Trading Day: ASX sets new records on strong earnings as TPG, Vodafone deal cleared
Shares finished mildly higher despite a new record early after a surprise lift in virus cases, while TPG and Vodafone cheered court approval.
- TPG, Vodafone cleared by court for merger
- Outage dents AGL profit
- NAB steady as low rates bite
- Telstra to pay special dividend
That’s it for the Trading Day blog for Thursday, February 13. The ASX set a new record high but quickly dialled back gains after the coronavirus tally surged. In earnings, results from Telstra, AMP, AGL, NAB, Goodman, Magellan, among others moved the market while the Federal Court has overruled the ACCC to allow the merger of TPG and Vodafone.
4.12pm: China jitters shake shares from highs
Virus fears knocked the local market from its record highs on Thursday, after China reported nearly 10 times as many newly confirmed coronavirus cases.
Strong earnings momentum and records on Wall Street pushed shares to a new all-time high of 7145.8 in the first hour of trade, but those gains were swiftly lost amid concerns the scale of the outbreak has been much larger than previous Chinese data had suggested.
By the close, the ASX had lost all of its gains to trade higher by 15 points or 0.21 per cent to 7103.2 while the All Ordinaries finished higher by 19 points or 0.27 per cent to 7204.6.
4.08pm: Late AMP rally as rating upgraded
AMP shares bounced 7pc intraday as Bell Potter’s Lafiani Soutiriou upgraded to Buy from Sell with a new target price of $2.25.
Bell Potter was the most bearish in the market for quite a while with a target price of $1.30 previously.
“We believe that we can see through to the other end of the tunnel on AMP for the first time in many years and reverse our longstanding Sell rating and replace it with a Buy recommendation,” Mr Sotiriou says.
“This is not done lightly, nor is it done in isolation of the issues the company is still facing (as there are many).
Instead, we believe AMP has sufficiently put enough of the issues on the table.”
AMP last down 0.3pc at $1.82.
3.41pm: ASX turns down after record high
Australia’s sharemarket has turned down after hitting a record high.
The S&P/ASX 200 fell about 1 point to an intraday low of 7086.9.
That follows a 0.8pc intraday rise to an all-time high of 7145.8 in early trading.
The reversal of strength comes amid renewed risk aversion in global markets after China reported a jump in coronavirus cases and deaths.
S&P/ASX 200 last flat at 7088.2.
Gerard Cockburn 3.37pm: Lynas jumps on licence rumours
Shares in rare-earth mineral company Lynas have jumped amid speculation of a licence renewal in Malaysia.
Investors rallied behind its ASX-listed stock, which was higher by 7.4 per cent to $2.27 per share in afternoon trade.
The lift comes after speculation on the Malaysiakini website that its permanent disposal facility had been granted approval by Malaysian authorities, a key factor in its operation in the South-East Asian country.
In a statement to the market, Lynas said it has not yet received notification of any sort of renewal, but has submitted the relevant documentation to the Malaysian Atomic Energy Licensing Board and is waiting for the regulators decision.
Hiedi Han 2.37pm: China replaces top Hubei official
The Chinese government has replaced its top official in Hubei following a dramatic surge of infections and fatalities in the central China province at the epicentre of the coronavirus outbreak.
Chinese state media reports that Ying Yong, who is current Mayor of Shanghai, has been appointed as the Party’s chief of Hubei Province, replacing Jiang Chaoliang, according to a decision by the Communist party’s Central Committee.
#BREAKING: Ying Yong has been appointed as Party chief of China's #Hubei Province, replacing Jiang Chaoliang, according to a decision by the CPC Central Committee. pic.twitter.com/ZMOFjwG7Kd
— People's Daily app (@PeoplesDailyapp) February 13, 2020
Cliona O’Dowd 2.07pm: Lowe calls for calm amid virus panic
RBA governor Philip Lowe has sought to reassure on Australia’s economic outlook and called for more emphasis to be put on the nation’s strong fundamentals and the opportunities ahead as he cautioned that the impact of the Covid-19 coronavirus would feed through to this quarter’s GDP figures.
Appearing on a panel at the Australia-Canada Economic Leadership Forum in Melbourne on Thursday, Mr Lowe also urged government and business to take advantage of the ultra-low interest rate environment by investing in infrastructure, technology, energy and climate adaptation.
“Absent the virus, the outlook in Australia was improving. I don’t think the virus fundamentally changes that outlook but it does mean that right at the moment, things are going to be softer than we thought,” Mr Lowe told the audience.
“[Covid-19] is having a major effect on the education sector [and tourism]. The number of Chinese tourists to Australia has skyrocketed over recent years; they’re now the biggest source of foreign tourists to Australia.
“We’ve also had some instances in the last few weeks where Chinese companies have called force majeure and [that’s affected] exports to Australia. It’s not on a widespread scale but it is having an effect. And I expect we’ll see the impact of that when we get the GDP data for the current quarter.”
1.31pm: SkyCity profits slip after fire
Casino operator SkyCity says a fire at its convention centre in Auckland has knocked its profits for the half year, despite a boost from the sale of its car park concession.
