ASX hits 6-day low on Vic lockdown, more change coming at Crown

ASX drops to six-day low on Victoria lockdown as Qantas and other travel stocks tumble, while NSW gaming chief says Crown CEO will exit shortly.

Crown Resorts chair Helen Coonan and CEO Ken Barton. Picture: David Geraghty

• Genworth braces for end to Covid support
• Pandemic no problem for Baby Bunting
• BNY Mellon jumps on bitcoin bandwagon

Welcome to the Trading Day blog for Friday, February 12. Australian stocks dropped to a six-day low as another Covid-related lockdown in Victoria announced. Earnings season continued, with property developer Mirvac signalling it will accelerate its housing pipeline as it turned in a $276m first half operating profit. Further results are from Genworth and Cromwell. The Crown Resorts overhaul continues.

Ben Wilmot 6.28pm: Vicinity centres open for essentials in Vic

Vicinity Centres, which co-owns Melbourne’s landmark Chadstone Shopping Centre with billionaire John Gandel, was sold down on Friday, losing 3c to close at $1.54.

Vicinity chief operation officer Peter Huddle said in the return to stage four restrictions across Victoria, the company’s centres remained open for necessary fresh food and groceries, household items, clothing, medical services and supplies, and financial services.

Beauty services, cinemas and gyms will temporarily close while restaurants and cafes can remain open for take-away and deliveries only.

“Our precautionary safety measures remain in place including hand sanitiser, signage and decals, increased sanitisation and security officers supporting local police as we continue to monitor and follow advice from the Victorian government,” Mr Huddle said.

5.58pm: ING profit plummets

Dutch bank ING on Friday said net profit plummeted 48 percent last year to €2.45 billion due to the effects of the coronavirus pandemic.

“The effects of the Covid-19 pandemic and lockdowns were visible in a softening of lending demand, which affected net core lending, and in an increase in net customer deposits,” it said in a statement.

AFP

5.55pm: Nikkei’s run ends

Tokyo’s key Nikkei 225 index closed lower Friday on profit-taking after four days of rallies.

The benchmark Nikkei 225 index slipped 0.14 percent or 42.86 points to 29,520.07 while the broader Topix index ended up 0.16 percent or 3.06 points at 1,933.88.

Toyota climbed 3.48 percent to 8,413 yen after it announced plans to sell electric vehicles in the US market, seen as a key step in its shift towards EVs.

Its rivals were lower, with Honda dropping 3.55 percent to 3,019 yen and Nissan dipping 3.87 percent to 627.7 yen.

AFP

4.30pm: ASX hits six-day low

Australia’s sharemarket dived to a six-day low as Victoria announced a five-day lockdown after another outbreak from a quarantine hotel.

The S&P/ASX 200 closed down 0.6pc at 6806.7 after falling to 6802.4.

Travel related stocks were among the worst off with Qantas down 4.8pc, Flight Centre down 2.7pc, Corporate Travel down 2.5pc and Sydney Airport down 2.1pc.

Toll road, shopping mall and gaming companies were also affected with Transurban down 1.6 per cent, Vicinity Centres down 1.9 per cent and Tabcorp down 1.8 per cent.

Banks were dragged down at the margin with NAB down 0.4 per cent, Westpac down 0.7 per cent and Bendigo Bank down 0.9 per cent.

But the Energy sector was weakest with OIl Search down 2.4 per cent after WTI crude oil futures fell 1.2 per cent overnight and 0.7 per cent in APAC trading.

Heavyweight drags included a 1.7 per cent fall in BHP and a 1.3 per cent fall in Macquarie.

Share trading volume was about 25 per cent below average with much of the region closed for Lunar New Year holidays.

The market should be fairly quiet with US markets closed on Monday for Presidents’ Day.

Lachlan Moffet Gray 4.10pm: Crown CEO exit within days

Chair of the NSW Casino regulator Philip Crawford says he expects the resignation of Crown Resorts CEO is imminent, and likely to happen “within the next few days.”

Talking to The Australian shortly after he met with fellow board members of the Independent Liquor and Gaming Authority in Sydney on Friday to formally consider the Bergin report released earlier in the week, Mr Crawford expressed his pleasure that Crown director Andrew Demetriou officially resigned earlier in the day after being condemned by the report.

“It was expected and we are pleased about that, that was a good development,” he said.

“As I keep saying, there’s a certain obviousness about some of these people needing to move on - and he was one of them.”

Mr Crawford said Crown director Harold Mitchell was possibly one of these people - the Bergin report recommended he be deemed not suitable as a director if a civil penalty or declaration is made against him due to the minor breaches he made as a director of Tennis Australia.

“I’m not sure what the company is doing there, but that is something we will certainly look at as ILGA,” Mr Crawford said of Mr Mitchell’s future.

“So that is a matter we will be discussing with the company going forward, absolutely.”

But on the topic of CEO Ken Barton, who was panned in the Bergin report for recklessly allowing money laundering to occur through company accounts, Mr Crawford was resolute.

“I would expect that it’s certain he will part ways with the company fairly shortly - within the next few days,” Mr Crawford said.

“I would assume they are in discussions with Mr Barton and he’s a senior - you know, he’s CEO of the company and I suspect he’s got a quite complex employment contract and they are probably working through the issues arising from that.”

Speculation has arisen over who might replace Mr Barton as CEO of the $6.6bn company.

One possible candidate is newly appointed board member Nigel Morrison, a former CEO of casino company SkyCity and Crown Melbourne head.

But insiders have also tipped Crown chairman Helen Coonan as a successor, given the praise she received in the Bergin report.

Mr Crawford began talks with Ms Coonan earlier in the week and said he was reassured by her actions.

“The talks have been very good, very constructive and we are seeing some immediacy about their actions which is very pleasing,” he said.

Mr Crawford said ILGA will enter into a formal consultation process with Crown over the future of its license to operate Barangaroo next week.

But he also said ILGA will be preparing to advise the government on regulatory aspects of the Bergin report - such as the use of mandatory gambling cards in casino to reduce money laundering risks.

“Our general view is that anything we can do to improve the quality of the regulation and the supervision of the casino and all casinos is something we are considering,” he said.

“And we would probably prefer that the commission be giving powers to look at these things or to go forward with the various industry players and if it’s appropriate impose those forms of cashless arrangements.”

Eli Greenblat 3.53pm: Woolies joins Coles with limits

Woolworths has swiftly mirrored the lockdown buying restrictions announced by Coles on Friday, reinstating purchase limits on a range of essential products in Victoria both in-store and online.

The nation’s biggest supermarket chain said the precautionary move follows an increase in demand following the Victorian Government’s announcement of a five-day lockdown. The limits will ensure Woolworths customers have fair access to essential products.

Woolworths Victoria assistant state manager, John Di Tirro said: “We understand this is an anxious time for Victorians, but we want to reassure customers we will remain open as an essential service.

“We have plenty of stock to draw on from our suppliers and distribution centres and our team will be hard at work making sure it flows into our stores in large volumes over the coming days.

3.38pm: ASX hits new 6-day low

Australia’s share market hit a fresh 6-day low amid fallout from Victoria’s 5-day lockdown.

The S&P/ASX 200 index fell 0.7 per cent to 6802.7, its lowest point since last Thursday.

Travel-related stocks have been hit hard with Qantas and Webjet down 5 per cent, Flight Centre and Corporate Travel down 2.9 per cent. Shopping mall and toll road owners are coming under pressure with Vicinity Centres down 2.4 per cent and Transurban down 1.9 per cent.

