in China’s economy as it wages a trade war with Washington.

Meanwhile, Japan’s politically sensitive trade surplus with the United States grew 17.7 per cent in April from a year earlier, the data showed, days before US President Trump arrives on a state visit.

Japan’s overall trade surplus plummeted by 90.3 per cent to 60.4 billion yen ($US550m).

The decrease, sharply lower than market expectations, was chiefly due to falls in exports of chip-related products to China, the finance ministry data showed.

AFP

Eli Greenblat 12.39pm: Channel-stuffing claims cloud Treasury

A UBS survey of winemaker Treasury Wine Estates’ biggest institutional investors has shown widespread concern about the “channel stuffing” allegations it faces in the US and a generally bearish sentiment.

According to UBS’ research, 58 per cent of these shareholders believe the allegations of channel stuffing in the US and China is the key issue facing Treasury.

It seems the growing negativity swirling around the company, which produces wine labels including Penfolds, Wolf Blass and Lindemans, has been fed by the accusations from the US, where a hedge fund manager alleged Treasury was engaging in channel stuffing in its key markets.

That poor sentiment has been exacerbated by chief executive Michael Clarke’s recent sell down of his shares in the group.

But UBS executive director of retail and consumer products Ben Gilbert argues concerns around channel stuffing and general negative sentiment are “overplayed” with Treasury Wine set to meet its earnings guidance.

The company has been feeling the heat for some time.

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12.35pm: ASX flat at noon

The Australian share market is treading water, seemingly hesitant to spend much time above the key 6,500-point level.

The benchmark S&P/ASX200 index was down 3.8 points, or 0.06 per cent, to 6,496.3 points at noon (AEST) on Wednesday, while the broader All Ordinaries was up 0.6 points, or 0.01 per cent, to 6,585.

The ASX200 closed Tuesday marginally above 6500 and briefly breaching the level early Wednesday before dipping back down.

The financial sector was down 0.43 per cent as a whole after the prudential regulator said it may impose additional capital requirements on some institutions, with Commonwealth Bank down 37.5 cents, or 0.47 per cent, to $78.595.

NAB was down 0.88 per cent to $25.97 and ANZ was down 0.72 per cent to $28.225, but Westpac was up 0.51 per cent to $28.645.

Bank of Queensland shares were down 0.54 per cent to $9.14 after the regional lender’s chairman said it hadn’t performed as well as hoped. The consumer discretionary and consumer staples sectors were faring better, up 0.89 and 0.29 per cent, respectively, with Woolworths up 0.61 per cent to $33.955 and Wesfarmers up 1.24 per cent to $37.115.

The energy sector was up 0.98 per cent as a while, with Woodside Petroleum up 1.35 per cent to $37.52.

The mining sector was down 0.28 per cent, with ex-dividend Fortescue Metals down 2.08 per cent to $8.225.

BHP was down 0.47 per cent to $37.76.

Lynas Corp was up 14 cents, or 6.17 per cent, to $2.41, after shares in the rare earths miner resumed trading after it clarified some of the ore reserve figures in its investor day presentation.

The Australian Agricultural Company was up 2.24 per cent to $1.14 after chief executive Hugh Killen said the loss of 43,000 cattle from flooding in Queensland in February wouldn’t affect its ability to fulfil supply obligations or the rollout of its premium branded beef strategy.

The Aussie dollar is buying US68.81c, from US68.79c on Tuesday.

AAP

Robyn Ironside 12.33pm: Virgin takes axe to key route

Virgin Australia has wasted no time cutting back capacity, announcing Alliance Airlines will takeover two return services a week between Brisbane and Cairns.

Currently operated by Virgin Australia’s Boeing 737-800 aircraft with the capacity to seat 176 passengers including eight in business class, Alliance will use its Fokker 100s on the services, seating 100 people.

A statement from Virgin Australia said the airline remained “committed to this area of our network”.

“We will continue to provide a strong schedule proposition on this route,” the statement said.

The Alliance services will operate on Thursdays and Fridays.

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12.23pm: Palaszczuk orders Adani timeline

Queensland Premier Annastacia Palaszczuk has conceded she’s “fed up” and frustrated with her own government’s processes on Adani’s Carmichael coal mine, amid calls from her own MPs to sort out the impasse.