The group, who owns a number of hospitality assets in New Zealand, reported normalised net profit, stripping out one-off impacts of the fire and sale, of $NZ75m for the year, down 16.4 per cent on the previous.
It said insurance payments were expected to cover all building damage, but that the fire had hit its gaming revenue.
In the wake of a hit to the gaming industry globally from coronavirus, SkyCity said there had been some hotel cancellations in Auckland, but they had been offset by new bookings, while there was as yet “no discernible impact on electronic gaming machines but some softness in table games that may be related”.
SKC shares last up 2.3pc to $3.53.
1.08pm: National Storage takeover talks ongoing
National Storage REIT says discussion are ongoing with potential suitor GAW Capital Partners.
Addressing speculation a bid had been lodged, the group said “there is no certainty that the discussions with GAW will lead to a binding proposal or a proposal that the Board of NSR will recommend to NSR securityholders”.
NSR will update the market as necessary in accordance with its continuous disclosure
requirements.
Shares were last higher by 2.77pc to $2.23.
1.02pm: Virus spike pares record rally
A surge in coronavirus cases has clipped the rally on the local market, despite hitting record highs early in the session.
At 1pm, the benchmark is higher by just 7.5 points or 0.1 per cent to 7095.7, after surging to as much as 7145.8 in the first hour of trade.
Concerns of a resurgence in virus cases is largely behind the pullback, with the Aussie dollar and US futures sharply lower as well.
In equities, results are dominating moves – NAB is higher by 1.7pc after steady results, while Goodman is up 5.4pc and TPG higher by 12.5pc after it won court approval for its merger with Vodafone.
Here’s the markets biggest movers at 1pm:
12.39pm: Pro Medicus takes investor hit
Health imaging group Pro Medicus are taking a hit from investors despite interim results described by one analyst as “beats across the board”.
The group reported a profit lift of 32.7 per cent for the six months to December 31, and revenue growth of 16pc as it said its pipeline was growing.
Still, its shares are lower by 11.6pc to $24.14.
RBC analysts Garry Sherriff says the first half results beat the bank’s bullish expectations with “beats across the board on a like-for-like basis”.
He adds that the dividend of 6c per share was well above consensus of 4c and the group’s pipeline is “very health”.
Last year shares in the company rose more than 100 per cent, boosting founders Anthony Hall and Sam Hupert higher up The List – Australias Richest 250.
12.20pm: TPG surges 20pc
TPG investors have cheered court approval of its merger with Vodafone, sending shares higher by as much as 20 per cent.
The stock had been halted pending the announcement, and came back online at 11.48am.
Shares touched as much as $8.78 on the news – the highest levels since September 2018, just after the deal was first announced.
Meanwhile, Hutchinson Telecommunications was higher by 18pc to 16c.
TPM shares last up 12.7pc to $8.24.
11.55am: Fears of new rival dent Telstra
Not even a special dividend is enough to offset competition jitters in the nation’s biggest telco, with shares slipping to a three-month low at noon.
Shares had been lifting after Telstra said it was recovering from the impact of the NBN and paid a special dividend.
But a swift blow from court approval of the TPG and Vodafone tie-up has sent shares lower by 2.5 per cent to $3.71.
Handing down the decision, Justice John Middleton said the new combined entity would create a stronger competition force against Telstra and Optus.
“Leaving TPG and Vodafone in their current state would not create more competition in the retail mobile market,” Justice Middleton said, adding it was not up to the ACCC to “engineer competition”.
Gerard Cockburn 11.47am: UBS counts virus toll on local GDP
UBS economists have slashed their outlook for Australia’s economy, tipping first-quarter GDP growth will turn negative on the back of growing disruption from the global coronavirus outbreak.
The brokerage expects Australia’s reliance on China as an export market will weigh on GDP growth, dragging it down to -0.1 per cent for the quarter, with annualised growth at 1.5 per cent. Quarterly growth of -0.1 per cent would represent the worst economic performance since the GFC.
UBS had previously anticipated first-quarter GDP growth of 0.2 per cent and year-on-year growth of 1.8 per cent.
In 2019, exports to China were worth 8.8 per cent of GDP, according to the brokerage.
They accounted for approximately 35 per cent of Australia’s total export market, with a value of $175bn.
UBS economist George Tharenou said the impact of the virus is much “worse” than the SARS outbreak of 2003.
“Overall, we think it’s likely the RBA will downgrade its growth profile again at the next SOMP in May,” Mr Tharenou said.
11.40am: Who set new records today?
While the new record high on the market was only short lived, here’s a list of the stocks that hit records so far today:
- Aristocrat – $37.60
- Breville Group – $23.96
- EML Payments – $5.65
- Fisher & Paykel Healthcare – $23.60
- Gold Road Resources – $1.65
- IDP Education – $24.88
- IPH Limited – $10.14
- Magellan – $74.21
- Premier Investments – $21.04
- Shopping Centers Australasia – $3.13
The S&P/ASX 200 has given back almost all of its has almost all of its daily rise – trading higher by just 13 points at 7101.3, after touching 7145.8.
