Trading Day: ASX keeps falling amid virus spread fears

News of the coronavirus’ global spread pushed investors to wipe $48bn off the value of shares in what was the second biggest fall in the past 12 months.

Paramedics at work in Hong Kong, where more people were confirmed to have contracted the coronavirus. Picture: Getty Images

• Ardent slammed after inquest
• Gold price reveals virus fears
• Platinum dives after reporting
• Results weaker than forecast

Thanks for joining our Trading Day blog for Monday, February 24. Local stocks opened sharply lower and kept going down throughout the day, as global markets grow more worried about the spread of coronavirus.

Today’s 2.25 per cent drop for the ASX 200 marked the second-worst fall of the past 12 months.

Meanwhile, local earnings season entered its last week, with results from BlueScope, Reliance, Worley, Amaysim and Viva, among others. A number of stocks including Wesfarmers, Woodside and Ansell were ex-dividend.

Join us again for live coverage tomorrow.

4.17pm: Big falls across the board

News of the coronavirus’ global spread over the weekend pushed investors to wipe $48bn off the value of shares in what was the second biggest fall in the past 12 months.

The ASX’s 2.25 per cent fall to 6978.3 was echoed in in markets in Asia, with South Korea’s Kospi index leading falls with a 3 per cent drop.

The Aussie dollar was buying US66.07c, up from US65.99c on Friday.

4.10pm: Equity hedges paying off for Pengana

Pengana senior portfolio manager Rhett Kessler says a “triple hedge” against a pullback in shares - via equity index put options, cash and gold equities exposure has “really worked”.

The S&P/ASX 200 is down 2.2pc at 6983 near the close of trading, heading for worst day in almost four months, after the coronavirus pandemic worsened at the end of last week.

“Valuations are high, the margin for error was low,” Mr Kessler tells The Australian. “There have been some very good earnings reports, but valuations have broadly been disconnected from fundamentals for some time.”

In recent months the Pengana Australian Equities Core fund run by Mr Kessler has been buying equity index puts and increasing exposure to cash and gold to guard against a correction in the sharemarket.

“It’s a triple hedge - so we have puts, we have lost of cash and aren’t playing in defensive stocks, and we have been accumulating a position in the biggest, low-cost gold factory - Evolution Mining - to get a defensive income stream.”

But it hasn’t been easy holding the line as the Australian sharemarket hit a record high of 7197 and record PE valuation of 18.5 times last Thursday before tumbling 3 per cent.

“This has been one of the most difficult times to stick to the strategy - seeing stocks go straight up this year,” Mr Kessler says.

Lilly Vitorovich 2.45pm Australia Post losses mount

Australia Post has reported a 46 per cent slump in first-half profit before tax with losses doubling at its embattled letter division.

It cautiously reaffirmed it was on track to deliver a “marginal” annual profit.

Despite the busiest Christmas period in its history, the government-owned organisation’s profit before tax dropped to $83m for the six months to December 31, despite a 4 per cent jump in revenue to $3.8bn and $129m gained in efficiencies. Last year’s interim result was also bolstered by a one-off $37 million benefit from the Aramex and AGS deals.

Australia Post has been reeling from the steep decline in the number of people and companies sending letters and using electronic communications instead, with its letter revenue down 9 per cent to $1.1bn and losses doubling to $87m.

Chief executive Christine Holgate said Australia Post’s strategy to diversify the business and focus on its customers was “working well, evidenced by our record underlying performance.

“However, the costs to operate the letter business continue to rise, as our people are still required to deliver to every home or business every day, process and collect the mail, whilst letter volumes and revenues fall,” Ms Holgate said in a statement.

Ms Holgate said Australia Post’s 10c letter price increase last month “will support the letters business going forward, but after four years of no increases, it alone will not fully compensate for the losses.’’

Glenda Korporaal 3.21pm: ‘Huge wave of black money’

A Bangkok-based casino regulatory expert has recommended that Australia should introduce a licensing scheme for junket operators – companies which bring high rollers and VIPs from Asia to gamble at local casinos.

Paul Bromberg, senior vice president of investigation with the Spectrum Gaming Group, gave evidence on Monday to an inquiry by the NSW Independent Liquor and Gaming Authority, before former judge Patricia Bergin, into the fitness of the Crown group to hold a VIP casino license in NSW, and said it would be preferable for gaming authorities to license junket operators, particularly in the wake of their practices in Macau.

The inquiry is also looking into last year’s sale of 9.9 per cent of Crown shares by James Packer’s personal company to his former business associate in Macau, Lawrence Ho.

Mr Bromberg said most VIP casino players around the world came from mainland China, initially heading to Macau with its relaxed regulations around gambling and casinos.

But he said tighter regulations in Macau had prompted VIP gamblers from China to look to other markets to gamble, including Australia.

“There has been a huge wave of black money which has come out of China over the last 10 years which has led to the increase in the VIP gambling market,” he said.

2.55pm: Seoul worst hit as Asia markets plunge

Seoul led a sharp drop across Asian equity markets as South Korea announced a surge in COVID-19 infections, while oil plunged and safe haven assets rallied on growing concerns about the global spread of the deadly virus.

With the outbreak showing little sign of easing investors are increasingly concerned it could have a much longer term impact on the world economy, which was already stuttering, with a number of companies warning about their bottom lines.

Traders had been broadly optimistic that the virus - which has killed nearly 2600 and infected 80,000 -- was being contained outside China but a spurt of infections and deaths in other countries including South Korea, Italy and Iran has fanned fears of a wider outbreak.

“While the coronavirus is probably slowing in China, it is speeding up elsewhere,” Charles Gillams, at RJMG Asset Management, said. “Its impact on Chinese business is already deep. So, whether that has a one economic quarter impact -- of some severity -- or is a bigger issue remains unclear and indeed we won’t know for while.”

On Monday, South Korea reported 161 more cases, taking its total to 763 and making it the world’s worst hit country outside China, with seven people now dead.

