Trading Day: ASX claws back ground as energy names rebound
Shares surged across all sectors to the benchmark’s best close in two weeks, led by a rebound in the energy sector.
- Shares close at two-week high
- Don’t touch franking credits: Wilson
- Transurban abandons forecasts as traffic plummets
- Telcos, NBN unite in virus support
- Oil rebounds from massive quarterly losses
That’s it for the Trading Day blog for Wednesday, April 1. Australian stocks jumped 3.6pc to a two week high – making back yesterday’s losses. Transurban reversed an early slide after scrapping its earnings guidance as traffic on its network plummeted while building approvals data for February showed a surprise uplift.
Overnight, Wall Street tumbled in subdued trade, with the Dow closing down 1.9 per cent, the S&P 500 losing 1.6 per cent and the Nasdaq down 1 per cent.
Perry Williams 4.35pm: Santos slashes 150 contractor jobs
Santos has blamed the oil price crash and coronavirus for its decision to slash 150 contractor roles and close its offices for two weeks, marking the latest round of cutbacks to hit Australia’s energy industry.
The South Australian producer flagged job losses last week after the double whammy of the rout in crude prices and COVID-19 pandemic forced it to delay growth projects including the Barossa gas development which underpins new supplies for the Darwin LNG plant.
The 150 contractor positions were spread roughly evenly across its growth projects in South Australia, Queensland and West Australian workforce and followed plans to cut its spending this year by 38 per cent to $US550m ($898m).
The move was made to spare job losses among its permanent staff after more than 1000 roles were slashed during the last major oil crash in 2015.
“This unprecedented event, combined with low oil prices, is continuing to challenge us all. We are working through a public health and economic crisis of a scale that we have not seen in our lifetimes,” Santos chief executive said.
“To do this, we need to maintain production and the revenue that comes with that so we can save Santos jobs and keep paying wages.”
4.12pm: Shares close at two-week high
The local market was a rare sea of green on Wednesday, starting the month with a bumper 3.6 per cent lift after the market’s worst quarterly performance since 1987.
A surge in oil prices from an 18-year low helped the market to notch gains of 182 points or 3.58 per cent to close out at 5258.6 – its best closing level in two weeks.
Meanwhile the All Ordinaries added 180 points or 3.52 per cent to 5290.7.
It comes despite weakness on the US market, with shares slipping overnight and similarly taking the US benchmark to its worst quarterly performance on record.
3.12pm: Health outperforms with quarterly lift
The ASX just capped its worst quarter since 1987, while the Dow Jones sunk to its worst quarter on record – but there was one outlier on the local market.
S&P analysis shows local health care stocks were able to notch a gain of 2.1pc for the quarter, standing out in a sea of red. The sector is higher by 37.8pc on a 12-month basis, ahead of Consumer Staples which is up by 11.4pc.
“Companies with low leverage and high return on equity offered relative safe harbour among our factor indices, with the S&P/ASX 200 Quality index outperforming its benchmark by 12pc in March,” index investment strategy analyst Sherifa Issifu says.
Unsurprisingly, energy takes the mantle as the worst performer for the quarter – declining by almost half or 47.9pc as OPEC disagreements rattled oil prices.
2.56pm: RBC warns of afternoon sell-off
Even as the market trades higher by more than 3pc in the afternoon session, RBC head of equities Karen Jorritsma warns a sharp sell-off isn’t out of the question.
In a note to clients, she says that the current market ructions are sign of “almost no conviction”.
“The Aussie market looks OK across the board today with every sector in the green … but given the thin volumes we could easily see a repeat of yesterday’s afternoon sell off,” Ms Jorritsma says.
“Worth noting too that the Australian market appears to have completely decoupled from the rest of the region and strangely the US markets have been moving closer to ours.”
She adds that banks continue to look well supported as retail money is keen to not miss out on banks at current levels “when they continue to pay the best dividends across the board”.
Gerard Cockburn 2.41pm: No Syd Airport payout til 2022: Morgans
Investors in Sydney Airport waiting on a dividend will have to wait at least two more years, according to investment analysts at Morgans.
The brokerage notes that further deteriorating conditions in the wake of the coronavirus pandemic are likely to drag on the airport’s balance sheet, pushing any dividend payment out until the 2022 financial year.
In addition to the halt in airport taxes, Morgans’ analysts expect reduced rental tenant income and declining carparking sales will pose significant downside risks to earnings for the airport.
It also identified that half of the airports retail earnings are attributed to duty free sales.
According to Morgans, Sydney Airport has a $2bn liquidity position, which it will use to refinance a $1.28bn debt due in the next 12 months and to fund further capital expenditure.
“We assume the capital expenditure budget will be scaled back from $350-450m to approximately $200m for FY20,” its analysts said.
SYD shares last up 5.4pc to $5.89.
2.01pm: China PMI shows signs of recovery
A private gauge of China’s manufacturing activity in March rebounded from a record low, in line with official data suggesting early signs of economic recovery amid the coronavirus pandemic.
The Caixin China manufacturing purchasing managers index, which is tilted toward small, private manufacturers, rose to 50.1 in March from 40.3 in February, Caixin Media and research firm Markit said Wednesday. The March result is just above the 50 mark, which separates contraction from expansion.
As with the official PMIs, China’s private sector Caixin manufacturing PMI bounced back in March. This does not mean that economic activity has fully recovered but it does indicate that things have improved a lot relative to Feb at the height of the shutdown
— Shane Oliver (@ShaneOliverAMP) April 1, 2020
(Goldman Sachs chart) pic.twitter.com/U6Yv4LQe9u
Output expanded due to easing travel restrictions, but new orders declined, Caixin said, adding new export orders declined notably in March as the virus spreads quickly outside China.
The manufacturing sector faced dual challenges in March as “business resumption was insufficient; and worsening external demand and soft domestic consumer demand restricted production from expanding further,” said Zhong Zhengsheng, an economist at CEBM Group, in a statement accompanying the data.
Dow Jones Newswires
Michael Roddan 1.49pm: Super funds on notice for crisis plans
The prudential regulator and the corporate watchdog have warned the $3 trillion superannuation sector to revalue their “unlisted and illiquid” assets, review stock lending programs for short-sellers, and launch “regular and detailed liquidity stress testing” to ensure funds can remain solvent during the coronavirus crisis.
In a joint letter sent to the nation’s 200 superannuation fund trustees on Wednesday, Australian Prudential Regulation Authority member Helen Rowell and Australian Securities and Investments Commission commissioner Danielle Press told the nest egg management sector to overhaul short-term strategies and priorities to ensure they could “fulfil their payment obligations” to members, including for the government’s plan to allow savers to access up to $20,000 from their retirement funds over the next two years.