Cliona O’Dowd 11.39am: AMP chief gets salary boost
The AMP board has delivered a booster shot to CEO Francesco De Ferrari’s remuneration package just over a year after he took on the top job, with the embattled wealth manager’s most senior executive now potentially eligible for a 200 per cent bonus on top of his $2.2m salary.
The salary sweetener was announced on the same day that AMP told shareholders it had scrapped its final dividend after posting a $2.5bn full-year loss.
In a statement released to the market on Thursday accompanying the scandal-plagued wealth manager’s full-year results, the board said the lift in the maximum short-term incentive opportunity replaced the previous maximum of 120 per cent of base salary, set when Mr De Ferrari was appointed CEO in August 2018. The new terms will be effective for the year ending 31 December 2020, AMP said.
“The change brings the CEO’s short-term incentive potential into line with the policy intended to apply for senior executives,” the wealth manager said.
11.17am: New Caltex bid likely supported: RBC
A third a final bid from Caltex suitor Alimentation Couche-Tard may not be as much as some shareholders expected, but should be enough to get board approval, according to RBC.
This morning the Canadian group raised its bid to $35.25 per share, from earlier $34.50.
“Against the backdrop of a weak refining environment and with the potential longer-term impact of the forced Ampol rebranding uncertain, we think any bump is a good bump,” analyst Ben Wilson says.
“The declaration of the bid as “best and final” with its attendant ramifications regarding the truth in takeovers code will likely bring any serious counterbidders forward if indeed there are any (or any with proposals mature enough to head off the revised bid).
“We think that, on balance, this bid should be enough to get support from the Caltex board.”
CTX shares last up 3.2 per cent to $33.98.
Eli Greenblat 11.08am: Breville soars on upbeat outlook
Kitchen appliance maker Breville Group has warned it expects a slower than expected ramp up in production at Chinese factories in the wake of the coronavirus outbreak.
But the company, famous for appliances such as toasters and jaffle makers, said it was largely immune from problems caused by the outbreak as it had high inventory levels and limited business in China.
Breville’s half-year result showed a 25.4 per cent rise in sales to $552 million, with as profit rising 14.1 per cent to $49.7m.
Breville also said it was expecting continued momentum in its business in the second half helped by uplift in Europe and a more certain tariff backdrop in the US.
Shares in the group are leading the market’s best performers, last up 14.2 per cent to $22.82 after setting a new record high of $23.96.
10.54am: Shares hit record, quickly pull back
Australia’s S&P/ASX 200 share index hit an all-time record high of 7145.8 points.
After a 3.5 per cent dip on the coronavirus outbreak in late January, the Australian sharemarket has exceeded the previous high of 7144.9 in just three weeks.
Those celebrations were short-lived though, as a surge in new coronavirus cases rattled sentiment. After revising their method, China has just reported a massive 14,840 new cases of the virus for February 12, that includes cases that are clinically diagnosed via imaging scans. Total deaths reported in the province rose by 242 to 1310.
This news is rapidly pushing the S&P/ASX 200 back down from the high.
S&P 500 futures turned down 0.4pc, spot gold jumped 0.3pc to $US1571.42, bond yields retreated, with the Australian 10-year yield flat at 1.06pc after hitting 1.10pc, and the Australian dollar dived from 0.6735 to 0.6707 before bouncing to 0.6722.
S&P/ASX 200 last up 0.6pc at 7128.
10.37am: TPG, Vodafone win case against ACCC
The merger of TPG and Vodafone has been approved by the Federal Court, overruling an earlier decision by the ACCC.
The $15bn merger had been blocked by the competition regulator on fears the tie-up would lessen mobile competition.
But the court said today the combined entity will create a stronger competitive force against Telstra and Optus.
Statement from @VodafoneAU on the federal court's decision to allow a merger with TPG. Story here: https://t.co/sJUkdESN1y pic.twitter.com/U2fqmawfPJ
— David Swan (@swan_legend) February 13, 2020
10.22am: Shares approaching record level
The local market is higher by 46 points or 0.7 per cent early on Thursday, with results in focus as it nears its previous all-time record.
The benchmark ASX200 is at 7134.8, a three-week high and just 10 points off the recent record of 7144.8.
If it closes at these levels the benchmark will break the previous record daily closing high of 7132.7.
Strength in NAB is doing a lot of the work, after the bank handed down a steady outlook at its third quarter briefing. Its shares are higher by 2.8 per cent while the rest of the sector is up around 0.3pc to 0.9pc.
Telstra is lifting by 1.4pc to $3.88 while AMP is slipping by 3pc. Breville Group is up 19pc after predicting earnings in line with the consensus, IDP Education is up 13pc after Goldman Sachs upgraded to Buy and AGL is up 4.5pc after predicting a full-year profit at the upper end of its prior guidance.
10.19am: Magellan sets new records on results beat
Magellan Financial Group has exceeded market expectations of a solid rise in its first half profit, underpinned by a strong investment performance and growth in funds under management.
