ASX lower, TPG tumbles as ACCC opposes Vodafone merger
The ASX clocked a loss on escalating US-China threats while TPG dropped after ACCC blocked its $15bn merger.
- BHP to defend Samarco legal claim
- Treasury chief sells $6.8m shares
- CSR takes profit hit on aluminium biz
- Automotive board backs higher offer
That’s it for the Trading Day blog for Wednesday, May 8. The Australian sharemarket was under pressure due to US-China trade tensions, while the ACCC’s opposition to TPG’s $15 billion merger with Vodafone shook those stocks late in the session.
4.39pm: TPG best prospect of new network: ACCC
The Australian Competition and Consumer Commission has revealed its reasoning behind the opposition of the $15 billion TPG-Vodafone tie up.
In a release to the market after the close, following its inadvertent early release at 3.20pm, the regulator said the local mobile services market was already very concentrated and any deal between the two would reduce competition in the sector.
“TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services,” ACCC chair Rod Sims said.
“Wherever possible, market structures should be settled by the competitive process, not by a merger which results in a market structure that would be subject to little challenge in the future. This is particularly the case in concentrated sectors, such as mobile services in Australia.”
Samantha Bailey 4.26pm: Asian trade softens tariff blow
An escalation in the US-China trade war has pushed the market to a loss in Wednesday’s trade, though not a complete whitewash as had been feared.
Threats to raise tariffs from both the US and China spooked Wall St and prompted a 1.79 per cent drop on the Dow Jones, 1.69pc on the S&P500 and a 1.96pc on the tech-heavy Nasdaq.
Despite that, the local market bounced from early lows thanks to an uptick in Asian markets.
“Investors have taken (Trump’s threats) quite negatively, given that the risk now of a long and protracted negotiation could really impact earnings,” Tribeca portfolio manager Jun Bei Liu said.
“At least the good news is that they are meeting… but whichever way the talks go, markets will move in that direction.”
BHP lowered 0.3 per cent to $37.18 on news it was facing the largest claim in UK legal history over a dam collapse in Brazil in 2015, which killed 19 people.
Rio Tinto edged 0.1 per cent lower to $95.95 while Fortescue fell 1.5 per cent to $7.49.
In financials, Westpac added 0.3 to $27.14 while ANZ made 0.3 per cent to $27.59. Commonwealth Bank ticked up 0.2 per cent to $74.74 while NAB inched down 0.1 per cent to $25.82.
AUD/USD last at 0.7023.
4.12pm: Trade fears weigh on trade
The local market has recovered some of its losses after early falls, hit on renewed tariff fears in the ongoing US-China trade negotiations.
The benchmark ASX200 fell as much as 0.9 per cent at the open, to two-week lows of 6241.5 but made back ground as Asian markets picked up in afternoon trading.
At the close of the session, the benchmark lost 26.6 points or 0.42 per cent to 6269.1 while the All Ords lost 31.7 points or 0.5 per cent to 6351.8.
4.05pm: Port Headland exports recover
Exports from the nation’s biggest iron ore port have rebounded in April after being ravaged by Cyclone Veronica a month earlier.
Figures from Port Hedland’s authority released today showed 41.8 million tonnes were exported from the site, up from 36.4m tonnes in March, but still down from 42.6m tonnes a year ago.
The figures point to a recovery at the key export hub, after dropping to their lowest March figures since 2014.
Sarah-Jane Tasker 3.48pm: Perth biotech jumps by 350pc
Perth-based company Orthocell is up more than 350 per cent on the Australian market after revealing early results of a clinical trial for nerve regeneration.
The company said today that following surgery with its product CelGro, patients had regained muscle function and/or sensation of affected limbs.
Shares in the company are up 356 per cent at 52.5c on the news - taking it from a market capitalisation of $11 million to close to $40m.
3.33pm: TPG tanks as ACCC opposes merger
TPG shares have dropped by 10 per cent in afternoon trade after ACCC mistakenly released its opposition to TPG’s $15 billion deal with Vodafone.
“This information was inadvertently published online on our mergers register briefly this afternoon. We intend to publish a further media release shortly,” it said in a release to the market.
Earlier this afternoon, Bloomberg reported the regulator had posted the notice, only to promptly remove the announcement from its website.
“Representative for TPG Telecom said he was not aware of any decision, while a representative for Vodafone Hutchison didn’t immediately reply,” Bloomberg reported.
The verdict was scheduled for release tomorrow.
3.09pm: NZ dollar recovers from cut shock
The New Zealand dollar is recovering slightly after a drop as much as 1 per cent on the central bank’s decision to cut rates.
