Trading Day: ASX closes near daily highs in record-breaking rally
The ASX200 capped a strong session near its daily highs, coming with just three points of a key 7000 point level.
- Gold miners lead record rally
- Tariffs to stay til Phase 2: Mnuchin
- Resolute confirms Ravenswood sale
- Kalamazoo surges on big name backing
That’s it for the Trading Day blog for Wednesday, January 15. The ASX200 clocked a second consecutive record-breaking session, hitting as much as 6996.8 in a broad rally ahead of the signing of a phase one US-China trade deal.
4.31pm: ASX bucks US, Asian drag
The local market bucked a weak US lead, and was a standout across the region with a 0.47 per cent gain as Asian markets pulled back.
China’s Shanghai Composite slipped 0.63 per cent and the Hang Seng pulled back by 0.82 per cent while Japan’s Nikkei lost 0.6 per cent.
Heavyweight iron ore miners were mixed, even as China’s iron ore futures rose amid worries over cyclone disruption to WA shipments. BHP lifted 0.3 per cent to $40.18 while Rio slipped by 0.6 per cent to $103.39 even as JP Morgan tipped the miner as its preferred pick of the bulk miners.
A downgrade from JP Morgan was also a catalyst for a slip in Fortescue, its shares closing down 1.3 per cent to $10.85.
Gold miners led the charge higher as gold futures gained more than 0.5 per cent.
Resolute was a key standout after confirming the sale of its Ravenswood gold mine for $300m. Its shares finished higher by 0.9 per cent to $1.18.
Evolution lifted by 5.8 per cent to $3.85, Newcrest Mining put on 3 per cent to $31.32 and St Barbara jumped by 8.1 per cent to $2.93.
Financials rose across the board, led by a 0.6 per cent lift in Commonwealth Bank to $83.66.
Westpac pushed higher by 0.5 per cent to $24.69, ANZ rose by 0.2 per cent to $25.25 and NAB put on 0.4 per cent to $25.17.
4.13pm: Shares extend record rally
Australian shares came within just three points of a key 7000 level on Wednesday, marking the benchmark ASX200’s best start to the year since 1987.
Shaking off a weak US lead, the benchmark ASX200 smashed its previous record at the open, and built through the session to hit as much as 6996.8.
The benchmark ASX200 settled to a record close of 6994.1, up 33 points or 0.47 per cent for the session to cement a 4.5 per cent year-to-date rise – its best since 1987.
Meanwhile the All Ords pushed past 7100 for the first time to finish higher by 36 points or 0.5 per cent at 7113.5.
Eli Greenblat 3.55pm: Jeanswest the latest retail collapse
The prolonged national retail slowdown has taken its latest victim, jeans and fashion chain Jeanswest.
The store was placed into voluntary administration, just weeks after the collapse of department store Harris Scarfe and the demise of women’s fashion chain Bardot.
The failure of Jeanswest threatens the future of almost 1000 jobs.
KPMG’s Peter Gothard and James Stewart were today appointed voluntary administrators of the Australian operations of clothing retailer, Jeanswest Corporation.
An iconic Australian retail brand which opened its first store in Perth Western Australia in 1972, Jeanswest employs 988 people in 146 stores across Australia.
Jeanswest is best known for its denim, wardrobe staples and maternity wear.
3.13pm: Gentrack pummelled on utilities warning
Utilities and airport software provider Gentrack has been pummelled by the market on Wednesday, following a warning on the market and loss of a key UK contract.
The group said difficult market conditions in its key utilities markets were hitting its sales pipeline more than expected.
Key UK customer E. ON also voiced its intention to suspend the deployment of its new Gentrack platform.
“Gentrack is currently assessing the financial implications of both the broader adverse
market conditions and E. ON’s decision,” it said, adding that an updated outlook statement would be released within a week.
GTK shares are down 25.2 per cent to $2.79, after hitting a near 3-year low of $2.76.
2.51pm: JP Morgan names top mining picks
Positive macroeconomic sentiment is already priced into local mining names, according to JP Morgan.