Net profit after tax rose for the six months to December 31 was $195.7m, a 13 per cent increase on the prior corresponding period, while adjusted net profit rose 23 per cent to $216.8m.
“Magellan had a successful first half that has been underpinned by strong investment performance,” said Magellan CEO Brett Cairns.
Mr Cairns said Magellan expects to make the Airlie Australian Share Fund available on the ASX in the coming weeks. Existing units of the currently unquoted fund will also be available for purchase or sale on the ASX, along with the existing traditional application and redemption process.
Shares in the group lifted to new records of $74.12 early, last up 2.2pc to $74.01.
Joyce Moullakis 10.08am: AMP shares slump after legacy loss
AMP shares slipped as much as 3.6 per cent lower in opening trade, after the embattled wealth group reported a 32 per cent drop in its underlying profit.
At its interim results, AMP said earnings were dragged lower by its wealth unit and mammoth fund outflows of $6.3bn.
Shaw and Partners analyst Brett Le Mesurier reiterated his “sell” rating on the stock after the result, highlighting further pressure ahead for AMP.
“The guidance is for the new and lower underlying profit to be stable at $464m from 2019 to 2020,” he said.
“The issue is whether or not this represents a new level of stability. This is most likely not the case.”
Shares slipped to lows of $1.74, last down 3pc to $1.77.
9.49am: Caltex suitor lifts bidding price
Caltex’s Canadian suitor Alimentation Couche-Tard has lifted its bid for the service station operator for a third time to a “best and final” offer worth $8.8bn.
In a notice to the market, Caltex said it was considering a $35.25 per share bid, up from the previous offer of $34.50 per share bid that was declined in December.
It comes after Caltex agreed to further open its data room to Couche-Tard last month.
The revised proposal is subject to conditions including completing due diligence, agreeing the terms of a scheme implementation agreement, no material asset acquisitions or divestments, capital raisings and unanimous recommendation by the Caltex board, among other things.
“The Caltex Board is currently considering the Revised Proposal, including obtaining advice from its financial and legal advisers,” Caltex said.
“The Revised Proposal is subject to various conditions and there is no certainty that it will result in a change of control transaction.”
CTX shares last traded at $32.93.
9.46am: ‘Elevated’ volatility to persist: ASX boss
ASX chief executive Dominic Stevens says its been a good start to the financial 2020 year with ASX on-market value rising by almost 9 per cent, though he says volatility is likely to be “elevated”.
Comments come as ASX posts first half earnings before interest and tax of $315.1m – a rise of 6 per cent – and statutory profit of $250.4 million, up 1.8 per cent compared to the same period last year. Revenue of $454.9 million, was up 7.1 per cent.
“Trading volumes in equities and futures were strong, and the strength in listings experienced last December has continued into the new year,” Mr Stevens said.
“Ongoing uncertainty arising from various global challenges is likely to keep volatility elevated. This has continued into the new calendar year as markets grapple with a range of global issues, including the coronavirus and the approaching US election.”
Perry Williams 9.44am: Woodside writedown spurs profit dive
Woodside Petroleum saw its annual underlying profit dive by 75 per cent after it took a hit from a $1bn writedown at its Canadian LNG project.
The Kitimat impairment, flagged to the market on Tuesday, saw its 2019 bottom line net profit plummet to $US343m ($509m) from $1.364bn the year prior.
Profit excluding the writedown fell 24 per cent to $US1.06bn from $US1.42bn, just missing consensus while revenues slid 7 per cent to $US4.87bn.
The West Australian gas producer declared a final dividend of US55c a share from US91c a share a year earlier.
Woodside said it continues to target 2020 for a final investment decision on the remote Scarborough gas field, part owned by BHP, which would feed an expansion of the existing Pluto LNG facility near Karratha.
Gerard Cockburn 9.32am: QBE taps veteran for new chairman
QBE Insurance has announced Mike Wilkins AO as its new chairman, the same man that was called in to lead AMP after the Royal Commission.
Mr Wilkins will commence in the role on March 1, replacing Marty Becker who did not stand for re-election at the company’s annual general meeting. Mr Becker will retire from the board on April 30.
Previously the chief executive of Insurance Australia Group, Mr Wilkins joined the QBE board as a non-executive director in November 2016.
Mr Wilkins was tapped to take on the role of executive chairman of AMP after the resignation of both its chief and chairman after damning allegations against both of them at the financial services royal commission.
“It is an enormous privilege to be elected to the role of Group Chairman of QBE and I thank the board for their confidence and support,” Mr Wilkins said.
Mr Becker joined QBE in 2013 and was elected chairman in 2014.
9.29am: Global growth lifts Breville profits
Breville has enjoyed a 14.1 per cent spike in first-half net profit after revenue was bolstered by growth in its global product and distribution segments.
The small home appliance company saw its net profit increase to $49.7m, with total revenues up 25.4 per cent to $552m.
Breville paid partially franked dividends for the half-year ending December 31 of 20.5 cents per share, up from 18.5 cents per share last year.
