$98bn business boost after RBA holds rates
The Morrison Government is giving business a $98bn boost after shares lifted and the RBA elected to stay out of the budget limelight.
Welcome to the Trading Day blog for Tuesday, October 6. Australian stocks finished in positive territory after world markets rebounded from Friday’s falls. The Reserve Bank has left the cash rate on hold ahead of tonight’s federal budget, while James Packer has been giving evidence to an inquiry on Crown’s gambling licence.
Glenda Korporaal 7.44pm: $98bn business boost
The Morrison Government is giving business a $98bn boost from a combination of accelerated personal tax cuts, generous short term investment allowances, temporary tax concessions and a $14bn in infrastructure spending to cushion the impact of the Covid induced recession and “kick start investment”.
Mr Frydenberg said the temporary full expensing allowances, which were much larger than expected by the business community, would “unleash a wave of investment across the country” for a potential 3.5 million businesses, generating a potential $200bn in new investment.
A million small businesses are also estimated to benefit from temporary loss, carry back concessions giving loss making business a chance to get a tax refund before they move back into profit.
Another $2bn is being made available through the research and development tax incentive scheme.
At the same time, the government asking business to step up to the plate with a $4bn JobMaker hiring credit program aimed at providing jobs for half a million Australians under 35, as part of its plan to hold down unemployment rates as support schemes such as JobKeeper and JobSeeker phase out next year.
6.35pm: Trump steadies Europe markets
Europe’s main stock markets steadied in opening trade on Tuesday with investors relieved that US President Donald Trump has returned to the White House following hospital treatment for Covid-19.
Trump’s return lifted a major source of uncertainty over the looming US presidential election on November 3, which some had feared could have been delayed.
Sentiment was also bolstered by fresh hope for a new US stimulus package to fight the economic fallout from the pandemic, dealers said.
In initial deals, London’s benchmark FTSE 100 index declined 0.1 per cent to 5,938.72 points.
In the eurozone, Frankfurt’s DAX 30 added 0.1 per cent to 12,842.37 points and the Paris CAC 40 was up 0.2 per cent to 4,879.52.
“US President Trump... is back in the White House, much to the relief of the markets,” said City Index analyst Fiona Cincotta.
6.15pm: Tokyo closes higher
Tokyo stocks closed higher on Tuesday, extending Wall Street rallies after US President Donald Trump returned to the White House following hospital treatment for Covid-19.
The benchmark Nikkei 225 index rose 0.52 per cent, or 121.59 points, to 23,433.73, while the broader Topix index advanced 0.52 per cent, or 8.50 points, to 1,645.75.
“The market took President Trump’s discharge from hospital as good news,” said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.
The gain came after US shares rebounded on Monday as reports suggested Trump’s health had improved.
“But since his release from hospital had already been factored in, the gain was limited,” Horiuchi told AFP.
The dollar fetched 105.66 yen in Asian afternoon trade, against 105.72 yen in New York and 105.58 yen in Tokyo late Monday
AFP
David Ross 4.51pm: Packer questioned on China
At the NSW casino inquiry it has emerged that Crown Resorts’ China operation was relying on legal advice to the effect that as so long as it did not maintain an office the business did not need a license to operate in China.
Mr Packer said he did not authorise the opening of an office disguised as an apartment in Guangzhou, which operated from 2015 to 2016, nor a previous office which operated in a similar manner from 2012 to 2015.
“I believe that Crown had legal advice that said what they were doing was legal,” he said.
The hearing heard the unofficial office in China operated with signage, gifts for customers, and computers where staff would process visa applications.
Mr Packer said the operation of the office in China was not something he was aware of and called it a “failure of compliance”.
But Mr Packer’s response was picked up by the Commissioner, who said it was “more than that” saying the issue “goes to the core” of the problems the company faced in China.
“Madam commissioner, I accept it’s a serious failure,” Mr Packer said in response.
The hearing has now ended for today and will resume tomorrow at about 10am for further questioning of Mr Packer.
4.31pm: ASX lifts on gold merger
The local sharemarket lifted on news of a $16bn merger between two leading goldminers and following a rise on Wall Street as oil prices surged overnight.
At the close of trade, the benchmark S&P/ASX200 was up 20.5 points, or 0.35 per cent, at 5962.1. The broader All Ordinaries rose 29.1 points, or 0.47 per cent, to 6164.2.
The bourse dipped as much as 0.5 per cent in early trade before drifting higher in afternoon trade.
The gains came as the Reserve Bank left the official cash rate on hold at a record low of 0.25 per cent.
GSFM investment strategist Stephen Miller said that the possibility of further monetary stimulus to support the government’s fiscal efforts remained likely, on the back of the RBA’s comments.
“The RBA today eschewed the announcement of any further monetary stimulus measures probably in an effort to maximise the focus on the federal budget,” said GSFM investment strategist Stephen Miller.
“The RBA governor has long been a strong advocate for fiscal stimulus as a complement to the monetary measures thus far enacted to combat the consequences of the COVID pandemic.”
Northern Star was the best performer of the session, gaining 10.6 per cent to $15.29 after it announced a $16bn merger with Saracen, which rose 9.6 per cent to $5.72 on the news.
In materials, BHP edged up 0.4 per cent to $36.28, Rio Tinto added 0.3 per cent to $96.02 and Fortescue stepped up 1.7 per cent to $16.74.
An upgrade on Westpac and ANZ by Macquarie analysts helped the bank’s shares rise 0.7 per cent to $17.41. ANZ added 0.5 per cent to $17.8, NAB edged up 0.3 per cent to $18.24 and Commonwealth Bank inched 0.2 per cent higher to $66.15.
The energy sector rallied on a stronger oil price, with Woodside gaining 2.2 per cent to $18 and Oil Search up 3 per cent to $2.79.
Nanosonics dropped 5 per cent to $5.48 after JPMorgan started coverage of the stock at underweight.
Star Entertainment gained 2.5 per cent to $3.24 after it announced it had qualified for phase 2 of the federal government’s JobKeeper program.
Crown Resorts lost 0.6 per cent to $8.73 as James Packer appeared in front of the NSW Independent Liquor and Gaming Authority Inquiry, which is examining into the company’s suitability to hold a casino licence.
Pharmaceutical company Mayne Pharma slumped to a six-month low of 30.5c after the US Food and Drug Administration raised questions about its new drug application. Shares in the company closed down 17 per cent at 32c.
Breville shares outperformed, lifting 1.2 per cent to $26.51, after the appliance maker announced on Friday that it had acquired Seattle-based coffee grinding company Baratza for a consideration of about $US60m.
Baby Bunting lifted 6.1 per cent to $4.87 after the retailer touted stronger sales for the financial year to date.
The Australian dollar was trading 0.05 per cent higher at US71.83c in late trade.
Lachlan Moffet Gray 4.19pm: Packer suffering from bipolar
At the NSW casino inquiry, James Packer has claimed that he suffers from bipolar disorder after a line of questioning relating to his conduct within a confidential email chain.
Discussing the content of the emails that resulted in the private session earlier in the day, counsel assisting Adam Bell asked Mr Packer whether he had threatened a “Mr X” in the emails.
“Verbally, yes,” Mr Packer responded.
Mr Bell then asked whether he knew he made the man fearful of him.
“No that came as a surprise as me.”