Gaming stocks are aso in the firing line with Tabcorp off 2.1 per cent and Crown down 1.6 per cent.

Concerns about Australia’s latest lockdown also appear to have rubbed off on US futures with S&P 500 futures down 0.2 per cent in thin trading while most of the APAC region is closed for holidays. But lockdowns work and the market knows the playbook.

The market tends to bottom out well before lockdowns end.

Eli Greenblat 3.08pm: Supermarkets slap limits on groceries during lockdown

The nation’s supermarkets are expected to soon announce buying restrictions across Victoria in response to the sudden five-day lockdown declared from midnight, with Coles releasing limits on a number of key grocery items.

Woolworths is believed to working on its own buying limits list which will be released soon. It brings back memories of 2020 when the emerging pandemic triggered panic shopping in the supermarkets, people fighting over products in the aisles and a run on toilet paper.

Coles said in a statement on Friday that to help customers access the food and groceries they need, it has also increased service levels for Coles Online.

To help manage demand for key staple items, limits are now in place at all Coles supermarkets, Coles Online and Coles Express stores in Victoria, including a one pack per customer limit for the following items:

• Toilet paper
• Paper towel

And a two pack per customer limits for the following items:

• Fresh white milk
• Hand sanitiser
• Chilled pasta
• Liquid soaps
• Poultry thighs
• Poultry breasts
• Tissues
• Mince
• Burgers
• Frozen Vegetables
• Sausages
• Frozen Chips
• Long life milk
• Canned meals
• Pasta
• Canned fish
• Flour
• Canned vegetables
• Rice
• Pre-packed seafood
• Sugar
• Noodles
• Eggs
• Face masks

Eli Greenblat 2.55pm: Lockdown a ‘devastating blow’ for retailers: ARA

The Australian Retailers Association, representing the $320bn retail sector, has tagged the shock Victorian lockdown declared from midnight Friday as a “devastating blow” for Victorian retailers.

Chief executive of the ARA, Paul Zahra, said some of the horrors of 2020 were now returning.

“They’ve been through so much in the past year and have done their best to return to an even footing in recent months. Unfortunately, some of the horrors of 2020 continue.

We certainly hope the Victorian health authorities get on top of this quickly and that this lockdown doesn’t drag out for longer than it needs to.”

The five day lockdown will also impact Valentine’s Day, which falls on Sunday and is a key driver of sales for retail, from buying gifts and flowers to restaurants.

“Sadly, there won’t be much love in the air for Victorian businesses this Valentine’s Day,” Mr Zahra said.

“Sadly, there won’t be much love in the air for Victorian businesses this Valentine’s Day. Last minute shopping will be curtailed and romantic dinner date plans have been dashed. That’s a massive blow for restaurants who would have been fully booked for one of their busiest nights of the year,” Mr Zahra said.

“As we said in response to WA and other snap lockdowns - we have to learn to live with Covid and manage things in a responsible way without devastating business and livelihoods.”

He called on uniform COVID measures across the country.

“It’s time to have consistency from state and territory governments when it comes to Covid restrictions. At the moment, businesses are at the mercy of the different approaches from the various Premiers with very little planning time around what the latest restrictions mean.

“The uncertainty and confusion around ‘trigger points’ has been a confidence killer and one of the key lessons out of this pandemic is to have a nationally consistent approach, with clear criteria, so business can at least operate with some sort of certainty.

“The vaccines can’t come soon enough, but even when they’re rolled out, we’ll still be living with Covid for some time, so the existing challenges will remain for retail.”

2.38pm: Crown Melbourne shutters gaming during 5-day lockdown

Crown Resorts will close its gaming activities, food and beverage, retail, banqueting and conference facilities from 11.59pm tonight until 11.59pm on Wednesday 17 February, after the Victorian government announced a five-day lockdown.

Hotel accommodation will continue to be provided in a reduced capacity, the company said.

Crown’s Perth casino has been cleared to reopen from 12.01am Sunday morning as Western Australia sheds its remaining major Covid restrictions. The casino and Perth’s nightclubs have been closed for almost two weeks since a security guard at a quarantine hotel tested positive to the UK strain of coronavirus.

WA premier Mark McGowan has ruled out accepting donations from Crown in the wake of the Bergin inquiry, and the government is seeking urgent legal advice over the potential ramifications for Crown in WA.

But Mr McGowan has stressed that he was keen to see a business remain in place at the casino, given the 5500 people employed at the complex.

READ MORE: Demetriou out in Crown overhaul

2.29pm: Need for national framework with fresh lockdown: BCA

A fresh lockdown and more stop-start restrictions will be a bitter disappointment for the whole community and show why Australia desperately needs a national framework that lets us live with the virus, Business Council chief executive Jennifer Westacott said.

“We can’t go on managing the country like this.

“This is the second lockdown caused by Victoria’s hotel quarantine system, it must not be as long and destructive as the last. We must get hotel quarantine working properly.

“Even a very short lock-down will have a monumental social and economic costs.

“Small businesses will now be making decisions about whether to lay-off staff or destroy inventory. Airlines will be cancelling thousands of flights and shifts.

“New outbreaks shouldn’t be a surprise; this is a highly contagious virus, but we know by now that we have to live alongside it.

“New and more contagious strains make getting contract tracing, hotel quarantine and local management right even more important, they are not an excuse for throwing an entire state into hardship.

“Developing a national, proportionate and evidence-based plan to keep people safe and save livelihoods must be our number one priority.

“What matters most is that we have confidence in the systems put in place to manage outbreaks when they happen.

“We urge the Victorian government to work closely with businesses to explain how this will work, the trigger for any further restrictions and exactly how this will work.

“The Victorian government must now explain why this step is necessary and exactly how this will work for each and every business across the state.

“If NSW can manage a much bigger outbreak, keep the state open and people safe then there is no reason other states can’t do the same.”

Rhiannon Down 2.15pm: Early reports of panic buying in Melbourne

Early reports of panic buying have already surfaced in Victoria, just an hour after Daniel Andrews announced a snap lockdown.

Panic buying in full force at Gladstone Park Woolworths. Morons as far as the eye can see. #COVID19

— Dale Equid (@DaleEquid) February 12, 2021

Footage of shoppers filling trolleys and joining snaking lines at checkouts has surfaced online, as Victorians prepare for their third lockdown.

“Panic buying in full force at Gladstone Park Woolworths,” one shopper said online.

“Morons as far as the eye can see.”

Woolworths - shoppers have already launched into a buying frenzy @TheMelbCityNews @theheraldsun pic.twitter.com/1DqNiSwc1w

— Grace McKinnon (@GraceMcKinnonL) February 12, 2021

READ MORE: Victoria back in five-day lockdown

Ben Wilmot 2.00pm: Real estate stocks slide on Melbourne lockdowns

Major property owners have come under pressure as Melbourne returned to a snap five day lock down with Vicinity Centres and GPT Group among the most exposed as they are large owners in the city.

Vicinity co-owns Chadstone Shopping Centre with billionaire John Gandel and had slipped 2c to $1.54 in early afternoon trade while the GPT Group, that owns Melbourne’s Highpoint, had added 2.5c to $4.16.

Stockland, which has a heavy residential exposure to Melbourne, added 0.5c to $4.705, while local Westfield owner, the Scentre Group, slipped 3c to $2.69.

Mirvac released upbeat results on Friday morning on the back of surging residential markets but slipped 4c to $2.32.

Chief executive Susan Lloyd-Hurwitz said that short, sharp targeted actions had “proven to be successful, and balance health and economic considerations”.