Ms Palaszczuk jetted to the regional Queensland mining city of Mackay today, to announce she has ordered her Environment Department, the state’s Co-ordinator-General and the Indian mining conglomerate to meet tomorrow and sort out a timeline for approval processes for the mine.

“I think that the community is fed up with the processes, I know I’m fed up with the processes, I know my local members are fed up with the processes,” Ms Palaszczuk said.

“We need some certainty and we need some time frames. Enough is enough.”

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12.12pm: Construction work falls

Construction work done across Australia fell further than expected in the March quarter, dipping by 1.9 per cent on a continued downturn in the home building cycle and a surprising pull-back in public works.

Total building work on homes dropped 2.5 per cent on the previous three months on a seasonally adjusted basis, while work on non-residential buildings grew by 3.6 per cent, Wednesday’s Australian Bureau of Statistics figures show.

The biggest quarterly fall — 3.9 per cent — was again in engineering work, while total construction work was down by 6.0 per cent from the same time last year.

The value of total construction work for the March quarter was $50.8 billion, down from $51.1 billion in the three months to December.

The market had tipped total activity to remain flat and Westpac warned there was more pain ahead.

“The housing downturn still has further to go and will weigh on conditions during 2019,” Westpac senior economist Andrew Hanlan said.

Mr Hanlan said he was surprised by the drop in public works and private infrastructure given the respective works in the pipeline.

AAP

Joyce Moullakis 11.58am: We’re facing headwinds: Treasurer

Treasurer Josh Frydenberg met with Reserve Bank governor Philip Lowe today to discuss the challenges and opportunities locally “in the face of economic headwinds”, he told stockbrokers at a conference in Sydney.

“The Australian economy faces some headwinds,” he said, adding that trade tensions were escalating between the US and China and weighing on growth.

Mr Frydenberg added that the drought and floods in Australia in recent months had also had a “significant impact” and made growth more difficult.

He said he stressed to Dr Lowe the government’s tax cuts and $100 billion in planned infrastructure spending that would help to buoy economic output.

“It’s the time for a pro-growth strategy,” he said.

“These are projects our country has been waiting half a century for,” Mr Frydenberg said of the pipeline of infrastructure projects including Snowy Hydro.

His comments follow a speech by Dr Lowe yesterday urging more stimulus in the economy including infrastructure projects.

Mr Frydenberg also met with the prudential regulator today and praised yesterday’s announcement of relaxed interest rate hurdles and buffers for home loan serviceability assessments.

“It is a positive move. It has been well received,” he said.

“That will continue to spur lending across the economy.

“Now that the royal commission is over, now that the election is over and there was obviously uncertainty around the Labor Party’s high tax agenda … now that is all over we can get on with business.”

Scott Morrison and Josh Frydenberg leave the RBA building after meeting Governor Philip Lowe. Pic: AAP

Ben Wilmot 11.54am: Investec demand strong

The Australian real estate investment trust sector is proving fertile ground for raisings by both existing groups and new players.

Arena REIT yesterday tapped the market for $50 million to pay for about $38m worth of acquisitions and Salter Brothers flagged plans for a $1 billion hotel float.

In the latest play, the Investec Australia Property Fund announced it has closed its $161m raising earlier than expected due to strong investor demand.

The trust, which owns about $1 billion worth of office towers and industrial parks, is expected to list on the Australian Securities Exchange on May 28.

Investec raised $102m via its issuing 76.9 million new units, which was significantly oversubscribed. To meet excess demand, 45 million units, worth $59m, owned by Investec, were also sold to institutions.

The early closure followed a local roadshow led by joint lead managers, JPMorgan and Macquarie Capital, which drew property specialist funds and general equities funds.

The offer and the IPF sale price was $1.32 per unit, above the minimum subscription price for the offer.

Fund chief executive Graeme Katz said there was strong appetite from Australian investors to list the fund on the ASX.

“Demand was strong, given the current and ongoing outlook for industrial and office properties in Australia and New Zealand,” Mr Katz said.

The fund has a portfolio of 28 properties and is looking to expand.

Eli Greenblatt 11.50am: ‘Weak” cashless index

The NAB Cashless Retail Sales Index has shown a 1.2 per cent gain in April compared to a 0.5 per cent fall in March on a month on month basis.

It was seen as a weak result by NAB chief economist Alan Oster with year-on-year growth for cashless retail sales 6.6 per cent for April, against 4.8 per cent to March and 8 per cent to February.