Mr Bell then asked Mr Packer if he accepted the behaviour was shameful.
“I do,” he said.
Mr Packer was then asked if he was director at Crown at the time.
“I can’t recall.”
Mr Bell then asked if it was “disgraceful conduct.”
“Yes”, Mr packer answered.
Mr Bell then noted that Mr Packer resigned weeks after the email exchange.
Mr Bell then asked Mr Packer if he understood he had to act ethically and with a high standard of integrity due to his position with the company.
“Correct,” Mr Packer said.
Mr Bell then questioned why the NSW Gaming and Liquor Board could then trust in Mr Packers “character and integrity”
“Because I am being treated now for my bipolar...disease,” Mr Packer said.
4.15pm: RBA eyeing march cut - RBC
The RBA was “slightly more dovish” but chose to “stay out of the budget limelight” in its statement today, says Royal Bank of Canada chief economist Sue-Lin Ong.
“There were few meaningful changes to the short statement, but we think it erred a little more dovish,” she says.
In her view that RBA added emphasis on its full employment target with the comment that “addressing the high rate of unemployment as an important national priority.“
In this context, it repeated that it continues to “consider how additional monetary easing could support jobs.
These labour market observations were in the key final paragraph and strengthen the easing bias slightly.”
Ms Ong expects the RBA’s cash rate, three-year yield target, and term funding facility targets to be cut to 0.1pc in the March quarter, when “the case for further RBA easing is likely to be more compelling.”
She has lowered her year-end unemployment rate forecast to 7.2 per cent from 9 per cent due to a better starting point and somewhat stronger employment generation ex-VIC in recent months.
Measures in tonight’s budget, including the bringing forward of the next stage of income tax cuts, back dated to 1 July 2020, that will lend support to demand in the coming months, buying the RBA time to monitor the economy.
But Ms Ong warns that the first half of 2021 will be “challenging” as key income support measures are pared back further and eventually cease.
“Wwe are mindful that speculation over further easing, including a QE program, is unlikely to abate and we view all meetings as live,” she says.
“The RBA will find it difficult to stand by idly for too long if the labour market weakens materially.”
4.05pm: No near term rate cut: Citi
Citi analysts say there is no indication that a rate cut is imminent in the near term, after the RBA left the official cash rate on hold at 0.25 per cent.
“The October rate decision was far more mundane than market expectations for it over the past week,” they said.
“As we expected, the RBA left the benchmark cash rate and 3-year yield targets unchanged at 25 basis points.”
Citi analysts said that tonight’s federal budget will be more important than usual for the near-term future path of monetary policy.
“Media reports have today cited that tonight’s budget will likely be more expansionary than previously expected,” they said.
“This is because stage 2 tax cuts are now likely to be backdated to 1 July 2020 adding a further $12bn into the economy.
“These tax cuts could pass into legislation before the end of the week or the very latest by mid-November, adding an extra $3bn to $4bn into low to middle income household balance sheets in the next month.”
Lachlan Moffet Gray 3.39pm: Packer appears unwell
Mr Packer is appearing at the NSW Inquiry via video link on board his $200m yacht, currently moored near Tahiti.
But the reclusive billionaire does not look as though he has been soaking up sun.
Mr Packer’s appearance today has reminded many of his father’s appearance in front of a print media inquiry almost 30 years ago.
James appears a little unwell, and does not appear to be having an easy time of it. His counsel Noel Hutley is continually cutting across Adam Bell’s non-linear line of questioning.
The move to the private session is to allow the Commissioner to be fully briefed on Mr Packer’s mental health issues.
Lachlan Moffet Gray 3.05pm: Packer ‘skimmed through’ bio
Earlier, James Packer told the inquiry that he “skimmed through” a book on himself and his tenure at Crown by The Australian’s Damon Kitney titled ‘The Price of Fortune.’
Mr Packer gave this answer in a response to a question from Mr Bell regarding the accuracy of the book, a line of questioning Mr Packers’ counsel strongly objected to.
Mr Packer was interviewed extensively for “The Price of Fortune” by Kitney, with the book delving into Mr Packer’s struggle with mental health that ultimately led to him standing down from the Crown board in 2018.
The book also analyses Mr Packer’s breakdown with singer Mariah Carey, his time living in Israel, his Hollywood exploits and his painful family battle with his sister Gretel.
Lachlan Moffet Gray 2.40pm: Packer questioning turns private
NSW Independent Liquor and Gaming Authority Inquiry has suspended public viewing of the hearing, while Counsel Assisting Adam Bell continues to question Mr Packer behind closed doors.
Lachlan Moffet Gray 2.36pm: Packer probe homes in on Z. Co
Counsel Assisting Adam Bell has asked James Packer whether he recalls the involvement of a company called Z. Co in the proposed privatisation of Crown Resorts.
Referring a laconic Mr Packer to emails filed as official inquiry materials, Mr Bell asked whether he recalled establishing a plan to have Z. Co contribute $1.5bn of equity to the proposed privatisation of Crown Resorts at a value of $9.1bn.
After a lengthy pause, Mr Packer asked for the question to be repeated before answering: “I can’t be sure, Mr Bell,” he said.
Mr Packer’s counsel Mr Noel Hutley has interjected to discuss the emails, asking them not to be disclosed as they reflect Mr Packer going through a “deep personal crisis.”
“There is no public interest in disclosing it,” he said, urging Commissioner Patricia Bergin to read the emails in their entirety for context.
Ms Bergin cryptically asked if a matter raised in paragraph 5 of Mr Packer’s submission was “causative” to the behaviour of Mr Packer captured in the emails but did not shy away from the importance of making them public.
Mr Hutley asked to speak to Mr Packer about “his state of mind” privately.
Ms Bergin agreed.
2.30pm: RBA leaves rates unchanged
The Reserve Bank has left interest rates unchanged at its monthly board meeting, after some economists had predicted another cut to help tackle the blow to the economy from the pandemic.
In a statement just hours before the federal budget, RBA governor Philip Lowe said the central bank board had decided to maintain the targets for the cash rate and the yield on three-year Australian government bonds at 0.25 per cent.
Dr Lowe noted that over the past six months, the Australian economy has been supported by a substantial easing of fiscal policy.
“Public sector balance sheets in Australia are in good shape, which allows for continued support, with the Australian government budget to be announced this evening,” he said.
“Both fiscal and monetary support will be required for some time given the outlook for the economy and the prospect of high unemployment.”
While noting that labour market conditions have “improved somewhat” over the past few months and the unemployment rate is likely to peak at a lower rate than earlier expected, Dr Lowe cautioned that Australia’s unemployment and underemployment are rates “likely to remain high for an extended period” and wage and inflation pressures “remain very subdued.”
A recovery in the global economy after a severe contraction due to the pandemic has been “gradual” and “uneven”, Dr Lowe said.
Moreover, its continuation depends on containment of the virus, with higher infection rates in some countries offset by lower infection rates in others.
The recovery has been most advanced in China , where conditions have improved “substantially.”
Eyes will now turn to the possibility of a cut to 0.1 per cent in November.
“The board continues to consider how additional monetary easing could support jobs as the economy opens up further,” Dr Lowe said.
The RBA has held the cash rate at a record low of 0.25 per cent since March, when it also adopted the three-year bond yield target. Last month it increased and lengthened its term funding facility.