“It’s devastating for everyone living in Melbourne go back to tough restrictions, however we need to acknowledge the government’s difficult decision to safeguard the community,” Ms Lloyd-Hurwitz said.

“We have been very well served in Australia by the collaboration between government, business and community.”

Vicinity’s Chadstone shopping centre in Melbourne. Picture: David Crosling

Ben Wilmot 1.42pm: Axiom Properties weighs return on capital

Developer Axiom Properties will ask shareholders to reduce its share capital by returning to investors 1.5c per share following the sale of a major building.

The company will return about $6.49m to investors after selling the South Australian Emergency Services State Command Centre to Charter Hall Social Infrastructure REIT.

The company said the move was part of an overall strategic review that considered the future capital commitments of its projects and operations.

1.38pm: $A, shares sink on Vic lockdown

The Australian dollar and shares sank after Vic announced a five-day lockdown from midnight after an outbreak of the virulent UK strain of the virus from a quarantine hotel.

AUD/USD hit an intraday low of US77.40c after retreating from a three-week high of US77.72c overnight.

The S&P/ASX 200 share index was down 0.6 per cent to 6-day low of 6812 after the announcement after losing steam on news that VIC’s crisis council of cabinet was meeting.da

Travel stocks and airlines were among the worst off with Webjet down 4.6 per cent, Qantas down 4.3 per cent, Corporate Travel down 3.3 per cent and Flight Centre down 3.2 per cent.

The impact of the lockdown was also felt in gaming stocks, with Tabcorp down 1.7 per cent and Crown Resorts down 1.7 per cent.

Toll road and shopping mall owners were also affected with Transurban down 1.5 per cent and Vicinity Centres down 1.3 per cent.

“We must assume that there are further cases in the community than we have positive results for, and that it is moving at a velocity that has not been seen anywhere in our country over the course of these past 12 months,” state Premier Daniel Andrews told reporters.

David Ross 12.50pm: Banks pay $1.24bn in compensation for scandals

Six banks have paid an additional $193.6m in ongoing compensation fees-for-no service misconduct or non-compliant advice scandals.

Total compensation now stands at $1.24bn as at December 31 last year and continues to grow as the banks identify further customers wrongly charged.

AMP, ANZ, CBA, Macquarie, NAB, and Westpac have paid out after two regulatory reviews into the scandals.

Reviews into the scandals have identified almost a million Australians who were wrongfully slugged by the banks.

However, the Australian Securities and Investments Commission notes the banks do not hold consistent data for all the numbers of individuals remediated.

Reports into the bank’s failings go back as far as 2015, with one review finding advisers were not complying with the relevant conduct obligations to give appropriate advice in the best interests of clients.

David Ross 12.21pm: Genworth braces for end of Covid support

The looming end to mortgage deferrals, coupled with the cut-off of the JobKeeper and boosted JobSeeker supplement, are set to keep Genworth Mortgage Insurance Australia on edge well into 2021.

Genworth reported a net loss after tax of $107.6m in the 12 months to December, a massive turnaround from its $120.1m profit only one year ago.

Dividends will not be paid, but the business flagged it would seek to resume payment as soon as “appropriate to do so” under prudential regulation.

Genworth reported an underwriting loss of $234m, a long way from the $42.1m profit posted in 2019.

The year closed with Genworth being forced to pay $120.8m in claims.

The loss saw a writedown of deferred acquisition cost of $181.8m.

Read more

12.05pm: ASX hits low on Vic lockdown fears

Australia’s sharemarket hit an intraday low just before midday on Vic lockdown fears.

The S&P/ASX 200 fell 0.3 per cent to 6827.6 after rising slightly to 6852.8.

Travel stocks underperformed with Qantas, Webjet, Corporate Travel and Flight Centre down more than 2 per cent.

BHP, Afterpay and Scentre were the top three drags, down 1.3 per cent, 1.7 per cent and 3.1 per cent respectively, with Scentre trading ex-dividend.

Banks found support with CBA up 0.7 per cent and ANZ up 0.3 per cent, while gains in Telstra and Goodman Group also lent support to the index.

John Durie 11.46am: The numbers that point to recovery

The corporate earnings season has started strongly, with net upgrades to full-year earnings on the back of the numbers presented and supporting a continued rally in stock prices.

AMP’s Shane Oliver said of the 33 companies to report so far 46 per cent have come in ahead of estimates and 27 worse.

This compares with the August reporting season, where just 32 per cent were better than expected.

Profits overall are up in 62 per cent of cases compared to 64 per cent down in the last earnings season, while 52 per cent of companies have reported an increase in dividends against last season where 55 per cent reported payout falls.

MST’s Hasan Tevfik reports upgrades averaging 1.3 per cent against the long term average of 0.7 per cent downgrades.

In all it’s been a strong start, reflecting better profit margins due to a better economy and continued focus on costs.

Read more

11.32am: Travel stocks hit as Vic mulls lockdown

The Australian sharemarket retreated slightly as travel stocks were hit by the risk of new COVID-19 lockdowns in VIC.

Victoria’s crisis council of cabinet is due to meet at 11:45 to consider whether to impose a snap lockdown on the state, writes Rachel Baxendale.

Premier Daniel Andrews is expected to address the media after the meeting.

A meeting of Victorian emergency chiefs is also underway to discuss the implementation of any potential lockdown.

QAN fell 2.5 per cent, Corporate Travel fell 3.3 per cent, Webjet lot 3.7 per cent and Flight Centre fell 2.4 per cent.

Victoria’s crisis council of cabinet is due to meet at 1145am to consider whether to impose a snap lockdown in the state,

A meeting of VIC emergency chiefs is also underway to discuss the implementation of any potential lockdown.

S&P/ASX 200 last down 0.2 per cent at 6836.6.

Joyce Moullakis 11.16am: AMP ‘getting turnaround traction’: Macquarie

AMP’s management is starting to get traction on its three-year turnaround plan, even against the backdrop of a $6bn-plus bid for the wealth group falling over.

Macquarie Group analysts markedly increased their earnings estimates for AMP after the company reported a 32.8 per cent slide in 2020 underlying profit to $295m, while statutory profit printed at $177m for the year ended December 31, compared to a bulging $2.5bn loss in 2019.

“Although the operational outlook remains challenging, management are beginning to get runs on the board,” the analysts said in a Friday note to clients.

They also upgraded their AMP recommendation to “neutral” from “underperform”, and raised their price target to $1.45 from $1.30.

After tumbling 11 per cent on Thursday, the stock edged up 0.9 per cent to $1.38 in early trading on Friday.

The Macquarie analysts raised their earnings-per-share estimate for AMP by 25 per cent for 2021 and by 19 per cent for next year.

“AMP now disclose gross financial data at a divisional level. This has assisted with greater clarity on investment income and income tax and is the primary reason for our earnings changes.”

US suitor Ares Management dumped its $6bn-plus whole of company AMP bid on Wednesday night, but continues to engage on a possible purchase of the infrastructure, real estate and equities division.

Perry Williams 11.14am: AGL retail and generation arms split maybe considered

AGL Energy may consider a split of its retail and generation arms and could sell one of its coal plants to grab extra market value from a move into green energy, analysts said.

The power giant is reviewing its business model and hinted at potential changes to its retail and generation arms as a solar-sparked price rout and government intervention slams the brakes on earnings growth.

“Given the poor outlook for wholesale electricity prices and the push by consumers for low carbon energy we think it makes sense to separate AGL along the lines of its newly arranged segments: Customer Markets and Integrated Energy,” Morgans said.

Goldman Sachs pointed to New Zealand gentailers with a lower carbon footprint who have gained a valuation premium in green indices, potentially creating a valuation uplift of $3.20 to $7.40 a share for AGL.