In a first quarter review, analysts led by Lyndon Fagan note that the macro forecast is positive and is set to bode well for commodity demand, but that several stocks were looking fully valued.
“After a good run into the end of 2019, we believe inexpensive valuations are harder to find,” Mr Fagan says.
The broker downgrades Fortescue to Neutral, citing its 150pc rally in 2019, and tips Rio Tinto ahead of BHP in the diversified miners as it has the lowest price- net present value ration of 0.91x.
Along with Rio Tinto, its key picks are Northern Star, St Barbara and OceanaGold.
1.53pm: Best start to trading year since ‘87
The Australian sharemarket is having its best start to any year since 1987.
The S&P/ASX 200 is currently up 4.47pc year to date.
In fact, it is only looking at the legacy All Ordinaries index that you find a better year, a 4.58pc rise in the first 10 days of 1987.
In October 1987, the All Ords lost 25pc in a single day
It took 6.5-years to recover from the 50pc peak to trough fall in Sept-Nov 1987.
The year to date surge in the in the S&P/ASX 200 comes after a 18.4pc gain in 2019.
The 1987 surge followed a much stronger 47pc rise in the All Ords in 1986.
1.44pm: UBS to donate brokerage for bushfires
UBS will be donating all of its cash equity commissions in the Australian sharemarket on February 12 to the Australian Red Cross Disaster Relief and Recovery Fund.
It is a good day for it, since a number of the market’s biggest companies – including Commonwealth Bank, CSL and James Hardie – will be reporting their results.
“As we are the number one broker in the Australian market it won’t be an insignificant amount,” said UBS Communications manager Jenny Warat.
“But the more people know about it the more likely they will be to trade through us and we can raise more for this important cause.”
Eli Greenblat 1.31pm: Harris Scarfe hopeful of sale
The receivers and managers for failed department store Harris Scarfe are on track to shutter most of the 21 stores slated for closure by February 2 but remain hopeful for a sale of the retail business after non-binding proposals from four bidders.
Deloitte Restructuring Services had initially opened discussions with more than 20 interested buyers in the wake of the collapse of Harris Scarfe two weeks before Christmas and has spent the new year narrowing that down to four strong bidders.
Private equity firm Allegro Funds, which owned Harris Scarfe for nine days before it placed it into voluntary administration, is not one of the final four bidders for the department store owner.
It is believed the final four bidders are all local and have existing retail investments or retail operations and have enough reputation, calibre and capital firepower to give confidence to Deloitte that it could resuscitate the failed business if it bought it.
1.14pm: HIA reports dip in housing starts
The national housing industry body has reported a retreat in housing starts for the September quarter, blaming the lull in home purchases at the start of the year.
Total new homes commenced during the quarter declined by 11.7 per cent from the previous quarter, and down 27.2pc compared with a year earlier.
But HIA senior economist Geordan Murray noted that confidence in the broader housing market had improved markedly in the second half of 2019, and the result was likely reflective of softness early in the year.
“The improved market conditions mean that it has become less likely that the substantial declines in new home starts that characterised 2019 will continue into 2020,” Mr Murray said.
1.02pm: Gold miners lead record rally
The ASX is pushing further into record territory at lunch, coming within just 10 points of a key 7000 level.
At 1pm, the ASX200 is higher by 26 points or 0.37 per cent to 6987.8.
All sectors bar consumer staples are higher, led by a 0.7 per cent lift in industrials.
Gold stocks are outperforming – Evolution is up by 5.4pc, Newcrest by 2.9pc and Northern Star by 2.3pc.
BHP is higher by 0.5pc while peers Rio and Fortescue are off by around 0.2pc.
The key drags are coming from Woolworths, down 0.7 per cent, and a2 Milk, down 1.4pc.
Here’s the biggest movers at lunch:
12.40pm: Asian stocks mixed ahead of signing
Hong Kong stocks are edging higher ahead of the long-awaited signing of the China-US trade deal later in the day.
The Hang Seng index is adding 0.32 per cent to 28,973 while the benchmark Shanghai Composite index eased is flat at 3,106.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, is giving up 0.10 per cent, or 1.80 points, to 1,816.33
AFP
Bridget Carter 12.07pm: Envirosuite to buy EMS B&K
DataRoom | Environmental consulting services company Envirosuite has announced a deal to buy EMS Bruel and Kjaer Holdings.