The NZD/USD fell 75 basis points on the news, to 5-month lows of US0.6529 but is now trading at 0.6590.
Economists were split in their forecasts of a cut, but ANZ chief NZ economist Sharon Zollner says the RBNZ has “taken the plunge a little earlier than we anticipated”.
She says the hurdle for a further cut is high for now, after the central bank downgraded its near term outlook substantially, but that ANZ’s forecast of a November cut remain, with a third to follow early next year.
“We expect the NZD to continue to lag its peers now that the RBNZ has entered into an easing cycle, while pricing should ebb and flow as markets regather after this Statement,” she says.
“The NZ 10-year bond yield rallied 5 per cent as the decision hit the wires but has failed to reach its lows seen after the RBNZ’s March Statement. We expect this move lower to find support in time.”
NZD/USD last at 0.6589.
RBNZ cuts 25bps as Westpac forecast, leaves the door open to a further possible easing by shifting the MPS track down to 1.4% from 1.8% but gives no obvious policy guidance which should limit downside for the NZ$. pic.twitter.com/u2pJCBjVNq
— Robert Rennie (@Robert__Rennie) May 8, 2019
Paul Garvey 2.42pm: Hancock wins over Riversdale
Gina Rinehart’s Hancock Prospecting has won the $806.5 million takeover battle for Canadian coal play Riversdale Resources, after private equity group RCF agreed to Hancock’s sweetened offer.
RCF had long loomed as the kingmaker in the takeover given its 48 per cent interest in the unlisted Riversdale, and had originally ruled out accepting Hancock’s original offer of $2.50 a share.
But Hancock on Monday sweetened the bid to $2.70 a share if it lifted its interest in Riversdale to 85 per cent, which was enough to get RCF over the line.
2.25pm: Housing biggest credit risk: Fitch
A domestic housing-market downturn is by far the greatest risk to Australian credit markets over the next 12 months, according to a survey of Australian fixed-income investors by Fitch ratings and bond specialist publication Kanga News.
“The proportion ranking a downturn as a high risk rose to 70 per cent in our second quarter 2019 survey,” Fitch said.
“This is up considerably from 50 per cent in our fourth quarter 2018 survey, which at that time was the highest reading on this risk from all surveys to date.”
For its part, Fitch expects any housing market correction to remain “orderly”.
National average house prices have fallen about 8 per cent from their October 2017 peak.
Damon Kitney 2.05pm: Don’t blur director duty lines: ACSI
A panel of leading company directors has pushed back against the increased blurring of the lines between the responsibilities of boards and their management teams following pressure from investors and regulators in the wake of a spate of corporate scandals.
Westpac chairman Lindsay Maxsted said one of the key lessons for the bank from the Hayne Royal Commission was “understanding the importance of non financial risk and compliance” at the bank.
But he said he was wary that a push by regulators and investors for directors to be more challenging and demand more information from management threatened to undermine the governance of listed companies.
“I think it is really really important that boards, backed by their shareholders, work hard to ensure they (the lines between the responsibilities of boards and management) are not blurred,’’ he said in a panel at the Australian Council of Super Investors (ACSI) conference in Melbourne.
“You will only get accountability if you know what the roles are of the board and management.”
Perry Williams 1.34pm: Nordic fund reduces coal exposure
Norwegian pension fund giant KLP has sold its stakes in BHP, South32, Origin Energy and AGL Energy following a decision to cut its exposure to coal.
The $97 billion fund has exited $520 million of equity and bond exposure in 46 global companies - including the Australian operators -that obtain more than five per cent of revenue from coal-based activities.
“Coal cannot, and should not be part of the energy supply in the future. Therefore, we have decided to divest completely from coal,” KLP’s chief executive Sverre Thornes said. “We are experiencing a strong commitment among our customers to intensify our climate efforts. By divesting completely from coal and at the same time increasing our investments in, among other things, renewable energy, we contribute to this.”
The move reflects a growing shift among pension and sovereign wealth funds to chop fossil fuel exposure as part of efforts to combat climate change and meet the goals of the Paris climate accord which aims to limit warming to well below 2 degrees above pre-industrial levels.
1.33pm: China trade surplus shrinks
China’s trade surplus shrank to $US13.84bn in April from $US32.67bn in February.
This was much smaller than the market consensus of $US34.56bn.
Imports rose 4pc versus an expected 2.1pc fall, and exports fell 2.7pc versus an expected 3pc rise.
China’s smaller monthly trade surplus and higher imports may marginally help its bargaining position in trade talks with the US.