“Recent outperformance of the NZ gentailers on inclusion in green indices suggests some multiple expansion of green assets, where the NZ gentailers currently trade on an average ~20x EV/EBITDA,” Goldman Sachs said. This “implies an effective green multiple for the AGL portfolio segment excluding the high carbon intensive assets of ~17x”.

AGL may also consider its ownership of the Loy Yang A and Bayswater plants as part of the review, Macquarie said.

“The need to hold both coal generators may be reconsidered as any divestment (especially Loy Yang A) would step change AGL down the ESG path, and the profit impact is far more moderate especially as most of the Loy Yang A tax losses have been utilised.”

Still, JP Morgan thinks AGL boss Brett Redman may take a more conservative approach when it details plans at its investor day on March 29.

“While it could involve separating retail from generation, we do not expect anything so substantial. Instead we believe management will focus on ways to improve generation profitability.”

Credit Suisse also questions any gains from a business split given the value of retail has stalled.

The “value of retail may be becoming more Independent, but it’s not Increasing,” the broker said noting a 6 per cent fall in customer gross margin in 1H21 and 16 per cent for electricity attributed to increasing discounting.

11.03am: ASX turns up with US futures

Australia’s sharemarket has turned up with US futures after an opening dip.

The S&P/ASX 200 rose almost 3 points to 6852.8 after falling 0.3 per cent to 6833.9 near the open.

Telstra, Fortescue and Goodman are the top 3 points contributors with gains of over 1 per cent.

BHP, Macquarie and Transurban are the main drags with falls of 0.8-1.1 per cent.

S&P 500 futures are up +0.2 per cent in early APAC trading.

Most regional markets are closed for Lunar New Year.

11.00am: IDP Education +6.4% to record high

IDP Education shares jumped 6.4 per cent to a record high of $26.53 on volume 2.5 times its 20-day moving average.

The company is due to report its interim results on Feb 24th.

IEL was last up 4.3 per cent at $26.02.

IEL is the best performing stock in the S&P/ASX 200 so far Friday.

10.57am: Baby Bunting spells out Covid observations

Babywares retailer Baby Bunting spells out some of its observations through COVID-19.

Namely the retailer noted that at the start of lock-downs, significant sales growth were in baby essentials (nappies, baby wipes), during lock-downs, sales mix shifted from travel (car safety, prams and strollers) to “nesting” (cots and furniture, manchester and bedding)

As restrictions eased, all categories experienced growth and sales mix returned to historical levels, Baby Bunting said.

While Baby Bunting encouraged switching to online channels during lock-downs which bricks and mortar stores were still the preferred channel to shop

At the height of national stay-at-home restrictions during March and April, 85 per cent of sales were still transacted in-store. Victoria saw 82 per cent of sales transacted in-store during the September quarter when Victoria was in lock-down, the retailer said.

The comments followed Baby Bunting earlier Friday delivering interim net profit growth of 43.5 per cent to $10.8m. At 10.55 AEDT shares in the retailer are down 3.9 per cent at $5.40.

10.46am: Money Cafe: Time to press for JobKeeper payback

In this week’s episode of The Money Cafe, Alan Kohler and James Kirby discuss the truly awful AMP and why Crown can’t go on like this. Also on the agenda are the inflation worriers and an explanation of who’s behind the short selling.

10.38am: Nearmap issues “well known”: Citi

Citi analyst Siraj Ahmed says a number of issues raised in the short report from J Capital Research relate to past execution issues in the US - scaling sales and marketing, customer churn - which are “arguably well known to the market”.

“With additional hiring in sales and marketing staff and the investment in product/content this time around expected to be more measured/incremental, we see the risk of scaling too fast as less likely and also see the vertical focus and additional investment in operational systems to support growth as positive,” he says.

His says some of Nearmap’s largest US customers say its roof geometry solution is seen as superior, with materially faster turnaround times than existing solutions, helping the customer gain market share in the residential roof reports market, and that Nearmap’s coverage frequency and more recent imagery in metropolitan areas is seen as a differentiator.

“Customers did point out the need to expand the coverage program to rural areas,” he said. “Nearmap is expected to expand its coverage in CY21e along with the introduction of HC4, which in our view could help increase Nearmap’s market share.”

“While one customer highlighted that Nearmap’s post processing may not be as good (images a bit grainier), image quality did not stop the customer from signing up with Nearmap.

Further, the consistent capture methodology across the US was seen as a strength (especially to develop machine learning programs) when compared to regional competitors.”

He keeps a Buy rating but trims his target price 5 per cent to $3.00 after trimming his FY21-FY23 EBITDA estimates by 6-8 per cent, primarily due to the higher Australian dollar.

NEA is due to respond to JCAP’s report and release its results on Monday.

10.25am: ASX dips 0.2 per cent in early trade

Australia’s sharemarket dipped slightly in early trading amid falls in resources, banks.

The S&P/ASX 200 fell 0.2 per cent to 6835.4 near the open, with BHP down 1.3 per cent, NAB down 0.5 per cent and Scentre down 2.2 per cent ex-dividend.

Unibail-Rodamco-Westfield was weakest in the ASX 200 with a 4.7 per cent fall.

Kathmandu fell 3.6 per cent and Mirvac dipped 2.1 per cent after reporting Friday.

AP Eagers and Mineral Resources fell over 3 per cent.

Telstra, Afterpay, Goodman and Newcrest rose more than 1 per cent.

ASX 200 last down 0.1pc at 6841.8.

The Australian dollar is steady against the US dollar, trading around US77.48c.

Ben Wilmot 10.20am: Unibail-Rodamco-Westfield faces headwinds: JPMorgan

Investors have been urged to steer clear of the owner of the offshore Westfield empire, Unibail-Rodamco-Westfield, by JPMorgan’s London-based property team.

They said the 2020 result was worse than expectations, the dividend had been suspended for three years and it had added US mall disposals to its deleveraging plan.

The company turned in Adjusted Recurring Earnings per Share of €7.28 for 2020, missing market consensus but within its guidance range as it took a heavy knock from COVID-19.

The US has been heavily hit by coronavirus and US flagship mall vacancy blew out to 12.5 per cent and 5.2 per cent of the group’s US stores were hit by tenant bankruptcy in 2020.

JPMorgan said headwinds remain for 2021 and the magnitude of cutting debt was significant.

“The deleveraging outlook ... hinges on disposals, and with US assets now added to the sales plan – we see this fraught with execution risk. In our view, Unibail-Rodamco-Westfield is not the reopening trade investors are looking for,” JPMorgan said.

Unibail is not paying a distribution until fiscal 2023 and is also in the sights of hedge funds who have been battling small investors over the share price’s direction.

The company, now under new management after an investor revolt against plans for a €3.5bn equity raising, reported its results on Wednesday night.

“One might be tempted to think these results are resetting expectations on the low side, but we can still see significant downside risks to values and rents, and execution risk in the disposal of US and European assets,” JPMorgan said.

JPMorgan said plans to “significantly reduce financial exposure” to the US “look like a big ask” with rising vacancy in flagship malls.

Unibail is one of the world’s leading owners and developers of shopping centre destinations across continental Europe, Britain and the US.

But JPMorgan said the outlook for retail property was challenging and the earnings impact was hard to quantify given uncertainties over underlying rents, potential significant disposal impact and potential variation in cost of debt.

“We expect values to continue to come under pressure. Unibail’s strategy of focusing on super prime malls in wealthy catchments will likely see them as long-term winners but it faces near term headwinds,” JPMorgan said.

