ASX cements 2.6pc weekly gain on defensive lift

Shares gained as much as 1.1pc intraday but faded to a 0.4pc lift thanks to support from defensive names, while the dollar climbed higher.

David Rogers and Melissa Yeo

28 min read

6:38AMJuly 03, 2020.

Updated 7:59PMJuly 03, 2020

Trade in defensive names such as Telstra helped the ASX to a 0.4pc daily boost.

Westpac to pay $8m in leave entitlements
Budget outlook deteriorates further: Evans
Retail sales up 16.9pc
Alcoa cuts $70m Adbri supply contract

Welcome to the Trading Day blog for Friday, July 3. Australian stocks pared gains at the closed but held on to a 0.4pc daily gain, cementing a 2.6pc weekly jump for the benchmark.

It followed a Wall Street boost from better-than-expected US jobs figures. The S&P climbed 0.5 per cent and the Nasdaq posted another record, adding 0.5 per cent ahead of the July 4 holiday.

Locally, Adbri dropped 25pc after the loss of a key $70m contract with Alcoa, while Afterpay hit a record $70 apiece after another bumper upgrade, but faded at the close. Retail sales for May showed a record 17pc rebound.

7.52pm: German cars go slow

Vehicles on a German autobahn.

Some 35 percent fewer new cars were registered on German roads in the first half of 2020 compared with last year, industry data showed on Friday, as the coronavirus pandemic plunges manufacturers into crisis.

In Germany, across Europe and around the world, “the collapse in markets is unprecedented in its size and global extent,” said Hildegard Mueller, president of the powerful VDA auto industry federation.

The Europe-wide passenger car market fell 43 percent in January-June, compared with 23 percent in the US and 27 percent in China, according to VDA figures.

Production within Germany’s borders fell 40 percent year-on-year to “its lowest level in 45 years” at just under 1.5 million vehicles, while exports fell at the same pace, to 1.1 million.

So far the impact on the roughly 814,000 jobs in the country’s auto industry has been limited, dipping just three percent.

But around half of those still in work are on government-backed shorter hours schemes, the VDA noted.

“Massively lower production does not just have grave consequences for manufacturers, but also for many small- and medium-sized component suppliers,” federation boss Mueller said, predicting more job losses by the end of the year.

Over all of 2020, the VDA forecasts the global car market to shrink 17 percent to 65.9 million vehicles.

It forecasts an “especially strong” fall of 24 percent for Europe, compared with 23 percent for Germany alone, 18 percent for the US and 10 percent for China.tgb/hmn/rl

AFP

6.08pm: Bonds turning Japanese?

Bonds in the US and much of the rest of the developed world suggest the future of interest rates is Japanese. Banking profits and monetary policy options for the US are likely to follow in time.

The gap between yields on long-dated government bonds in the rest of the developed world and yields on Japan’s equivalent debt have shrunk dramatically: As of this week, the spread between the ICE Bank of America 15+ Global Government ex. Japan Index and 30-year Japanese government bonds amounts to less than 0.4 percentage point, the lowest on record.

Even at the beginning of 2020, the spread between the two ran to 1.2 percentage points. British 30-year bonds now offer almost the same yield as their Japanese counterparts.

Two factors are at work. The first is the plunge in bond yields around the world, a result of the collapse in consumption and rise in savings, and forceful monetary easing from central banks.

The second is the fact that Japan stands out as a country that had no real room to cut interest rates before the pandemic and where yields have changed little this year. In fact, the 30-year yield is moderately higher than at the end of 2019.

That is proof, if more were needed, that there are realistic limits to how far south it is possible or sensible to push bond yields. The most crucial limit can be found in the data on average interest rates offered on Japanese loans and deposits.

Dow Jones Newswires

6.00pm: Modest lift for Europe stocks

European stock markets rose modestly at the start of trading on Friday, building on strong gains won the previous session thanks to solid US jobs data.

London’s benchmark FTSE 100 index climbed 0.4 percent to 6,262.19 points. In the eurozone, Frankfurt’s DAX 30 index advanced 0.3 percent to 12,645.65 points and the Paris CAC 40 increased by 0.2 percent to 5,060.26.

AFP

4.48pm: Retail sales no boost for listed retailers

Regardless of a boost in retail sales, listed retailers took a hit in Friday’s session, despite large retailers driving the rebound in turnover.

Myer slipped by 4.7 per cent to 20.5c even as department store sales for May rose by 44.4pc.

Elsewhere, Premier Investments lost 2.3 per cent to $17.08 and JB Hi- Fi finished flat at $42.69. After a rally on Thursday, Kathmandu gave up 3 per cent to $1.14 while Harvey Norman added 1.4 per cent to $3.64.

Defensive trade were key in helping the benchmark to hold on to gains in the final hour.

Heavyweight CSL did the heavy lifting with a 2.7 per cent jump to $297.46 while Telstra added 4 per cent to $3.36.

Cochlear jumped 5.9 per cent to $204 after several of its new tech-enabled products were cleared by US regulators.