Shanghai Composite last down 0.11pc at 2923.15.
Bridget Carter 1.16pm: Victory Offices IPO covered at bottom
DataRoom | Victory Offices says its $30 million initial public offering is now covered at the bottom end of its value range amid its book build today.
While the share price for the deal has been set at $2 each, the valuation range of the business varies – between 8.8 times and 9.7 times the group’s forecast annual net profit, which is expected to be about $9.4m.
The flexible work provider’s market value is to be between $81.8 million and $91m and its enterprise value is expected to be between $53.5m and $62.8m.
Working on the float is Ord Minnett.
12.46pm: Shanghai Comp recovers, helps ASX
China’s Shanghai Composite share index has almost recovered from an intraday fall to a fresh 2.5-month low this morning.
The Shanghai Composite is down 0.2pc at 2921 after falling 2pc to 2866.7 near the open.
The resilience in China is rubbing off on other markets with Australia’s S&P/ASX 200 down just 0.4pc at 6270 after as much as 0.9pc in early trading.
Of course it wouldn’t be at all surprising if the Chinese market is being propped up by the “national team” after falling 12pc in the past 3 weeks.
US officials won’t have such a low pain tolerance, but S&P 500 futures are up 0.2pc after the cash market dived 1.7pc overnight.
The outcome of US-China trade talks starting tonight will be crucial from here and without a breakthrough, US tariff hikes on $US200 billion of Chinese imports will take effect at 12.01am EST Friday (2pm AEST Saturday).
Reports suggest that China is poised to start retaliatory tariffs a minute later. That sets share markets up for a binary reaction on Monday, depending on whether the talks can stop the tariff hikes.
12.34pm: Peer read-through positive for QBE
Macquarie’s Andrew Buncombe sees a positive “read-through” for QBE’s first half result from offshore peer results in the March quarter.
He says the global margin and pricing outlook continues to improve slowly and despite US Crop planting occurring later this year due to weather events, he notes that QBE’s peers don’t expect this to impact insurance profitability.
Mr Buncombe also notes that QBE is trading near at a 14.8 per cent discount to the weighted average of its international peers, based on two-year forward PE multiples.
And while not expecting QBE to upgrade its FY19 guidance at the May 9th AGM, he expects the PE discount to reduce as portfolio remediation starts to bear fruit and buybacks continue.
Macquarie has an Outperform rating and $13.20 12-month target price. Bloomberg’s consensus rating is “Buy” with an average price target of $12.65.
QBE last down 0.43pc at $12.75.
Bridget Carter 12.29pm: Change ahead for Cromwell
DataRoom | ARA Asset Management’s move to lift its stake in Cromwell Property Group and request a copy of its share register signals a change in strategy for the listed real estate group, according to analysts.
Cromwell announced last night that major shareholder ARA Asset Management has increased its interest in the company to 20.1 per cent from 19.5 per cent and has requested a copy of Cromwell’s share register.
The Australian reported today that ARA may move to call an investor meeting to change the composition of the board, potentially boosting the representation of ARA’s head of Australia, David Blight.
“We believe this has the potential to lead to a change in strategy for Crowmell and or ARA making a bid for the outstanding shares,” JPMorgan analysts said in a research note.
JPMorgan said it had moved its rating of Cromwell to neutral, with a $1.15 per share price target after having a non rated designation on the stock.
12.16pm: RBNZ cuts rates to 1.5pc
New Zealand’s central bank has cut its cash rate by 25 basis points to 1.5 per cent, the first cut in more than two years, spurring a 74 point drop in the New Zealand dollar.
The RBNZ cited uncertainty in the global economic outlook and trade concerns, along with a slowing of its domestic growth.
“Given this employment and inflation outlook, a lower official cash rate now is most consistent with achieving our objectives and provides a more balanced outlook for interest rates,” it said in a statement.
NZD/USD last at 0.6572, down 0.44pc.
Have a read - #RBNZ statement reads almost the opposite of #RBA in looking at upside risks YET THEY CUT and the #RBA didn't
— Greg McKenna (@gregorymckenna) May 8, 2019
Intriguinghttps://t.co/YndeIfNukQ
12.09pm: Tariff threats the ‘new normal’: Natixis
Tariff threats against China are the “new normal” for US-China trade relations, notes David Lafferty, chief market strategist at Natixis Investment Managers.
“Threaten tariffs to bring China to the negotiating table, threaten again to keep negotiations moving forward, and if a deal eventually get done, continue tariff threats to enforce compliance,” he says.