The watchdogs also turned the blowtorch on super fund directors, warning that in some cases difficult decisions will be required” and boards and chief executives will need to display strong leadership or face consequences.
“The ongoing stability and proper functioning of the superannuation sector, which safeguards trillions of dollars on behalf of members, is critical to the overall stability of the financial system and the economic prosperity of all Australians,” the regulators said
Read more: Super funds health check ordered
Gerard Cockburn 1.37pm: Downside risk remains for banks: Macq
Despite recent underperformance, the risk-return balance for Australia’s banks remains skewed to the downside given the deteriorating economic backdrop, according to Macquarie.
The brokerage notes rising unemployment and declining income are likely to affect the credit spreads of the bank lending divisions, as more households begin feeling the financial strain of coronavirus.
Its analysts say the country’s banking sector has underperformed by approximately 5 per cent and further economic decline is likely to expose the sector to tail risks including significant credit losses and potential capital raisings.
“We expect some households that borrowed at high debt-to-income ratios to experience stress. While these issues shouldn’t impact banks in the near term given mortgage repayment deferrals, once conditions begin to normalise and customers are required to resume payments, we expect credit trends across historically resilient mortgage portfolios to deteriorate,” analysts write.
The brokerage also noted front book reprices will provide a near term positive, but the gap between front and back book prices remain elevated with a spread of approximately 40 basis points.
“We see rising risks that banks will be “encouraged” to offer existing customers more consistent rates with front-book pricing to alleviate pressure on incomes,” Macquarie analysts said.
Bridget Carter 1.30pm: IDP shakes tin for $190m
DataRoom | IDP Education is the latest company to tap the market, raising $190m by selling shares at $10.65 each.
The raise is through an institutional placement to secure $175m and a Share Purchase Plan for $15m.
Shares are being sold at a 7.9 per cent discount to the company’s last traded price of $11.56.
Working on the underwritten raise is Macquarie Capital.
The money is being secured to boost the balance sheet as the global economy is impacted by COVID-19.
Bridget Carter 1.24pm: Webjet secures $332m
DataRoom | Webjet has announced an equity raising to recapitalise the company at $1.70 per share to secure up to $332m.
According to a term sheet sent to investors, the company has launched an institutional placement and a partially underwritten 1 for 1 entitlement offer to secure at least $275m.
The entitlement offer will secure between $174m and $231m.
The fully underwritten placement will secure $101m by selling down 21.9 per cent of the company.
Working on the trade is Goldman Sachs, Ord Minnett and Credit Suisse.
Read more: Webjet goes for $332m capital raise
Patrick Commins 1.18pm: JobKeeper help to trim jobless surge: Evans
Westpac chief economist Bill Evans says the government’s $130bn JobKeeper package will have a “profound effect” on the trajectory for unemployment in coming months, as he slashed his forecast for the peak in the jobless measure to 9 per cent from 17 per cent.
Under the latest government measure aimed at cushioning the blow from a forced economic hibernation, employees of businesses which have been hurt by the global coronavirus crisis will receive $1500 a fortnight, paid via the employer from May 1. Treasury estimates 6 million people will eventually receive the payment, equivalent to more than half of the private sector labour force.
Westpac’s economics team expect GDP will contract by 8.5 per cent in the June quarter, followed by a 0.6 per cent contraction in the September quarter, before a 5.2 per cent lift in the final three months of the year.
That collapse in economic growth would have translated into unemployment peaking at 17 per cent in coming months, but the JobKeeper package “has been a game changer for employment and the unemployment rate,” Evans writes.
”We expect the rate will peak at 9 per cent in June and subsequently fall to around 7 per cent (compared to 9 per cent)” by the end of the 2020, he says.
Evans continues:
“We have assessed that 80 per cent of three sectors – retail and wholesale trade; accommodation and food services; and arts and recreation services – will be eligible for the payment.”
Follow all the latest coronavirus updates at our live blog
Bill Evans of @WestpacMacro says JKP is a gamechanger for jobs but Q2 GDP still seen -8.5% #ausbiz https://t.co/5vkHoBkjab
— Sean Callow (@seandcallow) April 1, 2020
1.11pm: Deutsche tips 10pc quarterly GDP drop
Deutsche Bank economist Phil O’Donoghoe is forecasting Australian calendar second quarter GDP to be down 10 per cent quarter-on-quarter.
He is also tipping a 3.2 per cent fall in GDP for 2020 versus 2019.
Without fiscal support this would possibly imply an unemployment forecast of around 15 per cent by the end of this year. “However, in light of the unprecedented JobKeeper allowance that we estimate will see the taxpayer meet around 30 per cent of the national wage bill for six months backdated to March 1, our unemployment forecast is unchanged at 7.5 per cent,” Deutsche Bank’s O’Donoghoe says.
“Where we differ slightly from our global peers is in terms of the timing of the recovery. Australia and New Zealand have imposed lockdown measures that are more aggressive than in the US and Europe, aided in part by the geographical isolation of the two countries,” he adds.
Steve Jackson 1.08pm: Seven orders staff to take 20pc pay cuts
The Seven Network is introducing severe cost-cutting measures, ordering staff to take 20pc pay cuts and warning job losses are “inevitable”, as it braces for the economic impact of the coronavirus crisis.
The network’s chief, James Warburton, broke the news in an email to staff on Wednesday afternoon, saying “we find ourselves in an extraordinary and challenging situation”.
“We are all working to response to the COVID-19 pandemic and the impact it is having on our people, our business and the broader economy,” he said.
Outlining the austerity measures, Mr Warburton said that all network staff earning between $80,000 and $200,000 – and not covered by an enterprise agreement – “will be asked to work a four-day week with a commensurate 20pc reduction in salary”.
Those earning more than $200,000 “will be asked to accept a 20pc temporary salary reduction and continue to work a five-day week to assist the company through this challenging time”.
He said staff would be allowed to take accrued annual leave to cover the enforced cut in hours but that “once annual leave is exhausted, the fifth day will be unpaid”.
“Unfortunately, no negative leave balances will be possible,” he said.
SWM shares last up 2.6pc to 8c.
1.01pm: Energy surge lifts ASX
Shares have trimmed a gain as much as 3.7 per cent, but still remain firmly higher for the session thanks to outsized gains in energy names as oil prices rebound.
At 1pm, the ASX200 is higher by 3.1 per cent to 5229.4, after hitting highs as much as 5263.4.
The energy sector is leading with gains of 8.1pc – while REITs are bouncing by 5.1pc.
Here’s the biggest movers at 1pm:
Bridget Carter 12.56pm: Webjet to reveal $330m raise
DataRoom | Webjet is now believed to be about to announce an equity raising to recapitalise the company at $1.70 per share to secure $330m.