Lachlan Moffet Gray 10.09am: Who’s likely to join ASX 200: MS

Analysts at Morgan Stanley say up to six companies could enter the S&P/ASX 200 index at the next quarterly rebalance on March 12.

Potential inclusions are ASX newcomer Nuix, Champion Iron, Nickel Mines, De Grey Mining and Redbubble.

Companies that might fall out of the index are Service Stream, GWA Group, Tassal, Smartgroup, Bravura Solution and Unibail-Rodamco-Westfield.

The analysts also said within the smaller industry indexes, technology could be lifted from the 8th to 5th largest index, followed by small increases in the materials and consumer discretionary indexes at the expense of the financial index.

Bridget Carter 10.03am: Credit Suisse hires Citi’s Ristevski

Credit Suisse has hired Citi banker Dragi Ristevski.

Mr Ristevski will become a managing director, heading up private equity coverage across Australia and New Zealand.

He will also act as a senior client partner for key Australian General Industrial clients.

Mr Ristevski has more than 20 years’ experience in Australia and at Citi, he was head of general industrials and financial sponsors.

He joined Citi from Macquarie where he worked in the bank’s general industrials and financial sponsors team.

Before that time, he worked for seven years at Mallesons Stephen Jacques (now King Wood & Mallesons) in their mergers and acquisitions team.

Among the transactions he has worked on are the $700m takeover by Affinity Private Equity of Scottish Pacific and the $1.2bn acquisition of Woolworths’ petrol stations by EuroGarages.

10.01am: Nearmap buying opportunity: Evans & Partners

Evans & Partners analyst Julian Mulcahy says the selloff in Nearmap following a negative report from J Capital is a “buying opportunity”.

“The report mainly contains opinion and is light on hard hitting evidence,” Mr Mulcahy says.

On valuations and margins, he notes that the report claims the bull case for NEA is based on replicating it’s Australian share (60 per cent) in the US.

“We are bulls on the stock, but our forecasts imply a share of only 12 per cent in FY27,” he says.

“The reports states that GP margins in the US have been falling because ‘competitors are crushing them’.

“It’s true that reported GP margins fell in FY20, but it was entirely due to the change in policy for amortising capture costs from five to two years.”

The report goes on to debunk JCap’s claims on NEA’s accounting, technology and market position.

NEA shares fell 10.7 per cent intraday after JCap’s report on Friday and were halted with the stock down 7.3 per cent at $2.16.

NEA says it will respond to the report and release its interim results on Monday.

9.45am: Northern Minerals halted for capital raise

Northern Minerals, has entered a trading halt before a capital raising announcement.

The $230.7m minerals explorer focuses on heavy rare earths projects, particularly dysprosium in WA and NT. NT last at $0.052.

9.37am: Nearmap ‘to respond’ to JCap short sell report on Monday

Nearmap says it will respond to the short sell report from J Capital Research on Monday.

It will also bring forward its results to Monday from Wednesday, with a results briefing due at 9.30am (AEDT).

JCap’s report clearly got some traction with funds on Thursday as the share price fell 10.7 per cent intraday.

NEA remains in trading halt. Last down 7.3 per cent at $2.16.

Lachlan Moffet Gray 9.17am: Crown’s Barton yet to formally resign, Demetriou exit confirmed

Crown Resorts has confirmed director Andrew Demetriou’s exit, but CEO Ken Barton is yet to formally resign, according to the company, who told the ASX the embattled executive is still considering his position.

“Crown Resorts Limited (ASX: CWN) (Crown) announced today that contrary to media reports, Mr Ken Barton, the Chief Executive Officer and Managing Director of Crown has not resigned,” the company said.

“Crown and Mr Barton are continuing to consider his position having regard to the recommendations and findings of the Commissioner’s report of the inquiry under section 143 of the Casino Control Act 1992.”

In a separate statement the company said the following:

“Crown Resorts Limited (ASX: CWN) (Crown) announced today that Andrew Demetriou resigned as a director of Crown and as Chairman of Crown Melbourne Limited.”

9.13am: ASX expected flat amid holidays

Australia’s sharemarket should be fairly quiet before the weekend.

Much of Asia including China remains on holiday and US markets will be closed on Monday for Presidents’ Day.

Overnight futures suggest the S&P/ASX 200 will open little changed, although Wall Street stayed buoyant.

The S&P 500 futures rose +0.2 per cent. The Nasdaq gained 0.4 per cent. Both finished set record highs on a daily close basis.

There may be some weakness in “COVID losers” today as rising locally-acquired case numbers in VIC may lead to another lockdown, with five new cases reported Friday.

However the Australian dollar rose 0.4 per cent to 0.7755 overnight as S&P 500 volatility remained near an 11-month low of 19.69 per cent it reached on Wednesday.

COVID infection trends in most countries are falling, with the US averaging 100,000 new cases a day from a peak of 250,000 at year end, and sharp falls in infection rates in Spain and South Africa.

But AstraZeneca has said it could take between six and nine months to produce COVID-19 vaccines that are effective against emerging mutant variants of the virus.

And initial findings in a small trial prompted South Africa to pause the AstraZeneca roll out while the efficacy is addressed.

While its vaccine has an overall efficacy rate of 70 per cent, that dropped to 20 per cent in a South African trial, and for those with South African variant, it dropped to 10 per cent.

In commodity markets, WTI crude fell 1.2 per cent to $US57.98, spot gold fell 0.9 per cent to $US1826.61, LME copper slipped 0.2 per cent spot iron ore was unchanged due to holidays in China.

The S&P/ASX 200 fell 0.1 per cent to 6850.11 on Thursday.

Ben Wilmot 9.02am: Mirvac to rev up housing pipeline

Property developer Mirvac has signalled that it will accelerate its housing pipeline as it turned in a $276m first half operating profit.

The company reiterated its earnings guidance and said that it expected more than 2200 residential settlements for the full year.

Despite the pandemic, it delivered solid results for the half including with earnings per security lifting 10 per cent to 7c in June 2020.

Mirvac initiated guidance for the full year, providing operating EPS guidance of between 13.1 to 13.5c per security and distribution guidance of 9.6c to 9.8c per security for this financial year.

Mirvac: Ascot Green

Mirvac said that it was benefiting from residential stimulus measures which had benefited the economy and also the housing sector.

But its retail earnings were down on pre-crisis levels as were the office and industrial units.

The company is also building up a portfolio of build-to-rent units and has a pipeline of 2200 apartments worth $1.6bn on completion.

Residential default lifted slightly to 3.5 per cent due to COVID-19.

8.45am: Genworth posts $107.6m loss

Genworth Mortgage Insurance Australia has reported an annual net loss, reflecting the impact of the coronavirus pandemic on the economy and the need to increase reserves ahead of potential claims in future.

Genworth reported a net loss of $107.6m for the 12 months through December, compared to a profit of $120.1 million a year ago. On an underlying basis, Genworth made a net loss of $104.3m compared to a $97m profit a year earlier.

Directors didn’t declare a final dividend given the statutory loss, but said they were committed to resuming payouts when appropriate and would take into account the impact of Covid-19 on the company’s financial and capital position.

“Importantly, Genworth remains in a strong capital position, able to withstand a wide range of future claims outcomes,” Chief Executive Pauline Blight-Johnston said.

The company reported 30% growth in gross written premium to $561.7 million during 2020.

Still, Genworth said an underwriting loss of $234m reflected the impact of Covid-19, which led to a write-down of deferred acquisition cost of $181.8m as at end-March, and a reserving review of $109.1m before tax.