“This is the ‘new normal’ for US-China trade relations and why investors should only take modest comfort in an eventual deal.”
Moreover, he argues that this isn’t a “binary” situation where no deal is “bad” and a deal is “good”.
“Even if the deal gets done, we’ll still be living in a world where that trade détente can be instantly shattered by a testy tweet.”
But a deal is “still more than likely at some point this year”, even though it’s “hardly a sure thing as markets have been pricing in recent months”.
Mr Lafferty argues that US and Chinese leaders will want to avoid a repeat of significant economic slowdowns and market sell-offs in the December quarter.
And at this point, the market sell-off is “still just noise until we get some clarity”.
Mr Lafferty is betting this is “a temporary re-set before negotiations continue”.
11.55am: Orthocell near-triples value on trial
Regenerative medicine company Orthocell has almost trebled in value after a WA trial showed its treatment could help to regenerate nerves in the hand and upper limb.
Releasing trial results today, the company said its first four patients had successfully regained muscle function and or sensation in the affected limbs using its CelGro platform.
Shares in the company have soared as much as 195 per cent in morning trade, hitting 34c.
The study involves 20 patients with traumatic nerve injury requiring surgical repair, with 15 patients already treated and recruitment expected to be complete by the second quarter this year.
“The first patient outcomes are very positive with early results indicating CelGro® is effective in guiding and regenerating peripheral nerves,” managing director Paul Anderson said.
“This is an important step forward in the development of the CelGro® platform in the area of human nerve regeneration.”
11.52am: Headwinds ahead for Harvey Norman
Harvey Norman shares have fallen 2.5pc to a 3-week low of $3.94 after Macquarie cut its rating to Neutral, while retaining at $4.20 target price.
Macquarie’s Rob Freeman says positive catalysts have “played out” and headwinds will now see a “de-rating” of Harvey Norman’s valuation.
He now sees risk of a “genuine slowdown” due to the federal election and falling home completions, after very weak March quarter retail sales and mall statistics.
The consensus view among analysts is mostly “Hold” or “Sell”, with an average 12-month target price of $3.57, according to Bloomberg.
11.21pm: High-profile partners boost FlexiGroup
Payments provider FlexiGroup is outperforming the market and its listed peers after updating the market on its latest merchant partnerships.
Touting itself as “Australia’s original buy now pay later provider” the company announced department store Myer, home furnishing giant Ikea and JB Hi-Fi’s New Zealand chains as the latest to join its humm platform.
“The range of merchants added reflects this appetite for more flexible Buy Now Pay Later solutions that can service a wider breadth of transactions and offer greater repayment terms to the retailers’ customers,” chief Rebecca James told the market.
“With humm, customers can handle the ‘little things’ worth up to $2,000, repaid over 2.5 or 5 months and the ‘big things’ worth over $2,000, repaid over 6-60 months, quickly and easily, from the same app — an Australian first.”
FXL shares are 16.7 per cent higher to $1.58.
11.18am: JB Hi-Fi cut on retail slowdown
Macquarie’s Rob Freeman has cut JB Hi-Fi to Neutral from Outperform while keeping its price target at $25.83.
He says positive catalysts from a less-bad-than-feared retail performance, stimulatory federal budget, rising expectation of interest rate cuts and an improved Gaming category performance have “played out”.
“Whilst structural threats are likely still overplayed given the weak Amazon start in Australia, efforts to minimise the eventual impact will continue to hinder margin via enhanced opex and the balance sheet via enhanced capex in our view,” Mr Freeman says.
He’s now focused on the risk of a slowdown in retail sales from the federal election and notes “very weak” March quarter retail sales volumes and mall statistics.
“With completions from the last housing cycle moderating we think fundamental performance may start to struggle,” he says. “This should see a de-rate.”
JBH last down 0.87 per cent at $25.04.
Perry Williams 11.14am: Housing slump has longer to run: CSR
Building products supplier CSR says the housing downturn probably has another year to run, but it’s not expecting the rate of decline to continue.
After warning of mixed economic signals for Australian construction activity in its annual results today, outgoing chief executive Rob Sindel said he still sees good demand signals over the medium term.
“The market peaked two years ago, so we are two years into a downturn already so the notion that the world is going to end I think is incorrect,” Mr Sindel told analysts. “Population growth in Australia is 400,000 per year and that requires 185,000 starts just before anyone does anything. So if it's a 12 month moderation in volumes which is what we’re saying, I don’t think it runs on much longer than that.”
Macquarie said while CSR’s volumes are holding in the short run, the outlook is less certain and the company’s guidance is relatively vague.
