Trading Day: Australian shares pummelled for a second day
The ASX has lost 3.9 per cent, or $82bn of value, in the past two days as coronavirus contagion escalates.
That’s all from the Trading Day blog for Tuesday, February 25. Australian shares were pummelled for a second day after Wall Street suffered its worst day in two years.
The benchmark S&P/ASX 200 share index closed down 111.7 points or 1.6 per cent at 6866.6 points.
The index fell as much as 2.6 per cent to a seven-week low of 6800 in early trading after the S&P 500 fell 3.5 per cent - its biggest fall since 5 February 2018 - after the international spread of novel coronavirus worsened significantly over the weekend.
But global markets were helped by some optimism about coronavirus vaccine development, leading to a 0.8 per cent rise in S&P 500 futures.
US President Donald Trump tweeted: “Stock market starting to look very good to me!”
Soon after, the Wall Street Journal reported that Moderna sent vaccine samples to the government for Phase 1 trials.
Moderna’s share price rose 18 per cent in afterhours trading.
Similarly in Japan, Fujifilm spiked 8.8 per cent after Japan’s health minister said Japan will recommend its Avigan drug to treat the virus.
Japan’s sharemarket fell 3.3 per cent as it caught up global markets after a holiday.
Treasury Wine Estates was the latest Australian company to cut its profit guidance on the coronavirus.
The Australian market has lost 3.9 per cent, or $82bn of value, in the past two days.
4.45pm: DATA ROOM: Partners Group grabs 16pc of Healius
Partners Group has secured the right to acquire 16 per cent of Healius. The private equity firm is being advised by JPMorgan. Shares have been secured at $3.60 each.
3.40pm: Goldman Sachs lowers Aussie GDP forecast
Goldman Sachs Australia chief economist Andrew Boak has lowered his Australian and NZ GDP forecasts to account for a larger than expected economic impact on China from the coronavirus outbreak, and its spread to other regions. Australia’s 2020 growth is now expected to be 2.1pc vs 2.4pc previously expected on a year-on-year basis. March quarter GDP is expected to contract 0.3pc Q/Q. That’s based on Goldman’s revised forecast that China’s GDP will slow to just 2.5pc Y/Y from 6.0pc in the December quarter.
This is the weakest Australian GDP forecast in the market, albeit there were already a number of economists expecting a negative quarter. The question is whether this might be sustained for a second consecutive quarter because of the coronavirus outbreak overseas.
Eli Greenblat 3.20pm: Treasury Wine hits 3-yr low on profit warning
Treasury Wine shares dived as much as 6.7pc to a 3-week low of $10.85 after unveiling its third profit warning in as many months as it admitted that the outbreak and spread of the coronavirus in China had dented sales of its wines into the region.
The winemaker abandoned its already watered down earnings target of 5 per cent to 10 per cent growth for fiscal 2020, saying much of its staff in China have been stuck working from home and have been able to go into work, with its key liquor sector partners such as retailers and wholesalers in a similar position which is disrupting operations.
The latest profit warning comes at a time that until now highly successful chief executive Michael Clarke prepares to hands the reins to a new CEO from July 1. Six years ago Mr Clarke six years ago pickedthe company off the floor to see its share price more than quadruple. But since the first profit warning and further caution about the impact of the coronavirus shares in Treasury Wine have fallen back by more than one third in value.
TWE last down 4.4pc at $11.13.
3.00pm: Treasury Wine warns on profit again
Treasury Wine has just made its second profit warning in the past 4 weeks.
It now flags operational impacts from coronavirus saying consumption in China will be “significantly impacted”. The vintner no longer believes it will achieve its FY20 guidance.
Two weeks ago Treasury Wine reiterated its expectation of 5-10pc growth in EBITS in FY20.
But it warned at the time that this guidance excluded any potential impact from the virus.
On January 28th, Treasury cut its prior FY20 guidance of 15-20pc growth in EBITS.
James Glynn 2.53pm: Virus worse than fires
The impact of the coronavirus outbreak on Australia’s economy will exceed that
of the bushfires which recently ravaged several parts of the country, Treasurer Josh Frydenberg says.
“There is considerable uncertainty around what that impact will be...The message is
very clear, the impact will be more significant than the bush fires,” Mr Frydenberg told reporters on Tuesday.
Mr Frydenberg, who attended the G-20 meetings over the weekend in Saudi Arabia, said the Department of Treasury has yet to put a number on the hit to growth.
Asked whether the government would deliver its first budget surplus in over a decade in May, Mr. Frydenberg said the economy was facing a number of external and local shocks.
Prime Minister Scott Morrison said the issue of the budget surplus would be considered in May. “I’m not drawing any conclusions at this point...We will deal with that at the time of the budget,” Mr. Morrison said, adding that there was no virus epidemic when they framed the budget last year.
The Coalition government had last year forecast that its 2019-20 budget would be in surplus by $5bn, the first in over a decade. The pledge of a surplus is a key plank of the government’s economic strategy.
The fourth-quarter GDP growth data are due to be released next week.
Dow Jones Newswires
2.40pm: Coronavirus adds pressure on RBA - AMP
AMP Capital’s head of investment strategy and chief economist Shane Oliver says his base case is that the coronavirus outbreak will be contained “allowing share markets and bond yields to rebound in the June quarter”. However, he says the the hit to economic activity “is deepening and the risks around Covid-19 becoming a pandemic have risen leaving share markets vulnerable to more falls in the short term”. “The rising threat to the Australian economy from coronavirus is adding to the likelihood that the RBA will cut rates in March or April and the pressure for more fiscal stimulus in the May budget is increasing,” Dr Oliver adds.The market is currently sees only a 7.8pc chance of the RBA cutting next week.
2.05pm: Markets mixed after bloodbath
Asian markets were mixed as bargain-buying after the previous day’s bloodbath tempered fears that the coronavirus will develop into a pandemic and hammer the global economy.
News at the weekend that COVID-19 was now spreading and claiming lives far beyond China sparked a flood to safety on trading floors across the world, with the Dow on Wall Street suffering its worst day in two years.
With the death toll at around 2,700 and 80,000 infected, the World Health Organization said the outbreak had “peaked” in China but warned that all countries should prepare for a “potential pandemic”.
“As the number of COVID-19 infections outside of China rises, investors are considering the potential ramification on the global economy beyond weaker growth in China and supply chain disruptions,” JP Morgan Asset Management’s Tai Hui said in a note.
“Equity markets will remain volatile in the near term, driven by new infection numbers around the world.”
Tokyo led losses as markets reopened to play catch-up with Monday’s global sell-off.
The Nikkei ended the morning three percent lower, while Sydney and Wellington each shed 1.3 per cent and Shanghai lost 0.9 per cent.