AAP
9.24am: What’s impressing analysts, what’s not
- a2 Milk raised to Buy – Citi
- ARQ Group cut to Sell – Bell Potter
- Bapcor cut to Hold – Morningstar
- Carsales.com cut to Neutral – Credit Suisse
- Carsales.com cut to Sell – UBS
- Centuria Capital raised to Overweight – JPMorgan
- Collins Foods raised to Overweight – Wilsons
- Commonwealth Bank cut to Reduce – Morgans
- Commonwealth Bank target price raised 7pc to $75 – UBS
- Computershare raised to Outperform – Credit Suisse
- Computershare cut to Underweight – JP Morgan
- CSL cut to Neutral – Macquarie
- CSL target price raised 17pc to $331.60 – Citi
- CSL target price raised 24pc to $365 – UBS
- Downer cut to Neutral – JP Morgan
- Evolution Mining raised to Buy – UBS
- Janison Education cut to Hold – Bell Potter
- Metcash cut to Sell – Morningstar
- Oil Search raised to Buy – UBS
- Orora cut to Hold – Morgans
9.16am: Record high within reach
Australia’s sharemarket may hit a record high today after the US market jumped to all-time highs amid easing concern about coronavirus.
Futures relative to fair value suggest the S&P/ASX 200 will open up 0.6pc at 7130. The previous record high close is 7132.7 and the all-time high is 7144.9.
That follows strong gains and new all-time highs in the three main US stock averages after China reported fewer cases of coronavirus for a second day running, while new cases in the epicentre of Hubei fell for the eighth day in a row.
Money flowed out of safe havens with 10-year US Treasury yields up 3.3 basis points to 1.63 per cent., while Brent crude rose 4.1pc rise to $56.24 a barrel, spot iron ore rose 5pc to $US83.80 a tonne, LME copper rose 1.4pc and nickel gained 1.7pc.
Despite that, ANZ’s Felicity Emmett says ongoing rumours of force majeure from Chinese buyers are likely to keep a lid on any gains commodity markets may achieve this week.
Today 14 companies in the S&P/ASX 200 index – including such heavyweights as Telstra, Woodside, Newcrest, Goodman, Magellan, ASX Limited, Unibail-Rodamco, AGL, South32 and AMP are reporting, along with NAB’s trading update.
The market will also be keeping an eye on RBA Governor Philip Lowe’s appearance at the Australia-Canada Economic Leadership Forum from 11.15am.
S&P/ASX 200 last up 0.5pc at 7088.2.
9.12am: South32 profit drops
South32 said its first-half net profit fell by 84 per cent as it felt the sting of weaker commodity prices and it absorbed a higher tax rate ahead of the planned sale of its South African Energy Coal assets.
South32 reported a net profit of $US99m for the six months through December, down from $US635m at the same stage a year ago. Underlying earnings before interest and taxes fell by 80pc to $US131m.
Still, the company said on Thursday that it would expand its capital management program by $US180m to $US1.43bn.
Directors declared an interim dividend of US1.1 cents a share, down from 5.1 cents a year earlier. They also declared a special dividend of 1.1 cents even as the company’s net cash dropped to $US277m at the end of December from $US504m six months earlier.
Dow Jones Newswires
Gerard Cockburn 9.06am: TPG halted ahead of court decision
TPG Telecom has requested its shares be placed in a trading halt ahead of the Federal Court’s decision on its landmark appeal for its merger with Vodafone Hutchinson Australia.
The Federal Court is expected to give its verdict at 10.30am on Thursday to see if the $15bn merger can go ahead.
The companies took the case to court after the ACCC blocked the deal on competition concerns in the mobile market.
TPG shares last traded at $7.31 each.
9.01am: Gold strength buffers Newcrest slip
Newcrest Mining said its first-half profit was roughly flat on year, as stronger gold prices and a weaker Australian dollar balanced the impact of lower output and higher costs compared to a year ago.
Newcrest reported a net profit of $US236m for the six months through December, compared to $US237m at the corresponding stage of the 2019 fiscal year.
Gold prices surged 19pc to $US1,519.50 a troy ounce on the Comex exchange last year, representing the largest one-year percentage gain since the end of 2010. The precious metal’s appeal as a safe-haven investment was bolstered by US-China trade frictions and concerns around the health of the global economic outlook.
Gold prices have moved even higher since the start of this year, reaching $US1,567.40 an ounce on Wednesday, as investors bet on the economic impact on China of the fast-moving outbreak of the coronavirus.
Newcrest, one of the world’s largest listed gold producers, said Thursday its earnings margin before accounting for interest, tax, depreciation and amortisation decreased slightly to 42.2pc.
Directors of the company declared an interim dividend of US7.5 cents a share, in line with a year ago.
Dow Jones Newswires
Perry Williams 8.49am: Outage dents AGL profit
Power giant AGL Energy has suffered a 20 per cent fall in first-half underlying profit after taking a hit from its extended Loy Yang coal plant outage, but expects full-year profits at the upper half of its guided range.
Australia’s biggest electricity generator delivered a $432m net profit for the six months to the end of December, down from $537m in the prior year.