“The group is reacting with cost reduction — a factor we believe will reduce downside operating leverage,” Macquarie said in a research note. “Having said that, industry feedback points to a really tough sales environment in new detached (52 per cent of building product sales), so visibility is challenged. The lack of visibility in outlook commentary is symptomatic of the sales challenges we have been hearing from builders.”
CSR shares were last down 1.92 per cent to $3.32.
11.00am: Treasury tumbles as chief sells down
Shares in Treasury Wines have dropped by 5.5 per cent in early trading after chief Michael Clarke sold down $6.8 million shares in the company.
In a notice to the market today, Treasury said Mr Clarke and wife Fiona had sold 400,000 ordinary shares from holdings of 836,381, not including 1.252 million performance rights.
Shares in the company have also come under pressure this week following a damning presentation from a US fund manager at an investment conference in New York, claiming the winemaker was falsely pumping up its sales and that it shares price had a 50 per cent downside.
TWE is the worst performing stock on the market, down 5.75pc to $15.24.
10.32am: Stocks see red on trade threats
The local market is trading firmly lower early, with losses across all sectors after the latest escalation in trade war threats overnight.
After President Trump’s threats to raise its tariffs on China, reports are that China will make retaliatory tariffs effective a minute later on Friday.
The local market is following falls on the US market, down 43 points or 0.68 per cent at 6252.7, hitting a two-week low of 6241.5.
Looking locally, miners and the major banks are falling lower, but losses in the tech sector are leading the charge.
The sector is down by 2.2 per cent, and market darling Afterpay is down by 3.77 per cent to $27.89.
Energy stocks too are under pressure after oil prices dropped to their lowest in a month — Beach Energy is down by 2.74pc, Woodside by 0.8pc, Caltex by 1.01pc and WorleyParsons by 1.11pc.
ASX200 last at 6251.5.
10.08am: Xplore Wealth trims guidance
Investment management group Xplore Wealth, formerly Managed Accounts Holdings, has trimmed its full year guidance by $4 million as implementation of its acquisitions lags.
The company had anticipated $3.5 million in synergies from its acquisition of rival Linear, of which it warned $1.1m would not be achieved in the financial year while delays in its new product launches also served a blow.
As a result, the company revised its earnings guidance to between $3m and $4m, from earlier expectations of $7m to $8.5m.
“Whilst we have made significant progress over the past year in rebranding and repositioning Xplore Wealth with an expanded product set, it is disappointing to deliver revised EBITDA guidance for the year,” chairman Peter Brook told the market.
“We look forward to FY20 with new leadership expected to drive growth, returns on investments, continued growth in FUM in the structural push away from large incumbents and a healthy pipeline of new sales initiatives.”
XPL shares down 12.5 per cent at 10.5c.
9.40am: BHP to defend Samarco claim
BHP has told the market it will defend the UK legal claim in relation to the Samarco dam failure of 2015, set to be the largest claim in UK legal history.
In a short notice to the market this morning, it confirmed both its Australian and UK entities had been served with legal proceedings filed in the Business and Property Courts of Liverpool, England.
It said it “intends to defend the claim”.
A group action lawsuit filed on behalf of 235,000 Brazilian individuals and organisations-including municipal governments, utility companies, indigenous tribes and the Catholic Church-is represented by law firm SPG Law.
9.37am: What’s impressing analysts, what’s not
- Ainsworth Game cut to Sell — Wilsons
- Aristocrat cut to Hold — Wilsons
- Credit Corp cut to Hold — Canaccord
- G8 Education raised to Buy — Morningstar
- NRW Holdings cut to Hold — Wilsons
- Perpetual raised to Hold — Morningstar
- JB Hi-Fi cut to Neutral — Macquarie
- Harvey Norman cut to Neutral — Macquarie
- Cochlear target price raised 10pc to $179; Equalweight kept — Morgan Stanley
- Magellan cut to Hold; target price raised 17pc to $40.33 — Ord Minnett
- Platinum Asset Management raised to Hold — Ord Minnett
9.32am: Shares vulnerable to trade war
Australia’s S&P/ASX 200 share index is expected to open down 0.6pc at 6258 points after sharp falls in US and European markets.
The S&P 500 fell 1.7pc, the Nasdaq fell 2pc, the Euro Stoxx 600 fell 1.8pc and the FTSE 100 fell 1.6pc after US trade officials confirmed China tariffs will rise at 12.01 EDT on Friday.
Bloomberg quoted sources saying China would make retaliatory tariffs effective one minute after the US, if its decision to increase tariffs on $US200bn ($287bn) of Chinese imports from 10 to 25 per cent goes ahead.