Cuts this month were anticipated by some traders, with cash rate futures pricing a 63 per cent chance of a cut and three-year bond futures pricing it as a 47 per cent chance.
Economists at AMP Capital, Capital Economics, HSBC and UBS expected the RBA to cut this month — potentially along with measures like expanded bond buying to lower longer-term interest rates — in a unified “Team Australia” approach between the central bank and the government, given the unprecedented challenge of getting the economy back on track after the coronavirus pandemic.
Lachlan Moffet Gray 2.19pm: Packer grilled on Netanyahu
Mr Packer is also facing questions about his association with Arnon Milchan, an Israeli Hollywood film mogul and associate of Israel’s Bureau of Scientific Research, who introduced Mr Packer to the Israeli prime minister Benjamin Netanyahu.
As well as being associated with the weapons-development bureau, Mr Milchan is also a person of interest in a bribery scandal that has examined Mr Packer’s relationship with Mr Netanyahu. But questions were not asked about the scandal, which is being investigated in an ongoing trial in Israel.
Acknowledging that he and Mr Netenyahu considered each other friends, Mr Packer also recalled that he met with Mr Milchan and a man subsequently associated with Mossad, the Israeli secret service, but could not recall if Mr Milchan introduced the man to him.
Mr Packer also clarified that when he referred to Mr Milchan as “dangerous” in the past, he meant it in the sense he was “charming.”
Changing tack, Mr Bell has begun to ask Mr Packer over his plans to privatise Crown in 2015.
Lachlan Moffet Gray 2.07pm: Packer concedes memory affected
James Packer is currently appearing in front of the NSW Independent Liquor and Gaming Authority Inquiry into the operations of Crown Resorts.
Mr Packer is facing a line of questions from Counsel Assisting Adam Bell about his capacity to recall events from his time as a board member of Crown Resorts, of which he owns a 37 per cent stake through his private company, Consolidated Press Holdings.
When asked by Mr Bell if he was currently on medication for health issues, Mr Packer replied: “Yes, that’s correct.”
When Mr Bell asked if Mr Packer’s memory was affected by the medication, he replied:
“That’s correct.”
Mr Bell then moved to discuss the Code of Conduct for directors of Crown Resorts in effect during Mr Packer’s tenure on the board.
Mr Bell pointed to a clause which read “a director must encourage the reporting and investigating of unlawful and unethical behaviour” and asked Mr Packer whether the clause was relevant to himself and other board members.
“I believe so,” Mr Packer replied after a lengthy pause.
His appearance is part of an ongoing inquiry into government concerns surrounding Crown’s dealings with junket organisers in China and potential links to organised crimes.
Commissioner Patricia Bergin could recommend the government cancel Crown Resorts’ NSW gaming licence, placing the billion-dollar Barangaroo Casino/hotel development in turmoil.
Lilly Vitorovich 2pm: Battle with tech giants paying off: Murdoch
News Corp executive chairman Rupert Murdoch says the media company’s long-running push to have technology giants such as Google and Facebook pay for news that they use on their platforms is starting to pay off.
Australia’s biggest digital publisher and the owner of news titles including The Australian, The Wall Street Journal and The Times has been leading the global charge to force technology players to pay for news content for more than a decade.
“Our long battle against the big tech platforms – for years a solitary struggle – has finally helped lead to legislative and legal scrutiny of their monopolistic and algorithmic abuses, with some finally providing payment to publishers for premium content,” Mr Murdoch said in News Corp’s 2020 annual report.
“The fate of a free and unfettered press hangs in the balance of this debate, and I am cautiously optimistic that we will see even more material benefit from this effort in the years ahead.”
News Corp shares last up 0.4 per cent at $19.85.
Read more: Battle with tech giants finally getting results, News Corp’s Rupert Murdoch says
1.20pm: ASX turns positive after morning in the red
Australia’s share market has turned up in early afternoon trade, after an intraday fall amid similar moves in S&P 500 futures.
The S&P/ASX 200 rose 0.2pc to a post-open high of 5953.8 after falling 0.5pc to an intraday low of 5912.7.
Northern Star and Saracen Mineral lead with a 9pc rise after their $16bn merger deal.
The tech sector is strongest, with Afterpay up 4.7pc.
Iron ore stocks are outperforming with Fortescue up 1.6pc as iron ore futures rise 0.4pc.
Energy stocks remain strong with Oil Search up 4pc after Brent crude rose 5.6pc overnight.
Banks, Property Trusts and Health Care are large cap laggards with CBA down 0.1pc, Goodman down 0.6pc and CSL down 0.9pc.
Lachlan Moffet Gray 1.04pm: Former BoQ CEO appointed ScotPac chief executive
Working capital giant Scottish Pacific has appointed former Bank of Queensland chief executive Jon Sutton as its new CEO, replacing Peter Langham.
Mr Langham will take up a non-executive board role at the Affinity Equity Partners-owned small to medium sized lender upon his resignation.
Mr Sutton stepped down from the role at Bank of Queensland in 2018 due to now-resolved health issues.
He has also served as Chairman of BNK bank’s board and as a board member for FinTech SendFx.
He will start at ScotPac on October 7 2020.
Mr Langham said Mr Sutton’s experience in working with SMEs made him perfect for the role.
“Jon’s experience with SMEs and his passion to help business owners succeed make him a great addition to the ScotPac business,” Mr Langham said.
Mr Sutton said he was looking forward to working with ScotPac’s customers.
“It’s so important for businesses to find the right funding support – we’ve seen that with the events of 2020, and it’s a factor that’s not going away. I’m excited to take up the role at ScotPac as we expand on how we can provide business owners with simple, fast funding products that offer them the best chance at success,” he said.
12.51pm: Inghams lifts CEO pay
Inghams chief executive Jim Leighton received a bump in pay for 2020 after his take home salary lifted from 951,000 in the 2019 financial year to nearly $1.7m. The bump helped lift his total pay packet lifted to more than $1.7m in 2020, up from $1m the prior year.
The poultry producer’s financial performance was hit by a fall in demand and constrained supply due to the coronavirus crisis in fiscal year 2020. In August, the company unveiled a statutory net profit of $40.1m, down 68 per cent on the prior year.
Bridget Carter 12.13pm: UBS exits for Barrenjoey gather pace
UBS Australian infrastructure head Jarrod Key and co-head of capital markets Australia Barry Sharkey have joined the number of investment bankers jumping ship to new rival start up Barrenjoey Capital.
Mr Key’s likely departure to the new firm was tipped by DataRoom last month.
It comes after it emerged on Tuesday that UBS block trades operative George Kanaan and members of his team were also joining Barrenjoey.
Others expected to follow Mr Key and Mr Kanaan out the door include vice chairman Geoff Davis and managing directors Kelvin Barry, Luke Bentvelzen and Shane Doyle.
Greg Peirce, who is soon to take on the role as head of investment banking in Australia, is earlier understood to have been approached about taking on a role.
Mr Key has run the UBS power utilities and infrastructure operations for UBS since mid-July 2008, providing financial advice to clients across the power, utilities and infrastructure sectors.
His expertise is centred on mergers and acquisitions, equity raisings, capital markets issuance and corporate restructuring.
The most recent transactions he has been involved with include the $25.2bn acquisition of a stake in Sydney’s WestConnex motorway project by a Transurban-headed consortium.
