Trading Day: Market snaps 5-day losing streak as rate bets rise
The local market rebounded after a broad trade-fear fuelled sell-off, while the $A tumbled on increased rate cut bets.
- $A gold price sets fresh record
- Dollar crashes to 10-year low
- CBA results a ‘nasty miss’
- Regulator takes AGL to court
- Transurban lifts M5 stake, profit drops
That’s it for the Trading Day blog for Wednesday, August 7.
Disappointing results from Commonwealth Bank restrained a local rebound, but a surprise 50bps rate cut from the RBNZ fuelled hopes of another cut from the RBA. At the close of trade, the market had capped a five-day losing streak with a 0.6 per cent gain. In other results, Suncorp ditched its marketplace strategy and Transurban announced it was moving to full ownership of the M5 in Sydney.
Samantha Bailey 4.23pm: ASX bounces despite CBA, miner dip
The ASX bounced back from an $86 billion sell-off earlier this week, to finish firmly higher as fears of an all out currency and trade war eased.
A shock decision by the RBNZ to cut interest rates by 50 basis points also added tailwinds, putting pressure on the local central bank to follow suit.
“It was a much more stable day across the Asia-Pacific region and here in Australia,” CMC Markets chief market strategist Michael McCarthy said.
“Given Australia was one of the hardest hit over the last two sessions, it was good to see a strong bounce back, the ASX outperforming most of the other markets.”
Mr McCarthy said that investors were favouring the sectors less-exposed to any trade tensions with domestic businesses, including property trusts and telcos among the best performing.
The major miners backtracked after the price of iron ore weakened 3 per cent overnight, pulling the commodity into a bear market.
BHP backtracked 0.9 per cent to $36.75 while Rio Tinto slid 2.1 per cent to $89.50. Fortescue lost 3.3 per cent to $7.05.
In financials, NAB made 0.7 per cent to $27.69 while ANZ put on 0.8 per cent to $26.93. Westpac added 1.1 per cent to $28.03.
Commonwealth Bank dropped 1.4 per cent to $78.70 after its full-year profit missed expectations, as it unveiled a push into the buy now, pay later industry with a stake in Swedish group Klarna.
The Aussie dollar plunged after the RBNZ announced a surprise 50 basis point cut to interest rates, hitting a 10-year low of US66.78c.
4.12pm: Rate cut bets push ASX higher
The local market has capped a choppy day of trade firmly positive, as a Wall Street rebound from trade tensions and a 10-year low for the dollar helped shares higher.
Stocks slumped early, weighed down by worse than expected profit results from Commonwealth Bank, but rallied in afternoon trade as the RBNZ cut rates and raised the pressure on the RBA to follow suit.
At the close of trade, the benchmark ASX200 was 41.4 points or 0.6 per cent higher to 6519.5, after reaching highs as much as 6530.2.
Meanwhile, the All Ords finished 42 points or 0.6 per cent higher to 6588.5.
3.50am: ACCC delays Ruralco verdict
The ACCC has pushed back its decision date for the Ruralco takeover by Nutrien, but the agricultural services company has reassured investors that won’t impact its deal timetable.
Last week, the ACCC asked for market feedback on the deal, with concerns it would lessen competition in rural markets, and has now advised its decision would be released a week later on August 22.
Ruralco today said it was confident in receiving all necessary approvals and reassured investors the scheme meeting to consider the proposal would go ahead on September 6.
“Ruralco remains confident that it, with Nutrien, can address the ACCC’s concerns, including by finalising the draft undertaking. Ruralco continues to believe the Scheme will create a robust rural services provider, with significant benefits for farmers, businesses and communities across regional and rural Australia,” it said in a statement.
RHL shares last up 0.93pc to $4.34.
Richard Gluyas 3.46pm: CBA cracks down on exec bonuses
Commonwealth Bank has continued a rolling pay crackdown for its senior bankers, with a poor performance on risk and reputation leading to lower short-term bonuses for 14 of 15 eligible executives, including chief executive Matt Comyn.
An unnamed senior executive also forfeited all their unvested deferred equity awards because of a reputational hit suffered by CBA as a result of the executive’s business unit.
In his first full-year result as CEO after starting in the job on April 9 last year, Mr Comyn received $4.36 million in statutory remuneration.
This compares to the halcyon, pre-royal commission days of banking in 2016, when then-CEO Ian Narev’s pay swelled from $8m to $12.3m after qualifying for multimillion-dollar share bonuses for CBA’s performance in previous years.