It follows earlier efforts to raise $250m-$300m at about $2 per share.
It also comes after private equity firms Kohlberg Kravis Roberts and Bain Capital were weighing a recapitalisation of the business.
KKR is known to have walked away from the opportunity.
More to come.
Perry Williams 12.36pm: Credit not as bad as GFC: Transurban
The coronavirus pandemic is unlikely to erode credit markets in the same fashion as the global financial crisis with banks prepared to look through short-term volatility, Transurban chief executive Scott Charlton said.
Mr Charlton, CFO at construction giant Leighton Holdings during the GFC in 2008, said although the scale of the pandemic was unprecedented there was still good access to debt markets for companies.
“It’s unprecedented times in relation to we’re dealing with a health crisis first and an economic crisis second. The issue around liquidity or access to capital in debt markets can always change – I’m not trying to suggest that I’m the oracle – but it does feel different,” Mr Charlton said.
“At this point we’re seeing tremendous support from our credit providers and others in relation to being able to access capital and markets are open though volatile. So it does feel different in that sense.”
Transurban raised $815m in Asian debt markets last week and $1.3bn from banks in March to boost its working capital, reflecting a desire to buttress its balance sheet and continue construction commitments amid heightened volatility.
“It could change obviously at any moment and we’re clearly aware of that and that’s why we’ve got enough liquidity to take us for well over a year. But it does feel a little bit different in that regard,” Mr Charlton said.
“We have offers and options on further liquidity and will continue to assess the situation. The debt markets are not closed for refinancings,” Mr Charlton said.
TCL shares last down 0.8pc to $11.95 after slipping to $11.23.
Patrick Commins 12.32pm: Bond dysfunction a key RBA consideration
“Dysfunctional” bond markets and an expected “very material economic contraction” as a result of the coronavirus pandemic drove this month’s unprecedented package of monetary measures, minutes from the March 18 emergency Reserve Bank board meeting showed.
The minutes, released Wednesday, also confirmed the end of conventional monetary policy.
Board members “agreed that the cash rate was now at its effective lower bound” and that there was “no appetite for negative interest rates in Australia”.
The expectation was that “the cash rate would remain at a very low level for several years”.
External board members were present via video conference at the RBA’s first out-of-cycle meeting since 1997.
In the meeting, the board approved a rate cut to 0.25 per cent, a $90bn three-year term facility to provide cheap cash to banks to lend on to business, and an open-ended commitment to buy bonds to keep three-year rates at 0.25 per cent.
Read more: RBA says cash rate now at ‘effective lower bound’
11.54am: Building approvals jump in Feb
Building approvals data for February has shown a surprise spike, up 19.9 per cent in seasonally adjusted terms thanks to a surge private sector apartment approvals.
More than 15,600 dwellings were approved over the period – a 0.8pc slip in houses while private sector dwellings excluding houses was up by 61.7pc.
“A significant rise in the number of apartments approved in February has offset the weakness recorded in January,” ABS construction statistics director Daniel Rossi said.
Across the states and territories, dwelling approvals rose in Victoria (3.9 per cent) and Queensland (0.4 per cent). Falls were recorded in the Australian Capital Territory (7.7 per cent), Northern Territory (5.3 per cent), South Australia (2.6 per cent), Western Australia (2.0 per cent) and New South Wales (0.1 per cent), in trend terms, while Tasmania was flat.
Building approvals data for February post a sharp rebound, with a lot of volatility in the medium density sector, but this does not seem sustainable going forward and what was a stabilization in trend terms will likely fade #ausbiz pic.twitter.com/O8tCFBVLwN
— Alex Joiner (@IFM_Economist) April 1, 2020
David Ross 11.48am: R.M Williams to close Adelaide factory
Australian up-market bootmaker R.M. Williams will close its Adelaide factory today for the next four weeks putting more than 700 people out of work, as it succumbs to a collapse in demand from the COVID-19 outbreak.
The closure of the factory in Sailsbury in Adelaide’s north, follows R.M. Williams shutting its retail outlets around the world earlier this week.
All 709 staff at the company will be offered two weeks salary as well as a payout of accrued annual leave, joining the almost one million Australians who have lost their jobs since COVID-19 caused the Australian economy slow sharply in recent weeks.
R.M. Williams chief executive Raju Vuppalapati said recent drought, bushfires and now a viral pandemic were proving tough for the business.
“At this moment of unprecedented uncertainty, it is hard to see past the headlines and understand what lies ahead,” he said.
The company, which is owned by a private equity arm of luxury goods giant Louis Vuitton Moet Hennessy Group, said it is working closely with the South Australian Government to ensure its employees get the support required to persevere through the COVID-19 crisis.
Eli Greenblat 11.25am: Asahi gets tick for CUB buy
Japanese brewer Asahi’s proposed $16bn acquisition of Carlton & United Breweries will not be opposed by the competition regulator, thanks to the divestment of two of its beer brands and three of its cider brands.
Brands to be sold are the Strongbow, Bonamy’s and Little Green cider brands and the Stella Artois and Beck’s beer brands. The future buyer or buyers of these assets will need to be approved by the Australian Competition and Consumer Commission.
“The ACCC was concerned that without the divestments, the proposed acquisition would substantially lessen competition in the cider market and remove a vigorous and effective competitor in the beer market,” ACCC chairman Rod Sims said this morning.
“Without the sale of five beer and cider brands including Strongbow and Stella Artois, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia, and owned the two largest cider brands, Somersby and Strongbow.
“We determined that Asahi selling the beer and cider brands would be sufficient to address our competition concerns and provide an opportunity for another business to play an important role in a relatively concentrated industry,” Mr Sims said.
Read more: ACCC cites cider, beer concerns in Asahi takeover
Gerard Cockburn 11.13am: Major Kathmandu backer bows out of raise
Major Kathmandu shareholder Briscoe has told the share market it will not participate in the adventurewear retailer’s equity raise.
The dual ASX and NZX listed retail group holds a 16 per cent stake in the Kathmandu and has previously attempted a takeover, but today said it would not support the chain’s latest raise.
Earlier today, shares in Kathmandu were placed in a trading halt, pending an entitlement offer to raise $NZ207m ($200m) to pay down debt and provide liquidity amid the current market uncertainty.
Briscoe’s managing director Rod Duke, said the company was not participating in the raise as it needs to ensure the financial health of its own operations.
“We are obviously supportive of the Kathmandu business and would like to see them successfully complete the equity raise to alleviate their balance sheet pressures,” he said.
“However, our immediate priority … is to our shareholders and employees to continue to ensure the strength of our own business both in the short-term and for the future.”