Here’s the biggest movers at the close:

4.12pm: Telstra, CSL support ASX

Shares clawed back ground in afternoon trade to come back from a minor negative blip – putting on 25 points or 0.42 per cent to 6057.9 at the close.

The lift cements a 2.6 per cent weekly gain.

Defensives were key in keeping the market in the green – with healthcare and communication stocks adding 2.3pc and 2.6pc respectively by the close.

Elsewhere, Rio retreated by 1.5pc while BHP added 0.7pc and Fortescue slipped 0.1pc.

3.16pm: Shift to quality signals looming pullback

In another warning of a looming pullback in Australian shares, quality is outperforming today.

CSL is up 2.6pc, Cochlear up 5.8pc, a2 Milk up 2.7pc, Woolworths up 1.2pc, Wesfarmers up 1pc and Amcor up 2.1pc.

Riskier stocks are underperforming, with NAB down 1.3pc, Westpac down 0.9pc, ANZ down 0.9pc, Macquarie down 0.8pc, Afterpay down 1.8pc, Scentre down 2.4pc and Rio Tinto down 1.7pc.

The S&P/ASX 200 is flat at 6034 after rising 1.1pc to a 3-week high of 6101.4.

David Ross 3.05pm: Woolworths to test staff temperatures

Woolworths has announced further product restrictions at its stores and the rollout of temperature checks for all staff at sites in Victoria as part of its response to the outbreak of new COVID-19 cases.

Woolworths customers are now restricted to two items per person across an additional 18 product lines including frozen vegetables, bread loaves, chilled fresh milk, pre-packaged sausages and burgers, as well as tissues.

These restrictions are in addition to existing product limits announced last week including two per person limits on toilet paper.

Coles announced similar restrictions on Thursday after an outbreak of six coronavirus cases at its Laverton chilled distribution facility in Melbourne.

The move from Woolworths also sees nurses put in place across its stores, distribution centres and online fulfilment centre in hotspot areas in Victoria and an expansion of its leave allowances for vulnerable staff working in hotspot areas.

WOW shares are higher by 1.3pc to $37.65.

Follow the latest at our coronavirus live blog

2.43pm: Shares fall into negative

The local market has given up all of a 1.1pc intraday gain to fall into the red in afternoon trade.

With just over an hour left of trade, the benchmark ASX200 is lower by 4 points or 0.1 per cent to 6028.4.

Adelaide Brighton is the biggest percentage hit, down 25pc, while the major banks all lose between 0.2pc and 1.5pc.

Afterpay too is pulling back, despite hitting highs of $70 earlier in the session.

2.26pm: Tech titans surpass UK, German GDP

Ongoing outperformance in the US tech sector means valuation of some of the market’s biggest names has now surpassed the combined GDP of the two biggest EU economies.

The FANGMAN index – that is Facebook, Amazon, Netflix, Google, Microsoft, Apple, Nvidia – hit a fresh all time high overnight at $US6.75tn, helping the Nasdaq too to hit record highs.

German market watcher Holger Zschäpitz noted the value is now larger than that of the entire gross domestic product of the UK and Germany.

Just to put things into perspective: Combined mkt cap of #FANGMAN (Facebook, Amazon, Netflix, Google, Microsoft, Apple, Nvidia) hit fresh ATH at $6.75tn, equal to combined GDP of Germany and the UK. pic.twitter.com/CSTNAtrpYk
— Holger Zschaepitz (@Schuldensuehner) July 2, 2020

Bridget Carter 2.19pm: Buyers lining up for Seafolly

DataRoom | More than 50 potential buyers are believed to be lining up for the iconic swimwear brand Seafolly, as its administrators shut 15 of the company’s Sunburn stores to boost profitability.

It is understood that interest has been received from both local and international parties, with information memorandums sent to suitors on Monday. Indicative bids will be due on July 12.

It is understood that the plan for voluntary administrator KordaMentha is to have a sale proposal ready for the second meeting of creditors in August.

KordaMentha was appointed to Seafolly last week, as it fell into voluntary administration, owning funds to lenders including ANZ Bank.

2.10pm: Westpac pays $8m in long service bungle

Westpac will pay back approximately $8m to 8,000 staff not paid their correct long service leave entitlements.

The group advised this afternoon that it would be remediating current and former employees who were paid the wrong amount due to some “calculation errors”.

“The errors led to underpayment and overpayment of some long service leave entitlements and were identified as part of a review of Westpac’s payroll and long service leave arrangements,” the bank said.

Group executive of enterprise services, Alastair Welsh said the bank was putting in measures to ensure employee long service leave was calculated correctly.

1.37pm: Clothes, cafe spend still below 2019 level

Spending on clothing and eating out is still below 2019 levels, despite a more than doubling of turnover last month.

The latest retail trade figures showed a 16.9pc jump in retail spending in May, after a record 17.7pc fall in April – fuelled by a 137pc surge in clothes spend, and 30pc lift at cafes and eating out.