Paul Garvey 3.33pm: Winfield makes bid for Stanmore Coal
Stanmore Coal has received a takeover proposal worth up to $442 million from private coal producer Winfield Group Investments, capping a turbulent week for the Queensland coal producer.
The unsolicited proposal of between $1.50 and $1.70 a share in cash comes just days after Stanmore received a requisition notice from its largest shareholder, Golden Investments, calling for the removal of managing director Dan Clifford and chairman Stewart Butel.
Golden Investments itself made a hostile 95c per share takeover offer for Stanmore late last year, picking up a 25.9 per cent interest in the miner through that process.
The proposed takeover price – which is subject to due diligence and Winfield securing finance for the deal – falls within the $1.48 to $1.90 per share fair value range determined by an independent expert during last year’s takeover battle with Golden Investments.
Mr Butel said the Stanmore board had engaged with Winfield with a view to entering into a process deed and ultimately facilitating a formal offer.
3.09pm: Pre-emptive RBNZ ahead of RBA: JPM
The RBNZ’s surprisingly-large 50 basis point rate cut today was “genuinely pre-emptive” and puts it back in front of the RBA and US Fed, in terms of the amount of stimulus delivered this year, according to JP Morgan economist Ben Jarman.
“The real rate trajectory is now 50bp lower than it was in May, and hits a trough of -1.0 per cent in 1Q21, which should again help getting transmission in the trade weighted index (TWI),” he says.
And while RBNZ leadership has not really suggested that getting ahead of the RBA and Fed is a goal, “it is hard not to view that as an objective of sorts given the importance of the TWI to overall financial conditions, which have otherwise been tightening, particularly in credit availability,” Mr Jarman adds.
“The RBNZ is facing unique financial headwinds, and in cutting 50bp with unemployment at a decade low, the RBNZ “should have bought themselves a bit of time with this decision.”
Moreover, NZ faces a lot of regulatory change domestically which is lowering the neutral cash rate, and would otherwise tighten financial conditions in the year ahead.
The main one being the intention to sharply raise bank capital requirements, which will likely flow through to mortgage rates.
Still, it’s clearly rubbed off on RBA expectations in large measure today.
2.56pm: BNPL providers brace for CBA entry
Buy now, pay later providers have had a mixed day on the market after Commonwealth Bank announced its entry into the sector with a $US100 million investment in Sweden’s Klarna.
Alongside its 8 per cent drop in profits, CBA said it had committed an investment to Klarna, making it Europe’s largest private fintech startup.
“We will become Klarna’s exclusive partner in Australia and New Zealand and intend to further invest at the parent and local level to support this partnership,” CBA said in a statement.
Incumbents are mixed on the market on Wednesday, after heavy selling across the sector earlier this week.
Market darling Afterpay is up by 1.75 per cent to $22.73, after a 12pc decline over the previous two days, while Zip Co is up by 1.57pc to $2.91.
Recent entrant Splitit is up by 1.04 per cent but locally-focused Flexi Group is lower by 3pc to $1.61.
The most recent addition to the sector, Sezzle, is higher by 6.05 per cent to $2.28 though the company is largely concentrated in the North American market.
CBA last down 1.05pc to $78.96.
2.39pm: $A getting ‘Kiwi infection’: NAB
The Australian dollar plunge could extend to as low as US0.6550 after breaching the flash-crash lows, according to National Australia Bank.
So far today, the dollar has dropped as much as 91 basis points to 0.6690, but NAB’s senior foreign exchange strategist Rodrigo Catril says downward moves are “still the path of least resistance” but that its unlikely to breach the 0.6550 level “imminently”.
He says the local currency is“certainly getting a bit unwelcome NZD infection”, and that the “aggressive, proactive RBNZ certainly ups the pressure on the RBA to more”.
“That said, history would suggest the RBA has its own approach based on its own outlook of domestic and global drivers, so the RBNZ cutting aggressively doesn’t mean the RBA will follow,” Mr Catril adds.
NAB expects the RBA to cut rates by 25bps in November.
AUDUSD last at 0.6699.
Ben Wilmot 2.36pm: Charter Hall buys Chifley Tower
Sydney‘s most famed office building, Chifley Tower and Plaza, has become part of the Charter Hall Group empire, with the listed group to taking control of the $1.8 billion landmark after striking a partnership with existing owner Singaporean sovereign wealth fund GIC.