Read more: Kathmandu in $NZ207m raising
Eli Greenblat 11.08am: Don’t touch franking credits: Wilson
Veteran fund manager Geoff Wilson has warned that “everything is on the table” when the government looks for ways to pay for its massive spending spree to support the economy in the midst of the coronavirus pandemic. But he cautioned against a second attempted raid on franking credits to pay off the blowout in the national debt.
Mr Wilson, who led the charge against the policy to remove dividend imputation that Labor unsuccessfully brought to the last election, said any policy to help pay off the debt now being accrued had to be logical, equitable and fair. But ending franking credits still wouldn’t make sense as doing so would starve Australian companies of capital and force many investors to send their money offshore, he said.
He said robbing investors of franking credits would also come at a time when Australian companies desperately needed capital to employ Australians and pay tax.
Read more: Franking credits must remain no-go zone
Leo Shanahan 11.02am: News Corp suspends community newspapers
News Corp have announced the suspension of the print editions of its community newspapers in New South Wales, Victoria, Queensland and South Australia.
As the coronavirus continues to wreak havoc with the advertising market and distribution of newspapers in Australia, News Corp Australasia Executive Chairman Michael Miller announced today the suspension of printed versions of the community titles in the four biggest states but would be seeking to preserve jobs.
“We have not taken this decision lightly. As I communicated to you last week, the coronavirus crisis has created unprecedented economic pressures and we are doing everything we can to preserve as many jobs as possible,” Mr Miller wrote in a note to staff.
News Corp’s community publishers include News Local in NSW, Leader Community News in Victoria, Brisbane News and Messenger News in Adelaide.
Gerard Cockburn 10.58am: Ardent to extends US business closures
Dreamworld owner Ardent Leisure will keep its US-based entertainment business closed due to the growing spread of coronavirus across North America.
In compliance with the US government’s extended social distancing measures, Ardent’s 42 Main Events Entertainment centres across 17 US states will remain closed until April 30.
“Main Event will continue to re-evaluate, on a market-by-market basis, when to reopen its centres,” the company said.
The company initially shut its doors on March 17, while its Australian theme park division closed on March 23 due to social gathering restrictions.
10.50am: Scentre boosts liquidity
Scentre Group said it has increased its liquidity position to $3.1bn as it navigates the impact of coronavirus on its malls, which has included many retail stores closing temporarily.
Scentre said the additional unsecured bank facilities are for two years, ensuring it has more funding flexibility at a time when the coronavirus impacts global capital markets.
“The group has $2.5bn of bonds and bank facilities maturing through to December 31, 2021,” Scentre said.
The spreading coronavirus has led many retailers to shutter stores and push for landlords to offer relief on rents until they can reopen again. On March 19, Premier Investments said it would close more stores permanently if landlords didn’t come to its aid.
In research this week, UBS said it thinks Scentre will allow rental abatement of $280m this year to preserve retailers’ businesses. “Longer term we anticipate a rebasing of specialty retailer rents 20pc lower,” UBS said, projecting a 29pc drop in Scentre’s funds from operations in 2020 and a 13-18pc decline over 2021-2023.
SCG shares last traded up 12.5pc to $1.76.
Dow Jones Newswires
Gerard Cockburn 10.41am: QBE goes entirely virtual for AGM
QBE Insurance will hold its annual general meeting virtually in order to comply with strict anti-gathering laws put in place to curb the spread of coronavirus.
Originally intended to be held at the Fullerton Hotel in Sydney on May 7, QBE will now hold a virtual conference with shareholders able to participate either online or via telephone – there will be no physical meeting.
The insurer becomes one of the first listed companies to hold a completely virtual AGM, following the crack down social gatherings.
QBE on Monday withdrew its 2020 outlook statement and financial targets, noting the pandemic had placed too much uncertainty within markets.
Read more: BOQ, QBE can outlooks, Ansell sales up
Angelica Snowden 10.39am: JobKeeper registrations double
Australian Taxation Office Second Commissioner Jeremy Hirschhorn says the number of businesses registered for Scott Morrison’s JobKeeper scheme doubled overnight.
An extra 200,000 businesses registered interest in the scheme and Mr Hirschhorn said that number could double again by the end of the day.
“I would not be surprised if that number doubles (at the end of the day),” Mr Hirschhorn told 2GB.
“We really want to make it as easy as possible for those who deserve it and as hard as possible for those who don’t,” he said.
The Tax chief clarified that employees “had to be an honest taxpayer reporting to an employer on March 1 to be eligible”.
Read more: JobKeeper: tips and traps for employers
10.27am: Brickworks to re-open five US plants
Housing materials player Brickworks says five brick plants in Pennsylvania have been cleared for reopening.
Two weeks ago Brickworks closed down manufacturing operations at its five US brick plants, in response the state ordering the closure of all non life-sustaining businesses.
“Following further consultation with the Governor, Brickworks has been advised that it may re-open the brick plants. As such, Brickworks will commence a phased process of restarting facilities in Pennsylvania, taking into account the anticipated level of demand, including due consideration of the continuing impact of COVID19, and previously planned plant rationalisation activities,” the company said.
Brickworks said given the rapidly evolving nature of the coronavirus pandemic, it anticipates further impacts on production and demand across its operations over the coming months. Brickworks last traded at $13.21.
10.13am: Shares lift 2.5pc
The local market has surpassed expectations at the open, lifting by 2.5 per cent thanks to gains across most sectors.
That’s despite a dip on Wall Street overnight – which closed out its worst quarter since the GFC.
At the open, the benchmark ASX200 is higher by 125 points or 2.5 per cent to 5202.3.
Transurban is one of only a few laggards – slipping by 5.6 per cent to $11.35 after scrapping its guidance.
Gerard Cockburn 10.04am: Rex backflips on QLD flight cancellations
Regional Express airlines has back flipped on its decision to cancel all Queensland fights, saying it has agreed with the state’s government to keep vital routes open.
The company will continue operation on a reduced schedule from Thursday, following a last-minute intervention by the Queensland Department of Transport and Main Roads to keep regulated routes operational.
REX on Tuesday said it would close operations within the state due to it not being commercially viable to keep flying during the pandemic.
A final agreement is yet to be decided between the department and the airline, however REX has said it will run the reduced schedule until April 8 in goodwill.
Read more: Rex suspends all QLD flights amid contract impasse
9.51am: Regis pauses development plans, dividend
Aged care provider Regis Healthcare has suspended its plans for home development, as it defers the payment of its interim dividend to September, citing uncertainty from the coronavirus pandemic.
The group said spot occupancy across its steady state homes was 90.5pc at the end of March, consistent with the average occupancy in the first half of the financial year, and that it had “robust operational controls” in the case of a coronavirus diagnosis at one of its homes.