A reported loss ratio of 92.9 per cent reflects an increased level of reserving during the year in response to anticipated future claims arising as a result of Covid-19, Genworth said.

Dow Jones Newswires

READ MORE: Pandemic business interruption insurance payout storm is brewing

Lachlan Moffet Gray 8.33am: Baby Bunting expansion pays dividends

Infant retailer Baby Bunting has posted a 50 per cent lift in its half year profit and increased its dividend as its strategy to expand its market share begins to show results.

The company also announced plans to roll out physical stores in New Zealand next financial year following the launch of a successful trans-Tasman online sales site.

Statutory net profit after tax for the first half lifted 54.7 per cent to $7.5m on the back of a 16 per cent increase in sales to $217.3m.

A fully franked interim dividend of 5.8c per share was declared, up from the 4.1c declared in the prior comparable period.

Gross margin increased 41 basis points to 37.4 per cent and EBITDA lifted 29.7 per cent to $18.5m.

CEO Matt Spencer said online sales contributed to the result.

“Our online sales growth in the half was very pleasing, with total online sales (including click & collect) up 95.9 per cent,” he said.

“Significantly, we still have over 90 per cent of sales occurring or being completed in our stores highlighting the importance of our store network across Australia.”

READ MORE: Pandemic no problem for Baby Bunting

8.30am: What’s impressing analysts today?

• AMP (AMP AU): Raised to Buy at Morningstar
• ASX raised to Neutral: Citi
• ASX raised to Neutral: CS
• Charter Hall Social Infrastructure cut to Neutral: Evans & Partners
• GrainCorp cut to Neutral: CS
• Healius reinstated at Positive: Evans & Partners
• Newcrest raised to Add: Morgans Financial
• Orora cut to Hold: Morningstar
• Transurban raised to Neutral: Citi
• Transurban raised to Neutral: CS
• AMP target price cut 19 per cent to $1.45; Neutral rating kept: UBS
• AMP target price cut 15 per cent to $2.25; Buy rating kept: Bell Potter
• AMP raised to Neutral; target price cut 10 per cent to $1.30: Macquarie

AMP building, Sydney. Picture: Hollie Adams/The Australian

Lachlan Moffet Gray 8.17am: Rip Curl sales boost lockdown-hit Kathmandu

Outdoor wear group Kathmandu Holdings is flagging an improved half-year result as strong sales of the newly acquired swimwear brand Rip Curl offset the impact of a lack of tourists on the company’s centrepiece Kathmandu brand.

In a statement to the ASX, Kathmandu said unaudited group EBITDA for the first half of the financial year is expected to be between $47m-$49m, compared to $40.5m in the prior corresponding period.

Group sales are expected to be 12 per cent above the last financial year, driven by a 21 per cent increase in sales for the Rip Curl Brand.

But overall sales will be 10.3 per cent lower, adjusted for the lockdown closure of stores, with Kathmandu sales falling by 30 per cent.

Online sales now represent 13 per cent of consumer purchases, up from 8.9 per cent last year.

Kathmandu will hand down its full half year results on March 23.

8.13am: US stocks close mixed; are valuations stretched?

US stocks finished mixed Thursday, giving up earlier gains and suggesting investors are at an impasse following last month’s stretch of wild trading.

The S&P 500 slipped from session highs, as losses accumulated across shares of communications, industrial, energy and financial companies. The market’s lone bright spot Thursday, tech stocks, gave up around half of their gains, hobbling, for the moment, at attempt at a gain for major indexes.

The S&P 500 ended up 0.2%, while the Dow Jones Industrial Average lost 0.1%. The Nasdaq Composite was higher by 0.4%.

Some investors pointed to a continuing conversation around whether valuations are stretched that appears to be playing out across the market.

On one hand, traditional metrics like price/earnings ratios suggest stocks are trading near their priciest levels ever, a prospect investors generally fear since that suggests future returns will be muted. On the other, several investors say that picture fails to take into account the impact of low interest rates, which tend to increase the future earnings of companies.

“There’s a great debate going on around valuation,” said Jace Aubry, chief investment officer of the Teacher Retirement System of Texas, a $165.4 billion pension fund. Factoring in the current level of low rates, Mr. Aubry says U.S. stocks appear undervalued.

“I lean toward optimism,” Mr. Aubry added.

Most calls on Wall Street line up with Mr. Aubry’s view that stocks have more room to run as long as interest rates remain low.

7.40am: Government to retain majority stake in AirNZ

Air New Zealand said the government has confirmed it plans to maintain a majority shareholding when the airline raises equity capital this year.

The national carrier said Friday it had recently reconfirmed with the government that it plans to sell new shares before June 30.

A government letter to the airline said that subject to Cabinet being satisfied with the terms of the share sale, “it would participate in that equity capital raise in order to maintain a majority shareholding in Air New Zealand.”

Dow Jones Newswires

7.20am: ASX poised to open flat

Australian stocks look set for a steady start, as Wall Street was mixed and lacking direction.

Shortly after 7am (AEDT) the SPI futures index was down just one point.

The Australian dollar is higher at US77.52c.

Spot iron ore is unchanged at $US165.95 a tonne.

Brent oil lost 0.5 per cent to $US61/14 a barrel. Gold futures are down 0.9 per cent to $US1826.80 an ounce.

6.59am: Biden mulls naming first Black woman to Fed

US President Joe Biden is considering nominating economist Lisa Cook to the Federal Reserve board, which would make her the first Black woman to serve in the role, according to media reports.

The historic choice of Cook, if confirmed, would continue Biden’s efforts to appoint women and minorities to key roles in his administration.

Cook, a University of Michigan professor, would fill an open seat on the seven-member Fed board and would become only the fourth African-American governor of the central bank.

Axios cited people familiar with the issue as saying Biden was considering Cook for the post, while Bloomberg reported that she has the backing of key White House officials, but a decision on the position is not imminent.

Cook, who has expertise in development and has written papers on the racial impacts of economic outcomes, has a doctorate in economics from the University of California, Berkeley and degrees from Oxford University and Spellman College.

AFP

6.50am: Digital sales help L’Oreal keep balance sheet pretty

French cosmetics giant L’Oreal said the Covid-19 pandemic impacted sales last year but that its e-commerce efforts helped it limit the drop to the single digits.

With restrictions closing beauty salons and many people working from home, sales in both the professional and consumer segments took a hit, but overall the drop was 6.3 per cent to 28 billion euros ($US34 billion) for the year as a whole.

Meanwhile, net profits at the firm which includes brands such as Maybelline and Redken, slid 5 per cent to 3.6 billion euros.

Asia Pacific is now L’Oreal’s biggest region and was the only one to post growth for 2020 overall and during the fourth quarter.

L’Oreal was helped by online sales.

6.15am: US stocks waver despite tech gains

US stocks dropped, giving up earlier gains and suggesting investors are at an impasse following last month’s stretch of wild trading.

The S&P 500 slipped from session highs, as losses accumulated across shares of communications, industrial, energy and financial companies. The market’s lone bright spot Thursday, tech stocks, gave up around half of their gains, hobbling, for the moment, at attempt at a gain for major indexes.

The S&P 500 was recently down 0.1 per cent, while the Dow Jones Industrial Average slid 107 points, or 0.3 per cent. The Nasdaq Composite was up 0.2 per cent in recent trading.

No significant catalysts led to the turnaround. But some investors pointed to an ongoing conversation around whether valuations are stretched that appears to be playing out across the market.

Dow Jones

6.14am: US debt on track to hit 107 per cent of GDP by 2031

Federal deficits are projected to soar over the next decade, but not as much as officials forecast last summer, thanks to an improving economic outlook that is expected to bolster federal revenues, the Congressional Budget Office said Thursday.