US-China trade talks will go ahead as planned on Wednesday (Thursday AEST) and China’s Vice Premier Liu He will attend the talks.
While shares will surely rebound if either side backs down, their short-term “pain thresholds” — in terms of sharemarket damage — is uncertain.
A S&P/ASX 200 sell-off could be compounded by seasonal weakness starting next week when the four-major banks and Macquarie trade ex-dividend.
Plus, while the RBA is still expected to cut interest rates this year, the first cut is not expected until September and a second cut is less certain after the RBA held off yesterday.
If the Australian dollar realises its technical potential to dive toward 67 cents on a break of 70 cents, as per the descending triangle pattern, it could trigger offshore selling of Australian shares.
On the charts, a break of Monday’s low at 6248 would sustain extend the short-term downtrend and a break of the 50-DMA at 6227 would target 100 and 200-DMA’s near 6030.
Index last 6295.7.
9.25am: Treasury chief sells $6.8m shares
Treasury Wines chief executive Michael Clarke has sold down roughly $6.8 million of his stake in the company.
The sale of 400,000 shares, owned directly and by wife Fiona Clarke, was completed last week in tranches for $17.22 and $17.25 per share after the company updated the market on its latest vintage.
Lodging documents to the market today, Treasury Wines said the sales were made “during the CEO’s tight trading window” and were “in accordance with the Company’s securities trading policy, including obtaining the required Board pre-trade approvals which provided Mr Clarke with the clearance to trade”.
Mr Clarke continues to hold 1.795 million shares, 542,994 ordinary shares and 1.252m performance rights.
9.19am: MYOB sets date for ASX departure
MYOB will remain on the ASX for just two more sessions, after the completion of its $2 billion takeover by Kohlberg Kravis Robers & Co (KKR).
In a note to the market this morning, MYOB said the $3.40 per share consideration had been paid to shareholders and it would be removed from the bourse at the close of trade tomorrow.
Perry Williams 9.11am: CSR takes profit hit on aluminium biz
Building products group CSR suffered a 14 per cent fall in annual net profit after high electricity costs punctured profits at its aluminium business and warned mixed economic signals have clouded the picture for Australian construction activity.
CSR said net profit fell to $181.7 million in the financial year from $210.6m previously and just shy of a $184m consensus forecast from analysts.
Earnings from its core building products unit fell 4 per cent to $206.5m partly due to the company paying more for imported products as a result of changing product mix.
Its aluminium unit was hit by a 54 per cent slide in earnings to $36.6m from $79.5m after the producer was slugged an extra $61m in electricity costs after a new contract started in November 2017.
Production costs at the unit also jumped on higher raw material costs including coke and pitch, although this was partly offset by improvements at Tomago.
The price of aluminium jumped by 11 per cent to $2939 per tonne during the 12-month period.
CSR said building products volumes in the first month of the year remain consistent with the last quarter but the outlook is less certain.
“Mixed economic signals make it difficult to predict building activity levels for the year ahead. CSR is making changes to its operating footprint and overheads to mitigate the impact on earnings,” CSR said.
The company will pay a final dividend of 13c per share from 13.5c last year.
8.48am: Religious donation boon boosts Pushpay
Mobile donations platform Pushpay has recovered from a significant loss last year to post a $US42.1 million profit for the year to March 31, citing more religions donations in its key US market.
The dual NZS and ASX listed company turned to profit from a $US23.3m loss last year, an improvement of 181 per cent.
Pushpay offers a mobile donations and engagement product, specifically targeting US churches and not-for-profit organisations. It said revenue had increased by $US28.2m for the year to $US98.4 million.
Looking ahead, it said it was evaluating potential acquisitions to broaden its current proposition and forecast total processing volume between $US4.6bn and $US4.8bn for the year ahead — up from $US4.2bn this year.
“We expect continued growth in Annualised Processing Volume driven by a larger proportion of new medium and large Customers, further development of our product set resulting in higher adoption and usage, increased adoption of digital giving in the US faith sector and increased giving to religion in the US,” the company said.
8.25am: Automotive board backs offer
The board of Automotive Holdings has recommended its shareholders accept an improved takeover offer by AP Eagers.
AP Eagers says it’s varying its all-scrip offer to one Eagers share for every 3.6 Automotive shares.
The $2bn bid launched last month aims to create Australia’s largest automotive dealership group, representing 242 new car dealerships in Australia and New Zealand.