NAB notes the increasing discretionary spend, while encouraging, is still lower by between 20pc and 30pc from a year ago.

Economist Kaixin Owyong notes “surprisingly strong growth” in food and household goods, up 7pc and 17pc respectively, from already high levels.

“Going forward NAB spending data suggests spending has levelled out in June, while new COVID-19 outbreaks in Victoria are likely to weigh on Victorian sales in coming months,” she warns.

“Retail spending in Q2 to date is 6pc lower than in Q1. The decline in Q2 to date follows an increase of about 3pc in Q1.”

NAB forecasts GDP to fall by around 8pc in the second quarter, marking a 9pc fall in activity over the first half.

Read more: Retailing rebounds from virus blow

Lachlan Moffet Gray 1.30pm: Vehicle sales get EOFY boost

End of financial year sales and a slowly recovering economy with fewer COVID-19 restrictions have thrown a lifeline to the new car market after the industry saw its largest ever monthly decline in April.

New car sale figures for June published by the Federal Chamber of Automotive Industries showed that 110,234 vehicles were sold during the month – a decline of just more than 6 per cent on the number of vehicles sold in June 2019.

The drop follows declines of 35.3 per cent in May over the same period last year and 48.5 per cent in April the worst result for any month since the data series began in 1991.

AP Eagers shares are trading lower by 4.5pc to $6.82.

Read more: New car sales rebound in June

[REPORT] Vehicle sales are on the road back: In June, 110,234 new vehicles were sold, down 6.4 per cent on June 2019. While down on a year ago, the result is the strongest since the COVID-19 crisis began https://t.co/XICliCzEuo #ausbiz #ausecon pic.twitter.com/8Epb6gbadZ
— CommSec (@CommSec) July 3, 2020

1.02pm: Shares give up intraday gains

Shares have given back almost all of a 1.1pc intraday gain thanks to a reversal in the major banks.

At 1pm, the ASX200 is higher by just 3 points to 6035.1, after soaring by 1.1pc in morning trade to a three-week high of 6101.4.

This intraday reversal is a sign of profit taking and potentially a tradeable pullback.

It comes after the CBOE VIX bounced off its 200-DMA last night at 25.9pc and the S&P 500 pared most of a 1.6pc intraday rise

It’s also worth noting that Citi’s US Economic Surprise index hit a record high of 188.1.

The question now is whether the market is adequately pricing risk, barring greater stimulus.

12.33pm: Budget outlook deteriorates further

Australia’s budget deficit is set to blow out by $230bn this year, representing a “staggering” 11.7pc of GDP, according to Westpac’s latest modelling.

Chief economist Bill Evans and senior economist Andrew Hanlan have revised higher their estimates of the deficit blow out, tipping the government to extend the JobKeeper package by three months or $35bn, and with an additional $15bn stimulus package of personal tax cuts, low income subsidies and infrastructure spend to come on budget day in October.

The bank estimates a deficit of $95bn or 4.8pc for FY20, and $230bn for FY21, from previous $80bn and $170bn respectively.

They note that their estimate of cyclical deficit – that which is associated with the business cycle – has blown out to 2.75pc for 2019/20, from initial expectations of 2pc, and they now see the cyclical deficit in the current year to be at 5pc.

“We have revised the 2020/21 cyclical deficit to 5.0pc, taking on board the weaker starting

position for 2019/20 and allowing for a slightly larger deterioration in 2020/21 than originally anticipated, mindful of the deep damage to the labour market from the current crisis,” they write.

“Given the highly compressed shock to activity in April/May 2020 we do not expect the additional deterioration to the cyclical deficit in 2020/21 to be as severe.”

As part of the transition out of the JobKeeper scheme, they estimate that the government will lift the original Newstart payment by around $230.

12.21pm: ASX pares gain as banks fade

Australia’s S&P/ASX 200 is up 0.33pc 6052 at midday after rising 1.1pc to a 3-week high of 6101.4.

Real Estate, Financials, IT, Energy and Industrials sectors are trading off their high, as NAB falls 0.3pc, Scentre falls 1.3pc and Rio Tinto slips 1pc.

After hitting $70 in morning, Afterpay is now down 1pc to $67.48.

Adbri remains down about 25pc after losing the Cockburn Cement lime supply contract with Alcoa.

Travel stocks are getting hit, with Qantas down 2pc and Webjet and Flight Centre down about 5pc.

11.32am: Retail sales up 16.9pc

Retail sales for May have jumped by 16.9 per cent, its largest on record, surpassing expectations of 16.3pc as consumers rushed to spend on clothing and cafes after lockdown measures were eased.

The jump follows a record 17.7pc fall in April, during the worst of the coronavirus shutdowns and an improvement on the preliminary data which suggested a 16.3pc jump.

Data from the ABS showed a massive 129.2pc surge clothing and footwear sales, while cafes and takeaway food services gained 30pc for the month.

May’s record read is the third consecutive monthly record – after an 8.5pc lift in March due to panic buying, then 17.7pc drop in April.