The target is an Australian based group that dominates in the environmental noise and vibration monitoring market, operating in more than 40 countries.
Envirosuite will pay $70m cash, offer 135 million shares in Envirosuite and 75 million Consideration Options in Envirosuite to Macquarie Corporate Holdings with an exercise price of 20c.
There will also be 20 million consideration options in Envirosuite to the minority shareholders with an exercise price of 25c, which will expire three years from the time of being granted.
It has also launched an equity raising through Bell Potter, planning to tap the market for up to $85m, $70m through an underwritten placement, up to $5 through a company managed placement and $10m through a share purchase plan.
Shares are being sold at 20c each.
11.55am: Tyro tipped for attractive growth: MS
Tyro Payments has been initiated at Overweight by Morgan Stanley, described as an attractive structural growth story in the payments space.
Analysts led by Andrew McLeod note that its key competitors are the big four banks, and while it is a significantly smaller player with just 4pc of the total market, it was winning market share.
“Tyro’s competitive advantage comes from its focus on SME customers, use of technology and superior customer service. We note global merchant acquirer peers generate attractive returns, most achieve EBITDA margins of 20pc to 60pc,” Mr McLeod says.
After its market debut in December last year, the broker notes it does not expect Tyro to be profitable in the next two financial years as the business requires further scale to cover its investment in technology and people.
Despite that, its predicting its total transaction volume to grow from 10pc of the SME markets currently to 20pc by FY24/25 and sets a 12-month target price of $4.15.
TYR shares last up 1.75pc to $3.48.
11.37am: ASX pushes further past record
The ASX200 is currently charging toward 7000 points.
After rising 0.3pc to 6983.8 in early trading, the index is now up 0.4pc at 6987.2.
Local strength is despite US futures trading lower by 0.2pc.
Volume remains paltry so this still looks more like a lack of sellers than strong buying.
Momentum is obviously king with the index up 4.5pc year to date.
Gerard Cockburn 11.16am: New Century sells cattle stake
New Century Resources has sold its stake in a Queensland cattle business, returning full ownership to traditional landowners.
The Waanyi People will acquire the mining company’s 49 per cent non-controlling interest for Lawn Hill and Riversleigh Pastoral Holding Company worth $9.8m.
New Century initially bought the land in the Lawn Hill region in 1996 for its Century Mine.
The cattle business, also known as LHRPHC, will be governed by the indigenous corporate body Waanyi SPC Pty Ltd.
Following the divestiture New Century will still retain the right for mining exploration under an amended Conduct and Compensation Agreement.
New Century last trading down 1.1 per cent to 27c.
11.00am: Gold miners lead top 200
Gold miners are the best performers early in the local session, as the benchmark eases from opening highs.
That’s despite a dip in gold in the US session, after optimism in the phase one US-China trade deal.
St Barbara is in pole position with a 4.1 per cent lift while Evolution gains by 3.6pc, Resolute is gaining 3pc and Regis by 2.9pc.
10.34am: Kalamazoo surges on big name backing
Victorian gold play Kalamazoo has surged as much as 45 per cent in opening trade, after backing from Canadian-listed gold explorer Novo Resources and renowned gold investor Eric Sprott.
Both parties have subscribed to 10 million Kalamazoo shares at 40c apiece, to raise $8m.
Funds raised will fund the junior miners exploration and drilling programs at three sites in Victoria.
Mr Sprott is a director of Novo and former chairman of dual ASX and TSX listed Kirkland Lake Gold, which owns the Fosterville Gold Mine, one of the world’s highest grade and profitable gold operations.
“The Victorian goldfields appear ripe for more high-grade discoveries. We are excited to have found an opportunity with Kalamazoo to pursue what may be yet another significant new discovery,” he said.
KZR shares rose to as much as 50c apiece, last up 30.4pc to 45c.
10.15am: ASX lifts to fresh record
The local market has a new record high in opening trade, surging to as much as 6983.9.