Sales edged 0.4 per cent lower to $6.31bn due to lower gas volumes after AGL lost large business and wholesale customers while earnings for its key wholesale markets business fell to $1.29bn from $1.39bn previously.
“Underlying profit after tax was down 20 per cent in the half, primarily due to the outage of Unit 2 at AGL Loy Yang, increased depreciation following record levels of investment in recent years, and the impact of market headwinds relating to lower year wholesale energy prices and reduced gas volumes,” AGL chief executive Brett Redman said.
8.45am: Goodman upgrades full year guidance
Goodman Group upgraded its earnings guidance as the growing popularity of online shopping continued to stoke demand for warehouses and industrial parks in countries spanning the US to Australia.
The upgrade was announced alongside a 13 per cent decline in net profit to $810.6m in the six months through December, down from $929.2m.
Goodman said it now expects 11pc growth in operating earnings to 57.3 cents per security in the year through June, up from a prior forecast for 56.3 cents. It stuck with earlier guidance for an annual distribution of 30.0 cents per security.
Dow Jones Newswires
8.25am: US stocks close at records
Wall Street stocks hit new records, once again closing higher as investors remained confident that a virus outbreak in China will not imperil the global economy.
The benchmark Dow Jones Industrial Average finished with a gain of 0.9 per cent at 29,551.42.
The tech-rich Nasdaq also rose 0.9 per cent to end at 9,725.96, and the broadbased S&P 500 rose by 0.7 per cent to 3,379.45 — both hitting their third consecutive record close.
AFP
8.10am: NAB cash earnings $1.65bn
National Australia Bank said profit in the fiscal first quarter remained the same as the year-ago quarter as expenses notched higher.
NAB recorded an unaudited net profit of 1.65 billion in the December quarter. It reported a profit of $1.7 billion in last year’s first quarter.
Cash earnings, a measure of profit adjusted for fair value and hedging movements and is the basis for calculating dividend payouts, was $1.65 billion for the quarter.
The bank said first-quarter revenue rose by 1pc due to a slightly higher net interest margin. Its net interest margin, a closely watched profit measure of the difference between interest generated and the amount of interest paid out, had been positively affected by home loan repricing, the company said.
Meanwhile, expenses for the period rose by 3pc driven by spending in technology and investments, as well as higher compensation costs. NAB said it continues to expect expenses for the full year to be flat.
Dow Jones Newswires
7.55am: Telstra to pay special dividend
Telstra’s first-half profit fell 7.6pc as the rollout of Australia’s nationwide broadband network continued to bite into the communications giant’s revenue.
Australia’s leading communications provider said net profit for the six months through December fell to $1.14 billion from $1.23 billion a year earlier, with total revenue slipping 2.8pc to $13.41 billion as customers migrate to the government-owned National Broadband Network.
The directors declared a dividend for the half year of 8.0 cents a share, flat on last year’s payout.
Fixed-line revenue dropped 11pc to $2.39 billion largely on the impact of the near-complete National Broadband Network, which has effectively renationalised a material part of Telstra’s business and sells access back to retailers.
Excluding the NBN headwind, Telstra said group underlying Ebitda grew for the first time since FY16.
Mobile revenue rose 0.3pc to $5.31 billion, although growth in hardware was partly offset by postpaid handheld, prepaid handheld and mobile broadband declines.
Telstra confirmed it remains on course to fulfil full-year guidance for revenue of $25.3 billion to $27.3 billion, underlying Ebitda of $7.4 billion to $7.9 billion, and capital expenditure of $2.9 billion to $3.3 billion.
Dow Jones
Joyce Moullakis 7.45am: AMP posts $2.5bn loss
AMP has reported a full-year net loss of $2.5 billion, blaming the result largely on first half impairments to “address legacy issues and position AMP for the future”.
AMP said its underlying profit of $464 million “reflects challenging environment in Australian wealth management, offset by strong earnings in AMP Capital and resilient AMP Bank performance”.
The wealth manager has scrapped a final dividend “to maintain balance sheet strength and prudent capital management through a period of significant change”.
“This position will be reviewed after completion of the AMP Life sale.”
7.40am: Oil rises
Oil prices rose over 3 per cent overnight as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover.
Brent futures gained $US1.78, or 3.3 per cent, to settle at $US55.79 per barrel, while US West Texas Intermediate (WTI) crude gained $US1.23, or 2.5 per cent, to settle at $US51.17.
Those were the highest settles for both futures since January even though the US government reported a larger-than-expected weekly build in crude inventories that was countered by a decline in fuel stocks, including an unexpected gasoline drawdown.
Reuters
7.30am: Coronavirus likely to hit US growth
China’s coronavirus outbreak will likely dampen US economic growth in the first quarter, according to a survey of economists by The Wall Street Journal.
The monthly survey of economists found 83pc of economists expected the coronavirus outbreak will have a small impact on U.S. gross domestic product growth from January to March, or less than 0.5 percentage point. Just 5pc of forecasters expected a significant reduction of more than 0.5 percentage point off the quarter’s annual growth rate.