President Moon Jae-in has raised the virus alert to the highest “red” level, in a bid to strengthen the government response to the spiralling outbreak.

News of the spread hammered the KOSPI, which sank more than three percent in early trade, with market heavyweight Samsung diving 3.4 percent. The won fell 0.7 percent and is sitting at a six-month low.

Hong Kong shed 1.5 per cent, with Sydney and Manila each dropping more than two per cent. Shanghai, Taipei, Wellington were all off more than one per cent. Singapore and Jakarta were off around 0.6 per cent apiece.

AFP

2.45pm: Virus threatens recovery hope - Halley

OANDA senior market analyst Jeffrey Halley says confidence in a “V-shaped” recovery in the global economy has taken a hit with the spread of the virus in South Korea, Iran and Italy.

“Much will now rely on the success of Japan, South Korea, Iran and Italy’s efforts in controlling the spread, even as the rate of new cases in China continues falling,” he says.

“A biological whack-a-mole scenario, where the pathogen is managed in one location, only to pop up in another, is somewhat of a nightmare scenario.

Next week’s PMI data from around the globe will give investors the first real insight into the hit to economic activity across the world from coronavirus.

A coronavirus booking around-the-world airline tickets make a ‘V-shaped’ recovery look more like a very wide and shallow ‘U-shaped’, or at worst, ‘L-shaped’.”

Bridget Carter 2.14pm: Blundy offloads Adairs shares

Brett Blundy is understood to have sold a small parcel of shares in Adairs.

It is understood that about five million shares owned by the wealthy retail businessman were offloaded, according to market sources on Monday.

It is understood that the trade was handled by UBS.

The stake equates to almost 3 per cent of the $438m company.

It comes after Catalyst Investment Managers sold an 11 per cent stake in Adairs worth $47.3m at $2.57 each through JPMorgan on Friday when shares closed at $2.59 each, with the trade equating to a 0.8 per cent discount to the last close.

Shares had rallied 8 per cent on Friday after delivering its results.

They were trading about 1.5 per cent higher on Monday afternoon at around $2.63.

The company told the market it had posted a 8.6 per cent lift in its sales and a 4.2 per cent increase in net profit to $15.7m.

It comes after DataRoom tipped the selldown to happen on February 16.

Both Brett Blundy and Catalyst, run by Trent Peterson, hold at least 18.5 per cent of the Adairs shares on issue and Mr Peterson is an Adairs director.

The homewares business has proved a success in recent years in stealing market share off rivals such as Myer.

2.08pm: More share volatility ahead

Credit Suisse analyst Damien Boey has formally increased the quality and reduced the value tilts of his model Australian share portfolio because he expects higher volatility.

Mr Boey says a situation where short-term economic growth is picking up, but cyclicals are underperforming defensives because the discount rate components are evolving unfavourably, is “distinctly possible.”

And VIX futures and Treasury forward curves collectively are pointing to higher volatility, and lower risk free rates.

“In other words, despite currently easy Fed policy settings and telegraphed easing to come, investors still think that volatility is likely to increase,” Mr Boey says.

“They are questioning the credibility of the Fed’s put (option). Indeed, futures and forward curves tell us that the sum of the VIX and bond returns is likely to be meaningfully positive in the months ahead, consistent with defensives outperforming.”

Against this backdrop, he says the key question for investors is not whether the outbreak of COVID-19 will derail economic recovery, but whether the extreme divergence of views has been adequately priced into volatility.

“Our belief is that it has not (and) the consequences of this are potentially non-linear,” Mr Boey argues. “After all, we have seen a tremendous rise in investment vehicles predicated on lower-for-longer rates and lower-for-longer volatility.

“Higher volatility could well trigger de-risking and de-leveraging. Making matters worse, all is not well in money markets, and so any fire sale in asset markets could undermine confidence in the financial system, with negative repercussions for 2021 growth.”

He warns that de-leveraging can cause asset prices to drive fundamentals lower, undermining the anchoring properties of value factors.

A weaker AUD/USD and potential fiscal stimulus as “mitigating factors” as “history tells us that AUD/USD undershooting, and larger fiscal deficits tend to support domestic growth relative to the global cycle, and therefore tend to support domestic value relative to global value”.

“However, the AUD/USD is already doing quite a lot of heavy lifting, having fallen to 66c, or 6 per cent undervaluation relative to “joint parity” equilibrium,” Boey says.

“It is possible, but hard to ask for more from the currency. As for fiscal policy, it is clear to us that fiscal deficits will only kick in once monetary policy has been exhausted.

So overall, we think that despite the presence of some natural shock absorbers, the Australian factor cycle will broadly follow the global cycle.”

2.04pm: Ardent hit after coroner report

Losses on Ardent Leisure have deepened, with the theme park operator down 17.6 per cent at $1.16 as Queensland’s Office of Industrial Relations considers launching a prosecution after the company’s poor safety practices were found to have led to the deaths of four people at its Dreamworld park.

A Queensland coroner earlier Monday found the company has overseen decades of “systemic failures“ to adequately assess the safety of Dreamworld’s Thunder River Rapids Ride.

Coroner James McDougall said he reasonably suspected Ardent Leisure had committed an offence under workplace law. The brief of evidence gathered during the inquiry will be handed to the Office of Industrial Relations. Whether charges will be laid is up to the office, Coroner McDougall said.

Meanwhile Ardent says it will respond tomorrow to the damning coroner’s report.

Ardent Leisure theme parks division chief executive officer John Osbourne expressed “deepest sympathies to the victims’ families.

“First and foremost, we express our deepest sympathies to the families and friends of Roozbeh Araghi, Luke Dorsett, Kate Goodchild and Cindy Low,” he said in a statement.

“Our thoughts are also with the first responders, emergency services personnel, investigators, counsellors and Dreamworld team members affected by this tragedy.

“We would like to acknowledge the attendance and involvement of the families, witnesses and all other participants in the inquest process, as well as the Coroner and his team.