AUDUSD last up 0.06pc to US69.26c.

Ben Wilmot 11.14am: Primewest adds to ‘daily needs’ portfolio

The John Bond-led Primewest has added two new shopping centres to its recently launched “Australian Daily Needs” retail property trust, taking its spend in the last three weeks to $126.5m

The company bought two Woolworths-anchored centres from Charter Hall Retail REIT and unlisted partner in Pemulwuy and West Ryde, NSW, following its recent purchase of the Spring Farm Shopping Centre south of Sydney.

It paid $91.5m, a slim 1 per cent discount to their last valuations.

The new trust was established under a new institutional mandate which is backing up to $300m worth of “daily needs” centres. The purchases show the split between larger, deserted malls, and busy grocery-anchored centres.

Mr Bond said the company had a strong, established track record in the retail sector with more than $1bn worth of daily needs convenience centre assets across Australia.

He added there was already a solid pipeline of potential opportunities within the new retail trust, as well as other counter-cyclical opportunities across Australia and potentially offshore.

10.56am: Mobility not deterred by VIC outbreak

Australians are still confident enough to get out and about despite the worsening pandemic in Melbourne, according to ANZ economists.

“The rise of community transmission of COVID-19 in some Melbourne suburbs has caused an observable impact on Victorian mobility behaviour and Google search sentiment, which aligns with changes in consumer confidence and ANZ spending data,” they say.

“Though, at this stage, Australians still seem confident that things are fine elsewhere and are moving about, booking restaurants and looking for places to visit.”

Although infection numbers spiked quickly in Melbourne, the impact on behaviour appears limited, as restaurant bookings in Victoria have continued to trend higher, Melbourne CBD foot traffic last weekend showed no discernible difference compared to previous weekends in June.

Other mobility data, though, shows a slowing in the recovering trend over the last two weeks back to pre-crisis levels, and ANZ-observed spending data is showing early signs that spending in Victoria is being impacted.

“If Melbourne’s infection rate continues, though, risks will grow that behaviour and spending will be negatively impacted in Victoria and potentially elsewhere,” ANZ cautions.

Melbourne's COVID-19 spike has affected the movements of Victorians but elsewhere Australia's easing restrictions and virus containment have allowed restaurant activity to recover faster than is the case globally. #ausecon #ausretail @DimesHayden pic.twitter.com/qMa6NDnhdB
— ANZ_Research (@ANZ_Research) July 2, 2020

10.50am: Cochlear back above $200

Cochlear shares have broken past $200 for the first time in almost three months, buoyed by the company’s latest tech-focused product range.

The group said this morning that four of its new products had been cleared by the US FDA, including a hearing aid that can sync to Apple or Android devices.

Shares in the group are up 4.5 per cent to $201.32, and if they hold above $200 at the close, will be the stock’s best levels since the start of March.

Year-to-date, the stock is down by 12.8pc.

10.41am: ASX sets new 3-week high

Australia’s S&P/ASX 200 share index jumped 1.1pc to a 3-week high of 6097.1 in early trading.

The index undershot a 1.3pc rise implied by overnight futures relative to fair value, as S&P 500 futures slipped a little.

All sectors are in the green, with Communications, IT, Health Care, Energy and Industrials outperforming.

Standouts in those sectors include Telstra, WiseTech, Cochlear, Oil Search and Austal.

Adbri fell 20pc after losing its Cockburn lime supply contract with Alcoa.

ASX200 last up 1.08pc to 6097.4.

Richard Ferguson 10.16am: China hits back at Hong Kong offer

China has hit out at Scott Morrison’s offer of safe haven to Hong Kong nationals fleeing the mainland’s security crackdown, warning Australia not to go down the “wrong path.”

The Australian has revealed Hong Kong nationals would have a fast track to resettlement in Australia through the skilled visa program, under an option cabinet will consider next week.

Chinese Foreign Ministry spokesman Zhao Lijian said overnight that Australia should look at the Hong Kong laws – which threaten pro-democracy activity with life jail sentences – in an “objective light” and told the federal government to stop interfering in China’s affairs.

“We advise the Australian side to look at the national security legislation in Hong Kong in a correct and objective light,” he said in Beijing.

“Stop interfering in China’s internal affairs with Hong Kong as a pretext, and refrain from going further down the wrong path.”

A protester is detained by police during a rally against a new national security law in Hong Kong. Picture: Anthony Wallace / AFP.

10.11am: Shares gaining 0.7pc

Shares are higher for a fourth day with gains across all sectors bar materials, after outperformance on Wall Street overnight.

At the open, the benchmark ASX200 is higher by 42 points or 0.7 per cent to 6074.7.

Adbri is taking a 19pc hit after warning Alcoa had walked away from a key contract, but the major banks are supporting the benchmark, adding between 1pc and 1.4pc.

Despite another solid upgrade, Afterpay is pulling back early by 1pc, after hitting record highs at the close yesterday.