Despite a lacklustre lead from Wall Street, the local benchmark is putting on 17 points or 0.24 per cent to 6978.6.
All sectors bar communications are trading in the green, led by an outsized jump in miners and industrials.
Gold miners too are lifting, Newcrest by 1.7pc, Evolution by 2.6pc and Northern Star by 0.7pc.
10.00am: Tariffs to stay til Phase 2: Mnuchin
US Treasury Secretary Steven Mnuchin says existing tariffs on China will stay in place, and any rollback will not be considered until the two parties agree on a Phase Two deal.
He added: "We'll see. Whenever we have a good agreement we'll present it to the President. We've never felt rushed."
— Eamon Javers (@EamonJavers) January 14, 2020
9.43am: Resolute confirms Ravenswood sale
Resolute Mining is selling its Ravenswood Gold Mine in Queensland to a consortium of private equity group EMR Capital and Singapore-listed Golden Energy.
Negotiations between the parties was revealed yesterday, but today the miner said this morning it had signed definitive agreements for the sale in a deal worth $300m.
An initial payment of $100m will be provided upfront, then up to $200m in potential payments contingent on a number of factors.
“We have strengthened our balance sheet with a combination of immediate cash and the potential for future upside as well as removing the requirement of a large near-term capital investment. The divestment has strong strategic merit for Resolute,” chief John Welborn said.
This is not Golden Energy’s first Australian asset, the Singaporean mining group has associations with listed Stanmore Coal and Westgold Resources.
Resolute said there would be no immediate changes to employment at the mine or its contract relationship, but provided strategic clarity for the group as it focused on gold in Africa.
Completion of the deal is expected before March 31.
9.28am: Stocks to set new high
Australia’s sharemarket looks set to hit a new all-time high before tracking sideways ahead of the next moves on Wall Street.
Futures suggest the S&P/ASX 200 will open up 0.2pc at 6976, about 15 points above the previous high of 6962.8 hit yesterday.
At that point the index will have risen 4.4pc in the 10 trading days for the year-to-date, after surging 18.3pc in 2019, its best year in a decade.
It will also be trading on a record 12-month forward PE multiple near 18 times and a decade-low dividend yield below 4 per cent.
Interestingly, the S&P 500 pared a 0.2pc intraday rise and closed down 0.2pc after Bloomberg said tariffs on $360bn ($522bn) of tariffs on Chinese goods will be reviewed after 10 months.
While the halving of the 15pc tariff on $120bn of tariffs will go ahead soon after the phase-one deal is signed today, the report suggests today’s agreement is “probably as good as it gets for 2020,” says NAB’s Tapas Strickland.
Politico has reported that China has committed to increase imports by $200bn over two years, including $75-77bn in manufacturing, $50bn in energy and $40bn in agriculture.
The deal will also include provisions for IP, forced technology transfer, the currency and market access to certain sectors of the economy.
US NFIB small business optimism missed estimates for December but lower-than-expected US CPI kept hopes of another US rate cut alive.
Results from Bank of America, PNC Financial and Goldman Sachs are due tonight following positive results and outlooks from Citi and JPM.
S&P/ASX 200 last 6962.2.
9.19am: Truce won’t reduce all tariffs: US
The trade truce with China set to be signed on Wednesday does not include a deal to roll back tariffs imposed on most Chinese goods, US officials said in a statement Tuesday.
The joint statement from the Treasury and the US Trade Representative’s office said “there is no agreement for future reduction in tariffs. Any rumours to the contrary are categorically false”.
The statement came after a Bloomberg report said tariffs on billions of dollars in Chinese goods will stay in place until after the US presidential election in November, after which they might be removed.
AFP
Bridget Carter 9.06am: CIMIC could dismantle Thiess for sale
DataRoom | The Spanish-controlled majority owners of CIMIC could head towards a break-up plan for its subsidiary Thiess should a buyer not be found for the entire business, according to analysts in the market.
Private equity firm Apollo was believed to be keen to buy Thiess last year, but its interest is understood to have since cooled.