He has also been an adviser on the long-term lease of NSW electricity network privatisations, including TransGrid, Ausgrid and Endeavour Energy, collectively worth more than $40bn.
Mr Key also worked on the $1.9bn acquisition of the Brisbane AirportlinM7 roadway for Transurban, among other deals.
Before he joined UBS, he was a director of Allco Finance Group and worked for ABN Amro Australia.
Mr Key’s offsider, Darren Tan, will also depart UBS for Barrenjoey Capital.
Mr Sharkey was promoted to co-head of capital markets at UBS in 2012.
He was previously a director within securities structuring.
11.59am: ASX slips to noon in quiet trade
Australia’s share market has disappointed so far, albeit in quiet trade the RBA’s interest rate decision at 2.30pm (AEDT) and the federal budget at 7.30pm.
The S&P/ASX 200 fell 0.4pc to an intraday low of 5912.7 in morning trade despite a 0.4pc rise projected by overnight futures, after global markets reacted positively to US President Trump’s improving health and his push for US fiscal stimulus.
The slight pullback comes after the local bourse surged 2.6pc to a five-day high of 5941.6 amid positive offshore leads on Monday.
US stock index futures mostly traded slightly weaker despite news that Mr Trump moved back to the White House from hospital after coronavirus treatment.
The Utilities, Real Estate, Health Care, Industrials, Financials, Consumer Discretionary, Communications and Consumer Staples sectors fell, with the major banks down 0.4-0.6pc, SL down 1pc and Wesfarmers down 1.7pc.
The Energy, Materials and Tech sectors rose, with Woodside up 1.5pc after crude oil prices surged, Northern Star and Saracen Mineral both up 7.2pc on a $16bn merger agreement and Afterpay up 2.2pc after US tech stocks rose.
Lachlan Moffet Gray 11.58am: Early super release payments drop
Weekly payments made under the COVID-19 early release of Super Scheme have continued their downward trajectory, with $267m walking out the door the week to September 27, according to APRA.
The scheme, which allows Australians with reduced outcomes to access up to two seperate payments of $10,000 from their super - one last financial year and one this financial year - has now facilitated the early withdrawal of $33.8bn by 4.4 million fund members.
The average withdrawal amount is $7671, but fund members who accessed the scheme a second time on average withdrew $8384.
The scheme commenced in April and is set to run until December 31 after being extended beyond its initial September 24 expiry date.
Treasury estimates that a total of $42bn will be withdrawn prematurely by the scheme’s end, costing the government $2.2bn in tax revenue over the next five years.
Ben Wilmot 11.53am: Property listings fall in September
National residential property listings decreased by 1.2 per cent over the month of September to 289,566 listings, according to analyst SQM Research.
The firm’s analysis showed listings were also down by 7.4 per cent on 12 months ago, with most capital cities recording decreases in property listings over the month with the exception of Sydney and Perth, which had 1.8 per cent and 0.9 per cent increases, respectively.
Not surprisingly, Melbourne recorded the highest decline in property listings of 4.2 per cent in September as stage 4 Covid-19 lockdown continued. Brisbane recorded the lowest decline of 0.2 per cent.
National year-on-year listings revealed a decrease of 7.4 per cent with the biggest falls in Darwin (26.8 per cent) and Hobart (18.1 per cent), however Sydney recorded a large of 9.2 per cent increase.
Melbourne’s decrease was smaller at 0.2 per cent. All other capital cities recorded declines over the 12 months.
Nationally, new listings increased by 2.4 per cent over the course of September with 1,447 more listings in the market. Perth posted the highest increase in new listings of 8.9 per cent, closely followed by Canberra with an 8.8 per cent increase. However, Melbourne recorded the highest decrease in new listings of 41.3 per cent.
“The fall in listings is a little abnormal for the spring season. It has been predominantly driven by two factors which include sharp falls in new listings for Melbourne over the month; as well as sizeable falls in older listings across the country,” SQM Research managing director Louis Christopher said.
“This second reason may point to an increase in absorption rates. In other words, there may have been increases in buyer activity over the month. There has also been other evidence of increases in buyer activity. This includes the rises in asking prices, the rises in auction clearance rates and the increases in housing finance approvals,” he said.
Mr Christopher said new apartment and housing construction would receive an important boost after the Morrison government announced a targeted extension to the First Home Loan Deposit Scheme.
Bridget Carter 11.52am: Hipages valued by GS ahead of IPO
Online trade services platform hipages has been valued at $280m to $370m by Goldman Sachs analysts ahead of its initial public offering.
The pricing equates to between 5.2 times and 6.9 times the company’s annual sales forecasted for the 2021 financial year.
It also equates to between 28.2 times and 37.4 times its earnings before interest, tax, depreciation and amortisation.
Hipages hopes to lodge a prospectus in mid-October ahead of a November listing.
The plan is to raise about $100m for its IPO being handled by Goldman Sachs, with its market value to be about $400m.
According to Goldman Sachs analysts, key growth drivers for hipages includes $83bn of annual spending on home improvements forecasted for this year.
Also, there are 1.1 million individual tradies and 257,000 trade businesses, while house hold formation is expected to grow at an annual average rate of 1.5 per cent.
Of the $976m, tradies are expected to spend on advertising this year, 12 per cent is spent on lead sourcing.
Trade advertising online growth is forecast to be 11.2 per cent per annum to 2024, which implies the lead sourcing market will grow to $179m over the period.
For the 2020 financial year, hipages had $45.5m of operating revenues, which would imply the share of the $117m of spending on lead sourcing is 39 per cent.
Other factors include the general shift to online commerce by consumers, brand investment through strategic advertising and a deepening and broadening addressable market.
11.45am: Trade balance at 33-month low
Australia’s trade balance hit a 33-month low in August.
A $2.63bn surplus was the lowest since November 2018 and just over half of Bloomberg’s $5bn consensus estimate.
It came as exports fell 4pc versus a 2pc fall expected, and imports rose 2pc versus a 5pc fall expected.
AUD/USD saw a marginally negative reaction, falling from 0.7190 to 0.7184.
11.44am: Job ads lift but remain down on pre-COVID levels
Job advertisements lifted 7.8 per cent month on month in September, but the number of ads is still down 21 per cent since February.
“After only minimal improvement in August, ANZ Job Ads growth accelerated to 7.8 per cent month on month in September,” ANZ senior economist Catherine Birch said.
“There were week-to-week gains throughout the month, which was positive news given the ongoing restrictions in Victoria.
“But Job Ads were still down 21 per cent on their February level (pre-COVID-19).
“The question now is whether a return to pre-pandemic levels of job ads and vacancies would be enough to entrench a solid labour market recovery.”
Ben Wilmot 11.31am: Centuria acquires cold storage facility
The listed Centuria Industrial REIT has snapped up a cold storage facility in Ormeau, Queensland, for $43m as the sector shows its resilience in the face of the coronavirus pandemic.
The 9,554sq m complex was sold by ESR on an initial yield of 5.5 per cent, a play to capitalise on the rising demand for cold storage facilities which currently outweighs supply.
The acquisition takes CIP’s total investment for 2020 to more than $523m, making it one of the largest acquirers of Australian industrial real estate in the period.
CIP is Australia’s largest listed domestic pure-play industrial REIT with assets under management expanding to 56 properties worth more than $2.1bn.