Still, given the circumstances, the group withdrew its earnings guidance and suspended development activities “until prevailing conditions improve”.
Chief Linda Mellors said all Regis homes had imposed stringent access controls on March 17, and the group continues “to plan for any further escalation of COVID-19 in the community in order to respond proactively and decisively”.
The interim dividend of 4.02 cents per share, 50pc franked, will be paid on September 30 for those on the register as at March 12.
REG last traded at $1.52.
David Swan 9.46am: Telcos, NBN unite in virus support
Australia’s ‘big five’ telcos have banded together along with NBN Co to form a special working group to help support customers through the COVID-19 pandemic, as the country’s network infrastructure continues to be stretched.
Telstra, Optus, Vodafone Hutchinson, TPG and Vocus are all in the group, which formed at the request of the minister for communications Paul Fletcher. It will help manage congestion and provide urgent support for customers experiencing financial difficulties.
Customers of each of the telcos in recent days have reported of increased call dropouts and slower internet speeds.
They telcos said in a statement that the ultimate aim was to ensure consumers are able to stay connected to communications services during the pandemic.
Australia’s consumer watchdog the ACCC granted interim authorisation to allow the companies to work together, and will be an observer on the working group.
More details are expected in coming days.
9.40am: Cochlear launches SPP For $50m
Cochlear has launched a share purchase plan to raise a further $50m, after an upsized $880m placement last week.
Eligible shareholders can apply for up to $30,000 of new fully paid ordinary shares at a price equal to the $140 per share placement price, or 2pc discount to the volume weighted average price of Cochlear shares traded up to the closing date of the offer – expected on April 23.
Cochlear shares last traded at $187.45.
Read more: Cochlear increases equity raising target to $880m
Gerard Cockburn 9.37am: Monash IVF delays payout, halts treatment
Monash IVF has delayed its dividend as it noted the shutdown of all elective surgeries due to the coronavirus pandemic would significantly impact its ability to provide fertility treatment to patients.
The medical company said patients who have already commenced treatment prior to the suspension are expected to complete the fertility course. However, further treatments may be impacted from the federal government’s surgery lockdown which come into effect today.
All elective surgeries, except for category one and urgent category two procedures will be placed on hold.
In a statement to the ASX this morning, Monash IVF noted it would defer its dividend payment until October 2, saying it is taking precautionary measures against the potential financial ramifications of the virus.
“This decision has not been taken lightly and will assist in ensuring the business is well positioned for the anticipated recovery,” the company said.
Monash currently has a net debt position of $90m including access to a further $25m of cash, after fully drawing down on its existing $115m debt facility. The debt facility does not mature until January 2022.
The company said it is currently in discussions to secure further additional working capital.
9.28am: CIMIC first to hold virtual AGM
CIMIC is the first to hold its AGM under stringent coronavirus restrictions – this morning streaming its meeting from Sydney, with several interstate and overseas board members appearing by virtual means.
Questions from shareholders have been lodged ahead of time, and the company says it will have “monitoring of adherence to social distancing protocols during the AGM”.
Leo Shanahan 9.25am: News Corp finalises US marketing sale
News Corp has finalised the sale of its News America Marketing business to private equity firm Charlesbank Capital Partners in a deal with up to $US250 million.
News Corp (parent company of News Corp Australia publisher of The Australian) last year announced their intention to sell the business in a bid to further simplify the structure of the company.
Under the terms of the agreement, News Corp will receive cash consideration of up to approximately $US235 million, comprising $US50 million in cash upon closing of the transaction.
It will also be entitled to more deferred cash payments in an aggregate amount of between $US125 million and $US185 million, which will be due five years after the finalisation of the deal.
The deal will also allow News Corp to retain up to 15% equity in NAM through an option to take 5 per cent at the closing of the deal and another 10 per cent in five years time.
Adeshola Ore 9.22am: Tesla ventilators ready for shipment
Tesla CEO Elon Musk has announced the electric car company has ventilators that can be shipped within the company’s delivery region.
In a tweet, Mr Musk said the ventilators were approved by the US’ Food and Drug Administration.
“Device & shipping cost are free. Only requirement is that the vents are needed immediately for patients, not stored in a warehouse.”
We have extra FDA-approved ventilators. Will ship to hospitals worldwide within Tesla delivery regions. Device & shipping cost are free. Only requirement is that the vents are needed immediately for patients, not stored in a warehouse. Please me or @Tesla know.
— Elon Musk (@elonmusk) March 31, 2020
It comes as the governor of New York, condemned the US federal government for its eBay-style bidding approach for ventilators.
Around the globe, governments have urged automakers to make ventilators and other medical equipment needed to treat patients of the coronavirus outbreak. Earlier this week, For became the latest carmaker to announce it would begin making ventilators.
9.17am: Macy’s slump prompts exit from S&P 500
S&P Dow Jones Indices said US Department store Macy’s will join the S&P SmallCap 600 after a 80pc share slide over the past 12 months.
That’s alongside the departure of United Technologies and Raytheon as they merge to become Raytheon Technologies – to be replaced by Otis Worldwide and Carrier Global.
“Macy’s has a market capitalisation more representative of the small-cap market space,” S&P Dow Jones said.
Macy’s has a market capitalisation around $US1.5bn, from about $US7bn a year ago. The stock has lost about 80pc in the last 12 months, compared with losses around 10pc for the S&P 500.
The company on Monday said it was furloughing most of its workers after losing most of its sales.
Dow Jones Newswires
9.05am: What’s on the broker radar?
- Air NZ cut to Sell – Goldmans
- Aurizon raised to Buy – Goldmans
- Coca-Cola Amatil raised to Outperform – Credit Suisse
- Fortescue cut to Hold – Bell Potter
- IGO raised to Buy – Bell Potter
- Mirvac Group raised to Positive – Evans and Partners
- Netwealth cut to Sell – Morningstar
- Qantas cut to Underperform – Credit Suisse
- Sims Metal Management cut to Hold – Jefferies
- South32 raised to Buy – SBG Securities
- Sydey Airport cut to Underperform – Credit Suisse
Michael Roddan 8.50am: Moody’s warns of looming credit downgrades
An $80m small business loan securitisation packed with borrowers from the food, drinks and retail industries could suffer a wave of defaults that wipe out even the highest-rated note holders in the bond, according to global ratings agency Moody’s.
The small business loan portfolio issued by ASX-listed lender Prospa, the Trust Series 2018-1, holds a pile of “short-term, high-yielding, largely unsecured loans”, a third of which were doled out to retail industries “severely affected” by the government economic shutdown.
“Given the transaction’s significant exposure to Australian small business highly impacted by the ongoing economic disruptions and the unsecured nature of the loans, Moody’s expects delinquency and default rates for the portfolio to rise to significantly higher levels than its closing assumptions,” said Moody’s structured finance group senior analyst Alena Chen.