Taipei and Jakarta were also lower. However, Hong Kong rose 0.2 per cent and Seoul added 0.6 per cent, having plunged almost four per cent Monday in reaction to a spurt of infections in South Korea at the weekend.
While the region is suffering another broad retreat, the losses are being tempered by bargain-buying, while reports said a US firm had developed a possible vaccine that had been sent for testing.
And analysts said the recent losses would provide a good buying opportunity as they looked past the virus and contemplated an improving economic outlook.
AFP
12.55pm: Insider trading guilty plea
ASIC says a former investment adviser from Sydney has pleaded guilty to insider trading.
Michael Ming Jinn Ho, 32, of Lilyfield, today appeared in the Downing Centre Local Court and pleaded guilty to five counts of insider trading and one count of communicating inside information.
ASSIC says the charges relate to Mr Ho’s purchase and sale of Big Un Limited shares and options between July 18 2016 and February 10, 2018.
“Mr Ho and the associates he procured invested a total of approximately $1.6m in Big Un securities over this period,” ASIC said.
He will reappear in court on March 6, as ASIC’s investigation continues.
12.35pm: Stocks bounce after dive
Australian stocks have recovered some ground after plunging over fears the coronavirus outbreak could become a pandemic, which sparked a major sell-off on global markets.
The S&P/ASX200 index fell more than 2.5 per cent as trade began on Tuesday but by midday had recovered ground after media reports of a potential coronavirus vaccine to be trialled on people.
By 12.30pm (AEDT) the benchmark S&P/ASX200 was down 1.1 per cent at 6899.3, representing a $23bn loss in value for the sharemarket.
It is the second day of a sea of red on the local bourse, which suffered losses across the board on Monday, with nearly $60 billion in value wiped out in its worst day in six months.
The oil price tumbled nearly 4.0 per cent overnight and global equity markets sank as investors rushed to park their money in gold, the go-to metal in times of financial concern.
But gold stocks were being sold off on the Australian Securities Exchange on Tuesday at midday.
Newcrest was down 95 cents, or 3.15 per cent, at $29.22, Northern Star lost 53 cents, or 3.64 per cent, to $14.43 and Evolution Mining fell 19 cents, or 4.17 per cent, to $4.37.
Oil and gas producers took a slide, with Oil Search easing 14.5 cents, or 2.36 per cent, at $6.01 and Santos losing 17 cents, or 2.22 per cent, to $7.49. All the big banks and insurers lower. Commonwealth Bank was down $1.12 at $86.87 while National Australia Bank dropped 50 cents, or 1.84 per cent, to $26.61. Companies in the news on Tuesday included vitamins maker Blackmores, which fell 1.61 per cent to $68.60 after saying the coronavirus and red tape in China were affected results.
Ardent Leisure plummeted 6.78 per cent to $1.10 after a dive on Monday following an inquest into four deaths at Dreamworld found the owners could be fined $3 million if prosecuted.
Caltex Australia lost 35.5 cents to $34.115 after it cut its final payout following weak retail margins, soft economic conditions and unplanned outages at its Lytton refinery.
Investment and superannuation platform HUB24 upped its interim payout after a profit hike of almost 90 per cent but its shares were beaten down too. HUB24 fell 30 cents, or 2.81 per cent, to $10.37.
AAP
Bridget Carter 12.15pm: Emeco to refinance debt
Emeco is tapping the Australian bond market for funds as it also makes efforts to secure about $US300m in the United States to refinance its debt.
As of December, the company’s net debt was $442m and the plan is to refinance its existing notes in a dual tranche offering in both Australia and the United States.
It is understood that the company first approached the United States market there, wanting to secure about $US300m.
Now it is understood that the company has tapped UBS here in Australia to secure up to about $350m through its retail broker network, according to sources.
The bonds are expected to pay a yield of about 6 or 7 per cent.
Emeco is said to have turned its attention to this market after the bond yields in the United States market were as high as 9.25 per cent.
12.01pm: ASX in 26bn selloff
Australian stocks remained well in the red at noon amid a global market selloff over fears about the spread of the coronavirus.
Shortly after noon, Australia’s S&P/ASX 200 share index was down 1.3pc at 6888 after earlier falling 2.6pc to a seven-week low of 6800 in early trading.
Shortly after noon the ASX had shed $26bn in value, after yesterday losing $48bn.
Asian markets also opened sharply lower.
It came as China reported 508 new coronavirus cases and 71 new deaths.
That lifts China’s total reported cases to 77,658 and reported deaths to 2,663.
But China’s new cases and deaths from the virus remain well down on recent weeks.
Importantly, China said 2,589 patients were discharged Monday, suggesting the virus has peaked in China.
But the concern this week is the spread of the virus outside China, particularly in Korea, Italy, Japan and Iran.
Vaccine development is giving a ray of hope that’s lifted S&P 500 futures 0.6pc in early Asian trading.
Moderna is up 18pc after shipping the first batch of its coronavirus vaccine for government testing.
Fujfilm Holdings spiked 8.8pc after Japan’s health minister said Japan plans to recommend its Avigan drug to treat coronavirus.
Gerard Cockburn 11.55am: BlueScope bounce tipped
UBS analysts expect BlueScope Steel (BSL) will be able to ride out the coronavirus wave as a recovering Australian housing is likely to spur a return to positive growth.
The brokerage has upped its 12-month target price to $13 per share from $12.28, following forecasts of a housing lift and a better spread in valuations.
UBS also upgraded its rating for BSL stock to “neutral” from “sell”.
As at 1.12pm, BlueScope shares were trading up 0.08 per cent at $12.64 each.
“With the outlook for Australian housing lifting and BSL commenting that it is taking market share and already seeing a return to positive growth, the risk of an earnings miss for Australian Steel Products has materially reduced,”
BlueScope estimates its Building Products Asia will continue to underperform in the second half of the 2020 financial year, with the coronavirus likely to induce an EBIT of zero for its Chinese operations.
11.50am: Asian shares extend losses
Asian shares have extended losses amid fears the coronavirus was rapidly mutating into a pandemic that could cripple global supply chains and wreak far greater economic damage than first thought.
Both US and European equities suffered their steepest losses since mid-2016, while demand concerns savaged prices for oil and a whole swathe of industrial commodities.
Sovereign bond yields dived on Tuesday as investors sought the most liquid of safe havens and wagered central banks would have to ride to the rescue with a burst of new stimulus.
“This is a world now where economies are so intertwined that it’s hard to know what the economic impact will be,” said Rodrigo Catrill, a currency strategist at NAB.
“It’s certainly hard to see a catalyst that might stop the losses in the near term, though the market has moved aggressively to price in US rate cuts as early as June.”
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped another 0.2 per cent, having already fallen 2.5 per cent on Monday. Australia lost 1.8 per cent, but South Korea’s market was trying to stabilise.