“The negative demand shock from coronavirus is significant,” said Constance Hunter, chief economist at KPMG. “China’s GDP will be impacted significantly and this will show up in everything from commodity prices to demand for global goods and services,” she said.
Dow Jones
7.15am: ASX to rise after US rally
The Australian share market is tipped for another rise after positive sessions on global markets as fears about the economic impact of the coronavirus eased.
At 7am (AEDT) the SPI200 futures contract was up 37 points, or 0.53 per cent at 7056.
Sentiment remained upbeat on Wall Street overnight amid optimism the coronavirus pandemic will be contained and the economic effects temporary, Westpac’s financial markets finance AM note says.
Locally the profit reporting season continues on Thursday with Newcrest, Woodside, AMP and Telstra among those set to release their results.
Australia’s S&P/ASX200 benchmark index finished Wednesday up 32.9 points, or 0.47 per cent, to 7,088.2, while the broader All Ordinaries index climbed 33.9 points, or 0.47 per cent, to 7,185.3.
The Aussie dollar was buying US67.36 cents at 7am (AEDT), from 67.29 US cents at Wednesday’s close.
AAP
7.10am: Telstra fears speech leak
Telstra said a draft copy of the CEO’s speech accompanying today’s first half results “may have lost confidentiality”.
“This is the result of an administrative error,” Telstra told the ASX last night.
“We are not aware that the speech has been made public at this stage but we are making this disclosure out of an abundance of caution.”
7.05am: NZ’s Synlait in profit warning
Synlait Milk says its full-year earnings could decline because sales of infant milk powder in China are significantly lower than expected.
The company on Thursday forecast 2020 net profit in a range of $NZ70 million to $NZ85 million dollars. Profit in the previous year grew 10 per cent to $NZ82.2 million.
It said infant powder sales in China are lower because of consolidation of the infant nutrition market, which reduced demand. Synlait said its earnings guidance also assumes the coronavirus epidemic will hurt its business.
The company forecast half-year net profit of $NZ26.5 million to $NZ28.5 million, down from $NZ37.3 million a year earlier.
The half-year result is also hurt by increased costs for Synlait’s Pokeno plant in New Zealand.
Noting the result, a2 Milk said its business performance remains strong and it continues to be in compliance with its continuous disclosure obligations
Dow Jones Newswires
7.00am: US stocks rise as virus worries abate
US stocks climbed to new highs as concerns about the economic impact of the coronavirus outbreak continued to ease.
The S&P 500 added 0.5 per cent and the Nasdaq Composite advanced 0.7 per cent, a day after both indexes closed at new highs. The Dow Jones Industrial Average gained 0.8 per cent, putting it on pace for a record close as well.
Australian stocks are also tipped to rise, adding to yesterday’s gains. At 6.50am (AEDT) the SPI futures index was up 34 points.
Shares that had fallen in recent days as investors worried about the economic effects of the outbreak in China — such as energy companies and cruise lines — posted gains Wednesday.
Although more than 44,000 people have been infected with the coronavirus globally, the spread of the disease appears to be slowing, according to China’s National Health Commission.
“The coronavirus is still the main narrative,” said James Athey, a senior investment manager at Aberdeen Standard Investments. The economic impact of the virus is still unclear, as figures for the first quarter haven’t been released yet, he said. “The market is finding a way to consistently see the positive in everything in the absence of bad news.”
As concerns about the outbreak’s effect on demand receded, Brent crude, the global benchmark for oil, climbed for a second day. It gained 3.4 per cent to trade at $US55.83 a barrel. The energy sector, the S&P 500’s weakest-performing group this year, was among the broad stock index’s leaders, rising 1pc.
Companies that have seen their share prices fall amid concerns about the outbreak gained ground. Shares of Royal Caribbean Cruises, Norwegian Cruise Line Holdings and Carnival each rose more than 2pc. Airline shares also ticked upward, with United Airlines Holdings, Delta Air Lines and American Airlines Group each adding more than 1pc.
Dow Jones Newswires
6.45am: Wages a chink in US economy
The US has seen steady job gains that have beat expectations and lasted longer than expected, but Federal Reserve Chairman Jerome Powell acknowledged that all is not well.
Wage gains have remained sluggish, while Americans lag workers in other advanced economies in education and skills, the amount of people in the work force and the cost of health care, Powell told senators.
And the number of people working more than one job is at “a very, very high level right now,” Powell said.
In two days of testimony to Congress, the Fed chief was upbeat about the economy, which is experiencing a record 11th year of growth, but he noted the chink in an otherwise healthy picture.
Though the unemployment rate is near a 50-year low, a little over five per cent of workers have to hold multiple jobs and earnings are rising at a rate of three per cent a year, just ahead of inflation, according to government data.
While hourly wage gains have picked up speed “you would have expected them to move higher than that” with the jobless rate so low, Powell said.
“So it’s a bit of a surprise” that wages have not risen more, he said.
AFP
6.40am: Virus forces tech show closure
Organisers of the world’s biggest mobile technology fair are pulling the plug over worries about the viral outbreak from China.