“We will now review the coroner’s report in detail before providing a further response tomorrow.”
Read more

Supratim Adhikari 1.58pm: Altium loses altitude

Electronics design software maker Altium is another of the highly touted tech stocks bearing the brunt of the coronavirus fallout, with its shares down almost 3.5 per cent on market jitters.

Altium last Monday warned that its full year 2020 numbers will take a hit on the back of the coronavirus outbreak and underperformance of its Octopart subsidiary in the first half of the financial year.

Octopart is a search engine for electronic and industrial parts that Atium bought in 2015.

The profit warning issued a week ago has knocked the wind out of high-flying Altium’s sails, with the company’s shares falling 22 per cent since them, from a peak of $42.63 to $33.18.

1.40pm: China market may offer hope

China’s stock market may be the best hope for a “circuit-breaker” in what could be a global meltdown today. After all the supportive comments from Chinese officials regarding the virus today, the odds favour an afternoon bounce led by “the national team”.

The supportive comments from Chinese officials have been fairly comprehensive today.

First, five China provinces lowered their coronavirus emergency level, second, the NDRC secretary general said China’s industrial restart is increasing, third, he said the the overall trend in China’s economy is “unchanged” and China is in a position to meet its economic targets for 2020, fourth, he said the government’s policies can ameliorate outbreak’s effects, fifth, the MOF’s Ou Wenhan said China will cut taxes and fees to help companies and will look into more targeted tax cuts, special bond issues and increasing trasfers to virus hit regions. The Shanghai Composite is down 0.9pc after falling 1pc earlier.

Australia’s S&P/ASX 200 keeps falling though, last down 2.4pc at 6967.9.

1.30pm: Complacent market waking to risk - Lucerne

Lucerne Investment Partners portfolio manager Jerome Lander says a “complacent” sharemarket is only just “waking up” to the true economic risk of the coronavirus pandemic.

“Until now, the equity market has dismissed the issue as China-specific, containable and short-term in scope, but this is likely to change in short order as a complacent market wakes up to the risk,” Dr Lander says. “A complacent and bullish market has simply compared the illness to historical outbreaks which have had little impact on markets, and hence dismissed it without much further thought or analysis. After all, who cares about coronavirus – or the real world - when central banks are busy pushing up asset prices and making the rich richer with easy money and low interest rates? The consensus wants to believe this time is different from prior cycles as current central banks and policy makers now seemingly control asset prices and seemingly want them kept high.”

Dr Lander argues that substantial anecdotal evidence of supply chain issues and collapsing Chinese demand have hence been ignored or dismissed as temporary in scope, in a “classic case of cognitive dissonance and willful neglect.”

But “China is obviously one of the two most important economies in the world and any challenge to economic growth there should not be easily dismissed.”

Meanwhile, market signals from other asset classes such as collapsing bond yields, commodity prices and soaring precious metals have also been “ignored along with excessive positioning and bullishness within equities.”

Investors have until now “superficially considered China to be successfully containing the threat given the official numbers show a decreasing trend of new cases.”

And global cases had been limited in scope and quite benign until the increasing spread in South Korea and Italy reported at the end of last week.

1.12pm: Crown shares dive as probe resumes

Shares in Crown Resorts have sunk to a more than two-year low amid more poor press and the resumption of a public inquiry into NSW’s casinos.

The probe initiated by the NSW Independent Liquor and Gaming Authority is investigating the multi-billion dollar industry’s vulnerability to money laundering and organised crime.

Former Supreme Court judge Patricia Bergin has been tasked with reporting on whether Crown and its Barangaroo casino licensee are fit to hold a gaming licence in NSW.

The latest round of hearings kicked off in Sydney on Monday with expert witness Paul Bromberg, from consultancy firm Spectrum Gaming Group, who appeared by video-link from Bangkok to give evidence on casino junkets for VIP high rollers and the potential for exposure to alleged criminal activities.

Mr Bromberg’s appearance follows a report in Nine newspapers on Sunday that a Crown Resorts vice-president authorised a junior casino staff member to transfer $500,000 to Melbourne drug trafficker in January 2017.

Meanwhile, the Australian Securities and Investments Commission is casting its eye over a now halted $1.8 billion deal to sell a 20 per cent stake in the company to Lawrence Ho’s Melco International last May.

Mr Ho’s father, Stanley Ho, has been allegedly linked to organised crime and is banned from being an associate of Crown’s Barangaroo casino - though he has never been convicted and has always rejected such accusations. Crown Resort board members Michael Johnston and John Alexander, as well as Crown’s general counsel and company secretary Mary Manos, and Melco’s Geoffrey Davis, will be called before the inquiry.

Major shareholder James Packer and Lawrence Ho are set to appear at a later date.

Crown shares were 6.12 per cent lower at $11.04 by 12.30pm (AEDT). They were last this low in October 2017, following accusations by Independent federal MP Andrew Wilkie the company had deliberately tampered with poker machines.

AAP

Supratim Adhikari 1.04pm: Virus weighs on WiseTech

Coronavirus worries are continuing to hit WiseTech Global’s stock, with the logistics software maker’s shares down over three per cent in early afternoon trading.

The local tech unicorn has seen over $3bn wiped off its market cap on the back of a coronavirus-induced earnings revision delivered last week.

The warning, while accompanied by a healthy first half FY20 results, revived concerns about WiseTech’s lofty valuation.

The software maker trimmed its 2020 financial year numbers, with revenue to now land between $420m to $450m and earnings before interest, tax, depreciation and amortisation set to come in at $114m-$132m. It had previously forecast revenue at $440m-$460m, with EBITDA at $145m-$153m.

WiseTech shares fell 27 per cent on the back of the results last week to $21.40. They have since slipped beyond $20 and were trading 3.2 per cent weaker on Monday at $18.63.

1.00pm: Virus outbreak “getting spooky” - Innes

AxiTrader chief market strategist Stephen Innes says “the world is getting spooky” in regard to the coronavirus pandemic. He points to extremely rapid growth in cases in South Korea, asymptomatic positive cases in US evacuees from the Diamond Princess, and the Italian outbreak that’s caused a significant lockdown of people and cancellation of public events.