E-Mini futures for the S&P 500 actually bounced 0.5 per cent, having plunged overnight as the full implications of the virus’ spread finally caught up with Wall Street.
Reuters
11.49am: Alumina profit halves
Alumina’s full-year adjusted net profit has halved as weaker Chinese demand hurt prices of alumina, but the Australian miner says it expects some recovery in 2020.
The prolonged trade war between the United States and China during 2019 crimped demand for aluminium and drove prices down, with the company on average earning about 25 per cent less per tonne of alumina sold compared with last year.
Excluding one-time items, net profit for the year came in at $US326.6 million ($494 million), down from the $US689.9 million it earned a year earlier and 11 per cent below a Jefferies estimate of $US366 million.
However, the miner expects the situation to improve across 2020, given prices have already shown some stability since the start of the year.
“Aluminium demand is expected to grow in 2020 as trade friction subsides. This will contribute to a balanced alumina market and China is expected to absorb any surplus rest of world production,” chief executive Mike Ferraro said.
Reuters
Lisa Allen 11.40am: Travel firms mostly steady
Shares in listed travel companies remained steady during intra-day trade this morning except for Webjet, whose share price plunged 6.8 per cent.
Other stocks such as Flight Centre, Helloworld and Sealink were down slightly.
Webjet’s managing director John Guscic told The Australian last week that Webjet is cashed up and was seeking to swoop on online travel companies who’ve been hit by the coronavirus.
Perry Williams 11.30am: Virus to hit jet fuel
Fuels retail giant Caltex warned the coronavirus had emerged as a “big disturbance” for its Australian customers, with demand for jet fuel forecast to fall between 5 to 10 per cent due to cancelled flights.
The knock-on effect could also hit tourism and small businesses in Australia, Caltex noted.
It expects the crude oil market to weaken due to falling demand in China with jet fuel refining margins under severe pressure.
Asian refining margins posted their biggest monthly decline in more than a decade in January as global airlines suspended flights to China.
Caltex said it couldn’t specify how long the 5 to 10 per cent fall in jet fuel might last for the business.
“The coronavirus impacts are emerging and it’s very difficult to predict what the overall impact will be,” Caltex’s interim chief operating officer Louise Warner said.
“We’re judging that based on discussions we’re having with customers many of whom are based in the public arena. They’re also having the same difficulty assessing the impact. We would say the coronavirus impacts that we know of today are short term impacts, but our ability to forecast where that heads is obviously very difficult.”
Caltex last down 1 per cent to $34.13.
11.23am: Vaccine hope pares selloff
Australian shares are tracking a bounce in S&P 500 futures amid hopes of a coronavirus vaccine.
The S&P/ASX 200 was down 1.6pc at 6869.1 after falling as much as 2.6pc to a seven-week low of 6800.
It comes as S&P 500 futures surge 0.6pc in Asia.
US biotech Moderna is up 17pc in after hours trading after it shipped the first batch of its rapidly developed coronavirus vaccine to US government researchers for Phase 1 trials.
11.10am: Tokyo stocks down over 3.5pc
Tokyo stocks dropped more than 3.5 percent at the open, tracking falls on global markets as fears mounted that the new coronavirus outbreak will derail economic growth.
The benchmark Nikkei 225 index sank 3.58 per cent or 836.57 points to 22,550.17 in early trade, while the broader Topix index was down 3.53 per cent or 59.07 points at 1,614.93.
Tokyo was closed for a holiday yesterday.
AFP
Ben Wilmot 11.07am: Ardent sinks further
Shares in the listed owner of Queensland’s Dreamworld theme park, Ardent Leisure Group, have continued their steep plunge in wake of a damning coroner’s report into the deaths of four park goers in 2016.
Ardent Leisure’s shares plunged by up to 21.3 per cent on Monday after findings that the company was responsible for systemic safety failures. The shares closed 23c down at $1.18, well below the $1.57 they hit last month.
The shares were down a further 7.5c to $1.105 on Tuesday morning at 10.45am as part of a broader market wipeout. Investors are worried the Gold Coast leisure park will face another bout of customers staying away and that a recovery already thrown off course by the coronavirus will take even longer.
The latest falls mean Ardent’s market capitalisation has shrunk to about $530m and pushed back expectations of a recovery deep into next financial year.
One circuitbreaker could be releasing the value of the US-based Main Event business that is pegged at about $1.2bn. Ardent has advisers Goldman Sachs looking for partners for that company.
11.00am: China steel inventories hit record
China’s inventories of steel rebar surged to a recod high of 21.612 million tonnes for the week ending February 21 according to China Steelhome.
It’s another sign of the unprecedented hit to China’s economy from the virus.
10.39am: ASX extends drop to 2.6pc
There’s no sign of a bounce after the early plunge in the S&P/ASX 200.
The index is now down 2.6pc at a seven-week low of 6800, after opening down 2.4pc.
S&P 500 futures rose 0.3pc initially and spot gold dipped 0.2pc, but those moves are unravelling now.
Joyce Moullakis 10.37am: Baxby tapped by Revolut
London-based fintech Revolut has tapped former Bank of Queensland finance boss Matt Baxby to lead its Australian push, as part of a string of local appointments.
In a statement on Tuesday, Revolut made three key appointments including Mr Baxby, the former BoQ chief financial officer and head of Virgin Money Australia, to the post of chief executive of Revolut Australia.
Scott Jamieson, the former compliance boss at digital bank 86 400 and Westpac manager, was appointed Revolut’s chief compliance officer for Australia.
The company also hired Michael Hendricks, who formerly held a number of senior leadership roles locally and internationally at ME Bank, Citibank and National Australia Bank, as its local chief risk officer.
Revolut - a global financial platform with more than 10 million customers globally - launched in Australia in a limited way last year. The company’s services include transaction accounts, payments, foreign exchange and overseas funds transfers and budgeting tools.
Gerard Cockburn 10.35am: iSelect posts loss
iSelect has booked an interim loss, saying ongoing headwinds in the energy market from recent regulatory changes have dragged on its performance.
The general brokerage booked a net loss of $5.6m, a 19 per cent improvement compared to the previous corresponding period, which recorded a loss of $6.9m.
Its earnings-before-interest-tax-depreciation-amortisation also incurred a loss at $2.2m, a slightly better figure than the previous half-yearly result which posted an EBITDA loss of $2.6m.
Chief executive Brodie Arnhold said retailer and margin products were impacted by the introduction of the Default Market Offer and the Victorian Default Offer at the beginning of the 2020 financial year, which had acted as a “price-ceiling” within the energy market.
“As a result, we saw a sharp drop in energy conversion from July 1, 2019,” Mr Arnhold said.
“Due to the ‘high volume’ nature of our energy business, this also impacted our cross-serve business.”
iSelect said it expects improvement in the second half of the financial year, as retailers continue to adjust to the new regulations.