“This is clearly a very weak result, which further underlines our broader concerns about the Australian economy,’’ Mr Oster said. “Other NAB data also show weakness, notably the April NAB Monthly Business Survey, which showed that the bounce in conditions in March was short-lived, as we expected.

“While trading and profitability have previously dipped below average, April is the first time the employment index has shown signs of weakness.”

NAB said while the March ABS retail sales was reasonable — up 0.3 per cent — it has now made downward revisions to its mapping of the ABS data for March, which is now down to 0 per cent.

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11.40am: Hong Kong stocks lift

Hong Kong stocks opened in positive territory Wednesday following a much-needed rally on Wall Street, but trade tensions and the Huawei row are keeping any gains in check.

The Hang Seng index rose 0.35 per cent, or 96.30 points, to 27,753.54. The benchmark Shanghai Composite Index was barely moved, inching down 0.44 points to 2,905.52 and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, slipped 0.14 per cent, or 2.10 points, to 1,546.59.

AFP

Paul Garvey 11.34am: Lynas shares continue rise

Shares in rare earths play Lynas Corp have continued to climb this morning as the market responds to reports of a crackdown on Chinese rare earths exports to the US.

Lynas shares were up 6.6 per cent to $2.41 today, their highest level this year, after posting a 14.4 per cent jump yesterday.

Reports this week suggested China — which dominates the global rare earths supply — was contemplating a ban on exporting the materials to the US amid the worsening trade tensions between the two nations and steps by the US to blacklist the Chinese phone company Huawei.

Any disruption would be of benefit to Lynas, which is the world’s biggest supplier of rare earths outside China and which this week announced plans to build a rare earths processing plant in Texas.

The company earlier this year rebuffed a $2.25 per share, $1.5 billion takeover proposal from Western Australian conglomerate Wesfarmers.

Not all rare earths companies are enjoying a second day of gains. Shares in would-be Northern Territory developer Arafura Resources are down almost 11 per cent to 6.5c each, although they did jump from 5.5c to 7.3c each yesterday.

Samantha Bailey 11.29am: Backing for APRA loan tweak

Brokerage Macquarie Wealth says APRA’s decision this week to remove the “serviceability floor buffer” around mortgage approvals should provide further support for the fragile property market and is a positive for the banking sector.

However the brokerage issues a note of caution on the banking sector, saying a lower interest rate environment is a net negative for the banking sector.

“Banks’ ability to generate returns diminishes as rates fall and they would need to re-price mortgages to sustain returns (which in the current environment we see as increasingly difficult),” Macquarie Wealth says in a note.

“In this context we see limited upside to the sector from current levels, although recognise that in the near-term investor repositioning may impact relative share-price performance,” the brokerage says.

At 11.25am (AEST), Commonwealth Bank had lowered 0.9 per cent to $78.30 while ANZ was trading 0.9 per cent lower at $28.18. NAB had lost 1 per cent to $25.95 while Westpac was unchanged at $28.49.

Samantha Bailey 11.27am: Healthscope investors back bid

Healthscope shareholders have voted in favour the $5.7 billion takeover by Canadian asset manager Brookfield.

More than 99 per cent of Healthscope shareholders voted in favour of the deal this morning, which included a scheme of arrangement at $2.50 a share to acquire 100 per cent of the Healthscope $2.40 a share to lodge a takeover with a minimum 50.1 per cent acceptance, as well as two separate property deals.

Healthscope operates 43 private hospitals across Australia.

Ben Butler 11.17am: APRA flexes new muscle at IOOF

Financial services group IOOF faces the prospect of committing a criminal offence if it does not meet a new deadline to clean up its superannuation business set by the prudential regulator.

In the first exercise of new powers granted following last year’s banking royal commission, the Australian Prudential Regulation Authority said it has directed two IOOF subsidiaries to set up an office supporting superannuation trustees by June 30.

IOOF shares, which have already been battered by the company’s bruising battle with APRA and a disastrous appearance at the royal commission, tumbled 6.8 per cent or 39.5c this morning to hit $5.385 at about 11.15am.

Failure to obey a direction from APRA is a criminal offence, punishable by a fine of up to $105,000 for a company, or $210,000 in total if all both the IOOF subsidiaries targeted by the regulator, IOOF Investment Management and Australian Executor Trustees, are ultimately found guilty.