Late Friday it was reported that 11 of 13 US evacuees of the Diamond Princess in Japan tested positive in the US even though not all had tested positive in Japan.

“But of all the alarming aspects of the rapidly spreading virus out Wuhan is that it’s showing up in patients with no connection to China or the city of Wuhan, ground zero for the outbreak,” Mr Inned said. “It suggests things are about to get extremely problematic, and market conditions could get exponentially worse this week.”

“Adding a few bricks to China’s Great Wall of Worry, consider the global economic snowballing effect of 40 per cent (nearly $US10bn) of China offshore bond from stressed issuers due in 2020, it is hard to see this ending well. That asymmetry means it’s very hard not to stay hedged if not back the truck up into more safe haven assets.”

Perhaps most concerning about the price action today is that Australian shares aren’t bouncing.

In fact the S&P/ASX 200 is still making new two-week lows this afternoon,

The S&P/ASX 200 was down 2.2pc at 6981.6.

12.50pm: Cooper Energy down 1.4pc after report

Cooper Energy escaped some of the pain washing across its sector on the sharemarket today after posting an 8 per cent rise in half-year revenue to $31.9m.

The group booked a net loss of $12.6m for the period on reserve development costs.

Cooper Energy shares were down 1.4 per cent in lunchtime trade, to 53.25c.

But that compared to a fall of 3.7 per cent across the broader energy sector, exceeded only by consumer discretionary. Woodside Petroleum was trading down 6 per cent to $31.21 ex dividend, with Santos down 4.1 per cent to $7.59. Oil Search shed 3.3 per cent to $6.14.

12.40pm: Ardent slammed after coroner findings

Ardent Leisure shares last traded down 15.2 per cent at $1.195 as Queensland coroner James McDougall hands the long-awaited findings into Dreamworld theme-park disaster that killed four people in 2016.

The six-week inquest closed in December 2018.

The findings are scathing of the Ardent-owned theme park, with findings of “significant risk to the safety of patrons” due to the hazards identified on the Thunder River Rapids ride.

Cindy Low, Kate Goodchild, her brother Luke Dorsett and his partner Roozi Araghi died in October 2016 when a water pump on the Gold Coast theme park ride malfunctioned.

McDougall said the hazards “would have been easily identifiable to a competent person”.

He found there is no evidence Dreamworld conducted a thorough engineering risk assessment of the ride in the three decades it was open to the public. “I find that shoddy record-keeping was a significant contributor to this incident,” he said.

“Failure to record the changes have contributed to the masking of the real risk of the (ride).” He said the ride was completely unsafe when the tragedy occurred, with safety procedures described as “rudimentary” and “unsophisticated”.

Since the disaster Ardent has had a major management and boardroom cleanout, with Gary Weiss becoming chairman with his funds vehicle Ariadne Australia taking a key stake.

Ardent Leisure chairman Gary Weiss outside Dreamworld. Picture: Adam Head

12.40pm: HK sharply lower

Hong Kong stocks extended losses at the start of trade on Monday as investors fret over the spread of the deadly coronavirus around the world.

The Hang Seng Index fell 0.75 percent, or 203.46 points, to 27,105.35.

The benchmark Shanghai Composite Index dropped 0.39 percent, or 11.78 points, to 3,027.89 and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, was 0.09 percent, or 1.79 points, down at 1,905.56.

12.20pm: ASX losses deepen at noon

Australian stocks have plunged after investors were spooked by fears the spreading coronavirus outbreak will increasingly affect global economic activity.

The plunge put the market on track for its biggest one-day fall since December 3.

Shortly before noon the benchmark S&P/ASX200 index touched a two-week low of 6984.6 to be down 2.2 per cent.

The biggest drags at noon were the energy, industrials, finance, info tech and consumer discretionary indices.

The dive follows sell offs in US and European markets on Friday on the back of increasing concerns over COVID-19 as more companies face disruptions and issue profit warnings.

Stephen Innes, Asia Pacific Market Strategist at AxiCorp, says markets were spooked by virus clusters breaking out “all over” Korea, with with Japan not far behind.

There were also asymptomatic positive tests in Omaha from cruise passengers and an outbreak in Italy postponing a top-level football much, Mr Innes said.

“But of all the alarming aspects of the rapidly spreading virus out Wuhan is that it’s showing up in patients with no connection to China or the city of Wuhan ... suggesting things are about to get extremely problematic, and market conditions could get exponentially worse this week.” Oil prices also fell but gold jumped to its highest level in seven years as investors rushed to put their money in the save-haven metal. Spot gold was trading at $US6,938 per fine ounce at midday.

AAP

12.15pm: Gold reveals virus fears

The continued surge in gold prices shows the extent of fear about the coronavirus pandemic.

Spot gold is up 1.2pc at $US1663.10 after jumping 2.2pc to a seven-year high of $US1679.70 in early trading.

It comes as heightened risk aversion in equities and commodity currencies fuels safe-haven demand.

AUD/USD dived 0.6pc to an 11-year low of 0.6585, S&P 500 futures fell as much as 1.4pc and Australia’s S&P/ASX 200 fell 2.2pc this morning.

Monday mornings in Asia are prone to volatility due to the lack of depth in global markets at that time of the week.

Still, it’s an exceptionally large rise in one of the world’s most liquid asset classes.

It suggests investors are re-evaluating the length and breadth of the coronavirus pandemic.

The consensus was that it would be under control by March and largely be confined to China.

But the rapid spread in South Korea, Japan, Italy and Iran are adding to worries about the stained high rate of spread in China.

No doubt China’s “national team” will be at the ready today but it’s hard to see how Wall Street avoids another fall tonight.

Nick Evans 12.10pm: Gold shares surge

The Australian gold sector has surged on renewed fears of the spread of the coronavirus, with gold companies among the few gains on the ASX today.

The spot gold price jumped above $US1660 an ounce in morning trading, with the Aussie dollar gold price briefly crossing $2535 before falling back to about $2515.