Federal debt, which reached 100 per cent of gross domestic product in the last fiscal year, is expected to rise to a record 107 per cent of economic output by 2031.

The agency expects cumulative deficits over the next 10 years will total $US12.6 trillion, 3 per cent less than projected in September, the last time the agency released its estimates. The decline stems from stronger-than-expected economic activity, higher inflation and higher interest rates, which will boost federal tax revenue more than spending, the nonpartisan agency said.

For 2021, CBO projects the deficit will total $US2.3 trillion, nearly $US900 billion less than the budget gap for the fiscal year that ended Sept. 30, but 25 per cent higher than CBO forecast in September. Those costs are offset in part by the effects of a stronger economy, the agency said.

Dow Jones

5.25am: Tech gains but Wall Street mixed

The Nasdaq gained but the Dow and S&P 500 were weaker in early afternoon trade on Wall Street, fading from earlier gains.

The Nasdaq was up 0.1 per cent, while the Dow was down 0 .3 per cent and the S&P 500 was 0.1 per cent weaker.

Shares of chip companies, IT services providers, electronic equipment and software companies rallied, pulling tech stocks in the S&P 500 up and also helping to lift the Nasdaq.

Some solid earnings supported earlier gains, along with ongoing expectations of additional relief measures by Congress to support the economy, analysts and investors said. The latter got a boost after fresh data showed that 793,000 Americans applied for first-time unemployment benefits in the week ended Feb. 6, while new applications for the prior week were revised higher to 812,000.

Bank of New York Mellon shares rose 2.5 per cent after The Wall Street Journal reported that the nation’s oldest bank will hold, transfer and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients. Mastercard also gained 2.7 per cent after the company said Wednesday it is preparing to support cryptocurrencies directly on its network this year.

Overseas, the Stoxx Europe 600 benchmark rose 0.4 per cent.

Dow Jones Newswires

5.20am: GameStop mania is focus of US federal probes

Federal prosecutors and regulators are investigating whether market manipulation or other types of misconduct fuelled the rapid rise last month in prices of stocks such as GameStop Corp. and AMC Entertainment Holdings Inc., according to people familiar with the matter.

The Justice Department’s fraud section and the San Francisco U.S. attorney’s office have sought information about the activity from brokers and social-media companies that were hubs for the trading frenzy, the people said. Prosecutors have subpoenaed information from brokers such as Robinhood Markets Inc., the popular online brokerage that many individual investors used to trade GameStop and other shares, the people said.

GameStop shares surged from about $US20 to $US483 over a period of two weeks in January. The stock has since fallen to around $US50. It was fuelled by an army of bullish individual traders exhorting one another on Reddit to buy the shares and squeeze hedge funds that bet the price would fall. Traders who bet stock prices will decline are known as short sellers.

In addition to the probe by the Justice Department, the Commodity Futures Trading Commission is examining similar trading, the people said. The CFTC has opened a preliminary investigation into whether misconduct occurred as some Reddit traders targeted silver futures and the largest exchange-traded fund tied to silver, the iShares Silver Trust, one of the people said.

The Wall Street Journal has reported that the Securities and Exchange Commission is reviewing the trading frenzy as well. The SEC and CFTC are civil regulators. The burden of proof in a regulatory enforcement action is lower than in a criminal case.

Separately, the House Financial Services Committee plans a hearing on Feb. 18 to examine what happened with GameStop’s shares. Reddit Chief Executive Steve Huffman was invited to testify and plans to appear before lawmakers, he told The Journal on Thursday.

5.15am: Microsoft urges US to make tech giants pay for news

Microsoft Corp. said the US should copy Australia’s controversial proposal that tech companies pay newspapers for content -- putting it at odds with Alphabet Inc.’s Google and Facebook Inc.

It isn’t the first time Microsoft has stepped into feuds involving rivals -- particularly in areas where they have an edge. Its Bing search engine lags behind Google in market share. Microsoft has urged governments to better regulate facial-recognition technology and last year sided with a video game developer against Apple Inc. in a dispute about app-store fees.

The Australian proposal, if enacted into law -- it is now before a parliamentary committee -- could prompt other countries to follow suit in a global transformation of the relationship between tech companies and traditional media.

Some countries, particularly in Europe, have tried to force tech companies to pay publishers, often with little success. Australia’s effort gained momentum last year, when the pandemic-driven downturn further strained the finances of media companies.

“The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press,” Microsoft President Brad Smith wrote in a blog post published Thursday. “It should copy it instead.”

Read more

Microsoft president Brad Smith.

Dow Jones

5.12am: Stocks higher, Bitcoin touches new record

US and European stocks moved higher as investors digested company updates and awaited developments on US stimulus, dealers said, while Bitcoin struck a fresh high.

Lacklustre US unemployment claims data helped keep investors confident that lawmakers would approve a fiscal stimulus package and comment by US Federal Reserve Chairman Jerome Powell also indicated the monetary policy was likely to remain loose and there is little risk of inflation.

The Dow rose from a record close at the start of trading, with the S&P 500 and Nasdaq Composite also rising and sitting just shy of record high levels.

Meanwhile, US unemployment data showed that first-time claims for benefits dipped by just 19,000 to 793,000. While that was a five-week low, analysts had been looking for a bigger drop.

“The key takeaway from the report is unchanged: the labour market is not in a good place and that will necessitate additional stimulus measures,” said Patrick J. O’Hare at Briefing.com.

In Europe, gains in Paris and Frankfurt were capped by news that the EU has slashed this year’s eurozone economic growth forecast to 3.8 per cent from 4.2 per cent, citing the impact of COVID-19 curbs.

Paris ended down less than 0.1 per cent, Frankfurt closed up 0.8 per cent and London added less than 0.1 per cent.

Meanwhile, Bitcoin struck a fresh high of $48,364.05 as the cryptocurrency gained further mainstream support.

After the announcement on Monday by Tesla that it had bought $1.5 billion in bitcoin and would soon accept the cryptocurrency, on Thursday it picked up support from US bank, BNY Mellon.

“The corporate support just keeps on coming: America’s oldest bank -- BNY Mellon -- will start financing Bitcoin and other cryptos. It’s a big deal since BNY is the first big national custodial bank to offer custody services for crypto assets,” said analyst Neil Wilson at Markets.com.

AFP

5.08am: Wall Street player BNY Mellon jumps on bitcoin bandwagon

Bitcoin and other crypto currencies took another leap towards the financial mainstream when Wall Street player BNY Mellon announced plans to accept digital currencies.

BNY Mellon, which is known as the oldest US bank, said it will form a new digital assets unit to transfer, safeguard and issue digital assets in response to client demand.

The move comes as bitcoin values continue to climb to new heights after receiving a legitimacy boost when Tesla and Mastercard announced they would accept the digital currency, even as many regulators remain sceptical of the volatile currency.

BNY Mellon, which was founded by the first US Treasury secretary Alexander Hamilton in 1784, described the move as a response to market demand.

“BNY Mellon is proud to be the first global bank to announce plans to provide an integrated service for digital assets,” said Roman Regelman, chief executive of asset servicing.

“Growing client demand for digital assets, maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field.”

Prices of bitcoin climbed further Thursday, rising to $US48,364, a new all-time high.

Bitcoin. Picture: AFP

AFP

5.05am: US jobless claims fall, but remain high

New applications for US unemployment benefits fell slightly last week, the government said, but the level remained high months into the coronavirus pandemic.