Read more

Will Glasgow 11.10am: Paul Edwards joins Foxtel

Clearly longtime ANZ spinner Paul Edwards has an adventurous streak.

After leaving the tribe at Shayne Elliott’s vegan bank ANZ, Edwards set off to join Matt Comyn’s reputationally tattered CBA.

And now Margin Call can reveal Edwards is off to a new, similarly formidable job.

He’s soon to be the media consigliere for Patrick Delaney at Foxtel, the broadcasting joint venture The Australian’s parent company News Corp shares with Andy Penn’s Telstra.

Some welcome good news for Delaney and his North Ryde gang as they plot the media outfit’s life after the “Game of Thrones” juggernaut.

Joyce Moullakis 11.04am: Robert pushes higher standards

Assistant Treasurer Stuart Robert has said reforms to education and professional standards in financial planning and stockbroking were “a long time coming”.

He told the Stockbrokers And Financial Advisers Association conference in Sydney the Hayne royal commission and prior inquiries made it clear higher standards were required.

“What we have today is a long time coming,” he said.

Mr Robert added though the government didn’t want to “unreasonably burden” existing advisers and had responded to initial concerns the new standards didn’t recognise some prior learning courses.

He said he was aware that stockbrokers believed their “concerns are not being heard” but a new committee would consult on the new education standards.

“Stakeholder implementation is key … we are making sure you are front and centre,” Mr Robert said.

“The reform is well and truly upon the industry.”

The federal government has set up the Financial Adviser Standards and Ethics Authority to administer the new standards for advisers and brokers.

10.58am: BoQ disappointed by earnings

Bank of Queensland’s chairman says the regional lender has not performed as well as hoped, but he is optimistic its retail banking business can be reinvigorated over the next year.

Roger Davis said in a letter to shareholders that customer acquisition and returns have been hampered by lending processes and regulatory uncertainty, while costs have been driven up by the need to respond to the financial services royal commission findings.

“The current earnings profile is not at the level that we aspire to,” Mr Davis said, before adding: “There is a lot to be optimistic about in terms of the progress made through our niche market strategies, Virgin Money Australia, and the opportunity of reinvigorating the retail banking business in the coming 12 months.”

In April, the regional lender reported an eight per cent slide in first-half cash earnings to $167 million.

Its cash profit for the six months to February 28 had fallen from $182 million a year ago, while statutory net profit aftertax decreased by 10 per cent to $156 million.

The lender cut its interim dividend by four cents to 34 cents per share, fully franked.

At 10.28am (AEST), shares in BoQ were 8.0 cents or 0.87 per cent lower, at $9.11.

AAP

10.50am: Choppy start for stocks

The Australian share market has had a choppy open and dipped into the red, as the banking sector dropped after two days of strong gains.

After opening in positive territory, the benchmark S&P/ASX200 index was down 5.7 points, or 0.09 per cent, to 6,494.4 points at 10.30am (AEST), while the broader All Ordinaries was down 1.3 points, or 0.02 per cent, to 6,583.1.

The banking sector was down 0.53 per cent as a whole, with Commonwealth Bank dropping 60 cents, or 0.76 per cent, to $78.37.

NAB was down 0.65 per cent to $26.03, ANZ was down 0.72 per cent to $28.225 while Westpac was up 0.21 per cent to $28.56.

Bank of Queensland shares were down 0.65 per cent to $9.13 after the regional lender’s chairman said it hadn’t performed as well as hoped. The consumer discretionary and consumer staples sectors were faring better, up 0.59 and 0.54 per cent, respectively, with Woolworths up 0.64 per cent to $33.965.

The energy sector was up 0.51 per cent as a while, with Woodside Petroleum up 1.05 per cent to $37.41.

The mining sector was down 0.22 per cent, with ex-dividend Fortescue Metals down 2.02 per cent to $8.23.

BHP was down 0.61 per cent to $37.71.

Lynas Corp was up seven cents, or 3.08 per cent, to $2.34, after shares in the rare earths miner resumed trading after it clarified some of the ore reserve figures in its investor day presentation.

The Aussie dollar is buying US68.81 cents, from US68.79 cents.

AAP

Samantha Bailey 10.40am: IOOF confident on licence

IOOF says it remains confident of meeting APRA’s licence conditions after the regulator said the troubled financial services group had breached its conditions by failing to meet a deadline to set up a special office to oversee its role as a superannuation trustee.