The renewed gold price run is translating directly to the stocks of ASX-listed producers, with Saracen Mineral Holdings leading the charge, up 26c or $3.2 per cent to $4.45 at midday.

Resolute Mining was up 5.1 per cent to $1.245, with St Barbara up 4.9 per cent to $3, Northern Star Resources gaining 4.8 per cent to $15.175, Newcrest Mining up $4.5 per cent or $1.30 to $30.02 and Regis Resources up 19c or 4.2 per cent to $4.71.

Gold Road Resources and Evolution Mining had both gained 6c to $1.765 and $4.57 respectively.

Of the gold miners listed in the S&P ASX200 index, only Silver Lake Resources was down on Monday, losing 0.5c at midday trading to $1.74 on the back of the release of its half-year results.

Ben Wilmot 12.03pm: McGrath bounces back

The firing residential property market has propelled a recovery for listed real estate agency McGrath, with its first half results coming in at the top end of guidance.

The company’s shares jumped by 4c to 34.5c in midmorning trade as the group, in which high-profile agent John McGrath has a 24 per cent stake, rides the tide of rising auction clearance rates.

“We have seen a strong start to activity in January with an increased number of vendors who have gone to market early and benefited from strong demand and continued rising values during the last quarter of 2019. We believe this will have a positive impact on vendor sentiment for the second half,” McGrath chief executive Geoff Lucas said.

The company’s revenue jumped 15 per cent to $48.9, and it had normalised earnings of $1.6m, a $4.1m turnaround from last year’s first half loss of $2.5m.

The company also clawed its way back to a net statutory loss of about $980,000, a recovery from a $9.6m loss in the previous first half.

11.40am: ASX falls further

A selloff in Australian shares is continuing unabated.

The S&P/ASX 200 was down 144 points or 2pc at a two-week low of 6995.8 in late morning trading.

The index is now heading for its biggest fall since December 3.

Robyn Ironside 11.32am: Airports still raking it in

Australia’s biggest airports have managed to increase profits despite weaker passenger growth and less revenue from carparking.

The Australian Competition and Consumer Commission’s annual airport monitoring report released on Monday, showed Sydney, Melbourne, Brisbane and Perth Airports earned a total of $863.5m from aeronautical charges in 2018-19, up 3.6 per cent of the previous year.

ACCC chair Rod Sims said the figure was a record for aeronautical activities.

“Australia’s four major airports have collectively increased their aeronautical profit almost every year over the 17-year lifespan of the ACCC’s monitoring,” said Mr Sims.

“This may illustrate the benefit of power of being a monopoly.”

Although the profitability of carparking continued to fall overall, the airports still made a $276.1m profit, down 2.5 per cent on the year before.

Sydney airport. Picture: Monique Harmer

11.30am: Platinum dives 7pc after reporting

Platinum shares have tumbled 7 per cent to a 2.5-month low of $4.305 after reporting late Friday. Interim profit rose 5.6 per cent to $79.1m from $74.9m a year ago, with revenue and other income up 15.5 per cent at $153.6m. But net outflows soared to $1.3bn in the half year. Platinum said outflows “related to the time-lag effect of the weak relative investment performance experienced in the 2019 financial year, caused by the late cycle bull market, particularly in the US”.

But Ord Minnett analysts said they expect outflows to worsen this year on the back of Platinum’s underperformance against its main competitors.

“The stock is trading on a price earnings ratio of 19 times fiscal 2021 earnings, which we believe is far too expensive for a high-beta stock experiencing outflows and shrinking earnings per share,” they said. “We expect flows to soften further into 2020 given the soft performance of recent months and years, contrasted against the strong performance of key peers in Magellan and Hyperion Global.”

11.20am: Energy stocks lead ASX plunge

Australian stocks have plummeted after offshore markets fell on fears the coronavirus outbreak is spreading across Asia and will increasingly affect global economic activity.

At 11.20am the benchmark S&P/ASX200 index was a sea of red as it fell 126.4 points, or 1.8 per cent, to 7012.8.

Earlier, after half an hour of trading, the biggest drags were the energy, materials and consumer discretionary indices.

Energy was 2.82 per cent lower, industrials were down 2.42 per cent and the consumer discretionary index had tumbled 3.39 per cent.

US and European markets fell on Friday on the back of increasing concerns over COVID-19 as more companies face disruptions and issue profit warnings. Oil prices also fell but gold jumped to its highest level in seven years as investors rushed to the save-haven metal.

Gold stocks were the few bright spots on the trading board on Monday, with both Newcrest and Northern Star gaining more than 3.8 per cent respectively to $29.82 and $15.04.

Woodside and Wesfarmers both dived after going ex dividend.

Wesfarmers was down $1.70, or 3.69 per cent, at $44.32 while Woodside was off $1.55, or 4.67 per cent, at $31.65.

BlueScope Steel warned of a heavy impact from the virus and its shares fell 87 cents, or 6.31 per cent, to $12.84 after it posted a 70 per cent drop in interim profit.

Worley reported a 40 per cent first half profit jump, but its shares fell too, down 32 cents or 2.27 per cent at $13.76.

Outdoor advertiser oOh!media talked of “unprecedented” media market softness, federal election fallout and a weak economy. Its shares declined four cents to $2.89 at 1048 AEDT.

The Aussie dollar was buying US66.04 cents at 10.30am (AEDT), up from US65.99 cents on Friday.

AAP

Nick Evans 10.50am: Ramelius jumps on earnings

Ramelius Resources shares jumped in early trading after the company reported a strong first half of the year, with earnings and profit up strongly on the back of the strong gold price.

Ramelius shares were up 6.5c, or 5.1 per cent, to $1.335 in early trading on the back of the company’s half-year financial results.

Despite a 13 per cent drop in revenue, to $158.5m, earnings before interest, tax, depreciation and amortisation rose 32 per cent in the half to $65.9m, with net profit up 321 per cent from $7m in the first half of the previous financial year to $20.5m in the six months to the end of December.