10.05am: Another bumper upgrade for Afterpay

Analyst capitulation continues on Afterpay with RBCCM’s Tim Piper lifting his price target 106pc to $60 a share while keeping a Sector Perform rating.

That follows a remarkable 137pc price target upgrade by Citi’s Siraj Ahmed which pushed Afterpay’s share price up 9.5pc to a record high close of $68.16 yesterday.

“The market is currently rerating high-growth, tech names and leverage to e-commerce, three attributes of Afterpay which have driven a more than 100 per cent re-rate for the calendar year to date,” says RBCCM’s Piper.

“We increase our medium-term forecasts as APT benefits from an acceleration in e-commerce activity. We see strong growth ahead, but there is little priced into the current valuation for near-term risks, and APT is very pricey even vs. high-growth peers.”

9.42am: ASX headed for four-day rally

Australia’s share market should see a strong end to the week based on offshore leads.

A 1.3pc rise in overnight futures relative to fair value suggests the S&P/ASX 200 will hit a 3-week high above 6100 points.

A rise today would mark the first four-day gain since the index hit a 3-month high of 6198.6 points on June 9th.

As shares rise on the back of stronger-than-expected US economic data and expectations of sustained stimulus, there will be some fear of missing out on the rally. Indeed there will also be a renewed sense that there is no alternative to shares as interest rates remain near zero

Upside breakouts from bullish pennant patterns on the Australian and US markets now suggest they will rise well above their recent highs.

The ASX200 now targets 6560 on a break above 6200, and former resistance at 6000 should now offer some support, while the June low at 5720 remains critical to the uptrend.

Two concerns – apart from the worsening US pandemic and deteriorating relations with China – are that the VIX volatility index bounced off its 200-day moving average again and the Fed’s balance sheet shrank for the third week in a row.

When the VIX bounced off its 200-day moving average earlier this month, it spiked to 44pc amid a renewed sell-off in the S&P 500. The Fed’s balance sheet is shrinking for technical reasons, but it’s concerning for bulls reliant on Fed liquidity.

May retail are due at 11.30am AEST with the market expecting a 16.3pc rise according to Bloomberg.

9.35am: Alcoa cuts $70m Adbri supply contract

Building materials group Adbri says key customer Alcoa has pulled the pin on its longstanding $70m annual lime supply contract, set to materially impact revenue from June 2021.

The group said its subsidiary, Cockburn Cement had been informed by the aluminium powerhouse that it had elected not to renew its contract after almost 50 years.

“The Company will promptly evaluate and take necessary mitigating actions. Consequently, it is not possible to quantify the full financial impact of the non-renewal at this stage,” it said.

Chief Nick Miller described the development as ‘disappointing’, adding Alcoa was displacing locally manufactured product with imports.

“We will work quickly to mitigate the impact on local jobs supporting our lime business and we remain committed to supplying our WA resources sector customers,” he said.

Adbri’s Cockburn Cement factory in WA. Picture: Stewart Allen.

9.19am: What’s on the broker radar?

Afterpay price target raised 106pc to $60 – RBC
BlueScope cut to Underweight – Morgan Stanley
Charter Hall cut to Sell – Morningstar
Electro Optic Systems raised to Positive – Evans and Partners
Hub24 cut to Neutral – Credit Suisse
Netwealth cut to Underperform – Credit Suisse
Transurban raised to Overweight – JP Morgan

9.08am: New Cochlear tech gets FDA tick

Cochlear has this morning told the market it had been given approval by US regulators for four new products, to be released in the US and western Europe in the next few months.

The products include the Nucleus Kanso 2 Sound Processor, described by Cochlear as the “world’s smallest off-the-ear cochlear implant sound processor, and the first of its products to offer direct streaming to Apple or Android devices.

“The Nucleus Kanso 2 Sound Processor showcases Cochlear’s latest and most advanced hearing performance technology. With our latest connectivity features and a simple design that is comfortable and discreet, it really is designed to help cochlear implant recipients enrich their lives,” chief Dig Howitt said.

COH last traded at $192.69.

8.54am: Clean Seas sales better than tipped

Kingfish producer Clean Seas says a spike in coronavirus cases in Victoria will likely hit the group’s July sales, as it reports growth in local sales volume for June.

The company guided to full year profit of $1.5m to $2m, noting that although fourth quarter sales were impacted by COVID-19, a focus on non-restaurant channels had helped the company to fare batter than expected.

It said global sales in June recovered to 77pc of the prior year, but Australian sales were a standout, growing by 5pc versus the last June.

Still the company said it would take a non cash inventory impairment of $16.5m, reflecting clearance of fish not sold during the shutdown, lower selling prices to support entry into new markets, and lower farm gate prices from increases in airfreight costs.

“Clean Seas market focus for the next 12-24 months (while export markets recover from the impacts of COVID-19) will be to maximise cash generation opportunities while developing new products and supply chains for its strategic pivot to new channels, including retail and meal kits,” the company said.

CSS shares last traded at 56c.