In an update to the market this morning, IOOF said it had responded to APRA’s formal directions and had continued to take steps to implement and maintain the Office of the Superannuation Trustee within the operations of the Group.

“IOOF remains confident of meeting APRA’s deadline of the end of June 2019 for the implementation and maintenance of the Office of the Superannuation Trustee,” the company told the ASX.

10.30am: Banks grappling with culture, accountability

The Australian Prudential Regulation Authority has released a report analysing the self-assessments carried out by 36 of the country’s largest banks, insurers and superannuation licensees.

It followed weaknesses identified by an inquiry into the Commonwealth Bank.

Consistent findings in the self-assessments included: non-financial risk management requires improvement; accountabilities are not always clear, cascaded and effectively enforced;

acknowledged weaknesses are well-known and some have been longstanding; and risk culture is not well understood, and therefore may not be reinforcing the desired behaviours.

APRA deputy chair John Lonsdale said it is clear that many of the issues identified within CBA are not unique to that institution.

“Although the self-assessments raised no concerns about financial soundness, they confirmed our observation that industry is grappling to manage non-financial risks, such as culture and accountability,” Mr Lonsdale said.

Samantha Bailey 10.28am: ACCC clears coal-seam gas deal

The competition watchdog says it won’t oppose the proposed $231 million acquisition of the Ironbark coal seam gas project by Australia Pacific LNG, after concluding it would be unlikely to substantially lessen competition in any domestic gas market.

Earlier this year, Australia Pacific LNG entered into a deal to buy the undeveloped coal-seam gas permit in Queensland’s Surat Basin from Origin Energy.

“We had regard to the relatively small size of the Ironbark project,” said ACCC commissioner Roger Featherston. “We also considered the alternatives available to Origin to either sell Ironbark to someone else or develop the project itself.

“In our view, neither of these alternatives would lead to a significantly different outcome for domestic gas users from that of the sale of Ironbark to Australia Pacific LNG.”

Origin holds a 37.5 per cent stake in Australia Pacific LNG.

At 10.20am (AEST) shares in Origin Energy were trading up 0.25 per cent at $7.87 apiece.

10.22am: ASX makes further gains

The Australian share market has opened higher, building on its gains of the last five days after a temporary US licensing reprieve for Chinese telco Huawei gave Wall Street an overnight boost.

The benchmark S&P/ASX200 index was up 6.6 points, or 0.1 per cent, to 6,506.7 points at 10.15am (AEST), while the broader All Ordinaries was up 8.9 points, or 0.14 per cent, to 6,593.3.

The Aussie dollar is buying US68.83 cents, from US68.79 cents yesterday.

AAP

Samantha Bailey 10.10am: Lynas withdraws figures

Rare earths miner Lynas has withdrawn concentrate figures for a 2025 project tabled at an investor presentation yesterday.

In a statement to the market today, the company said date and forecast rates of concentrate production included in yesterday’s presentation were not material and would be withdrawn.

In a clarification today, Lynas said those figures were “opportunities” for the future and they were not relied on for the 2025 project presentation.

“In any event, those figures were not intended to be read as mineral resource or ore reserve figures and accordingly they should not be relied on and are withdrawn,” Lynas said.

Shares in the company surged 14.4 per cent to $2.26 yesterday before the stock entered a trading halt ahead of this morning’s announcement.

The gains yesterday came after the company announced plans to set up a processing facility in WA as well as invest in its processing facility in Malaysia.

10.05am: Fortescue’s new iron ore development

Fortescue Metals Group says it will develop the Queens Valley mining area at its Solomon Hub in Western Australia for roughly $US287 million.

The world’s fourth-largest exporter of iron ore said the development will ensure it can “maintain production of the low-alumina Kings Fines product and is consistent with Fortescue’s strategy of optimising margin through an enhanced product mix.”

The Queens Valley development has an expected life between 10 and 15 years.

Dow Jones Newswires

Perry Williams 9.590am: Forrest in LNG talks

Andrew Forrest’s planned LNG terminal in NSW has opened talks to strike a five-year $500 million-plus supply deal with utility EnergyAustralia as it works to lock in customers backing the nation’s first gas import plant.