Mr Arnhold said solar panel product expansion is planned for the second half of the current financial year.
Its shares last traded at 38 cents each.
Eli Greenblat 10.34am: Retail reels in selloff
The rout on the sharemarket has lashed the nation’s leading retailers, with large falls recorded across supermarkets, consumer electronics, fashion and other discretionary retailer companies as the market opened this morning.
Among the supermarkets Woolworths fell 1.65 per cent to $41.95 and Coles was down 2.17 per cent at $15.31. Consumer electronics giant JB Hi-Fi, whose shares rallied more than 10 per cent on its half-year result, fell 3.83 per cent on opening to $36.82, Harvey Norman is down 2.85 per cent at $4.42 and Myer is down 2.66 per cent at 36.5 cents.
Perth-based conglomerate Wesfarmers, whose businesses include Bunnings, Officeworks and Kmart, has seen its shares this morning down 2.1 per cent at $43.20, Super Retail Group is down 2.13 per cent at $9.17 and Treasury Wine Estates - which is deeply exposed to China - is down 1.7 per cent at $11.43. Shares in the winemaker have fallen almost one third since the beginning of the year.
Nick Evans 10.30am: Stavely news lifts stock
Stavely Minerals shares jumped on the opening of the market after the company announced more high-grade hits from its Victorian copper and gold project.
Stavely helped light up the junior exploration sector on the east coast in September 2019 when it announced the discovery, east of Dunkeld in western Victoria, saying it had hit copper grades of up to 40 per cent not far from surface.
Since then the company has been extending the discovery, announcing a new round of drilling results on Tuesday.
The latest assays include an 8 metre width grading 5.1 per cent copper, 1.5 grams a tonne gold and 34.3 grams a tonne silver from 121m down-hole, including 1m at 26.8 pe cent copper.
A second hole it 19m at 1.5 per cent copper, including a 3.7m width at 6 per cent copper.
Despite the market opening well down, Stavely shares jumped on the announcement, climbing 8c or 12 per cent in early trading.
10.20am: ASX dives more than 2pc
Australia’s sharemarket has plunged at the open after bigger-than-expected falls on Wall Street amid coronavirus fears.
The S&P/ASX 200 opened down 165 points or 2.4pc at a seven-week low of 6811, putting it on track for its worst day in more than six months.
The technology, industrials, health care, energy, communications, consumer discretionary and financials sectors are underperforming.
Utilities, real estate, materials and consumer staples stocks are outperforming.
Investors seem to be switching from growth, quality, and value stocks to defensive utilities and gold miners.
CSL is down 2.5pc, Macquarie is down 2.8pc and Woodside is down 3pc, while the major banks are down about 2pc.
Newcrest is again the strongest in the top 200 with a rise of 1.1pc.
The broader All Ordinaries index was down 166.1 points, or 2.35 per cent, at 6899.3.
The local bourse was again a sea of red after suffering losses across the board on Monday, with nearly $60 billion in value wiped out in its worst day in six months.
Fears about the extent of the spread of COVID-19 in South Korea, Iran and Europe, and numerous other countries, then drove a major fallout in markets overnight.
World Health Organisation chief Tedros Adhanom Ghebreyesus said the spread was deeply concerning but it was not yet a pandemic.
For now, it was not an uncontained global spread with large-scale severe disease or deaths, he said. “Does this virus have pandemic potential? Absolutely, it has. Are we there yet? From our assessment, not yet”, he said on Monday.
The oil price tumbled nearly 4.0 per cent as investors rushed to dump shares and growth assets and park their money in gold, the go-to metal in times of financial concern.
CMC Markets and Stockbroking chief market strategist Michael McCarthy said share markets had finally moved into line with other markets after many were at record highs despite warning signs.
The disruption to supply chains if countries closed borders to contain outbreaks could see global trade grind to a halt, Mr McCarthy said.
The Australian dollar was buying US66.06 cents at 10.10am (AEDT), up from US65.97 cents on Monday.
With AAP
Eli Greenblat 10.05am: Virus hits Mosaic dividend
Fashion retailer Mosaic Brands, formerly known as Noni B, said the coronavirus has slowed February deliveries of clothing and could impact Mother’s Day sales if the lockdown in China continues.
The warning came as the retailer decided to skip its interim dividend until the full impact of coronavirus is clarified.
Mosaic said assuming the coronavirus issue is eventually resolved with minimal impact, the company could later declare an interim dividend similar to last year. It also said it would not be prudent at this time to provide an earnings outlook.
Mosaic has posted a 10.9 per cent drop in half-year revenue to $413.8 million as profit jumped 47.5 per cent to $14.1m, as the company continues to pull away from costly discounting and promotions and its core portfolio of clothing stores hitting like for like sales growth for the first time in years.
Mosaic’s brands include Noni B, Millers, Rockmans, Katies and the recently purchased online retailer EziBuy, and has recorded a 36 per cent rise in EBITDA to $32m.
The retailer warned its sales were impacted by the bushfires in November and December with overall group comparable store sales down 8 per cent for the half.
It said demand at its stores had improved in recent weeks, however the coronavirus was now threatening to disrupt its supply chain and had already impacted February deliveries. If this continues it could delay winter clothing deliveries.
9.55am: Analysts’ rating changes
Ansell raised to Buy - Morningstar
Audinate raised to Positive - Evans & Partners
Avita Medical raised to Buy - Morningstar
BlueScope Steel raised to Neutral - UBS
BWX cut to Sell - Shaw & Partners
Brambles raised to Hold - Morningstar
Computershare raised to Buy - Morningstar
Cooper Energy raised to Overweight - JPMorgan
Hotel Property raised to Neutral - Goldman
NIB Holdings raised to Buy - Citi
Mayne Pharma raised to Marketweight - Wilsons
McMillan Shakespeare raised to Buy - Morningstar
Oil Search raised to Buy - Morningstar
Regis Resources cut to Sell - Morningstar
Reliance Worldwide raised to Buy - UBS
Reliance Worldwide cut to Neutral - Credit Suisse;
Reliance Worldwide raised to Buy - Morningstar
Select Harvests cut to Underweight -Wilsons
Spark Infra raised to Buy - Morningstar
Viva Energy Group raised to Buy - Goldman
Vocus raised to Hold - Morningstar
Supratim Adhikari 9.54am: Seek joins virus victims
Seek has joined the list of ASX-listed companies counting the cost of the coronavirus, with the online recruiter warning that its full year 2020 results could be lower than expected.
According to Seek, the impact of coronavirus on its Zhaopin business, which operates in China and Hong Kong, is likely to strip up to $25m from its full year net profit and between $110m and $120m of revenue.
“Our near-term results will be impacted by the coronavirus, softer economic conditions and our investment bias,” Seek co-founder and CEO Andrew Bassat said in a statement.