8.25am: Rio study backs Oyu Tolgoi feasibility

Rio Tinto said an updated study of the Oyu Tolgoi copper-mining operation in Mongolia had confirmed the feasibility of an underground mine costing up to $US7.1 billion to build.

Rio Tinto said the study incorporated a new mine design for panel 0 of the Hugo Dummett North underground mine at Oyu Tolgoi. It will now submit the findings to the Mongolian government.

“This amended mine design is another positive step in the development of the underground mine which will unlock the most valuable part of Oyu Tolgoi,” said Arnaud Soirat, chief executive of copper and diamonds. “We remain focused on delivering the underground project safely and within the guidance ranges we have announced on both cost and schedule.”

Those ranges include a delay of 21 to 29 months for first sustainable production compared to the original feasibility study guidance in 2016 and an increase of $US1.3 billion to $US1.8 billion from the original $US5.3 billion development capital, Rio Tinto said.

Rio Tinto owns 33.5pc of Hugo Dummett North and 29.5pc of Hugo Dummett North Extension.

Dow Jones Newswires

7.17am: Judge denies Maduro gold

A British judge refused to give Venezuela’s Nicolás Maduro control of nearly $US2 billion in gold sitting in a Bank of England vault because Britain does not recognise the socialist leader as president of the Latin American nation.

Maduro has demanded the gold to help his cash-starved nation fight the coronavirus pandemic. But the central bank for the United Kingdom, whose government recognises Venezuelan opposition politician Juan Guaidó as his country’s legitimate leader, had refused to hand it over to Maduro’s administration.

The ruling clarifies the question of who is Venezuela’s legitimate leader — at least in the eyes of one world power.

“This is very much showing the isolation of the Maduro government,” said Christopher Sabatini, a senior research fellow for Latin America at the Chatham House think tank in London.

Guaidó has sought to preserve the gold stash at the Bank of England to keep it out of the hands of the Maduro government, which it contends is illegitimate and corrupt. His lawyers reiterated during a recent four-day hearing their stance that the National Assembly leader became Venezuela’s rightful president under provisions of the country’s constitution.

Venezuela's President Nicolas Maduro. Picture: AFP

7.00am: Oil prices rise

Oil prices rose after employment data showed the US economy gained more jobs than expected last month.

U.S. crude futures for August delivery added 2.1pc to $US40.65 a barrel on the New York Mercantile Exchange, closing at their highest level since March 6.

Prices edged higher after Labor Department data showed the U.S. added 4.8 million jobs in June, bringing the unemployment rate down to 11.1pc. That increase was larger than economists surveyed by The Wall Street Journal expected.

Oil investors said Thursday’s strong employment report was a sign that the U.S. economy is recovering from the pandemic, despite a recent climb in cases. Recent data has indicated that the recovery could be slowing down, a concerning development for those betting on surging demand for crude.

Brent crude futures for September delivery, the global gauge of oil prices, jumped 2.6pc to $US43.14 a barrel on the Intercontinental Exchange.

Dow Jones Newswires

6.20am: ASX tipped to open higher

Australian stocks are set for a positive start after Wall Street gains fuelled by an unexpectedly healthy jobs report.

At 6am (AEST) the SPI futures index was up 42 points, or 0.7 per cent.

Australia’s sharemarket yesterday posted its best day since mid-June, with the ASX 200 rising 1.7 per cent to a three-week high close of 6033.7 points.

In the US, the Dow Jones Industrial Average gained 0.4 per cent to close at 25,828.45, and the S&P 500 climbed 0.5 per cent to end the week at 3,130.05. The tech-rich Nasdaq posted another record after climbing 0.5 per cent to close at 10,207.63.

The Australian dollar was this morning at US69.26c, up from US69.20c at yesterday’s 4pm close.

6.10am: US stocks lifted by jobs report

US stocks rose Thursday after the June employment report showed the economy added more jobs than expected, reassuring investors that the recovery is continuing.

The US gained 4.8 million jobs last month, while the unemployment rate ticked down to 11.1 per cent from 13.3 per cent in May. That marked the second month in a row that employers added jobs since massive waves of lay-offs gripped the country earlier in the coronavirus pandemic. Both figures beat the expectations of economists surveyed by The Wall Street Journal.

The Dow Jones Industrial Average climbed about 94 points, or 0.4 per cent, after earlier rising nearly 470 points. The S&P 500 was up 0.5 per cent, its fourth day of gains.

Gains across the market were broadbased, with nine of 11 sectors in the S&P 500 rallying. The energy sector led the way, with Apache jumping 2 per cent and Continental Resources gaining 7.3 per cent.

Growth stocks rallied, too. Microsoft added 1.6 per cent and Tesla surged 8 per cent after the electric car maker said that its second-quarter global deliveries fell less than expected.

Those gains helped put the Nasdaq Composite at a new all-time closing high. The index rose 0.5 per cent on the day.

“This continues the trend that we’ve seen here of economic data coming in stronger than expected,” said Jim Baird, chief investment officer of Plante Moran Financial Advisors. “It all points to a recovery that is clearly under way.”