Ramelius boss Mark Zeptner said the earnings lift came from improving grades at its WA gold mines, particularly its Mt Magnet production hub, with its earnings from Edna May operations - formerly owned by Evolution Mining - only marginally down despite the fact the operation is increasingly reliant on processing low-grade stockpiles.

“This profitability has been achieved as a result ofstrong cost controls, improving grades, and an improving gold price,” he said.

Ramelius did not declare a dividend for the period. It finished the period with $87.7m in cash and equivalents.

RBC Capital markets analysts said the Ramelius result reflected a “solid” performance.

“The company retains a comfortable cash position following the investment of ~A$78m during 1H toward mine development (future optionality) and exploration,” RBC said in a client note.

“We continue to view RMS as an attractive valuation play down the curve in a space (Australian gold sector) that we view as fully-to-fairly valued. RMS exhibits exploration upside across its tenements, and valuation is also attractive.”

Eli Greenblat 10.45am: Retailers bear brunt of market selloff

The retail sector is underperforming the broader market as Wesfarmers falls 3.5 per cent to $44.40 ex-dividend, JB Hi-Fi falls 2.7 per cent to $39.13, Woolworths drops 1.7 per cent to $42.72 and Coles slips 0.8 per cent to $15.86. Myer is bucked fall, up 1.3 per cent at 38.5c.

Lilly Vitorovich 10.37am: oOh!media earnings slip

Outdoor advertising company oOh!media has reported a 5 five per cent drop in annual underlying earnings, hurt by weak advertising spending and higher costs.

Underlying earnings fell to $139m last year, in line with last month's revised guidance, from $145.7m, hurt by a slowdown in underlying revenue growth.

Underlying revenue rose 1 per cent to $649.6m as costs of media sites and production jumped 5 per cent to $366.3m last year.

Outgoing chief executive Brendon Cook said the group continued to outperform the broader market, which declined an estimated five per cent.

“Following the difficult second and third quarters, we delivered a stronger performance and recovered hare in the fourth quarter to deliver revenue growth in line with the OOH market and earnings within our guidance range," he said.

10.20am: ASX opens sharply lower

Australia’s S&P/ASX 200 share index dived 1.7pc to a two-week low of 7018.9 in early trading.

That’s much worse than the 0.7pc fall projected by overnight futures after Friday’s tumble in offshore markets.

Next chart support for the index is the 50-day moving average at 6947.

It comes as S&P 500 futures fall as much as 1.4pc after the coronavirus pandemic worsened over the weekend.

All local sectors are deeply in the red, with the consumer discretionary, tech, energy, industrials and health care sectors underperforming.

Among large caps, CSL is down 1.8pc, BHP is down 1.7pc and Macquarie is down 2pc, while the major banks are outperforming with falls of 1.1pc - 1.3pc.

Reliance Worldwide dived 25pc after cutting its full-year earnings guidance.

Six stocks in the S&P/ASX 200 are ex-dividend - including Woodside, Wesfarmers and Tabcorp.

10.09am: Worley profit rises 40pc

Worley said its half-year net profit rose by 40pc, as it reaped early benefits from its $US3.3-billion acquisition of Jacobs Engineering Group’s energy, chemicals and resources division.

Worley reported a net profit of $115 million for the six months through December, up from $82.4 million a year earlier. Directors of declared an interim dividend of 25 cents a share, double the payout of a year earlier.

Monday marks the start of Chris Ashton’s tenure as chief executive of the Australian engineering and services contractor. Mr Ashton, who was responsible for the integration of Jacobs’s ECR division in his previous role as Worley’s chief operating officer, replaced Andrew Wood who had led the company for seven years.

Dow Jones Newswires

10.00am: Results weaker than forecast - Citi

Citi analyst Craig Woolford says interim results have been weaker than forecast.

With 65 per cent of Citi’s coverage and 82 per cent of market capitalisation having reported, Mr Woolford says the aggregate shows there were some misses on the revenue and EBIT line and larger misses at the NPAT line, and dividends have also disappointed.

The resource sector drove earnings weakness as a mostly unchanged revenue line was eroded by somewhat higher operating costs, as well as optically-greater interest expense, due to adoption of AASB16 accounting, and there were some noticeable misses in dividends, including for BHP and Fortescue, according to Mr Woolford.

Lower resource earnings reflect a mix of lower oil price assumptions and poorer results.

Banks’ earnings have been revised down, mostly on Westpac’s trading update, but outside of these two broad sectors, earnings have been resilient, Mr Woolfored says.

Downward revisions have been large, but mostly concentrated in resource sector names.

Upward revisions have been smaller with few common threads except for better margins.

Eli Greenblat 8.40am: Pental pushes into Asia

Pental, whose household consumer brands include White King bleach, Aim toothpaste and Velvet and Country Life soaps, is pushing to grow its export business into Asia, with the coronavirus outbreak lifting demand in China for its disinfectant range at a time when stagnant wages growth and price wars are hurting earnings in Australia.

The consumer goods manufacturer said it has begun discussions to forge new export business into The Philippines, Thailand, South Korea and Vietnam to complement its small but burgeoning exports into China where middle-class households are keen to but its branded soaps, toilet cleaners and disinfectants.

However, tempering that potential growth into Asia is the continued tough trading conditions in Australia where supermarket price wars, the proliferation of private label products - especially into its core cleaning category - and stagnant wages growth is constricting the local market.

Pental on Monday posted a 2.57 per cent lift in half-year net profit to $1.475 million as sales for the period rose 15 per cent to $55.259m as the recent acquisition of the Duracell battery business helped fuel a sales kick.

The company declared an interim dividend of 0.7 cents per share, in line with last year, and payable on March 25.