The challenge for divesting Thiess is always thought to have been its size, with the world’s largest mining services provider estimated to be worth more than $3bn.
Some in the market believe selling off Thiess in parts could be the best path for the subsidiary that was formed by a series of acquisitions and amalgamations of other operations. Thiess offers development, extraction, processing and remediation services.
9.00am: What’s on the broker radar?
- Carsales cut to Sell – Morningstar
- Dexus rated new Buy – Jefferies
- Metcash raised to Neutral – Credit Suisse
- Moneyme started at Add, $1.79 target – Morgans
- Mosaic Brands cut to Hold – Morgans
- Pendal cut to Hold – Morgans
- Pivotal Systems GDRs raised to Buy – Shaw and Partners
- Platinum Asset Management cut to Sell – Morningstar
- Saracen Minerals raised to Buy – Goldman
- Tyro Payments rated new Overweight – JP Morgan
8.57am: Gold dips ahead of trade deal
Gold fell overnight ahead of the much awaited signing of an interim US-China trade deal that dampened the appeal of bullion, while palladium notched a record high on a sustained supply deficit.
Spot gold dipped 0.1 per cent to $US1,546.48 an ounce on Tuesday after touching the lowest since January 3 at $US1,535.63. US gold futures settled down 0.4 per cent at $US1,544.60.
“The main thing is that a week ago we had the Iran-US news, that caused a pretty significant rally in gold; and now that news has subsided,” said Bob Haberkorn, senior market strategist at RJO Futures.
“The US-China deal is also supposed to get signed tomorrow. So, the fact that two big drivers for gold in the geopolitical front have kind of come and gone, so gold sold off here.”
AAP
8.20am: Tariffs news dents Wall Street
Wall Street stocks finished a choppy session mostly lower as earnings season opened with mixed banking results ahead of a US-China trade agreement.
Stocks were bruised by an early afternoon Bloomberg News report that said the United States could maintain tariffs on more than $US300 billion in Chinese goods past November 2020.
The report came a day before US and Chinese representatives are set to sign a partial trade deal in which the Washington agreed not to impose additional tariffs and to reduce tariffs on about $US120 billion of goods.
The Dow Jones Industrial Average ended up 0.1 per cent at 28,939.67. The broadbased S&P 500 dipped 0.2 per cent to 3,283.15, while the tech-rich Nasdaq Composite Index also shed 0.2 per cent to 9,251.33.
Both the S&P 500 and Nasdaq had finished at all-time highs on Monday, the latest records in a run boosted by improved US-China trade relations, central bank easing and solid US economic data.
Some investors have been expecting a pullback following the surge in recent weeks that have left the market in what analysts have called an “overbought” condition.
JPMorgan Chase and Citigroup both advanced more than one per cent after reporting better-than-expected fourth-quarter results on growth in their credit card businesses and much improved results in trading.
But Wells Fargo sank 5.4 per cent as the bank missed earnings expectations and new chief executive Charles Scharf suggested a turnaround will take longer than expected.
Delta Airlines surged 3.3 per cent after reporting better-than-expected fourth-quarter profits on strong consumer demand and lower fuel costs.
AFP
7.50am: Oil breaks losing streak
Oil prices climbed overnight after five days of declines as the United States and China prepared to sign a preliminary trade deal and as Middle East tensions eased.
Brent futures were up 66 US cents, or 1 per cent, at $US64.86 a barrel, while US West Texas Intermediate (WTI) crude was up 39 US cents, or 0.7 per cent, at $US58.47.
That put WTI front-month futures on track to close below the second month for the first time since November 19, which is known in the trading industry as contango.
In addition, oil also found technical support after WTI fell to a more than five-week low of $US57.72 before bouncing off the 200-day moving average. The outlook for oil demand was supported by the expected signing of a Phase 1 US-China trade agreement on Wednesday, marking a major step in ending a dispute that has cut global growth and dented demand for oil.
Reuters
7.25am: ASX may trade flat
Australian share prices appeared headed for a flat start to trading after US stocks fell late on news that the US would likely maintain tariffs on Chinese goods until November as part of a trade deal.