“A key growth thematic for CIP is the non-discretionary, food distribution and cold storage industries and this facility increases the trust’s exposure to food and cold storage related users to almost 30 per cent by income,” fund manager Jesse Curtis said.
The Ormeau facility was constructed in 2015 and is occupied by Markwell Cold Storage, a subsidiary of Competitive Foods Australia, one of the largest privately owned companies in the Australasia food sector.
The deal was done by Colliers International’s Gavin Bishop and JLL’s Tony Luliano and Gary Hyland. Mr Bishop said that during recent times of economic uncertainty, the industrial and logistics sector had proven to be resilient, buoyed by several cyclical and structural tailwinds which continue to underpin the occupier market.
“Given the underlying drivers of population growth, growing food consumption and the rise of the Asian middle class, groups have increasingly sought exposure to the cold storage logistics market in 2020 and we expect this to continue, further highlighted with the depth of capital chasing this asset,” he said.
11.29am: Tokyo stocks rise after Trump leaves hospital
Tokyo stocks opened higher, extending Wall Street rallies, as US President Donald arrived back at the White House after undergoing hospital treatment for COVID-19.
The benchmark Nikkei 225 index was up 0.44 per cent or 103.36 points at 23,415.50 in early trade, while the broader Topix index advanced 0.43 per cent or 6.99 points to 1,644.24.
AFP
11.17am: Trump speaks, US futures steady
S&P 500 futures have regained positive territory after President Trump’s latest video tweet.
This follows a 0.2pc dip on confirmation that the US President had left hospital late Monday as planned after coronavirus treatment.
S&P 500 futures were last up 1 point at 3394.
But Australian shares have continued to slip.
The S&P/ASX 200 fell 0.4pc to 5918 after surging 2.6pc on Monday.
— Donald J. Trump (@realDonaldTrump) October 5, 2020
11.15am: Breville gains following coffee acquisition
Breville shares are outperforming the index this morning after the appliance maker announced on Friday that it had acquired Seattle-based coffee grinding company Baratza for a total consideration of about $US60m.
Breville last up 0.6 per cent at $26.37.
10.55am: Lynas CEO pay shaved
Lynas chief executive Amanda Lacaze has had her total pay packet slashed, receiving $2m in fiscal year 2020, down from more than $3.2m the previous year. Ms Lacaze’s takehome salary was inline with the prior year and she received $419,885 in share based payments for the period, down from more than $1.6m in shares the prior period.
In August, the rare earths miner unveiled a net loss of $19.4m for the 12 months through June, while earnings before interest, tax, depreciation and amortisation dropped 41 per cent on the prior year.
10.32am: Mayne Pharma slips on FDA roadblock
Shares in pharmaceutical company Mayne Pharma have slumped to a six-month low in morning trade after the US Food and Drug Administration raised questions about its new drug application.
The company’s chief executive Scott Richards moved to reassure shareholders, saying: “We are confident we can address the issues raised in the letter in a timely manner.
“Pleasingly, the FDA has indicated that Mayne Pharma and its development partner Mithra have an acceptable manufacturing process for generic NUVARING.
“Furthermore, the market opportunity continues to be highly attractive with only one independent generic approved and an addressable market of $US920m.”
Mayne Pharma shares last down 18.4 per cent at 31c.
10.25am: ASX slips as US futures waver
Australia’s share market turned down slightly after rising less than expected in early trading as US index futures wavered.
The S&P/ASX 200 was down 0.1pc at 5936.7 after hitting a five-day high of 5957.1 in early trading.
The index surged 2.6pc on Monday, its best one-day rise in four months, as global markets sentiment improved and the market allowed for potential stimulus from the RBA meeting and federal budget today.
After strong gains on Wall Street, S&P 500 futures slipped 0.1pc even after US President Donald Trump left hospital late Monday US time.
Falls in the Real Estate, Health care, Utilities, Consumer Discretionary, Financials, Communications and Industrials sectors were outweighing gains in Energy, Consumer Staples, Materials and Tech.
After surging on Monday, the four major banks slipped despite upgraded ratings on Westpac and ANZ from Macquarie Equities.
Woodside rose 1.3pc after Brent crude oil rose 5.6pc to $US41.46 overnight.
But Coles Group rose 3.1pc after Credit Suisse upgraded to Outperform.
Newcrest rose after Northern Star and Saracen announced a $16bn merger.
Outside the ASX 200, Mayne Pharma dived 17pc 6-month low of $0.315 after the FDA queried its Nuvaring contraceptive.
Nick Evans 10.24am: Newcrest returns to Canadian exchange
Australia’s biggest gold company will return to trading on North American markets, with Newcrest Mining returning its shares to the Toronto exchange as the company looks to the Americas for its next phase of growth.
Newcrest boss Sandeep Biswas flagged a return to the Toronto exchange at the company’s annual financial results in August, telling reporters the idea was “under active consideration.”
He said on Tuesday the decision flowed from Newcrest’s acquisition of a majority stake in the Red Chris mine in 2019, and as part of its plans to step up investments in exploration in Ecuador.
“We have observed an increase in interest from North American investors in the gold sector over the last six months, When combined with our large existing North American shareholder base it makes sense for Newcrest stock to be able to be traded in this time-zone,” he said.
”We believe the TSX listing will improve the global visibility of the Company and broaden our access to the large North American capital pool.”
Newcrest left the Toronto Stock exchange as the gold price crashed in 2013 after just 18 months of trading on the Canadian market, after the gold major booked massive losses, saying it did not believe the listing would deliver any significant future value.
The company said on Tuesday it expected its shares to begin trading on the TSX by October 13.
Newcrest CEO rides gold surge for bonus
10.21am: Consumer confidence lifts amid tax cut talk
Consumer confidence has strengthened for a fifth straight week, lifting 0.7 per cent in the seven days to Sunday, according to the ANZ-Roy Morgan Consumer Confidence index.
Confidence is up more than 10 per cent since the second weekend of August, when it fell to its lowest level since April.
“Continued improvement in the local news around the pandemic and talk of early tax cuts and other fiscal measures in the Budget led to a gain in consumer confidence for the fifth straight week,” said ANZ head of Australian economics, David Plank.
“Consumers are still pessimistic, but confidence is at its highest level since June.”
The ‘current financial conditions’ subindex gained 3.3 per cent, while ‘future financial conditions’ edged up 0.3 per cent in what was its fourth straight weekly gain.
Still, ‘current economic conditions’ declined 1.1 per cent after a 10.3 per cent gain in the previous reading.
10.13am: JobKeeper extended for Sydney casino
The Star’s Sydney casino says it has qualified for phase 2 of the federal government’s JobKeeper program.
In a statement to the market this morning, the company said its Queensland entity was not eligible for the second phase of the wage subsidy, but that about 3,000 employees in Sydney were eligible to receive the payment.
The casino operator has been one of the biggest recipients of JobKeeper payments, expecting to receive $130m in taxpayer cash after the forced closure of most of its operations in March hit revenue.
Despite missing its targets for its executive short-term incentive program, Star’s board used its “discretion” to pay four of its top executives $1.4m in bonuses.
Read more: Executive bonuses roll on while accepting JobKeeper cash
10.00am: ‘Criminals’ behind cyber attacks
Recent high-profile cyber attacks in New Zealand and Australia were “highly likely” to have been the efforts of a criminal group that’s been active globally for a couple of years, a New Zealand spy chief said.