AP Eagers, which already holds a 28.84 per cent stake in Automotive Holdings, initially offered one share for every 3.8 shares in AHG.
7.45am: Copper slips on tariff fears
Copper prices fell overnight towards 2-1/2 month lows hit last week on worries about demand after US President Donald Trump said he would raise tariffs on Chinese goods before US-China trade talks.
Benchmark copper on the London Metal Exchange ended 0.9 per cent down at $US6,180 a tonne.
Prices of the metal used widely in power and construction last week fell to $US6,150 — its lowest since February 15.
Reuters
7.40am: Oil sinks on trade worries
Oil prices closed at their lowest in about a month overnight as renewed doubts over a US-China trade deal stoked concerns over global growth and on expectations that US crude stockpiles could hit fresh 19-month highs.
Brent futures fell $US1.36, or 1.9 per cent, to settle at $US69.88 a barrel, while US West Texas Intermediate slipped 85 US cents, or 1.4 per cent, to end at $US61.40.
Those were the lowest settles for Brent since April 4 and WTI since March 29. “WTI has been beaten down during the past couple of weeks by some unexpectedly large crude supply increases,” Jim Ritterbusch, president of Ritterbusch and Associates in Chicago, said in a report.
US crude stocks have climbed to their highest since September 2017 and were forecast to have added another 1.2 million barrels last week, according to analysts in a Reuters poll.
Reuters
7.20am: ASX set to follow Wall Street lower
Australian shares are expected to open lower following significant losses on Wall Street overnight sparked by renewed trade war fears.
At 7am (AEST) the SPI200 futures contract was down 48 points, or 0.76 per cent, at 6,233.0, suggesting a fall for the benchmark S&P/ASX200.
On Wall Street, the Dow Jones Industrial Average was down 1.79 per cent, the S&P 500 was down 1.65 per cent and the tech-heavy Nasdaq Composite was down 1.96 per cent.
The Aussie dollar is buying US70.13 cents from US70.35 cents yesterday.
AAP
6.50am: US stocks tumble on trade war fears
Wall Street stocks sank amid renewed trade war fears, joining other leading bourses in selling off amid signs Washington and Beijing are moving further from an agreement.
The Dow Jones Industrial Average fell 1.8 per cent to 25,965.09. The broadbased S&P 500 shed 1.7 per cent to 2,884.05, while the tech-rich Nasdaq Composite Index dropped 2.0 per cent to 7,963.76.
Australian stocks are set to follow suit, after yesterday posting small gains. At 6.50am: The SPI futures index was down 46 points.
Hopes the United States and China can seal a trade deal took a hit over the weekend when President Donald Trump threatened to raise tariffs on Chinese imports as of Friday.
Beijing has decided to proceed with key trade talks later this week but the White House now says US duties on $US200 billion in Chinese merchandise will more than double on Friday.
Investors have generally viewed the Trump threats as a bargaining tactic. Still, the overnight pullback suggested some fear the latest back-and-forth could pose a more serious obstacle.
“The new tariffs have caught the market off guard,” said Quincy Krosby, chief market strategist of Prudential Financial. “The question becomes, What will the Chinese do?”
Industrials were a hard-hit sector, with Caterpillar, United Technologies and 3M all losing more than 2.0 per cent.
Technology companies also fell, with Apple, Microsoft and Facebook all losing more than two per cent.
Among individual companies, drug maker Mylan plunged 23.8 per cent after reporting disappointing first-quarter sales and scepticism over some of the company’s forecasts.
AFP
6.45am: Lyft posts strong growth, big losses
Lyft is reporting strong revenue growth but substantial losses in its first quarterly earnings report since its rocky stock market debut.
The ride-hailing company posted revenue of $US776 million during the first quarter of 2019, nearly doubling the amount it made the same time last year and beating expectations of analysts polled by FactSet, who were expecting $US740 million.
But the San Francisco-based company lost $US1.1 billion in its first public quarter, primarily because it paid out $US894 million in stock-based compensation and related payroll taxes during its initial public offering.
After adjusting for those one-time costs, Lyft’s losses reached $US211.5 million in the first quarter, compared to $US228.4 million at the same time last year.
AP
6.40am: BHP facing negligence claim
BHP Group is facing the largest claim in UK legal history for being “woefully negligent” in its duty to prevent the catastrophic collapse of the Fundao dam in Brazil, in 2015, which killed 19 people.
A group action lawsuit filed in Liverpool, England on Tuesday on behalf of 235,000 Brazilian individuals and organisations-including municipal governments, utility companies, indigenous tribes and the Catholic Church-is represented by law firm SPG Law. The suit against BHP-the world’s biggest mining company by market value-claims $US5 billion in damages caused by the collapse of the dam.