Moody’s said it was preparing to downgrade the securitisation, in a sign of the start of further adverse action in the high-yield credit market and loan securitisation market.
Corporate bonds have been swamped by selling amid the coronavirus pandemic and following the oil price crash, amid fears of a widespread default event. The liquidation out of riskier assets has frozen credit markets and the Australian Office of Financial Management has had to step into the lurch to keep issuance markets functioning.
Eli Greenblat 8.43am: Harris Scarfe unveils redundancies
Harris Scarfe has made 59 staff redundant as it readies the department store for sale to the Spotlight retail chain, however the job losses are unrelated to the coronavirus pandemic making it unlikely those impacted can receive the federal government’s JobKeeper wage subsidy.
Of the employees let go, 43 are from its stores and 16 from the head office, but for all of the workers let go it comes at a difficult time in the economy to look for and secure new employment.
Harris Scarfe collapsed into voluntary administration two weeks before Christmas. In early March, a deal was secured by the Spotlight retail empire, owned by the Melbourne-based Fried and Fraid families and estimated to be worth more that $1.65bn, to have the exclusive right to buy the failed department store business Harris Scarfe.
Read more: Spotlight looks set to salvage Harris Scarfe
8.30am: Transurban abandons guidance
Transurban Group pulled guidance for its distribution in the second half of the 2020 fiscal year, after government measures to contain the spreading coronavirus drove a steep drop in traffic on its toll roads.
Transurban had expected to pay a distribution of 31 Australian cents per security for the six months through June. On Wednesday, the company said it would now pay a distribution in line with free cash flow, excluding capital releases.
Transurban said the impact on road journeys from government restrictions was noticeable from early March and it had worsened as the month went on. Overall traffic in March fell by around 14pc, but had declined by 36pc in the last week of the month.
All markets where it operates have been affected, with the biggest impact in countries where restrictions are tightest. In North America, for example, average daily traffic in the final week of March was down 65pc on a year earlier.
Dow Jones Newswires
8.20am: Gold slides
Gold prices dipped over 2.0 per cent to their lowest level in a week as the US dollar firmed, but the metal was on track for a sixth straight quarterly rise on concerns about the global economic damage caused by the coronavirus pandemic.
Spot gold fell 2.1 per cent to $US1,587.70 per ounce on Tuesday. US gold futures settled 2.8 per cent lower at $US1,596.60.
“The mood across markets seems to be improving as investors take comfort from the positive economic data from China. However, a sense of caution still lingers in the air which is stimulating appetite for the dollar,” said FXTM analyst Lukman Otunuga.
Reuters
Bridget Carter 7.51am: Kathmandu unveils raising
Adventurewear retailer Kathmandu is raising $NZ207m at NZ50c per share.
The offer comprises a $NZ30m institutional placement and a $NZ177m, 1.2 for 1 entitlement offer.
The raise is a 51 per cent discount to Kathmandu’s last closing share price of NZ$1.02.
The proceeds of the raise will be used to pay down debt and provide liquidity and funding for medium-term operating requirements, including estimated redundancy costs.
Working on the capital raising is Credit Suisse, Jarden, Crags and Forsyth Barr.
The raising comes days after coronavirus restrictions forced Kathmandu to shut down its Australian and New Zealand stores and stand down around 2000 staff, many for four weeks without pay.
It also comes after the group last year tapped the market for $NZ177m to fund the $350m acquisition of surf wear brand Rip Curl through Credit Suisse, Jarden and Deutsche Craigs.
7.50am: Oil’s big quarterly losses
Crude oil benchmarks ended a volatile quarter with their biggest losses in history, as both US and Brent futures were hammered throughout March on the global economic freeze due to the coronavirus pandemic and the eruption of a price war between Russia and Saudi Arabia.
Both benchmarks lost roughly two-thirds of their value in the quarter, with March’s declines of about 55 per cent accounting for the lion’s share of the losses.
US West Texas Intermediate crude salvaged the end of the month with a modest 2.0 per cent gain on Tuesday, while Brent ended slightly lower.
Global fuel demand has been destroyed by travel restrictions due to the coronavirus pandemic. Forecasters at major merchants and banks see demand slumping by 20 per cent to 30 per cent in April, and for weak consumption to linger as economic activity is severely curtailed for the next several months. WTI settled 39 US cents higher at $US20.48 per barrel.
The US benchmark plunged 54 per cent during March and 66 per cent for the first quarter, the worst declines since the contract’s inception in 1983. May Brent crude futures ended the session 2.0 cents lower at $US22.74 a barrel ahead of expiration.
The international benchmark fell 66 per cent in the first quarter and 55 per cent in March, the worst quarterly and monthly percentage declines on record. The more-active June contract settled 7.0 cents lower at $US26.35 a barrel.
Reuters
7.23am: ASX set for opening bounce
The Australian share market is tipped to open higher after yesterday’s wild swings, which ultimately sent the bourse into the red.
At 7am (AEDT) the SPI200 futures contract was up 71 points, or 1.39 per cent, at 5,180.0 points, suggesting strong early gains for local stocks in a volatile market.
The S&P/ASX200 benchmark index climbed by as much as 3.5 per cent on Tuesday before dropping most of the afternoon to finish down 104.6 points, or 2.02 per cent, at 5,076.8.
For the month, the ASX200 closed down 21.2 per cent, and it finished out the quarter down 24.1 per cent in its worst quarterly decline ever.
Elsewhere, Wall Street suffered more losses overnight as the coronavirus pandemic continues to stoke economic fears.
The Reserve Bank of Australia is today scheduled to release the minutes of its ad hoc meeting held a fortnight ago, where board members decided to cut the cash rate to 0.25 per cent and launch quantitative easing measures.
The Australian dollar is buying US61.50 cents, down from US61.99 cents as the market closed on Tuesday.
AAP
7.12am: Dow ends sharply lower
US stocks stumbled to end their worst quarter since the financial crisis, a stunning blow for the market that few investors could have anticipated at the start of the year.
Markets were wobbly on the final day of the quarter.
The Dow Jones Industrial Average extended losses in the afternoon, falling 413 points, or 1.9pc, to 21914, while the S&P 500 slipped 1.6pc and the Nasdaq Composite lost 1pc.
The relatively muted moves stood in contrast to the volatility over most of the past few months, which even veteran traders on Wall Street have described as being one of the most turbulent periods they could remember.
The S&P 500 was down 20pc for the quarter, its biggest quarterly decline since 2008. The Dow industrials fell 23pc through Tuesday, their worst decline since 1987.
Money managers and strategists are reluctant to call when the worst of the selling might pass.