9.30am: Today’s analyst rating changes

Boral cut to Hold - Morningstar

Bravura cut to Market-Weight - Wilsons

Carsales.com raised to Hold - Morningstar

Citadel Group raised to Buy - Bell Potter

City Chic Collective raised to Buy - Baillieu

Inghams raised to Buy - Goldman Sachs

Inghams raised to Outperform - Credit Suisse

Infigen cut to Neutral - Macquarie

Iress raised to Hold - Morningstar

Mayne Pharma cut to Hold - Morningstar

MyState raised to Buy - Bell Potter

New Hope raised to Buy - Morningstar

QANTM IP raised to Buy - Bell Potter

Sandfire Resources raised to Buy - Bell Potter

Select Harvests cut to Hold - Bell Potter

Senex raised to Outperform - Credit Suisse

Village Roadshow cut to Neutral - JPMorgan

David Rogers 9.22am: ASX tipped for sharp fall

Australia’s sharemarket is set for a relatively sharp fall, in line with offshore markets.

Futures suggest the S&P/ASX 200 index will open down 0.7pc at an almost two-week low of 7090.

If sustained at the close that will be the biggest one-day fall in three weeks.

It comes after the S&P 500 fell 1.1pc to a two-week low of 3337.8 amid disappointing US PMI data and the spread of coronavirus.

A 2pc fall in the NYFANG+ of top US tech stocks led a 1.8pc fall in the Nasdaq, with Apple down 2.3pc.

But shares could fall more than futures suggest after concern about coronavirus worsened over the weekend.

Confirmed worldwide cases rose to 78,919 with 2,466 deaths after China’s Hubei reported 630 new cases and 96 deaths on Friday.

Hubei also revised up cases reported for Wednesday to 775 from 349 after some areas used the wrong methodology.

Italy locked down an area near Milan with 50,000 people and Venice and Milan cancelled all public events amid more than 130 cases.

In the Middle East, Iran reported 43 infections including 8 deaths from the virus and Turkey has closed its border to Iran.

Israel shut its borders to foreigners who visited Japan and Korea in the 14 days prior.

Reflecting increased risk aversion due to weekend events, AUD/USD fell 0.6pc to a new 11-year low of 0.6585 in early trading.

The local market is also digesting earnings reports with 10 of the top 200 reporting today and 42 due this week.

With earnings season already two thirds complete by number, strategists are concluding that it has been disappointing.

But while the S&P/ASX 200 is trading near a record high-PE multiple and decade-low dividend yield, investors remain starved of yield from safer assets.

Today also sees six S&P/ASX 200 companies including Wesfarmers, Woodside and Ansell trading ex-dividend.

The S&P/ASX 200 fell 0.3pc to 7189.6 on Friday after hitting a record high of 7197.2 on Thursday.

Gerard Cockburn 9.14am: G8 profit slips

ASX-listed child care provider G8 Education has posted a fall in profit for 2019, noting challenging operating conditions, bushfires and coronavirus as a drag on growth.

The country’s largest early childhood provider recorded a net profit of $62.5m, down 13 per cent compared to the previous year.

G8’s underlying earnings were down three per cent compared to the previous corresponding period at $132.5m.

Its shares last traded at $1.83 each.

Chief executive Gary Carroll said underlying EBIT has been impacted by investments made in its greenfield portfolio.

Bushfire and coronavirus has dented the company’s occupancy levels, with year-to-date, like-for-like occupancy slightly behind the previous year.

G8 said the extent of the ongoing volatility is still “too early” to gauge.

“While G8’s network has been impacted by supply in recent years, the rate of growth in supply impacting G8 centres has reduced significantly,” Mr Carroll said.

“The group’s increased focus on its turnaround program will continue to help mitigate the impact of new supply in the areas in which G8 operates.”

Perry Williams 8.56am: Viva launches buyback

Petrol producer and retailer Viva Energy has posted annual profit at the bottom end of guidance due to a tough refining market and launched a $680m share buyback after selling out of its property trust.

Viva’s full-year underlying profit after tax for the year ending December 31 fell 41 per cent to $135.8m from $293m a year ago, just scraping in ahead of its $135m to $165m guidance issued in December.

Its retail fuel margins were hit by oil price volatility and tougher competition in the market, although margins improved in the fourth quarter.

Earnings at its core retail, fuels and marketing division fell 8 per cent to $861m from $938m while refining earnings slipped 6 per cent to $117m.

It flagged a major maintenance turnaround at its Geelong refinery in the third quarter of 2020 at a cost of $110m to $140m which will take two months and impact its refining intake by 1m to 1.5m barrels.

A $680m off-market share buyback will be launched after Viva last week sold its 35.5 per cent stake in its petrol station property trust it floated four years ago, raising $734m and resulting in a $113m pre-tax profit on the sales.

Jared Lynch 8.50am: NIB profit sinks

NIB managing director Mark Fitzgibbon has lashed out at the health insurance industry’s community ratings scheme after the company’s half year profit plunged more than 27 per cent to $83.2 million.

Mr Fitzgibbon said the first half earnings result was disappointing, citing frustration at the industry’s risk equalisation pool - which means people pay the same health insurance premiums regardless of their health or age - saying the company was being “penalised”.

“We’re not accustomed to seeing our earnings decline and it’s especially frustrating when our revenue is actually growing right across the group, including in our principal ARHI (Australian residents health insurance) business,” he said.

“NIB indirectly paid other health insurers $126.5 million in 1H20, an incredible 10.3 per cent increase on 1H19. We’re effectively being penalised for our success in growing the market and especially in attracting younger people who mainly foot the risk equalisation bill.

“Plus, as a compensation scheme for hospital claims, risk equalisation in its current design is holding back investment and effort in keeping people healthy and out of hospital.”

However, Mr Fitzgibbon said insurance margins remained strong and “represent a very good return on invested capital”.

Revenue surged 7 per cent to $1.293bn in the six months to December 31, while it grew its membership by 1.4 per cent.

NIB’s Mark Fitzgibbon. Picture: Hollie Adams

8.25am: Amaysim swings back to profit

Telco Amaysim says it’s posted a half year profit of $3.7m, up 177.5 pc from the same period last year, when it posted a loss of $4.8m

Revenue fell 7.1pc to $244m.