At 7am (AEDT) the SPI200 futures contract was up 5 points, or 0.07 per cent, to 6,914.0 following a new high on the Australian Stock Exchange of 6,962.2 points on Tuesday, putting the bourse within reach of the 7000 mark.
However investor sentiment could be tempered by the tariffs details of the US-China trade deal.
The deal is expected to be signed overnight in the US.
Meanwhile the Australian Bureau of Statistics is due to publish building approvals data later this morning.
The Australian dollar was buying US69.04 cents, up from US69.0 cents at Tuesday’s close.
AAP
7.00am: Tariffs report hits Dow
Wall Street stocks were under pressure in US afternoon trade following a report that existing US tariffs on China will remain in place until after the 2020 presidential election.
All three major indices briefly tumbled into the red following a Bloomberg News report that said the US would maintain tariffs on more than $US300 billion of Chinese goods past November 2020.
The report came a day before US and Chinese representatives are set to sign a partial trade deal in which the Washington agreed not to impose additional tariffs and to reduce tariffs on about $US120 billion of goods.
In afternoon trade, the Dow Jones Industrial Average was up 0.3 per cent at 28,978.59. The broadbased S&P 500 was off less than 0.1 per cent at 3,287.50, while the tech-rich Nasdaq Composite Index fell a hair to 9,272.50.
The report came as investors digested mixed earnings from large banks, with JPMorgan Chase and Citigroup rallying but Wells Fargo losing almost five per cent on disappointing results.
Among other companies reporting results, Delta Air Lines surged 3.6 per cent after reporting better-than-expected fourth-quarter profits on strong consumer demand and lower fuel costs.
US data showed only modest consumer inflation in December when food and fuel categories were stripped out, a dynamic unlikely to alter the Federal Reserve’s stance of keeping interest rates steady.
After surging to a fresh record yesterday to within reach of the 7000 mark, Australian stocks are set to open marginally higher. At 7am (AEDT) the SPI futures index was up 10 points.
AFP
6.58am: Iron ore up
The spot price of iron ore has risen 1.7pc to $US95.20, according to CommSec.
6.57am: Microsoft flaw exposed
America’s National Security Agency has discovered a major security flaw in Microsoft’s Windows operating system.
Microsoft said the NSA notified the company about it. A fix was made available Tuesday, crediting the agency as the flaw’s discoverer.
The company said it has not seen any evidence that hackers have used the technique discovered by the NSA.
“Customers who have already applied the update, or have automatic updates enabled, are already protected,” said Jeff Jones, a senior director at Microsoft, in a statement.
AP
6.55am: UK PM challenges Huawei critics
Prime Minister Boris Johnson on Tuesday challenged US opponents of Britain’s potential decision to let China’s Huawei telecoms giant develop its 5G network to come up with a better choice.
Johnson’s comments came one day after a US delegation arrived in London for a last-gasp push aimed at keeping its ally from signing up the private but controversial Chinese firm.
The United States and Australia have both banned their 5G providers from using Huawei on security grounds.
But UK security officials think the company’s risks can be managed if it is only used for “non-core” elements of the network such as antennae and base stations attached to masts and roofs.
AFP
6.50am: Stocks tread water
Stock markets were range bound while the yuan briefly spiked against the dollar after the US said it no longer considered China a currency manipulator and tensions eased between the economic titans.
The US Treasury announcement came as the two countries prepare to sign the first part of a wider trade agreement that has helped fan a rally in world equity markets.
Washington’s move triggered a sell-off in haven assets, including the yen and gold.
In midday New York exchanges, the Dow showed a gain of 0.4 per cent.
In August, US President Donald Trump had accused Beijing of weakening its currency “to steal our business and factories”, restating a longstanding grievance.
But soon after trading ended on Monday, the Treasury said in its semi-annual report to Congress that the yuan had strengthened and Beijing was no longer keeping it artificially weak.
The dollar slumped to 6.8670 yuan at one point, the lowest level since July, before rebounding to trade around 6.8843 in late European trading.
“The yuan is the purest and best barometer to gauge the market’s view on US-China trade tension,” said AxiTrader’s Stephen Innes.