“We’re really in unprecedented territory,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.
Over the past couple of weeks, Mr. Snyder said some clients have inquired about whether stocks may be close to bottoming out, and whether it may be time to put money back into the market. It’s been difficult for him and others to get a sense of the answer — especially with the number of coronavirus cases in the US still rising day by day.
“There’s still a huge amount of uncertainty right now. Is this a V-shaped recovery, or is this something that lingers and lasts longer than we thought?” he said.
Among the worst-hit groups in the rout of the first quarter was shares of energy companies. Companies like Chevron and Exxon Mobil have tumbled more than 35pc for the year, hurt by expectations that disruption to business and travel will take a toll on demand for energy, as well as a global price war between major producers.
Elsewhere, the pan-continental Stoxx Europe 600 ended Tuesday with its biggest quarterly loss since 2002. Japan’s Nikkei Stock Average suffered its biggest quarterly loss since 2008.
Dow Jones Newswires
6.35am: Dow extends losses
US stocks are headed toward their worst quarter since the financial crisis, a stunning blow for the market that few investors could have anticipated at the start of the year.
Markets were wobbly on the final day of the quarter.
The Dow Jones Industrial Average extended losses in the afternoon, falling 389 points, or 1.7pc, to 21942, while the S&P 500 slipped 1.8pc and the Nasdaq Composite lost 1.4pc.
The relatively muted moves stood in contrast to the volatility over most of the past few months, which even veteran traders on Wall Street have described as being one of the most turbulent periods they could remember.
Dow Jones
6.20am: Oil rallies
US oil prices rose, paring some of their slide from a day earlier but still recording their largest drop in any month ever as the coronavirus crisis dents fuel demand.
US crude futures rose 1.9pc to $US20.48 a barrel on the New York Mercantile Exchange, a day after crashing to a fresh 18-year low.
Prices ended Tuesday down 54pc for the month and 66% for the quarter, their largest monthly and quarterly drops ever, according to a Dow Jones Market Data analysis of figures going back to 1983.
Brent crude, the global gauge, edged down 0.1pc to $US22.74 a barrel on the Intercontinental Exchange on Tuesday.
Oil markets have been battered by the coronavirus, which has sapped demand as travel around the world grinds to a halt and people consume less fuel. At the same time, a price war between Saudi Arabia and Russia over their share of global energy markets threatens to make the glut of oil even more severe.
Dow Jones
5.50am: US stocks set for worst quarter since GFC
US stocks are headed toward their worst quarter since the financial crisis, a stunning blow for the market that few investors could have anticipated at the start of the year.
Markets were wobbly on the final day of the quarter.
In afternoon trade the Dow Jones Industrial Average was down 166 points, or 0.75pc, to 22160, while the S&P 500 slipped 0.87pc and the Nasdaq Composite lost 0.36pc.
After closing 2pc lower yesterday, giving up some of Monday’s record 7 per cent rally, Australian stocks are tipped for a stronger start, although markets are volatile. At 5.45am (AEDT) the SPI futures index was up 75 points, or about 1.4pc.
The S&P/ASX 200 lost 24 per cent in the March quarter — its worst quarter since inception in 2000.
The Australian dollar was down at US61.28c.
Wall Street’s relatively muted moves stood in contrast to the volatility over most of the past few months, which even veteran traders on Wall Street have described as being one of the most turbulent periods they could remember.
The S&P 500 was down 19pc for the quarter through to Monday, heading for its biggest quarterly decline since 2008. The Dow industrials have fallen 22pc through Monday, on track for their worst decline since 1987.
Money managers and strategists are reluctant to call when the worst of the selling might pass.
“We’re really in unprecedented territory,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.
Over the past couple of weeks, Mr. Snyder said some clients have inquired about whether stocks may be close to bottoming out, and whether it may be time to put money back into the market. It’s been difficult for him and others to get a sense of the answer — especially with the number of coronavirus cases in the US still rising day by day.
“There’s still a huge amount of uncertainty right now. Is this a V-shaped recovery, or is this something that lingers and lasts longer than we thought?” he said.
Among the worst-hit groups in the rout of the first quarter was shares of energy companies. Companies like Chevron and Exxon Mobil have tumbled more than 35pc for the year, hurt by expectations that disruption to business and travel will take a toll on demand for energy, as well as a global price war between major producers.
Bank stocks also reeled, with Goldman Sachs and JPMorgan both down more than 30pc apiece for the year. A series of emergency interest-rate cuts have helped stabilise the financial system but also further crimped banks’ net-interest margins, a measure of lending profitability.
Elsewhere, the pan-continental Stoxx Europe 600 ended Tuesday with its biggest quarterly loss since 2002. Japan’s Nikkei Stock Average suffered its biggest quarterly loss since 2008.
On Tuesday, signs of a rebound in the Chinese economy helped calm market sentiment. An official gauge of China’s manufacturing activity climbed sharply in March as factories resumed work following months of a near-total shutdown, though economists warned that business activity remains far from normal.
There are also tentative signs that new infections in Italy might be slowing.
But analysts cautioned that the global economy is still headed for a sharp contraction in the first half of the year.
Dow Jones Newswires
5.55am: ASX’s worst quarter
A huge bounce in global sharemarkets in the past week was far from healthy.
As much as the unprecedented policy measures to counter the severe economic damage from unprecedented lockdowns to fight the coronavirus pandemic are necessary preconditions for an eventual lasting recovery, the extreme volatility in global markets in the past week is disconcerting.
After a devastating quarter for long-only funds, the hoped-for “V-shaped” global economic recovery looks elusive.
Indeed with the world potentially still in the early stages of a financial crisis caused by a public health crisis and a damaging oil price war, the June quarter may not be much better. The S&P/ASX 200 lost 24 per cent in the March quarter — its worst quarter since inception in 2000.
The All Ordinaries lost 24.9 per cent, its worst since the 1987 Crash and the third-worst since at least 1970. Thankfully investors were spared from the worst after a massive bounce in the past week.
5.45am: Coronavirus bond snapped up
The first bond issue in Europe by a public investment bank to fund measures to cope with the coronavirus pandemic has been successfully placed, one of the organisers said.
The Nordic Investment Bank raised one billion euros ($US1.1 billion) on the markets for a “COVID-19 Response Bond”, France’s BNP Paribas bank said.
“It’s a first on European markets and is part of measures taken as a result of the epidemic,” said Agnes Gourc of BNP Paribas CIB’s sustainable finance and investment wing.
The operation followed the model of green or responsible bonds with very strict conditions on what type of projects the funds may be used, she told AFP.
AFP
5.40am: Oil rally runs out of gas
A jump in Chinese factory activity despite the virus-hit global economy helped keep equities markets bubbling higher, but oil prices failed to rebound convincingly from 18-year lows.