“It’s impossible to forecast the impact of coronavirus but we have provided a set of assumptions to help assess the negative flow through on our FY20 financial performance.”
“Due to these factors, we are significantly under-earning relative to our true earnings potential,” he said.
Gerard Cockburn 9.52am: FlexiGroup lifts profit
FlexiGroup has posted a profit rise in its half yearly result, saying its simplification strategy and push into buy now, pay later platforms is generating healthy returns.
The financial services group booked a net profit of $33.3m, up 6 per cent compared to the previous corresponding period.
Its total income across all sections was down 4 per cent at $227.5m compared to its previous half yearly result, which recorded a total sales figure of $236.1m.
Chief executive Rebecca James said the profit rise has been induced by the company’s transformation strategy implemented 12 months ago, focused on reducing losses proportional to volumes and further investment into financial technology.
“This has been achieved in conjunction with transitional investments in technology, credit and collections capability, new product development and marketing,” Ms James said.
Investment has been primarily geared to expanding the group’s two buy now, pay later products humm and bundll.
Ms James said the growth of both BNPL platforms is a key area of growth for the remainder of the financial year.
“These initiatives, coupled with investment in the business, will increase the trajectory of volume growth as the year progresses,” she said.
FlexiGroup’s shares were last trading at $1.84 each.
Eli Greenblat 9.50am: Buyer found for Jeanswest
Collapsed fashion retailer Jeanswest has been sold to a Hong Kong company that has links to the previous parent company of the failed jeans group, saving up to 680 jobs and providing some goods news for the troubled retail sector that has been plagued by retail closures and job losses.
However, the deal will rest on the agreement of shopping centre landlords to agree to new lease arrangements.
Peter Gothard and James Stewart of KPMG and voluntary administrators announced Tuesday morning a buyer had been found for the Australian operations of clothing retailer, Jeanswest after its collapse in January.
9.48am: Seek warns of profit miss
Seek Ltd. has slashed its dividend and is almost certain to miss its full-year profit guidance due to the coronavirus-related employment-market slowdown in China and Hong Kong.
The company said Tuesday that net profit for the first half, which ended December 31, slipped 24pc to $75.6 million due to increased capital investment and losses from early-stage ventures.
Directors declared an interim dividend of 13 cents per share, down from 24 cents a year earlier.
Stripping out currency movements, revenue from Chinese jobs portal Zhaopin, which is 61.1pc-owned by Seek, rose 27pc in the first half, but February billings were 60pc lower compared with a year earlier, Seek said.
Assuming March and April billings are 30pc lower than a year earlier, Seek said full-year net profit could come in about $35 million below November’s reiterated guidance of between $145 million and $155 million.
Dow Jones Newswires
9.45am: ASX200 set for 2.5pc fall
Australia’s sharemarket is set for another sharp fall after the US market plunged amid the global spread of coronavirus. A 3.35 per cent fall in the S&P 500 was more than twice as much as the 1.4 per cent fall that was indicated by futures yesterday afternoon.
S&P/ASX 200 futures relative to fair value suggest the Australian index will open down 2.5pc at a 7-week low of 6805. A close at that point would make it the worst fall in six months.
A fall below 6684.07 would turn the index negative year to date. After it breaks the 50-day moving average at 6947, the next levels are the 100-DMA at 6822 and the 200-DMA at 6708.
The COVID-19 virus is now in 30 countries, with almost 80,000 cases and at least 2,600 deaths worldwide, albeit mostly in Hubei, China.
Italian and Korean markets saw some of the biggest falls - down 5.4pc and 3.9pc respectively - while Japan was closed for a holiday. Italy reported 200 cases and 7 deaths, while the number of deaths rose to 12 in Iran, and Afghanistan, Bahrain and Kuwait reported their first cases. The World Health Organisation said the outbreak isn’t a global pandemic – an uncontrollable geographical spread – but the jump in cases in Italy, Iran and South Korea is “deeply concerning”.
While the number of cases outside China remained relatively small, the WHO is concerned about the number of cases with no clear epidemiological link, such as travel history to China or contact with a confirmed case.
Also of concern for markets, the Wuhan local authority said an earlier announcement that it would let some people leave the city was made without authorisation and has been revoked.
Reporting season continues with 11 top 200 companies including Oil Search, Alumina and Spark Infrastructure reporting today.
Ex-dividend today are APN Property, Breville Group, Challenger, CC-Amatil, Domino’s Pizza Enterprises, Downer EDI, IOOF, Netwealth Group, Sandfire Resources, Santos, Star Entertainment. The index fell 2.25pc to 6978.3 on Monday.
9.42am: Fed official rejects cut
A Federal Reserve official said she does not see a need to cut interest rates yet, even as worries about the viral outbreak that began in China caused global stock markets to plunge and some economists are penciling in a rate reduction by April.
“I see it as a risk to the (economy’s) outlook, but the fundamentals are still strong enough to support trend growth,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said. “I think our policy is well-calibrated to where we are ... including the risks that are out there.” She also said that, “we don’t want to overreact to the volatility in the markets” after just one day of sharp drops. The benchmark S&P 500 index fell 3.4% on Monday.
AP
9.39am: HUB24 H1 profit up 90pc
HUB24 has upped its interim payout as an increasing market share helped it lift first-half profit 90 per cent to $6.03 million.
The investment and superannuation platform increased funds under administration by 58 per cent to $15.8 billion at December 31, up from $10 billion a year ago in what the company has declared a “record first half”.
Revenue rose by 11.1 per cent, or $5.4 million, to $54 million in the six months to December 31 as the firm’s market share increased to 1.6 per cent at September 30, from 1.1 per cent the year before.
AAP
9.20am: Appen beats forecasts
Machine learning specialist Appen lifted full-year underlying profit by 32pc, beating its thrice upgraded earnings guidance.
The Australia-founded tech firm raised net profit for the 12 months through December to $64.7 million, from $49.0 million in 2018.
Revenue jumped 47pc to $536.0 million on a big rise at its two established units and a contribution from the Figure 8 business it acquired in April 2019.
Including the Figure Eight acquisition costs and a subsequent earn out adjustment, statutory net profit edged 0.6pc lower to $41.6 million.
Underlying earnings before interest, tax, depreciation and amortization rose 42pc to $101 million, beating guidance for $96 million to $99 million.
Directors declared an interim dividend of 5.0 cents per share.
Dow Jones Newswires
9.15am: Estia blames govt as profit falls
Estia Health has blamed a 32 per cent interim net profit drop on federal funding and lower occupancy rates, warning its second-half results are not likely to significantly improve without aged care sector reform.
Estia flagged in December that poor press from the royal commission into the aged care sector had hurt occupancy rates.
The aged care provider said on Tuesday that its first-half revenue was up 9.0 per cent $316 million but its net profit was down 32 per cent to $14.3 million for the six months to December 31 and its profit before tax had dropped 30 per cent.