Intelligence agencies still don’t know the identity of the group, partly because the denial of service attacks came from internet locations in multiple countries, said Andrew Hampton, director-general of the Government Communications Security Bureau.
“It’s very hard to go upstream to find out who is behind it,” he told on a business forum.
“That said, we have seen some common practices, tactics and procedures used by this group that is providing some clues.”
The ransom-demanding group is believed to be well resourced and “agile” based on its ability to target multiple organisations simultaneously and the large volume of data it can deploy in attacks distinguishes, Mr. Hampton said.
New Zealand’s stock market was disrupted for several days in August by a denial of service attack that took the exchange operator’s website offline and prevented dissemination of potentially price-sensitive company announcements.
The New Zealand government called in the GCSB, which gathers signals intelligence as part of the “Five Eyes” alliance with Australia, U.K., U.S. and Canada, to help the exchange fend off the attacks.
“In terms of motivation, it’s all about money. We don’t think it’s a state-sponsored group, we don’t think it’s group seeking to cause disruption for disruption’s sake,” said Mr. Hampton.
“It’s a group seeking to make money. That’s why they are targeting the financial sector and related sectors.”
Dow Jones Newswires
9.55am: Trump ‘back on the campaign trail soon’
US President Donald Trump announced he would be “back on the campaign trail soon”, just before returning to the White House from a hospital where he was being treated for COVID-19.
“Will be back on the Campaign Trail soon!!!” Trump tweeted. “The Fake News only shows the Fake Polls.”
Trump was hopitalised on Friday after testing positive for the coronavirus. He announced today he would leave the Walter Reed Medical Centre.
Shortly before his tweet, staffers began setting up lights outside the tower from which Trump will emerge.
A helicopter could be heard landing on the lawn nearby, and a motorcade moved into place to take Trump from the hospital door to the landing zone.
Will be back on the Campaign Trail soon!!! The Fake News only shows the Fake Polls.
— Donald J. Trump (@realDonaldTrump) October 5, 2020
AFP
9.44am: Packer to front casino inquiry
Crown shares will be in focus as James Packer takes the stand at 2pm (AEDT) in NSW casino inquiry. It will be 5pm in Tahiti when he starts giving evidence.
Packer’s yacht, from where he will be video calling, was last reported in the Pacific near French Polynesia.
Crown’s directors have been questioned at an ongoing NSW gaming inquiry into the company’s suitability to hold a casino licence in the state.
Read more: James Packer to front gaming inquiry from $200m yacht
9.42am: What’s impressing analysts?
Westpac raised to Outperform: Macquarie
ANZ raised to Outperform: Macquarie
Coles raised to Outperform: Credit Suisse
Nanosonics started at Underweight: JPMorgan
9.38am: ASX to rise ahead of RBA, budget
Australia’s share market is expected to rise before the RBA’s monetary policy decision at 2.30pm (AEDT) and the federal budget at 7.30pm.
Overnight futures relative to fair value suggest the S&P/ASX 200 will open up 0.4pc at a five-day high of 5965, but it probably has upside risk.
The index surged 2.6pc to 5941.6 on Monday, its best day in four months.
But the US share market rose about three times as much as indicated by futures when the ASX closed Monday.
The S&P 500 rose 1.8pc to a more than 4-week high close of 3408.6 as US President Trump pushed for fiscal stimulus and said he will leave hospital today.
Elsewhere, the gold sector will get a boost from the $16bn merger of Saracen and Northern Star, as flagged by DataRoom last week.
And Macquarie has upgraded Westpac and ANZ to outperform, albeit may have helped their share prices surge more than 4pc yesterday.
On the charts, the index may test its 50-day and 100-day moving averages at 5995 and 6030.8 and the 100-DMA at 5949 may revert to support.
If it breaks last week’s high at 5995, the index will form a double-bottom pattern targeting approximately 6100.
Bridget Carter 9.10am: UBS MD Kanaan steps down
UBS block trade expert and managing director George Kanaan is leaving UBS to
join Barrenjoey Capital.
Mr Kanaan dominates block trades in Australia and has been widely expected to jump ship from UBS to join the new investment banking start up launched by ex UBS operative Guy Fowler and soon expected to include Mr Kanaan’s former boss, Matthew Grounds within its top ranks.
It marks the end of an era for Mr Kanaan, who has worked at UBS as its head of Australian distribution since 2005, running equity sales and the sales trading desk.
He previously worked at JPMorgan.
Mr Grounds departed UBS as the Australian head last year.
Magellan Financial Group last month confirmed it was funding the new venture Barrenjoey Capital, along with Barclays Capital.
Outgoing ANZ boardroom head David Gonski — one of the country’s mostwell-connected businessmen — is believed to be in line to take the role of independent chairman.
Read more: Barrenjoey Capital nabs George Kanaan from UBS
9.04am: WBC, ANZ up to Outperform: Macquarie
Macquarie’s Victor German has upgraded Westpac and ANZ to Outperform from Neutral.
His price targets are $18.00 and $20.71 respectively.
Banks surged yesterday with Westpac up 4.4pc to $17.29 and ANZ up 4.2pc to $17.80.
Eli Greenblat 8.50am: Baby Bunting upbeat on sales
Infant products retailer Baby Bunting says it has seen continued positive momentum in its business since the start of the fiscal 2021 year, with strong growth for its online platform a feature of its current growth trajectory.
Outside Victoria which is under strict trading conditions because of a COVID-19 outbreak, click and collect sales rocketed 233 per cent for the quarter, underlining the shift to online by consumers.
In an update to shareholders at its AGM on Tuesday, Baby Bunting released trading figures showing year-to date (to 2 October) comparable store sales growth of 17 per cent.
Excluding Melbourne metropolitan stores, where the city is under strict stage 4 regulations, comparable store sales growth was 28.5 per cent.
The company told the ASX in a statement released before the company’s AGM that online sales (including click and collect) were up 126 per cent during the first quarter.
Excluding Victoria, online sales growth was 92 per cent during the first quarter. Click and collect sales grew 233 per cent.
Baby Bunting said gross margin was up 90 basis points to 37.5 per cent to the end of the first quarter.
It said COVID-19 had impacted operating costs and plans opening four to six new stores in 2021.
“We have seen the positive momentum in sales continue for the first quarter, which is reflective of the less discretionary nature of the maternity and baby goods category,” said Baby Bunting chief executive Matt Spencer in his address to shareholders.
“What we have seen during periods of public health restrictions is that there was an increase in sales in products for the home with a reduction in travel related categories, such as car seats and prams, etc. Outside of significant restrictions, these trends have reversed and we have seen sales in our travel related categories rebound strongly.
As a result of the pandemic, our customers’ shopping behaviours have changed; not only what they shop, but how they shop, with many switching channels or choosing different ways to shop.”
Bridget Carter 8.48am: Northern Star to takeover Saracen
Northern Star and Saracen have agreed to a $16 billion merger.
It comes after DataRoom flagged last week that a major gold mining merger transaction was underway in Western Australia, thought to potentially be a long mooted merger between Saracen and Northern Star.
The deal will unlock between $1.5bn and $2bn of synergies.
The transaction will involve Saracen shareholders receiving 0.3763 Northern Star shares for each Saracen share in what will be a merger of equals.