Asia stocks picked up the baton from a rally Monday that saw all three of Wall Street’s main indices jump more than three per cent.
That carried over into Europe and back to New York, although gains were more modest.
“The release of Chinese PMI data overnight provided some reason for optimism, with a sharp rebound back into expansion lifting spirits ahead of the European session,” said market analyst Josh Mahony at online trading firm IG.
China’s manufacturing sector saw surprise growth in March, having been mauled in February as the country went into lockdown to tackle the virus.
China’s Purchasing Managers’ Index, a key gauge of factory activity, jumped to 52.0 from a record low 35.7 the month before. Any figure above 50 is considered growth.
China is slowly returning to a semblance of normal life after months of tough restrictions that confined millions of people at home and brought economic activity to a near standstill.
The Chinese data initially helped oil prices rebound from 18-year lows struck on Monday as measures to contain the coronavirus outbreak have hit demand.
A strong and quick recovery of Chinese output would help boost demand for energy.
But European benchmark Brent crude began to fall once again, although the main US contract, WTI, was still up over two per cent.
An ongoing price war between Russia and Saudi Arabia has also put downward pressure on prices.
Trillions of dollars pledged to offset the economic impact of the deadly virus have provided a semblance of stability to world markets, which were initially pummelled by the rapid spread of the disease, which has forced swathes of the planet — and the global economy — into lockdown.
But others are more sceptical.
“It is becoming obvious that lockdown measures around the world will need to be extended, and that will likely make everyone’s GDP decline forecast a little uglier,” said OANDA’s Moya.
London closed up 2.0pc, Frankfurt rose 1.2pc and Paris ended up 0.4pc.
AFP
5.36am: US consumer confidence sinks
Uneasiness about the American economy spiked in March, according to a survey, and that was before the worst of the lockdowns due to the coronavirus pandemic were imposed.
The Consumer Confidence Index sunk to 120 from 132.6 in February, as the view of the near-term outlook worsened significantly, the Conference Board said in its monthly report.
However, even that decline is likely overly optimistic.
The cut-off date for survey responses was March 18, before the worsening outbreak in New York City forced the deployment of a navy hospital ship and the construction of field hospitals in Central Park, and before data showed 3.3 million Americans filing for unemployment benefits in a single week.
AFP
5.35am: Fed steps in again
The Federal Reserve is intervening once again to try to smooth out the world’s lending markets, this time by lending dollars to other central banks in exchange for Treasurys.
The Fed’s move marks its latest aggressive effort to keep borrowing rates down and ensure that financial markets can continue to function in the face of the coronavirus outbreak.
The virus has caused a near-shutdown of economic activity in the United States and abroad and made it harder for some banks and companies to borrow. The Fed is trying to facilitate lending and boost confidence that it’s ready to do everything it can to support the global financial system.
The new lending program will allow other central banks to access dollars without having to sell Treasury securities. Excessive selling of Treasurys typically causes their interest rates, or yields, to rise, and that makes borrowing more expensive. The Fed is trying to prevent this.
AP
5.30am: China supports small business
China will step up support for smaller enterprises in a bid to shore up support for sectors hit by the novel coronavirus, increasing financing quotas of small- and medium-sized banks by one trillion yuan ($US140 billion), state media reported.
A State Council meeting presided over by Premier Li Keqiang said authorities would guide smaller banks to lend all the funds they receive to small- and medium-sized enterprises at preferential rates.
The Communist Party’s decision-making politburo had called last Friday for stronger counter-cyclic policy measures and a step-up in stimulus, as the pandemic ravages the global economy.
On Tuesday, state broadcaster CCTV reported that following a State Council meeting on the same day, China decided to issue another batch of local government special debt quotas to boost investment.
To support the car sector — which has been badly affected — the meeting also decided China would extend the policy of subsidies and purchase tax exemptions for new electric and hybrid vehicles for two years.
AFP
5.25am: Euro break-up warning
Eurogroup president Mario Centeno warned the euro single currency could break apart if feuding governments don’t bury the hatchet and agree on a rescue plan to help Italy and Spain.
The carefully worded warning came as the 19 members of the single currency still cannot agree on a rescue plan to reverse the devastating impact of the coronavirus pandemic on the European economy.
Italy and Spain are so far the continent’s worst hit and are also among the eurozone’s most indebted countries. On their own, they simply lack the fiscal firepower to restart their economies.
Centeno’s plea for unity harked back to the worst days of the eurozone debt crisis when divisions between the eurozone’s richer and poorer members almost sank the currency.
AFP
5.22am: Huawei posts strong growth
Huawei said it had sustained solid growth in its global businesses in 2019 despite a US campaign to isolate the Chinese tech giant, but warned of its “most difficult year” ahead.
The stark warning came as a result of stringent US sanctions, with their impact worsened by the fallout from the deadly coronavirus pandemic.
Huawei — the world’s top supplier of telecom networking equipment and number-two smartphone maker behind Samsung — said group revenue expanded 19.1 per cent last year to 858 billion yuan ($US120 billion), a nearly identical growth rate to that seen in 2018.
Net profit last year, however, grew 5.6 per cent, compared with 25 per cent in 2018, as a result of the US sanctions.
Australia has barred Huawei from its 5G rollout, on security grounds.
AFP
5.20am: Cash lifeline for Emirates
Dubai’s government announced it will inject equity into Emirates airlines as the Middle East’s largest carrier grounds nearly all of its flights due to coronavirus restrictions on travel.
Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum said in a statement that liquidity would be given to the state-owned airline, “considering its strategic importance” to Dubai and the economy of the United Arab Emirates, as well as the airline’s “key role in positioning Dubai as a major international aviation hub.” He did not say how much credit would be pumped into the airline, only that further details would be announced at a later stage.
Emirates carried around 58 million passengers last year, keeping Dubai’s airport as the world’s busiest for international travel for several years running. The coronavirus travel disruptions have pommeled the aviation industry worldwide, with carriers temporarily laying off cabin crew and pilots or reducing salaries of staff.
ASX 200 flat before US CPI data; Computershare, AGL, Suncorp lift
Global markets await US CPI data later Wednesday. CBA is little changed after 'no-surprise' interim result as overvaluation concerns remain. AGL cuts div, narrows guidance after profit fall. Suncorp's March cash windfall, buyback promise. Computershare lifts earnings expectations.
ASX ends flat with CSL the main drag
The local share market closed flat as CSL dives after its results, Macquarie jumps on its trading update, gold miners up as gold hit a record, SGH soars on strong results, Nine, Seven West Media up on positive signs for advertising. Australian carveout on Trump tariffs 'under consideration'.