Estia said profit had declined because it ensured quality of care and service despite government funding rates not being enough to cover rises in operating costs, principally staff.
AAP
Jared Lynch 9.06am: Blackmores profit plunges
Vitamins maker Blackmores has been caught in a net of red tape in China, with the company blaming regulatory changes in Beijing as well as its transition to manufacturing for a 47 per cent plunge in half-year net profit to $18.2m.
The profit fall comes as the company warns the impact from the coronavirus could last months and drive its full-year profit down to as low as $17m - a 68 per cent decline on 2019.
Blackmores chief executive Alastair Symington unveiled the results of a strategic review on Tuesday, aimed at four key points to turn the company around.
“We confirm today that the Blackmores Group sales performance in the first-half has been broadly in-line with expectations and our brand health metrics are very strong,” Mr Symington said.
“However, there is acknowledgement that our costs have increased at a greater pace and our structure has become overly complex, which is the responsibility of the new Executive Team to fix.”
The company’s revenue fell 5 per cent to $303m in the six months to December 31.
9.03am: Virus vaccine tests loom
Moderna has shipped the first batch of a coronavirus vaccine it developed to US government researchers to start the first human tests.
The National Institute of Allergy and Infectious Diseases expects to start a clinical trial of about 20 to 25 healthy volunteers by end-April, Dow Jones reports, citing NIAID
Director Anthony Fauci.
8.55am: Trump tries to talk up stocks
US President Donald Trump has attempted to restore calm and talk up the US stockmarket after the major US indexes plunged between 3.4pc and 3.7pc amid fear of a global pandemic hitting economic growth.
But the Australian dollar and spot gold haven’t reacted so far this morning suggesting Trump’s tweet will have little impact on global markets today.
The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!
— Donald J. Trump (@realDonaldTrump) February 24, 2020
8.50am: Caltex profit falls 32pc
Caltex Australia said its annual profit fell by 32pc as it weighs competing takeover offers from UK-based EG Group and Canadian convenience-store operator Alimentation Couche-Tard Inc.
Caltex reported a net profit of $383 million in 2019, down from A$560 million a year earlier. The company reports on a historical cost basis.
On a replacement cost-of-sales basis----which strips out the impact of movements in oil prices by restating the cost of sales using the replacement cost of goods sold--Caltex’s profit was 38pc lower, at $344 million. Still, the result beat the midpoint of a guidance range provided by the refiner in December.
Caltex said its result was dragged down by lower earnings from its Lytton refinery along with subdued market conditions in refining and retail fuel. “While market conditions stabilized in the second half, they are yet to recover, as the Australian economy remained weak,” the company said.
Annual revenue for the year totaled $22.35 billion compared with $21.74 billion in 2018. The company said it will pay a final dividend of 51 cents a share, bringing the full-year payout to 83 cents.
Dow Jones
Gerard Cockburn 8.45am: Date set for Caltex CEO exit
Caltex says Julian Segal will step down as CEO of Caltex on March 2.
Matthew Halliday, currently Caltex’s CFO, has been appointed as interim CEO with effect from the same date.
The fuel company had announced last August that Mr Segal would retire once a formal succession and transition process was completed.
However Caltex chairman Steven Gregg said recent competing acquisition proposals by UK-based EG Petroleum and Canadian Couche-Tard had delayed the search for a new CEO.
“The board recognises the critical importance of CEO succession and we have made significant progress in our search over the last six months,” he said.
“However, given our recent announcements regarding the receipt of revised and new proposals to acquire Caltex, it is not possible for us to complete this search at this time.”
Robert Gottliebsen 8.10am: What’s our plan
The fear-driven fall in global sharemarkets, teamed with an oil price slump, makes a significant Australian downturn a certainty.
But the unofficial word doing the rounds of Canberra is that the coronavirus will not peak until around April, so the repercussions are likely to last for most of 2020.
Large companies will cope but large sections of the employment driver of Australia – small and medium-sized business – will be severely damaged or destroyed.
But we might be lucky.
8.10am: ASX set for big fall
Australian stocks are set to plunge again after fears about the spread of the coronavirus sparked a major sell off on global markets overnight.
At 8am (AEDT) the SPI200 futures contract was down 167 points, or 2.41 per cent, at 6,762, pointing to a sharp fall when the local market opens.
The ASX suffered losses across the board on Monday, with nearly $60 billion in value wiped out in its worst day in six months. Fears about the extent of the spread of Covid-19 in South Korea, Iran and Europe, and numerous other countries, then drove a major fallout in markets overnight.
World Health Organisation chief Tedros Adhanom Ghebreyesus said the spread was deeply concerning. But for the moment it was not an uncontained global spread with large scale severe disease or deaths.
“Does this virus have pandemic potential? Absolutely, it has. Are we there yet? From our assessment, not yet,” he said on Monday.
The oil price tumbled nearly four per cent as investors rushed to dump shares and growth assets and park their money in gold, the go-to metal in times of financial concern.
In local news on Tuesday, Blackmores and Caltex are among the companies due to report their earnings with potential impacts on their outlooks from the virus.
The Australian dollar was buying US66.01 cents, up from US65.97 cents as the local share market closed on Monday.
AAP
8.08am: Dow ends over 1000pts lower
US stocks ended sharply lower, with the Dow Jones Industrial Average and S&P 500 giving up their gains for the year as investors dumped global equities and other assets perceived as risky amid worries over the spread of COVID-19 outside of China.
The Dow Jones Industrial Average ended around 1031 points lower, a drop of 3.6pc, near 27,961, according to preliminary figures, leaving the blue-chip gauge down 2pc for the year to date.
The S&P 500 fell around 112 points or 3.4pc, to end near 3,226, leaving it 0.2pc lower for the year.
The Nasdaq Composite dropped around 355 points, or 3.7pc, to finish near 9,221; it remains up 2.8pc for the year to date.
Energy was the hardest hit sector in the S&P 500, dropping 4.7pc as crude-oil futures fell sharply on worries the economic impact of the viral outbreak would dent demand for crude. Transportation-related shares also suffered, with cruise-ship operators Norwegian Cruise Line Holdings and Carnival Corp among the biggest decliners on the S&P 500, with each falling more than 9pc.
Dow Jones
7.55am: NZME posts loss
NZME, publisher of New Zealand’s largest circulation newspaper, reported a full-year loss after writing down the value of its media brands to reflect declining print advertising revenue.
The company said its full-year loss was $NZ165.2 million. It reduced the balance sheet value of goodwill and mastheads and other brands by $NZ175 million.
“The media industry in New Zealand remains incredibly competitive and is significantly susceptible to the local impact of global players like Facebook and Google,” said CEO Michael Boggs. Operating revenue declined 4pc to $NZ371.7 million. Underlying earnings fell 7.0pc to $NZ50.6 million.