Investors said Thursday’s gains could put stocks on track for another big rally after largely being stuck in a narrow trading pattern in June.

All three major indexes finished the week up at least 3.2 per cent. Markets are closed Friday for the Independence Day holiday.

Still, some investors noted, many potential obstacles to a full economic recovery loom – which may make any stock market rally more bumpy in the future. Even with Thursday’s employment gains, the jobless rate is still at historically high levels and the U.S. labour market is operating with about 15 million fewer jobs than in February.

Even more, much of the data from Thursday’s jobs report was collected while local economic re-openings were well under way. A recent rise in coronavirus infections – which has paused or reversed reopening plans in some states – could dampen next month’s employment gains.

Investors said they would be looking to see if rising employment numbers result in an uptick in consumer spending, which accounts for roughly two-third of U.S. economic activity.

“Everybody is obviously watching the changes in the American labour market,” said Florian Hense, an economist at Berenberg Bank. “The U.S. consumer is the most important driver of the global economy.”

Globally, stocks also traded higher. The pan-continental Stoxx Europe 600 gained 2 per cent, while Hong Kong’s Hang Seng index closed up 2.9 per cent and the Shanghai Composite Index gained 2.1 per cent.

Dow Jones Newswires

5.50am: More good news for Tesla

Tesla’s second-quarter global deliveries fell 4.9 per cent from a year earlier, a much smaller decline than Wall Street had forecast, underpinning chief executive Elon Musk’s ambitious growth plans despite the coronavirus pandemic and threat of an extended recession.

The results may fuel heightened investor expectations for the next six months as they bet 2020 will be the year Tesla turns a full-year profit.

Shares in Tesla, which have more than doubled this year, closed up almost 8pc on Thursday. The stock opened the day above $US1200 for the first time ever. Investor enthusiasm, even amid the pandemic, has made the electric-car company the world’s largest automaker by market value, overtaking Toyota Motor Corp.

The Silicon Valley company delivered 90,650 vehicles in the April-through-June selling period, compared with 95,356 a year earlier. Analysts surveyed by FactSet, on average, expected 72,000 deliveries after Tesla’s lone U.S. assembly plant, in Fremont, Calif., was closed for almost half the quarter as California authorities put measures in place to slow the spread of COVID-19.

Dow Jones

5.40am: German MPs shut down bond-buying row

German MPs on Thursday passed a motion supporting the European Central Bank’s massive bond-buying support to the eurozone economy, closing for now a battle with the country’s top court.

The Federal Constitutional Court (FCC) had in May threatened to block the Bundesbank, the central bank, from taking part in the stimulus plan unless the European Central Bank (ECB) could show within three months that its government debt purchases are not “disproportionate”.

AFP

5.37am: US Treasury agrees on airline loans

The US Treasury announced it had reached an agreement with five major airlines on the terms of loans to rescue their businesses after the coronavirus pandemic badly dented air carriers.

The $US2.2 trillion CARES Act stimulus package passed in late March provided for $US25 billion to be lent to the airline industry, but carriers were hesitant to take the money for fear of draconian conditions.

American Airlines, Frontier Airlines, Hawaiian Airlines, Sky West Airlines and Spirit Airlines finally agreed to the government’s terms, the Treasury said in a statement. Discussions are continuing with other companies in the sector.

AFP

5.35am: Stocks climb on US jobs recovery

Stock markets pushed higher Thursday as investors cheered a solid rebound in US employment and encouraging news about progress towards a coronavirus vaccine.

The US economy regained 4.8 million jobs in June as businesses began to reopen nationwide, while the unemployment rate fell more than two points to 11.1 per cent, the Labor Department reported.

The job creation amid the coronavirus pandemic was far higher than economists were expecting, and showed the rapid pace of gains as people who were laid off returned to their jobs, especially in hard-hit sectors like leisure and hospitality, which accounted for just under half of the increase.

“The key takeaway from the report as far as the market is concerned is that it reflects an economy that is bouncing back from the depths of the COVID-19 shutdown period,” said market analyst Patrick J. O’Hare at Briefing.com.

“There are still far too many people unemployed (17.75 million), yet the June numbers are moving in the right direction,” he said in a note to clients.

Crude oil prices also benefited from the US jobs numbers.

“Oil prices are settling above the $US40 level after a strong US non-farm payroll report suggests the US economic rebound continues and that crude demand should follow suit,” said analyst Edward Moya at currency trading platform Oanda.

Wall Street’s main indices shot out of the gate at the opening bell, quickly racking up gains of over one per cent, with the tech-heavy Nasdaq Composite continuing to push into record territory. They later pared their gains.

Europe’s main stock markets finished the day with strong gains, with both Frankfurt and Paris up by more than two per cent. London rose 1.3 per cent.

Sentiment had already been largely positive after hopes for a vaccine were given a boost when Germany’s BioNTech and US pharmaceutical giant Pfizer late Wednesday reported positive preliminary results from a joint project.