EnergyAustralia, one of Australia’s big three power retailers, is in final talks for a contract to buy up to 15 petajoules of gas from 2021.

A deal will likely be concluded in the next two weeks with gas from the Port Kembla terminal to be supplied to EnergyAustralia’s residential and industrial customers on the east coast, sources close to the deal said.

9.20am: BHP’s nickel plan

BHP wants to raise its bets on a pending nickel boom tied to rising demand for electric vehicles, an about-turn for the world’s biggest miner which had sought to sell its nickel business in recent years.

Peter Beaven, BHP’s chief financial officer, said the world’s biggest miner by market value is interested in building its resources of nickel sulphide, which can be processed into sulfate for use in batteries.

Last week, chief executive Andrew Mackenzie said the company has decided to keep its Australian nickel mining and processing operations, for which it failed to find a buyer in recent years, because of expected growth in battery markets and the scarcity of nickel sulphide assets.

BHP is also seeking to increase its options for growth in copper and oil, Mr Beaven said in prepared remarks for an investor briefing.

Read more

Dow Jones

Samantha Bailey 8.42am: AACo losses deepen

Beef producer Australian Agricultural Company has widened its full-year loss on lower meat sales.

For the full year through March, the company posted a net loss of $148.4 million, compared to a loss of $102.6m a year earlier.

Meat sales during the period dropped 26 per cent to $246.3m, while cattle sales shot up 151 per cent to $117.8.

7.55am: Oil steady

Oil futures were steady as the prospect of mounting US-Iran tensions disrupting supply was offset by concerns that a lengthy trade war between Washington and Beijing would limit crude demand.

Brent crude futures settled at $US72.18 a barrel, gaining 21 US cents. US West Texas Intermediate crude futures settled at $US62.99 a barrel, down 11 US cents ahead of the front month contract for June delivery expiring on Tuesday.

Reuters

7.46am: SkyCity online gaming plan

ASX-listed casino company SkyCity says it will partner with Gaming Innovation Group to set up an online gaming platform in New Zealand.

The proposed “skycitycasino” online gaming site is expected to be launched in mid-2019

and will be operated from Malta under a .com URL.

Under current New Zealand law, only government-owned Lotto and the TAB are permitted

to offer online gaming from within New Zealand.

“However many New Zealanders freely participate in online casinos provided by offshore operators,” said SkyCity.

It said while operated from offshore, the online casino will ensure its obligations under NZ law are complied with.

7.35am: Aussie dollar declines

The greenback strengthened, buoyed by gains against the Australian dollar after the Reserve Bank of Australia cleared the path to an interest-rate cut in June.

The Australian dollar declined 0.4 per cent against the US dollar to US68.82 cents, while the New Zealand dollar also slid 0.4 per cent to US65.05 cents.

Both currencies fell after the release of minutes from the RBA’s May 7 meeting indicated that a deterioration in Australia’s job market would warrant the first rate reduction since 2016. RBA Governor Philip Lowe later said that officials would “consider the case for lower interest rates” at the central bank’s next meeting.

Those comments sapped demand for the Australian dollar because lower interest rates make currencies less attractive to yield-seeking investors.

Dow Jones Newswires

7.25am: ASX tipped for further gains

The Australian share market is expected to build on its fresh 11-and-a-half year high after a temporary US licensing reprieve for Chinese telco Huawei gave Wall Street an overnight boost.

At 7am (AEST) the SPI200 futures contract was up 13 points, or 0.2 per cent, at 6,580.0, suggesting another rise for the S&P/ASX200 at today open, after the benchmark hit heights not seen since November 2007 during the previous session.

The tech-heavy NASDAQ was the best performing Wall Street index overnight following a move by the US to grant Huawei a licence to buy US goods until August 19, offering a reprieve to shares of chipmakers.

The Aussie dollar is buying US68.83 cents from US68.79 cents yesterday.

AAP

6.45am: Tech rally leads US stocks higher

Wall Street stocks gained ground following two straight losing sessions, after the US said it would delay imposing a ban on dealings with Huawei, which gave a boost to technology shares.

The tech-rich Nasdaq Composite Index led major indices lower yesterday on worries about the Huawei ban, and then led the advance overnight, closing at 7,785.72, a gain of 1.1 per cent.

The Dow Jones Industrial Average climbed 0.8 per cent to finish at 25,877.33, while the broadbased S&P 500 gained 0.9 per cent to 2,864.37.