NZME, which publishes the New Zealand Herald newspaper, is seeking regulatory approval for a deal to buy rival publisher Stuff. It has proposed maintaining separate newsrooms and other measures to overcome concerns about the concentration of media ownership that resulted in a previous rejection of the deal.
Dow Jones Newswires
7.35am: ‘Locked’ e-cigarette plan
Juul Labs plans to present to US federal regulators a new version of its vaporiser designed to unlock only for users at least 21 years old as part of an application the controversial e-cigarette maker must file to keep its products in the US market.
All manufacturers must submit their vaping products for Food and Drug Administration review by May 12 to continue selling them in the US after that date. The companies must demonstrate that their e-cigarettes present a net benefit to public health -- in other words, that the benefit of helping adult cigarette smokers switch to a safer alternative outweighs the potential harm of hooking young people on nicotine. Juul has been blamed for a surge in underage vaping and faces a raft of state and federal investigations into its marketing practices.
Dow Jones
7.30am: Oil slumps, gold rises
Oil prices fell and gold rose to a seven-year high as the number of coronavirus cases outside China continued to multiply.
Brent crude, the global benchmark, fell 3.8pc to $US56.30 a barrel. The main US oil price gauge, West Texas Intermediate, fell 3.7pc to $US51.43 a barrel.
The outbreak has fueled speculation that demand for oil may wane as economic growth slows in China and flights around the world are curtailed to limit the contagion. Concerns about demand prompted Saudi Arabia to consider a break from its four-year oil-production alliance with Russia over its plan to reduce output, a move that would be opposed by Moscow.
The Group of 20 major economies also warned Sunday that the virus posed a serious risk to global growth. Those concerns are multiplying now that new cases are being reported in locations such as Italy, Iran and South Korea.
“It’s another wave of fear, as the virus makes its way to European shores,” said Edward Marshall, commodities trader at Global Risk Management. “We’re trading fear as we wait and see how governments will react with airports and other pieces of infrastructure that are heavy on energy.”
The outbreak is likely to shave roughly 400,000 barrels a day from global consumption growth, taking it to the lowest level in nearly a decade, Warren Patterson, head of commodity strategy at ING, wrote in a note to clients.
The price of gold, meanwhile, gained 1.7pc at $US1,672.40 a troy ounce, its highest price since early 2013, as investors flocked to haven assets such as precious metals and currencies like the Japanese yen.
Dow Jones
7.10am: ASX set for big fall
Australian stocks are set to dive again after fears about the spread of the coronavirus sparked a major sell off on global markets overnight.
At 7am (AEDT) the SPI200 futures contract was down 138 points, or 1.99 per cent, at 6,791, pointing to big falls when the local market opens.
The Australian market suffered losses across the board on Monday, with nearly $60 billion in value wiped out in its worst day in six months.
Fears about the extent of the spread of the coronavirus in South Korea, into Europe and numerous other countries, then drove a major fallout in markets overnight.
The Australian dollar was buying US65.99 cents at 7am (AEDT), up from US65.97 cents as the local share market closed on Monday.
AAP
6.50am: Dow tumbles 1000 points
Investors around the world stepped up their retreat from stocks and piled into haven assets like government bonds and gold, reflecting escalating worries that the coronavirus will crimp global growth.
The Dow Jones Industrial Average dropped more than 1000 points; the yield on the benchmark 10-year Treasury note approached its record low; and gold prices climbed for the eighth straight session to a fresh seven-year high.
Fears about contagion rattled investors after a surge of cases outside China were reported over the weekend, prompting concerns about new pockets of infection in Italy, Iran and South Korea.
The epidemic, which has curtailed Chinese manufacturing, exports and consumption this year, is threatening to dampen global growth as factories world-wide depend on a supply chain tethered to China. Officials and economists are warning that an extended Chinese shutdown could cripple global manufacturing and cost the world up to $US1 trillion in lost output.
“With the developments we saw over the weekend -- more cases, more people getting sick without coming into contact with people from China -- I think it’s opened the eyes of the investment community and it opened the eyes of the World Health Organization,” said Carter Henderson, a portfolio manager at Pittsburgh-based Fort Pitt Capital Group. “We don’t know how or why this virus is spreading.”
In US afternoon trade the blue-chip index fell 801 points, or 2.8pc, erasing it gain for the year. The index earlier dropped as much as 1,080 points. The S&P 500 declined 2.6pc, with all 11 sectors posting declines.
The Nasdaq Composite suffered the steepest losses, dropping 2.8pc. Tech stocks have continued to lead the market this year, and the Nasdaq is hanging on to a 3.7pc gain for 2020.
U.S. stocks had been relatively resilient in the wake of the epidemic. The S&P 500 and technology-heavy Nasdaq Composite set records as recently as Wednesday but have dropped 4pc and 5.3pc, respectively, over the past three sessions. The Dow industrials are off 4.6pc from their Feb. 12 record.
After shedding $48bn yesterday, Australian stocks are set to plunge again. At 6.30am the SPI futures index was down 178 points.
The US flight from stocks coincided with a push into haven assets. Gold prices rose 1.6pc to $US1,674.60 a troy ounce. Increased demand for US government bonds sent the yield on the benchmark 10-year Treasury note down to 1.367pc, approaching the 2016 all-time closing low of 1.364pc, according to Tradeweb.
“The rally of haven assets such as gold reflects surging demand for safety during a time of uncertainty,” said CMC Markets analyst Margaret Yang. “Things will probably get worse before it gets better.”
The Cboe Volatility Index, or VIX, jumped to 24.20, on track to close at its highest level since early August. The options-based gauge tends to rise when markets fall and investors reach for insurance-like contracts to protect their portfolios. Near-dated futures contracts tracking the index also jumped above those expiring in later months, a sign that many investors are bracing for more volatility.
Meanwhile, Brent crude dropped 5.3pc to $US54.86 a barrel. Oil prices have declined in recent weeks on investors’ concerns that the epidemic would sap demand for crude.
After weeks of new highs among major US stocks indexes, market gains started to unravel last week, as it became increasingly clear that the coronavirus will disrupt global supply chains more than originally anticipated. Those concerns worsened over the weekend after a surge of cases were reported in South Korea, Iran and Italy.
So far in Italy, six people have died from the illness, making it the world’s third-biggest national outbreak after China and South Korea. More than 50,000 people remain under quarantine in the country.
In an update Monday, the World Health Organization said China has reported a total of 77,362 cases of the coronavirus, including 2,618 deaths. The Geneva-based organisation said the number of cases is declining in China, even as they increase elsewhere.
“Clearly this sell-off today is pretty dramatic and there’s no question that the sell-off in the U.S. was precipitated by what’s going on in Europe,” said Chris Zaccarelli, chief investment officer for Charlotte-based Independent Adviser Alliance. “Fear has gripped the continent.”