“Investors largely are shrugging off higher cases … as Pfizer reported positive results from a vaccine trial,” said Neil Wilson at Markets.com.

“We have been here before – it’s too early to get too excited – but a working vaccine is the holy grail as it would allow real normality to return to the economy.”

In Asia, Hong Kong led gains on reopening after a one-day break, despite concerns about a new security law imposed on the city by China that observers said was more draconian than feared and could impact its future as an attractive business hub.

AFP

5.36am: Airbus in jobs appeal

European aircraft builder Airbus said it could save up to 3500 jobs in Germany and France if government help is forthcoming, out of 15,000 lay-offs planned worldwide over the coronavirus’ impact.

“We could preserve up to 500 jobs if the German government supported us via its program to develop hydrogen drive for planes. Prolonging shorter hours schemes to 24 months could save 1500 more,” chief executive Guillaume Faury told news weekly Der Spiegel, adding that “talks are already underway on this.” Likewise, 1,500 posts could also be saved in France, he said. Germany and France have complained in recent days at around 5,000 lay-offs each set to hit their countries, with Berlin urging fair distribution of the pain while Paris blasted the cuts as “excessive”.

AFP

5.35am: Myanmar jade mine disaster

The battered bodies of more than 160 jade miners were pulled from a sea of mud after a landslide in northern Myanmar on Thursday, after one of the worst-ever accidents to hit the treacherous industry.

Scores die each year while working in the country’s lucrative but poorly regulated jade trade, which uses low-paid migrant workers to scrape out a gem highly coveted in China.

The disaster struck after heavy rainfall pounded the open-cast mines, close to the Chinese border in Kachin state, where billions of dollars of jade is believed to be scoured each year from bare hillsides.

A slice of mountain collapsed, sending a churning torrent of mud into an aquamarine-coloured lake of mine waste water as workers scampered uphill.

Rescuers recover bodies after a landslide in a jade mining site in Myanmar. Picture: AFP)

AFP

5.32am: US trade deficit widens

The coronavirus pandemic caused the US trade deficit to widen in May as both exports and imports fell, the Commerce Department said.

The rise in the deficit to $US54.6 billion was worse than expected and came after April data showed both exports and imports dropping by a record amount, sending the trade deficit climbing to an upwardly revised $US49.8 billion.

The Commerce Department put the blame for the continued drop in activity on the pandemic, which has caused countries to shut their borders and order businesses closed, at least temporarily, to stop the virus.

AFP

5.30am: European banks offer card alternative

Sixteen European banks have teamed up to deliver by 2022 a new unified payment system that will offer consumers on the continent both cards and digital wallets that could offer a serious alternative to the giants in the sector such as Visa and Mastercard.

Dubbed the European Payments Initiative (EPI), the “solution aims to become a new standard means of payment for European consumers and merchants in all types of transactions including in-store, online, cash withdrawal and ‘peer-to-peer’ in addition to existing international payment scheme solutions,” the consortium said in a statement.

The proposal would offer consumer the possibility to make instant transactions, a service start-ups have pioneered and which some European banks have begun to integrate into their offers.

AFP

JOBS, JOBS, JOBS! #MAGA pic.twitter.com/W3Ify8K2tH
— Donald J. Trump (@realDonaldTrump) July 2, 2020

5.25am: US gains 4.8m jobs in June

The US economy regained 4.8 million jobs in June as businesses began to reopen nationwide, while the unemployment rate fell more than two points to 11.1 per cent, the Labor Department reported.

But as coronavirus cases surged later in June, especially in southern and western states, authorities have rolled back the reopening of their economies, forcing businesses to close again, which could jeopardise the latest job gains.

A separate Labor Department report showed job losses continued, as 1.43 million people filed initial claims for unemployment benefits last week, only slightly less than the prior week. Lay-offs have averaged 1.5 million a week over the past four weeks.

But the monthly rebound in employment will be good news for President Donald Trump who needs a strong economy to help his re-election bid in November.

“These improvements in the labour market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the report said.

The data showed the number of people on temporary lay-off dropped to 10.6 million, a decline of 4.8 million, while leisure and hospitality added 2.1 million workers in June.

Unemployed Kentucky residents wait outside a career centre for help with their unemployment claims. Picture: AFP

AFP

5.20am: Google’s Fitbit deal attacked

An international group of consumer groups and NGOs denounced Google’s bid for sports smartwatch-maker Fitbit, saying it would threaten privacy and grant the search giant unfair access to a new market.

Google’s $US2.1 billion acquisition of the maker of smartwatches and fitness trackers was unveiled in November and rang alarm bells among global regulators over antitrust and privacy worries.

Fitbit is a pioneer in the market for connected watches and other physical activity sensors that measure the number of daily steps taken, calories burned or hours of sleep.

A group of 20 NGOs “have significant concerns” that the takeover “would be a game-changer not only for how people interact with the online world but also for digital and related health markets,” a statement said.

“Regulators around the world … must therefore give it their utmost attention,” they said, calling it a “test case” on facing down big tech firms.

AFP