The Labor Department said new claims dipped to 793,000, seasonally adjusted, in the week ended February 6, a decrease of 19,000 from the previous week but nonetheless a higher level than expected.

Another 334,524 people, not seasonally adjusted, filed claims under a program for freelance workers, which brought the total new applications last week to more than 1.1 million.

“Additional fiscal stimulus and broader vaccine diffusion will eventually allow the labour market to heal,” Nancy Vanden Houten of Oxford Economics said.

However she pointed to January employment data showing the economy barely adding jobs in the month and warned, “current conditions are still quite weak, and declines in new jobless claims are likely to occur only gradually in the near term.” That echoed comments from Federal Reserve Chair Jerome Powell who said Wednesday that the US economy remains “very far” from returning to a strong labour market.

AFP

5.05am: Danone targeted in fresh activist investor assault

A second activist investment fund said it had built up a sizeable stake in French dairy and water giant Danone, looking to revamp management and fire up a share price hammered since the onslaught of the COVID-19 pandemic.

The move by the American fund Artisan Partners comes just a few weeks after another hedge fund, London-based Bluebell Capital, revealed it had acquired shares in hopes of provoking shareholders to demand a strategy review from Danone’s boss Emmanuel Faber.

Artisan in particular wants Faber to split his dual roles of both board president and chief executive, saying it would ensure accountability as the company plots a post-Covid recovery strategy.

“Change is urgently needed to avoid permanent damage to the group’s iconic brands and market position,” Artisan wrote in a letter to Danone’s board.

“Unfortunately, the financial performance of Danone is not consistent with the quality of its assets,” it wrote, adding that it had spent some $US1.6 billion to take a stake of over three per cent in the firm -- making it the third-largest shareholder.

Danone’s shares plunged by more than a third last year as the coronavirus crisis shut down restaurants and tourism, a huge market for the firm’s profitable water brands such as Evian and Volvic.

AFP

5.00am: Shell unveils green strategy

Energy giant Royal Dutch Shell declared that its oil output is locked in decline after peaking in 2019 as it outlined green plans to switch away from fossil fuels.

The London-listed company will invest up to $US6.0 billion (4.9 billion euros) per year in green energy products such as biofuels, electric car charging and renewables, it said in a strategy update.

The group said it anticipates a “gradual reduction” in oil output of 1.0-2.0 per cent each year, including divestments.

Total carbon emissions for the company peaked in 2018, it added. The global oil sector, nursing vast losses due to the COVID-19 pandemic, is accelerating plans to switch into greener energy and slash carbon emissions in the face of with intensifying climate change fears.

“Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” Shell chief executive Ben van Beurden said Thursday. “We must give our customers the products and services they want and need -- products that have the lowest environmental impact.

“At the same time, we will... make the transition to be a net-zero emissions business in step with society” by 2050, van Beurden added.

Shell is matching a commitment by rival BP as the Anglo-Dutch group’s update sparked more accusations of corporate “green washing” from environmental campaigners.

Shell is going “green”. Picture: AFP

AFP

4.58am: AstraZeneca doubles 2020 profit

AstraZeneca, the British maker of a Covid vaccine with Oxford University, said net profit more than doubled last year to $US3.2 billion on strong sales of new cancer drugs.

Profit after tax, equivalent to 2.64 billion euros, soared 139 per cent compared with 2019, the pharmaceutical giant said in a statement.

Group revenue jumped 9.0 per cent -- or 10 per cent at constant exchange rates -- to $US26.6 billion.

The update did not include any current or projected earnings from AstraZeneca’s coronavirus vaccine which is being rolled out worldwide.

“Despite the significant impact from the pandemic, we delivered double-digit revenue growth” in 2020, chief executive Pascal Soriot said in the earnings statement.

AFP

4.55am: EU slashes 2021 growth forecast

The EU slashed its growth forecast for 2021 as the coronavirus pandemic keeps much of Europe under restrictions but Brussels insisted that a powerful rebound was near.

The European Commission said GDP growth in the 19 countries that use the euro would hit 3.8 per cent this year, with the recovery coming later than originally hoped.

This was down from the 4.2 per cent for 2021 forecast in November. But Brussels gave a sharp boost to its prediction for growth next year, upping it to 3.8 per cent from 3.0 per cent earlier.

Most hopefully, the EU said that the European economy would reach pre-pandemic levels in 2022, which was faster than earlier hoped, although the recovery would be uneven among member states.

“We remain in the painful grip of the pandemic, its social and economic consequences all too evident,” the EU’s Economy Commissioner Paolo Gentiloni said.

“Yet there is, at last, light at the end of the tunnel,” he added.

EU commissioner for 'Economy' Paolo Gentiloni. Picture: AFP

The EU cautioned strongly, however, that the forecast was highly uncertain, given the unknown evolution of the pandemic, especially the spread of variants that could delay the end of restrictions and lockdowns.

The EU said its forecast was made under the assumption that containment measures will remain strict through March and gradually ease until a more marked opening in the second half of the year.

Next year, Europe will see only “targeted sectoral measures still present”, the EU said.

The commission said that the 27-member EU as a whole, which also includes Poland and Sweden, would grow by 3.7 per cent this year and 3.9 per cent in 2022.

In the forecast, the bloc’s biggest economies followed the pattern of the eurozone as a whole.

Germany saw this year’s growth forecast cut to 3.2 per cent, but boosted for next year.

In France’s case, the commission hugely boosted its growth forecast for next year from 3.1 per cent three months ago, to 4.4 per cent.

Italy, which is currently going through a political crisis, saw its growth estimate for this year slashed from 4.1 to 3.4 per cent.

The EU said the forecasts did not include the impact of its massive recovery plan, which will inject 750 billion euros through grants and loans into the European economy, hopefully starting later in the year.

The commission’s forecasts are a crucial reading of the economy on which the EU’s executive bases its oversight of member state budgets and the amount of debt they can take on.

The EU has for the moment suspended its rules on running up high debt and deficits, to give countries free rein to spend and fight the impact of the pandemic on their economies.arp/del/bmm

4.50am: Oil market fragile: IEA

The International Energy Agency warned the world oil market remains fragile, despite a recent recovery in prices, as tighter restrictions are imposed to curb more contagious coronavirus variants.

At the same time, the IEA said the economic outlook was brighter overall, especially in the second half of this year.

“The rebalancing of the oil market remains fragile in the early part of 2021 as measures to contain the spread of COVID-19, with its more contagious variants, weigh heavily on the near-term recovery in global oil demand,” the IEA said in its latest monthly report.

“But fresh support has been provided by a more positive economic outlook for the second half of the year, along with a pledge from OPEC+ to hasten the drawdown of surplus oil inventories,” it added.

OPEC producers plus their non-cartel allies, principally Russia, have stuck to hard-won output limits, driving prices back to around $US60 per barrel, levels last seen early last year before the pandemic took hold.

The IEA noted that in January, the International Monetary Fund had raised its global growth forecast for this year to 5.5 per cent from 5.2 per cent, largely due to “the robust recovery in manufacturing activity and stronger growth expectations for the United States.” In Europe, however, the outlook was weaker, it noted.

“Renewed lockdowns, stringent mobility restrictions and a rather slow vaccine rollout in Europe have delayed the anticipated rebound until the second half of the year,” it said.

The IEA said it had left its 2021 global oil demand forecast unchanged, at 96.4 million barrels per day (mbd), which represents a gain of 5.4 mbd over 2020.

It added however that “the forecasts for economic and oil demand growth are highly dependent on progress in distributing and administering vaccines, and the easing of travel restrictions in the world’s major economies.”

AFP