It says it’s on track to achieve FY20 underlying EBITDA guidance of $33m to $39m.

Amaysim says it won’t pay an interim dividend.

7.48am: BlueScope profit plunges 70pc

BlueScope Steel says its half-year net profit fell by 70 per cent, as its businesses in Australia, the US and New Zealand grappled with weaker steel prices and spreads.

BlueScope said it made a net profit of $185.8 million in the six months through December, down from $624.3 million in the same period a year earlier. Directors of the company declared an interim dividend of 6.0 cents a share, in line with the payout a year earlier.

Underlying earnings before interest and tax totalled $302.4 million, down 64pc on a year earlier.

BlueScope said it expected similar underlying ebit in the second half of fiscal 2020, but was alert to the impact of the coronavirus on its businesses, supply chains and customers.

Dow Jones

7.42am: Oil slides on fears over virus toll

Oil prices fell about one per cent on Friday on renewed concerns about crude demand being pinched by the economic impact of the coronavirus outbreak, while OPEC and allied producers appeared to be in no rush to curb output. The latest signs of infections outside the Hubei province epicentre in China spurred a sell-off across financial markets, as G20 policymakers travelled to Saudi Arabia for talks on the global economy.

Brent crude tumbled as more than 2 per cent at one point before settling down 81 US cents, or 1.4 per cent, at $US58.50 a barrel. US crude futures settled 50 US cents lower, or 0.9 per cent, at $US53.38.

Reuters

7.35am: Gentrack CEO quits

Gentrack Group, a billing software company that’s lost more than half its market value in the past year, said its chief executive Ian Black has resigned.

Recruitment efforts for a new CEO have started and chairman John Clifford will be executive chairman until a new CEO is appointed, the New Zealand company said.

Gentrack, which provides billing and other business management software to power utilities and airports, has downgraded earnings forecasts several times in the past year due as regulatory changes reduced demand from its key utilities market.

Dow Jones Newswires

7.05am: Air NZ slashes earnings forecast

Air New Zealand said the coronavirus epidemic has reduced demand for travel on Asian routes, forcing the airline to slash its forecast for full-year earnings.

The company on Monday said earnings for its 2020 financial year would be reduced by $NZ35 million to $NZ75 million.

Bookings have fallen for routes between New Zealand and Asia, which has also flowed through to a reduction in demand for domestic flights and travel between New Zealand and Australia, the airline said.

The national flag carrier said it now forecasts full-year earnings before tax and significant items of $NZ300 million to $NZ350 million.

Flights between New Zealand and Seoul will be suspended from March 7 to the end of June, Air New Zealand said. Total seat capacity for Asian routes will be 17.0pc lower for February through to June, it said.

Domestic capacity is reduced for March to April by 2.0pc, the airline said, with reduced flights from Auckland to Christchurch and the popular tourist destination of Queenstown.

An Air NZ 787-9 Dreamliner.

Dow Jones Newswires

6.40am: ASX tipped to open lower

The Australian share market is expected to decline when it opens this week due to fears coronavirus is spreading across Asia and will increasingly impact global economic activity.

United States and European markets fell on Friday on the back of increasing concerns over COVID-19 as more companies face disruptions and issue profit warnings.

Locally, the SPI futures index was at 6.30am (AEDT) down 47 points, pointing to an opening fall of 0.7 per cent.

“People are increasingly concerned about the number of cases outside of China particularly in places like Korea and Japan,” AMP Capital chief economist Shane Oliver said.

“There’s a concern that if there are more cases in Asia that will further hit global economic activity.”

The Dow Jones fell 227.6 points or 0.8 per cent at the close on Friday and the S&P 500 declined 1.1 per cent while European shares shed 0.6 per cent.

The benchmark S&P/ASX 200 index closed 0.3 per cent lower at 7,139 on Friday but recorded its third weekly gain benefiting from company earnings and domestic expectations for monetary stimulus.

Local construction data out on Wednesday for the December quarter will probably show a fall, the economist predicts.

Business investment figures to be released on Thursday are more likely to be mixed but still soft overall.

Both sets of figures will be watched closely because they’ll suggest how GDP performed in the December quarter.

Credit data published on Friday could be boosted by the pick-up in housing lending.

Reporting season continues domestically with Rio Tinto and Woolworths among those to reveal their earnings this week.

Dr Oliver says if the results are better than feared it could again help support the Australian market.

AAP

6.20am: Wall St recap

Wall Street continued to tumble Friday amid renewed fears that the virus outbreak in China will have a real impact on companies that depend on goods from the Asian manufacturing hub.

More than 2200 people have died from the disease in China, which has infected more than 75,000 people there and over 1000 abroad, fuelling concerns the epidemic will become a bigger problem in neighbouring economies.

As a growing list of companies warned of an expected hit to their bottom lines, investors seemed unwilling to hold onto shares and moved into safe havens.

The benchmark Dow Jones Industrial Average fell 0.8 per cent to close the week at 28,992.41.

The broadbased S&P 500 lost 1.1 per cent to end at 3,337.75, and the tech-rich Nasdaq dropped 1.8 per cent to 9,576.59.

“Because we just don’t know the full impact of the coronavirus yet, we’re going to continue to see a shadow of uncertainty over the market,” said Shawn Cruz of TD Ameritrade.

The economic impact “might come from both ends,” he told AFP. “You might run out of suppliers because so many people get their supplies from China” and at the same time there will be less buying “on the other side,” he said.

Dow-member Coca Cola was among the firms warning about the virus’ impact on earnings in the first quarter, but said it will expect to meet full-year targets. The company’s shares gained 0.7 per cent.

But Apple, which warned this week of lower revenue and constrained iPhone supply, lost 2.3 per cent.

Gold jumped 1.6 per cent to $US1,646.20 an ounce, while the return on the 30-year US Treasury bond hit an all-time low of 1.9 per cent.

US economic data did not help matters, with existing home sales dipping in January -- though they remain strong and far higher than a year ago -- and a business activity survey showed a continued slowing of manufacturing output.

AFP