After yesterday hitting a new 12-year high, Australian stocks are set to open slightly higher. At 6.45am (AEST) the SPI futures index was up 12 points.

US stocks fell sharply yesterday after Google began to sever ties with Huawei. But the US Commerce Department announced later it would delay implementation of the ban for 90 days to allow companies to adjust their operations and avoid sudden disruption.

Nate Thooft, senior portfolio manager of Manulife Asset Management, Huawei seems to be a “bargaining chip” in the broader US-China trade talks, raising concerns China could respond by targeting US tech companies.

Many analysts expect more volatility in markets ahead.

“We don’t know what’s going to happen on trade,” Thooft said. “Our baseline remains the view that basically there is going to be a trade deal. But the timeline is very questionable on when it’s going to happen.”

Google-parent Alphabet rose 1.0 per cent, while Apple gained 1.9 per cent, after falling hard yesterday.

Department store chain Kohl’s slumped 12.4 per cent as it slashed its profit forecast after first-quarter sales lagged expectations.

Other retailers were mixed after earnings reports, with Home Depot adding 0.2 per cent and TJ Maxx parent TJX gaining 0.5 per cent and JC Penney slumping 7.4 per cent.

Dow member Merck rose 0.8 per cent as it announced it would acquire Peloton Therapeutics, which is developing cancer drugs, for $US1.05 billion.

US stocks recovered ground. Pic: AP

AFP

6.40am: Tesla cuts prices

Faced with a slumping stock price and questions about demand for its vehicles, Tesla has lowered the US base prices of its two most expensive models.

The company cut $US3,000 from the price of the Model S sedan and $US2,000 from the Model X SUV.

Tesla said in a statement that it periodically adjusts prices and available options like other car companies. The decreases offset price increases from a month ago when Tesla offered longer battery range and added a new drive system and suspension. The statement didn’t say if slowing sales influenced the decision.

The Model S now starts at $US71,250 while the X starts at $US71,950. Both prices don’t include federal and state tax credits.

AP

6.35am: Department stores slow

Sales at several US store chains slowed during the latest quarter, clouding the outlook for the retail sector as it braces for a significant increase in tariffs on goods imported from China.

Sales at Kohl’s, JC Penney, Nordstrom and Home Depot weakened as they experienced a slower start to the year. Comparable sales fell 3.4 per cent at Kohl’s, and were down 5.5 per cent at Penney. Both retailers missed analysts’ expectations for the quarter, which ended on May 4. Nordstrom’s net sales fell 3.5 per cent.

Home Depot reported a rise in quarterly comparable sales, but the 2.5 per cent increase was less than analysts expected.

Their results are in contrast to other chains that reported stronger results, including Walmart and Macy’s last week and TJX on Tuesday.

Dow Jones

6.30am: Jamie Oliver’s UK restaurant chain collapses

Celebrity chef Jamie Oliver’s British restaurant chain filed for bankruptcy protection, partly due to increased competition and escalating rents in local commercial districts.

The insolvency will leave 1000 people out of work and reignited worries about local retail and food outlets in Britain, which are struggling to attract customers much like downtowns in the United States.

“I’m devastated that our much-loved UK restaurants have gone into administration,” Oliver wrote on Twitter. “I am deeply saddened by this outcome and would like to thank all of the staff and our suppliers who have put their hearts and souls intothis business over the years.” Financial firm KPMG, which will oversee the process, said all but three of the group’s 25 eateries will close. They include restaurants in the Jamie’s Italian chain, as will the more up-market Fifteen, and steak house Barbecoa. Two restaurants and a diner at Gatwick Airport will continue to operate while joint administrators explore options for the site. Overseas branches of Jamie’s Italian, Jamie’s Pizzeria and Jamie’s Deli, are not affected, nor is Fifteen Cornwall, which operates as a franchise.

Jamie Oliver. Pic: AFP

AP

6.25am: Stocks recover from Huawei scare

Relief that the United States took a step away from imposing crushing restrictions on Huawei helped stocks recover, while the pound whiplashed on fresh Brexit drama.

After hitting a four-month low at $US1.2685 the pound shot higher on speculation Prime Minister Theresa May was poised to offer lawmakers a chance to vote on holding a second Brexit referendum.