Tokyo’s main stocks index was among the biggest gainers, rising 0.7 per cent as the dollar advanced against the yen owing to a rush out of safety — giving a boost to Japan’s exporters.
However, profit-taking saw Hong Kong drop 0.2 per cent and Shanghai slip 0.3 per cent following recent advances.
European stock markets were mixed in afternoon trading, with London up 0.1pc, Frankfurt flat and Paris up less than 0.1pc.
AFP
6.47am: Boeing orders drop
Boeing reported a net drop in commercial plane orders in 2019 and much lower deliveries as its protracted 737 MAX crisis weighed heavily on operations.
The aerospace giant suffered a net drop of 87 orders for the year following cancellations as it booked few new orders for the MAX, which has been grounded since March following two deadly crashes.
Besides cancellations, some of the drop in net orders was from customers who have “converted” MAX orders into a smaller number of orders for the larger 787 “Dreamliner” plane.
Boeing made just 380 plane deliveries for 2019, fewer than half the number the prior year.
Boeing last month announced it was suspending production on the MAX as it seeks regulatory approval for upgrades to the plane following the Lion Air and Ethiopian Airlines crashes that together claimed 346 lives.
Boeing has built and stored hundreds of new MAX planes since the global grounding last year.
AFP
6.44am: US inflation at 14-month high
Mounting food and fuel prices helped send US consumer inflation to a 14-month high in December while price pressures otherwise were steady, government data showed.
The latest figures seemed unlikely to be of concern to policymakers at the US Federal Reserve, who have said since the end of 2019 that they expect to keep interest rates steady for the near future.
Compared to November, the Consumer Price Index, which tracks costs for household goods and services, matched economists’ expectations, rising 0.2 per cent for the month on higher prices for gasoline, shelter and medical care.
AFP
6.42am: Citigroup profits rise 15pc
Citigroup says fourth-quarter profits rose by 15pc as the banking conglomerate benefited from a boost in trading similar to competitor JPMorgan Chase.
The New York-based bank said it earned a profit of $US4.98 billion, or $2.15 per share, compared with a profit of $US4.3 billion, or $1.65 per share, in the same period a year earlier. The results topped analysts’ expectations for a profit of $1.81 a share, according to FactSet.
Like JPMorgan Chase, which also reported its results on Tuesday, Citi saw a boost in profits from its trading operations. Bond trading revenues rose 49pc from a year earlier, when a steep downfall in the markets in the fourth quarter took its toll on all banks’ trading desks.
In Citi’s consumer group, profits rose 12pc from a year earlier, helped by the bank’s large credit card division where more consumers borrowed and spent during the holiday season.
AP
6.40am: Wells Fargo slides
Wells Fargo’s net income tumbled in the fourth quarter, weighed down by hefty costs and a lower interest rate environment.
The San Francisco-based bank earned $US2.87 billion, or 60 cents per share, for the period ended Dec. 31. A year earlier it earned $US6.06 billion, or $1.21 per share.
The current quarter’s results included 33 cents per share of litigation accruals.
Analysts polled by FactSet predicted a profit of $1.12 per share. Net interest income declined from the third quarter to $US11.2 billion, mostly hurt by lower interest rates.
The biggest U.S. mortgage lender’s revenue dropped 8pc to $US19.9 billion. Wall Street expected $US20.12 billion.
Wells is still under growth restrictions by regulators after years of missteps, beginning in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas.
AP
6.37am: JPMorgan Chase profits jump
JPMorgan Chase saw profits jump in the fourth quarter, topping expectations amid strong credit card lending and good performance in trading, the bank reported.
The biggest US bank by assets, JPMorgan said profits surged 20.6 per cent to $US8.5 billion for the three months ending December 31, kicking off the corporate earnings season with a strong performance.
Revenues rose 9.0 per cent to $US29.2 billion.
Chief Executive Jamie Dimon said despite the “continued high level of complex geopolitical issues” facing the global economy, the “resolution of some trade issues helped support client and market activity towards the end of the year.” Dimon described the holiday season as “robust,” as reflected in a 10 per cent jump in credit card sales volumes.