GSMA said that this year’s edition of Mobile World Congress will no longer be held as planned in Barcelona, Spain, on Feb. 24-27.
The decision comes after dozens of tech companies and wireless carriers dropped out, with the latest cancellations by Nokia, Vodafone, Deutsche Telekom and Britain’s BT.
Other big names that have already dropped out include Ericsson, Nokia, Sony, Amazon, Intel and LG. The companies cited concerns for the safety of staff and visitors.
AP
6.35am: Stocks climb as virus concerns ease
Global stock markets climbed on easing investor concerns over the economic impact of COVID-19.
While the death toll from China’s coronavirus epidemic climbed past 1100, the number of new cases fell for a second straight day, raising hope the outbreak could peak later this month.
US stocks pushed into record territory yet again, while in Europe the DAX 30 in Frankfurt set a record close. Paris rose 0.8 per cent to close at its highest level this year. London ended up 0.5 per cent
Market sentiment has been positive since US Federal Reserve Chairman Jerome Powell said that its assessment of the economic fallout was not as gloomy as many had expected.
There are meanwhile expectations that Beijing will introduce major stimulus policies to offset economic hits.
“It’s now hoped that, as far as the economy is concerned, we’re just facing a bad quarter that could wipe around 1.0 per cent of full-year Chinese growth,” noted Craig Erlam, senior market analyst at OANDA Europe.
With economic concerns easing, Brent crude oil rallied by more than two per cent on Wednesday while safe-haven investment gold retreated.
“Gold is slowly losing its appeal as traders declare the end of COVID-19 in sight,” said Erlam.
“This may be premature but stock markets are at record highs and central banks appear relatively relaxed about the whole situation.”
US plane maker Boeing, however, issued a stark warning about the impact of the deadly coronavirus outbreak, saying there was “no question” it would hammer the aviation industry and the broader economy.
AFP
6.32am: Virus: new cases fall
The number of new cases in China dropped for a second straight day in the virus outbreak that has infected about 45,000 people and killed more than 1100, health officials said.
Chinese President Xi Jinping promised tax cuts and other aid to industry as the government tries to limit growing damage to the economy. The outbreak has become the latest political challenge for Xi and China’s ruling Communist Party. While most of the infections have been in China, it has gradually rippled overseas.
In Japan, 39 new cases were confirmed on a cruise ship quarantined at Yokohama, bringing the total to 174 on the Diamond Princess. A Formula One race in Shanghai in April became the latest event cancelled because of the virus. Nokia, Vodafone and Deutsche Telekom became the latest companies to pull out of a major wireless trade fair this month in Spain that usually draws 5,000 to 6,000 Chinese visitors.
AP
6.30am: Ford recalls over 240K vehicles
Ford is recalling over 240,000 SUVs and cars worldwide because a suspension part can fracture and increase the risk of a crash.
The recall covers the Ford Flex, Taurus police car, Taurus SHO and Lincoln MKT from the 2013 through 2018 model years. Most of the recalled vehicles are in North America.
Ford says if the suspension moves a lot on the vehicles, the rear toe links can fracture. Toe links help keep the rear suspension stable and the tires on the pavement.
The company says it’s not aware of any crashes or injuries caused by the problem in this batch of recalled vehicles.
Dealers will replace toe links on both sides with new ones that are stronger. Owners will be notified starting March 2.
AP
6.25am: BP aims for net zero emissions
British energy giant BP, under the leadership of new chief executive Bernard Looney, declared its aim to achieve “net zero” carbon emissions by 2050, although it was vague on how it planned to hit the target.
“BP’s new ambition to be a net zero company by 2050 or sooner covers the greenhouse gas emissions from its operations worldwide … and the carbon in the oil and gas that it produces,” said a statement ahead of a speech by Looney on plans to “fundamentally transform its whole organisation”.
Environmentalists immediately challenged the company’s statement, saying it lacked detail and specific commitments.
AFP
6.23am: Goodman boosts Canada partnership
Australia’s Goodman Group and Canada Pension Plan Investment Board said they are committing an additional $US2.5 billion of equity to their US logistics partnership.
The Sydney-based property group and Canada’s biggest pension fund said the move increases their total equity commitment to Goodman North American Partnership to $US5.5 billion.
Goodman Group, which owns 55pc of the partnership, will allocate $US1.4 billion to the new commitment, while CPPIB will pony up $US1.1 billion.
Goodman and CPPIB formed the partnership in 2012 to invest in logistics and industrial property in key North American markets. The equity infusion boosts the partnership’s total investment capacity to $US7.5 billion, Goodman and CPPIB said.
Dow Jones Newswires
6.20am: OPEC cuts oil demand growth forecast
The OPEC oil cartel lowered its forecast for growth in global oil demand this year by nearly a fifth over the outbreak of the new coronavirus in China.
In its monthly report on the world’s oil market, OPEC said it now expects growth in global oil demand of 0.99 million barrels per day (mbd) this year, which is down from 1.22 mbd in its forecast last month.
“The outbreak of the Coronavirus in China during the first half of 2020 is the major factor behind this downward revision,” OPEC said.
AFP
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