May outlined in a speech to lawmakers a series of incentives for MPs to support her Brexit deal, including the possibility of a vote on holding a second referendum, saying there was “one last chance” to end the deadlock.

Stocks took a hit on Monday after Google said it was beginning to sever ties with Chinese telecoms giant Huawei, days after US President Donald Trump’s decision to bar it from the US market.

The Huawei development — with the US citing national security concerns — has ratcheted up pressure in the trade stand-off between Washington and Beijing, which was once thought to have been close to conclusion.

But the decision late Monday by the US Commerce Department to issue a 90-day reprieve on the ban on dealing with Huawei was greeted by markets on Tuesday with relief.

“Stock markets in Europe have rallied today on the back of the news that the US granted Huawei a 90-day extension before the ban will be implemented,” said market analyst David Madden at CMC Markets UK.

“This is seen as a sign the US administration don’t want to turn up the heat on China just yet, but the ball is in Beijing’s court,” he said.

London closed up 0.3 per cent, Frankfurt ended up 0.9 per cent and Paris closed 0.5 per cent higher.

AFP

6.20am: Shoemakers slam tariffs

Adidas, Nike and PUMA have urged President US Donald Trump to prevent the shoe industry from falling victim to the trade war with China, saying new tariffs could be “catastrophic.”

In a letter to Trump, those big name manufacturers joined forces with more than 170 other American shoe manufacturers and retailers to call on Trump to exempt shoes a new round of punitive tariffs on $US300 billion in Chinese goods.

In the escalating trade war with Beijing, Trump this month increased existing tariffs on $US200 billion in Chinese imports to 25 per cent, and is threatening to extend those duties to nearly all Chinese products imported into the United States.

That would mean additional taxes on a range of consumer goods, including electronics and clothing, such as athletic shoes and iPhones, which has sparked fear in retailers and producers who rely on goods from China.

Athletic shoe makers are worried about the impact of the trade war. Pic: AFP

AFP

6.15am: US home sales fall

US home sales slipped 0.4 per cent in April, as would-be homebuyers face affordability challenges and a limited supply of starter houses. The National Association of Realtors says that existing homes sold at a seasonally adjusted annual rate of 5.19 million last month, down from 5.21 million in March.

Despite the solid job market and lower mortgage rates, sales have tumbled 4.4 per cent from a year ago. The sales decline is entirely concentrated in homes worth less than $US250,000, a likely reflection of a shortage of properties at those price points being listed for sale.

AP

6.12am: Huawei says US is ‘bullying’

Chinese giant Huawei denounced what it called US bullying and warned Europeans against “complacent appeasement” of Washington’s move to block its access to markets and technology.

Abraham Liu, Huawei’s envoy in Brussels, played up what he said were his firm’s common interests with Europe and pledged to go the “extra mile” to ease EU security concerns over rolling out 5G technology.

“Now Huawei is becoming the victim of the bullying by the US administration,” Liu told a press conference at his company’s offices. “This is not just an attack against Huawei. It is an attack on the liberal, rules-based order. This is dangerous,” he said.

He warned that Huawei, which is accused of maintaining close ties with Chinese intelligence, may be targeted today but that any company could be hit in the future.

Liu stressed his company’s nearly 20-year presence in Europe, its employment of 12,200 people, most of them hired locally, and what he said was its key role in advancing European economic interests.

But he also addressed suspicions among Europeans who share some of the same concerns as the Trump administration over Huawei’ salleged link to Chinese intelligence.

In March, the European Commission, the EU’s executive arm, presented a plan to ensure the secure introduction of 5G telecom networks, as some EU countries negotiate with Huawei to deploy its advanced technology.

AFP

6.10am: OECD cuts global growth forecast

The OECD has cut its forecast for the world economy, urging governments to resolve their trade disputes as the latest flare-up in the US-China trade war threatens to crimp global growth.

“Governments must act urgently to reinvigorate growth that benefits all,” the Organisation for Economic Co-operation and Development said as it pared back its forecast for global growth to 3.2 per cent this year from 3.3 per cent earlier.

“Resolve trade disputes through increased international co-operation while fixing the international rules-based system,” said the OECD, a Paris-based forum that advises the world’s advanced economy.

“Invest in infrastructure, digital transformation and skills to meet tomorrow’s challenges. In the euro area, combine structural with fiscal policies to stimulate activity.”

AFP