Earnings rose in three of the banking giant’s four operating divisions, with an especially big jump in corporate and investment bank results. Fixed income trading, a weak area in some recent quarters, surged 86 per cent.
JPMorgan’s share price rose 1.7 per cent to $US139.55 in pre-market trading on the news.
AFP
6.35am: Germany invests more in rail
The German government agreed to pump 62 billion euros into modernising its rail network system, as part of a wider plan to incite commuters to opt for greener public transport options.
“We’ve just signed the most important program of modernisation ever in Germany,” said Transport Minister Andreas Scheuer. Besides the massive sum stumped up by the state, equivalent to $US69 billion, German rail operator Deutsche Bahn will also plough an additional 24 billion euros into the renewal program.
AFP
6.32am: Opel announces 2100 job cuts
Peugeot subsidiary Opel said it would offer 2100 more German workers voluntary redundancies, as it struggles to stay afloat faced with collapsing demand and an EU emissions squeeze.
The historic German carmaker, which Peugeot bought from US-based General Motors in 2017, has already slashed almost 7000 jobs since the takeover, as tumbling sales have left its main factory largely idle.
AFP
6.30am: BlackRock drops coal
Investment giant BlackRock is divesting holdings in companies that generate more than a quarter of their sales from thermal coal production, chief executive Larry Fink said.
“We believe that sustainable investing is the strongest foundation for client portfolios going forward,” Fink said in a letter to clients last week.
In line with that target, “we are in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25 per cent of their revenues from thermal coal production,” the letter said.
New York-based BlackRock, the world’s biggest private investment fund, set a deadline of mid 2020 to reach that goal, it added.
AFP
6.27am: Oyo lays off 10pc of India staff
Indian hotel giant Oyo said it is cutting 1000 employees, or 10 per cent of its local staff, as it battles multiple allegations including bribery and pressure from Japanese backer SoftBank to cut costs.
An Indian newspaper said 2400 jobs would go in total and that the firm, which has expanded aggressively in Asia and the Middle East under its 26-year-old founder, had offloaded around a quarter of its unprofitable properties.
SoftBank has backed a slew of start-ups but problems with some of the companies it has invested in including office-sharing firm WeWork and ride-hailing operator Uber had led to it pressuring others to slash costs.
A source at Oyo said it was “letting go” the 1000 employees in India, a tenth of its total strength. Bloomberg News reported last month that it has also laid off five per cent of its 12,000 staff in China.
AFP
6.25am: VW hits record sales
Volkswagen has announced record sales figures for last year that could determine whether it keeps its crown as the world’s largest automaker.
The automaker based in Wolfsburg, Germany, delivered 10.97 million vehicles in 2019.
That compares to 10.83 million in 2018, when Volkswagen edged out the Renault-Nissan-Mitsubishi alliance and Toyota, although the alliance was slightly ahead when Volkswagen’s trucks are removed from the totals.
The alliance and Toyota will report their figures in coming weeks. Toyota in December estimated its 2019 total would be 10.72 million, which would leave it behind Volkswagen.
Volkswagen was able to increase sales despite shrinking global auto markets. That means its market share increased against the competition. Sales were boosted by strong results in its home market in Germany, the US and in Brazil, while sales slipped in the Asia-Pacific region.
AP
6.22am: UK bans credit cards for gambling
Britain will from April ban the use of credit cards to pay for bets, its gambling regulator announced, the latest clampdown on the industry.
“The Gambling Commission has announced a ban on gambling businesses allowing consumers in Great Britain to use credit cards to gamble,” a statement said.
The ban comes into effect on April 14 and follows a measure introduced last year by the British government to slash the maximum stake on electronic casino-style games aimed at curbing their addictive appeal.
AFP
6.20am: Naked Brand names new CFO
Naked Brand Group said it named Cheryl Durose chief financial officer.
The Australian maker of intimate apparel and swimwear said Ms Durose previously spent 10 years at Warehouse Group, where she oversaw the finances of several brands.
Naked Brand said Ms Durose succeeds David Adams, who has served as interim chief financial officer since July 2019.
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