Saracen will also pay a special, fully franked dividend of 3.8c per Saracen share, conditional on the Scheme becoming effective and banking consents.
Northern Star shareholders will own 64 per cent of the combined entity and Saracen shareholders the remaining 36 per cent.
Northern Star’s Bill Beament will remain Executive Chair, transitioning to Non-Executive Chair, and Saracen’s chief executive Raleigh Finlayson will become Managing Director.
Both companies jointly own the major Super Pit gold mining project in Western Australia.
The companies are said to have a similar culture and a good relationship exists between both.
Northern Star has tapped Sternship Advisers for its $16bn merger with Saracen and its legal adviser is Ashurst.
Saracen’s financial adviser is Macquarie Capital and it’s legal adviser is DLA Piper.
Read more: Northern Star, Saracen in $16bn merger
8.38am: IAG flags hit from class action settlement
IAG has flagged a $50m net impact in its first half earnings after it settled a class action brought against its subsidiaries, Swann Insurance and Insurance Australia Limited, by Johnson Winter & Slattery.
The class action related to add-on insurance products sold through motor vehicle and motorcycle dealers. The company exited these business areas in 2016 and ceased the distribution through motorcycle dealers in the financial year 2018.
The company would pay a $138m gross payment under the terms of the settlement, which is subject to approval by the Federal Court of Australia.
Read more: IAG settles Swann Insurance class action for $138m
8.27am: BHP to lift Shenzi oil stake
BHP says it will acquire from Hess Corporation an additional 28 per cent working interest in Shenzi, a six-lease development in the deepwater Gulf of Mexico.
The $US505 million deal will bring BHP’s working interest to 72 per cent and immediately
add approximately 11,000 barrels of oil equivalent per day of production.
“This transaction is consistent with our strategy of targeting counter-cyclical
acquisitions in high-quality producing or near producing assets,” BHP said.
Shenzi is currently structured as a joint ownership, with BHP, the operator, on 44 per cent, Hess on 28 per cent Repsol SA on 28 [per cent.
BHP president petroleum operations Geraldine Slattery said: “This transaction aligns
with our plans to enhance our petroleum portfolio by targeted acquisitions in high
quality producing deepwater assets and the continued de-risking of our growth
options.
“We are purchasing the stake in Shenzi at an attractive price, it’s a tier one asset with optionality, and key to BHP’s Gulf of Mexico heartland. As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”
The effective date of the transaction is July 1 2020 with an expected close by December 2020.
7.20am: Bad behaviour at gamer giant
A quarter of employees at the French video game giant Ubisoft have been victims of professional misconduct at work or were witnesses to it, according to a survey carried out by the group following allegations of sexual misconduct.
The creator of hit games including Assassin’s Creed and Far Cry launched a probe and announced the departure of its chief creative officer and other senior executives in July after claims about the group’s toxic work culture.
Chief executive and co-founder Yves Guillemot, who admitted earlier this year that the group had “fallen short”, said that 2,000 employees had participated in “listening sessions” and nearly 14,000 had responded to an anonymous survey.
The results showed that “roughly 25 per cent have experienced or witnessed some form of workplace misconduct in the past two years, and that one in five do not feel fully respected or safe in the work environment”, said a statement from the company.
7.07am: Wall Street closes higher
US stocks rose as investors cheered signs that political uncertainty may ebb following reports of President Trump’s improving health condition.
The S&P 500 rose 1.8 per cent as the broad market gauge followed up on gains from last week. The Nasdaq Composite Index climbed 2.3 per cent, while the Dow Jones Industrial Average added 466 points, or 1.7 per cent.
Uncertainty over the leadership of the U.S. government rattled markets late last week after Mr. Trump tested positive for COVID-19, raising questions about the functioning of the government, the election campaign and the Supreme Court nomination process if the president were to be sidelined.
Equities remain sensitive to any signals about the state of Mr Trump’s health, investors said.
Shortly before the close of trade, Mr Trump as preparing to leave hospital top continue treatment at the White House, even though doctors said he was not yet “out of the woods”.
On the economic front, the US services sector posted a steady increase last month, marking its fourth straight month of gains after large contractions in April and May.
On the election front, Vice President Joe Biden’s lead over the president also appears to have widened, according to a poll conducted by The Wall Street Journal and NBC News in the two days following the debate. That signals there may be less room for dispute over the results of the November elections, which would be welcomed by markets.
“Renewed hopes of a bipartisan fiscal stimulus agreement are also lifting the mood, while indications that Democratic presidential nominee Joe Biden has widened his lead in the polls is reducing concern over the possibility of a contested November election,” Wells Fargo Advisors said in a note.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi talked again as they searched for a long-elusive agreement on additional stimulus for the pummelled US economy, a top Pelosi aide said.
The two sides have been negotiating for weeks over a follow-up package to the $2.2 trillion CARES Act passed as the coronavirus pandemic erupted earlier this year.
Dow Jones Newswires, AFP
6.53am: Air NZ CFO to step down
Air New Zealand said its chief financial officer will step down around mid-2021, adding to a series of executive departures as the airline shrinks because of the pandemic.
The airline on Tuesday said CFO Jeff McDowall would leave after a capital raising that it is planning to complete by the middle of next year.
Air New Zealand also said it had appointed Leanne Geraghty, who oversees the airline’s operations at international airports, to the new position of chief customer and sales officer.
The airline is tapping a government loan to survive a financial crunch caused by the coronavirus pandemic.
Dow Jones Newswires
6.50am: Trump not entirely ‘out of the woods yet’
Donald Trump is not yet “out of the woods,” his physician said, as the President prepared to leave hospital to continue his COVID-19 treatment at the White House.
“Though he may not entirely be out of the woods yet, the team and I agree that all our evaluations and most importantly his clinical status support the president’s safe return home where he’ll be surrounded by world-class medical care 24/7,” White House physician Sean Conley told reporters.
“We are in a bit of uncharted territory when it comes to a patient that received the therapies he has so early in the course,” he added.
AFP
6.45am: ASX to open higher
Australian stocks are tipped for opening gains after world markets rebounded on reports about Donald Trump’s health and signs of progress towards a US stimulus package.
Shortly before 6.45am (AEDT) SPI futures were up 26 points, or 0.4 per cent.
Australian stocks yesterday surged 2.6 per cent in a $47bn rally, their biggest rise in four months, as investors bet on a big-spending federal budget to deliver economic support while the global mood turned positive on reports Donald Trump would soon leave hospital.
The Reserve Bank meets on Tuesday with some economists tipping the central bank could add to the fiscal kickstart with a rate cut, although the bulk of the market betting has pushed out easing moves to next month.
The Australian dollar was higher at US71.84c.
Oil prices jumped, with the benchmark Brent rising 5.1 per cent to $US41.29 a barrel.
6.01am: ExxonMobil to cut European workforce
US oil and gas giant ExxonMobil announced it would slash 1600 jobs in Europe equalling more than 11 per cent of its workforce there as it struggle with the coronavirus downturn.
“The impact of COVID-19 on the demand for ExxonMobil’s products has increased the urgency of the ongoing efficiency work. It is anticipated that up to 1,600 positions would be impacted by the end of 2021 across the company’s affiliates in Europe,” the Texas-based company said in a statement.