The Stoxx Europe 600 index retreated 3.8pc. Germany’s DAX, the benchmark for Europe’s industrial powerhouse, dropped 4pc.
Dow Jones Newswires
6.40am: Miners seek to cut coal use
Barrick Gold Corp. and Newmont Corp. said their mining venture in Nevada approved the conversion of a coal-fired plant into one that could also produce power from natural gas.
The venture, called Nevada Gold Mines, is working with state regulators to secure permits to start construction on the project this year and achieve final commissioning for the plant in the second quarter of 2022.
Like other companies, miners have been looking to bolster their environmental bona fides as investors focus more on those issues as well as on social and governance concerns.
Meanwhile, coal miners that focus on utility coal face pressure, given the carbon emissions associated with the mineral.
The Nevada venture also is considering adding a solar facility to the mining development, Barrick and Newmont said.
Dow Jones
6.35am: Stocks, oil prices tumble
World stock markets and oil prices were hammered by fears of a coronavirus pandemic, while gold hit a seven-year peak on safe-haven buying, dealers said.
One of the hardest hit European markets was in Milan, which gave up 5.4 per cent following reports of a fifth death in Italy amid the COVID-19 epidemic.
In northern Italy, villages have been sealed off and security measures enforced to stem the spread of the disease.
Traders’ screens flashed red across Europe meanwhile, with Frankfurt and Madrid falling by 4.0 per cent, Paris shedding 3.9 per cent and London losing 3.3 per cent.
In midday New York exchanges, the Dow Jones index was down by 3.3 per cent.
Brent oil prices fell by 5.0 per cent as the crisis fuelled worries about global energy demand.
Conversely, on the London Bullion Market gold spiked to $US1,689.31 per ounce, a level last seen in January 2013, before easing back to $US1,676.50 as investors sought the precious metal as a safety measure amid the market turbulence.
“The root of the problem is this: there is burgeoning fear that the shutdown effect that has hit China’s economy is going to take over elsewhere, dealing another blow to global growth, and earnings growth prospects,” commented Patrick O’Hare at Briefing.com.
“Not surprisingly, the (US) Treasury market has been a beneficiary of the risk-off move in stocks. The 10-year note yield is down eight basis points to 1.39 per cent and flirting with its all-time low yield of 1.36 per cent seen in July 2016,” he added.
US Treasury bonds are another popular safe haven investment during economic downturns.
The World Health Organization chief on Monday warned countries to prepare for a “potential pandemic” of new coronavirus, calling the sudden increase in cases in Iran, Italy and South Korea “deeply concerning”.
Seoul’s stock market shed 3.9 per cent as South Korea announced a surge in coronavirus infections, while Hong Kong gave up 1.8 per cent.
Shanghai slipped by just 0.3 per cent however owing to a series of economy-boosting measures by Chinese officials.
Last week, traders were broadly optimistic that the virus -- which has killed nearly 2,600 and infected 80,000 -- was being contained outside China, before a spurt of infections and deaths in other countries fanned fears of a global outbreak.
“It would appear the coronavirus has finally caught up with the markets,” OANDA analyst Craig Erlam told AFP.
“As we saw in China, this can spread rapidly and be very difficult to contain.”
AFP
6.30am: Paris braces for tourism hit
The new coronavirus outbreak is depriving Paris hotels, restaurants and retailers of big-spending Chinese visitors, the latest challenge for a French tourism industry facing headwinds from homegrown protests and Brexit, officials said.
“For now, airline forecasts suggest a 60 per cent drop in Chinese visitors for February, March and April compared with the same period last year,” said Valerie Pecresse, president of the Ile-de-France region that encompasses the French capital.
“Yet Asian clients are absolutely crucial for us,” she said while presenting 2019 tourism figures for the region.
Around 950,000 Chinese visited Paris last year, making them the fifth-largest source of tourists by nationality, according to the CRT regional tourism committee.
AFP
6.28am: Virus to hit US economy
The disruption caused by the virus outbreak in China will have an effect on the US economy, but the magnitude of the hit remains uncertain, a White House economist said.
With the death toll worldwide reaching 2,600, the official cautioned that other illnesses such as influenza are responsible for far more fatalities annually than the COVID-19 virus that originated in central China.
Global stock markets were reeling Monday amid renewed fears about the spread of the virus, with Italy, Iran and South Korea emerging as new hot spots.
“The real threat, I think, is obviously the coronavirus. We don’t know yet, but we’re taking a wait-and-see approach,” said Tomas Philipson, acting director of the White House Council of Economic Advisors.
“That doesn’t mean that economic effects from all the shutdowns in China won’t have any impact. They will,” he told a conference of the National Association for Business Economics.
AFP
6.25am: Goldman pleads not guilty on 1MDB
Three units of Goldman Sachs pleaded not guilty in Malaysia over the investment bank’s alleged role in the multibillion-dollar scandal at the country’s sovereign wealth fund 1MDB, official media reported.
Huge sums were allegedly looted from the Malaysian fund in a globe-spanning fraud, which reportedly involved ex-leader Najib Razak and his inner circle.
Goldman’s role has been under scrutiny as it helped arrange a series of bond issues worth $US6.5 billion for the investment vehicle.
Malaysia in 2018 filed charges against the units -- Goldman Sachs International, Goldman Sachs (Asia), and Goldman Sachs (Singapore).
They were accused of giving false statements that led to large sums being misappropriated in relation to the bond issues.
A Goldman Sachs representative entered not guilty pleas at Kuala Lumpur High Court, Malaysia’s national news agency Bernama reported.
The judge said the trial would begin in November.
AFP
6.20am: China promises companies aid
China’s government promised tax cuts and other aid to help companies recover from its virus outbreak while a spike in new cases in Iran, Italy and South Korea raised the prospect of wider disruption to tourism and other global industries.
At a news conference, Chinese finance and planning officials expressed confidence the ruling Communist Party’s growth targets can be achieved this year despite anti-disease controls that shut down much of the world’s second-largest economy last month.
President Xi Jinping publicly promised over the past week to ensure farming and other industries recover quickly. Still, forecasters say it is likely to be at least mid-March before automakers and other companies return to full production. The government is looking at “targeted tax reduction,” interest rate cuts and payments to poor and virus-hit areas, said an assistant finance minister, Ou Wenhan.
AFP
6.15am: Flight held over virus fears
An Alitalia flight from Rome was being “held” in Mauritius on Monday, the Italian government said, amid health concerns as coronavirus cases in Italy continue to rise.
The Italian foreign ministry said it was in contact with Alitalia and with the Italian embassy in South Africa in order to provide assistance to Italians on board.
About 70 people from the affected areas in Italy were being prevented from disembarking, media reports said.
AFP
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