Dow Jones
6.35am: US farmers urge Trump on trade
US soy farmers and industry urged President Donald Trump to pull back from his tariff threat and quickly bring an end to the trade dispute with China.
That message was reinforced by financial markets, as US stocks fell by more than two per cent for the first time in months amid concerns the renewed trade tensions could scuttle a deal.
Trump has vowed to more than double the tariffs on $US200 billion in Chinese goods starting Friday, after US negotiators accused Beijing of reneging on commitments made during months of talks that aim to reduce the US trade deficit, clamp down on theft of US technology and reduce China’s massive subsidies.
American soy farmers have found themselves in the crosshairs of Chinese retaliation, and prolonging the battle will be even more damaging, Davie Stephens president of the American Soybean Association (ASA), said in a statement.
AFP
6.30am: Markets tumble as trade fears grow
Global equity investors ran for cover as it dawned on markets that US President Donald Trump’s trade war threat against China could be deadly serious.
Indices had already slumped earlier in the week, with Shanghai suffering its heaviest loss in three years, after Trump threatened to hike tariffs on $US200 billion of Chinese goods this week amid apparent setbacks in trade talks between the economic superpowers.
Some quickly dismissed the move as Trump-style brinkmanship, but many market players decided they would rather not take any chances.
“Smoke continues to linger across market sentiment following the smoke grenade President Trump launched over the weekend with the threat of adding further tariffs on Chinese imports at the end of the week,” said Lukman Otunuga, a research analyst at FXTM.
Trump’s remarks completely wrong-footed markets, coming just days after officials on both sides had sounded positive on the talks.
European stocks were down by more than 1.5 per cent at the close — with a growth outlook downgrade for the eurozone not helping matters.
London, Frankfurt and Paris each closed 1.6 per cent lower.
Earlier, Shanghai’s index recovered slightly, having lost a whopping 5.6 per cent the previous session, but Tokyo slumped further.
The International Monetary Fund warned that tensions between the economic superpowers were a “threat” to the world economy.
AFP
6.25am: Markets missing climate threat
Investors are overlooking the long-term risks climate change poses to oil and gas infrastructure firms, which face tens of billion of dollars worth of stranded assets as the world transitions to greener energy, according to new analysis.
As the use of fossil fuels — the main source of planet warming greenhouse gases — comes under growing scrutiny, a number of funds are choosing to divest themselves of energy projects that may end up cancelled or mothballed as efforts grow to limit emissions.
ATLAS, an investment fund specialising in long-term infrastructure projects, examined how the assets of five oil and gas infrastructure companies would fare as countries switch to renewables in line with the Paris targets.
The analysis, seen exclusively by AFP, shows that the firms — who together hold a roughly 10 per cent share of the energy infrastructure market — risk losing more than $US100 billion of their valuation.
“There’s a very significant unspoken risk to the valuation of these companies,” said executive chairman Charles Kirwan-Taylor. “That’s something we take account of in our investment selections and we think other people should too.”
ATLAS said that the market was improperly valuing oil and gas infrastructure projects by not discounting the risks of declining hydrocarbon use.
AFP
6.20am: EU cuts eurozone growth forecast
The European Commission cut its eurozone growth forecast for 2019, with overspending by populist-run Italy again a concern.
In its quarterly forecast, the EU executive blamed the downward trend on the slowdown in China and US protectionism that has crimped global confidence.
The commission said growth in the 19-nation single currency bloc would hit just 1.2 per cent this year, down from the already weak 1.3 per cent predicted in February.
AFP
6.15am: Porsche fined over diesel cheating
German sports car maker and Volkswagen subsidiary Porsche will pay a $US598 million fine over diesel vehicles that emitted more harmful pollutants than allowed, Stuttgart prosecutors said.
“The Stuttgart prosecutor’s office has levied a 535-million-euro fine against Porsche AG for negligence in quality control,” the investigators said.
Porsche “abstained from a legal challenge” against the decision, the prosecutors office added.
The levy against Porsche is the latest in a string of fines against VW over its years-long “dieselgate” scandal.
The auto behemoth admitted in 2015 to manipulating 11 million vehicles worldwide to appear less polluting in laboratory teststhan they were in real driving conditions.
Following fines against VW, high-end subsidiary Audi and now Porsche, no further investigations over “administrative offences” remain open against the group, a spokesman said.
But legal proceedings against individuals, including former chief executive Martin Winterkorn, remain open.
AFP
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