AFP
5.45am: Trump says he’s leaving hospital
President Trump said he will be leaving Walter Reed National Military Medical Center, after being hospitalised for several days.
In a tweet, he said, “Feeling really good! Don’t be afraid of Covid.”
Dow Jones Newswires
I will be leaving the great Walter Reed Medical Center today at 6:30 P.M. Feeling really good! Don’t be afraid of Covid. Don’t let it dominate your life. We have developed, under the Trump Administration, some really great drugs & knowledge. I feel better than I did 20 years ago!
— Donald J. Trump (@realDonaldTrump) October 5, 2020
5.40am: US stocks rise on signs of muted political risk
US stocks rose as investors cheered signs that political uncertainty may ebb following reports of President Trump’s improving health condition.
In US afternoon trade the S&P 500 rose 1.4 per cent, signalling that the broad market gauge may follow up on gains from early last week. The Nasdaq Composite Index climbed 1.7 per cent, while the Dow Jones Industrial Average added 370 points, or 1.3 per cent.
Uncertainty over the leadership of the US government rattled markets late last week after Mr. Trump tested positive for COVID-19, raising questions about the functioning of the government, the election campaign and the Supreme Court nomination process if the president were to be sidelined.
Equities remain sensitive to any signals about the state of Mr Trump’s health, investors said. Mr Trump’s medical team has said he could be sent back to the White House as soon as Monday, following several days of contradictory information from doctors and advisers.
On the economic front, the US services sector posted a steady increase last month, marking its fourth straight month of gains after large contractions in April and May.
On the election front, Vice President Joe Biden’s lead over the president also appears to have widened, according to a poll conducted by The Wall Street Journal and NBC News in the two days following the debate. That signals there may be less room for dispute over the results of the November elections, which would be welcomed by markets.
Still, the poll was conducted before news emerged that Mr. Trump had tested positive for COVID-19.
Regeneron Pharmaceuticals shares rose 5.8n per cent after the White House said Friday the president received an eight-gram dose of Regeneron’s antibody drug cocktail as a precautionary measure.
Shares in MyoKardia jumped 58 per cent after Bristol Myers Squibb said it will buy the biotech company in a $US13.1 billion deal aimed at expanding the cancer-drug powerhouse’s line-up of heart drugs.
Shares in Cineworld Group, which owns Regal Entertainment Group, plummeted 36 per cent in London after the second-largest cinema chain in the U.S. said it was closing all of its locations nationwide, after reopening in August, escalating the pandemic-driven crisis facing the entertainment industry.
In commodities, Brent crude, the international energy benchmark, rose 3.5 per cent to $US40.63 a barrel.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7 per cent.
Major Asian stock markets also rallied by the close of trading. Japan’s Nikkei 225 rose 1.2 per cent. Hong Kong’s Hang Seng Index advanced 1.3 per cent. China’s Shanghai Composite Index remained closed for a holiday.
Dow Jones Newswires
5.40am: UK fund to force more diversity
Legal and General Investment Management (LGIM), one of Europe’s largest asset managers, will use its voting power to force top firms to hire more ethnic minorities, it emerged.
“We have initiated a new engagement campaign that specifically engages FTSE 100 and S&P 500 companies that do not have ethnically diverse directors on the board,” the fund said in a report.
LGIM, which has £1.2 trillion in assets under management, explained that “starting in 2022, we will vote against the chair of their nomination committee or the chair of their board if they fail to meet our expectations on ethnic diversity”.
The fund said it was spurred into action by the death in US police custody of African-American George Floyd and the subsequent global protests against discrimination and racial injustice.
But it added that diversity also made financial sense.
AFP
5.35am: Markets rebound on Trump health, stimulus hope
Global markets bounced back on reports suggesting Donald Trump’s health had improved after his positive test for the coronavirus, with traders also cheered by signs that US lawmakers were edging towards agreement on a new stimulus package.
Global equities sank on Friday after the White House announced Trump’s diagnosis, creating more uncertainty a month before the November 3 presidential election, with some commentators even questioning whether the vote would actually take place.
Oil prices also began recovering Monday after last week’s heavy losses. West Texas Intermediate and Brent prices rose almost six per cent on optimism over Trump’s health, improved appetite for risk and a strike at six offshore oil and gas fields in Norway.
Optimism over the health of President Trump “has encouraged traders to buy back into the market”, said CMC Markets analyst David Madden.
“Over the weekend, Mr Trump expressed his desire for Republicans and Democrats to compromise and make a deal with respect to the proposed coronavirus relief package.” Analysts said that could help jolt congressional leaders to increase their efforts for a second economic rescue package. “This kind of changes the dynamic,” said House Speaker Nancy Pelosi.
The more positive outlook for Trump’s health lifted riskier assets, with higher-yielding currencies up against the dollar, while key safe havens yen and gold retreated.
London closed up 0.7 per cent, Frankfurt added 1.1 per cent and Paris gained 1.0 per cent.
AFP
5.30am: US services sector sees growth
The dominant US services sector saw growth accelerate in September, posting its fourth consecutive month of expansion, according to an industry survey.
The Institute for Supply Management’s services index rose 0.9 points to 57.8 per cent, revving up after slightly slower growth in August as employment recovered following six months of contraction amid the COVID-19 crisis.
Employment rose 3.9 points to 51.8 per cent, putting it above the 50 per cent mark that indicates expansion.
However only nine industries saw job gains, while six continued to shed employees, according to the survey.
AFP
5.28am: UK ruling on Venezuela gold reserves
The Court of Appeal in London overturned a ruling that recognised Venezuela’s opposition leader Juan Guaido as president, as part of a dispute regarding the release of gold reserves worth $US1 billion.
Three judges set aside a High Court judgment in July that stated the British government had “unequivocally recognised” Guaido as the troubled Latin American country’s president.
That ruling came in a dispute over $US1 billion in gold reserves that Venezuela’s central bank wants released from the Bank of England to help fund the country’s response to the coronavirus crisis.
The Bank of England said it was unable to act on the instructions because it was “caught in the middle” of competing claims for the presidency after disputed elections in 2018.
The Venezuelan central bank’s board was appointed by the government of President Nicolas Maduro, successor to the late anti-US populist Hugo Chavez.
A rival ad hoc board appointed by Western-backed Guaido had asked for the release to be denied.
AFP
5.25am: Vinci wins freeway contracts
Vinci SA has received two freeway contracts worth roughly 200 million euros ($US234.3 million) in Australia.
An Australian subsidiary of Vinci Construction got one contract to upgrade a stretch of the M1 Pacific freeway and another one with a partner for the Barton Highway, the company said Monday.
Dow Jones Newswires
5.20am: DAX 30 mulls adding 10 more firms
German stock exchange operator Deutsche Boerse has proposed adding 10 more companies to the prestigious DAX 30 index as part of an overhaul spurred by the collapse of fraud-hit payments provider Wirecard.
Deutsche Boerse said it was launching a market consultation asking investors to weigh in on suggested reforms, including expanding the blue-chip DAX from 30 to 40 members.
Under the same proposal, the mid-size MDAX would be reduced from 60 to 50 listings.
“It’s no secret that I personally would welcome the expansion of the DAX 30 to a DAX 40,” said Deutsche Boerse CEO Theodor Weimer in a statement.
The change could improve the diversity of an index dominated by heavyweights in the auto and chemical sectors, observers said.
AFP
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