Charter Hall said two of its wholesale funds would acquire a half interest in the landmark asset at 2 Chifley Square, with the group to take on the asset and property management of the entire tower, lifting the group’s funds under management to more than $33bn.
1.41pm: ASX gains as rate cut bets rise
The local market is surging to intra-day highs amid a drop in the dollar and 9 basis point slip in 10-year bond yield.
It comes after the Reserve Bank of New Zealand made a surprise 50 basis point cut to interest rates, and suggested it could use negative rates.
Australian 10-year bond yields have fallen as much as 10bps to an all-time record low of 0.943, what has also spurred a boost to equities.
The local market is trading 0.7 per cent higher to an intra-day high of 6522.8, with all sectors bar energy in the green.
1.32pm: Another case of shock and Orr
The Aussie dollar is setting fresh decade lows past the 67c level amid more dovish comments from New Zealand’s central bank.
In his address following the decision, governor Adrian Orr said it was “easily in the realms of possiblity that we might have to use negative rates” but that today’s 50bps cut reduced the risk of that outcome.
He said that the cut did not rule out further action and that the primary challenge was how low global interest rates were at this moment.
The Aussie dollar has slipped further, now down 91 points from its pre-cut levels at US0.6691, while the USNZ is weakening by 2.06pc to US1.5635.
1.13pm: $A gold price sets fresh record
Flight to safe haven assets, alongside a depreciating dollar have boosted the Australian dollar gold price to new highs in afternoon trade.
The measure has climbed almost 33 per cent in the past year, and was today up by $49 per ounce or 2.25 per cent to $2226.32.
US dollar gold futures are also higher by 1pc to $US1498.75.
That’s good news for local producers, spurring yet another rally in the stocks in afternoon trade.
Resolute Mining, who has put on 23 per cent since the start of the month, is leading the market with a 8.71 per cent boost to $2.06 while Regis Resources is higher by 5.95 per cent to $5.97.
Evolution Mining is up by 5.5 per cent and St Barbara is gaining 5.42 per cent.
12.56pm: RBNZ cut a ‘stunning decision’: Westpac
The only times the RBNZ has cut the cash rate by this magnitude were after the 9/11 terrorist attack, during the GFC and after the Christchurch earthquake, making this choice a ”stunning decision” according to Westpac.
Chief NZ economist Dominick Stephens says there was no signal on the likelihood of further cuts, but the bank expects another cut this year, to take the OCR to 0.75pc.
“Given the Committee’s clear willingness to reduce the OCR, and our view that there is some further economic softness to come in the near term, we now expect another 25bp cut in November,” Mr Stephens says.
“The RBNZ has abandoned its previous forecast that house price inflation will soon pick up due to lower interest rates. We disagree on this point, and indeed today’s decision will provide further fuel for the housing market.”
USDNZD last at 1.5541, 1.44 per cent weaker, while the AUDUSD is at US0.6723.
#RBNZ cuts rates by 50 to “demonstrate ongoing commitment to ensure inflation increases to mid-point of target range, & employment remains around its max sustainable levelâ€. Certainly does. RBNZ forecast for OCR end 2020 dropped by 106 bps in 9m and suggests another cut possible pic.twitter.com/lxy3F6qmLO
— Robert Rennie (@Robert__Rennie) August 7, 2019
12.51pm: Wynn keeping it in Vegas
One time Crown suitor Wynn Resorts is keeping it in Vegas, revealing revenue increased at all of its properties in the latest quarter and reporting a nearly 10 per cent rise in the money it makes per room in the Nevada gambling mecca.
Wynn walked away from its bid for James Packer’s Crown in April, but Crown later found a more motivated buyer in the form of Mr Packer’s good friend, Melco chief Lawrence Ho.
Wynn announced overnight it had booked a profit for the second quarter of $US94.6 million, or US88c a share, down from $US155.8 million, or $US1.44 a share, a year earlier.
The lower profit comparison was primarily due to an increase in pre-opening expenses related to the development of the company’s newly opened Encore Boston Harbor, Wynn Resorts said.
Adjusted earnings were $US1.44 a share, beating the $US1.32 a share analysts polled by FactSet were looking for. Operating revenue rose 3.3 per cent to $US1.66 billion. Analysts surveyed by FactSet expected $US1.6 billion in revenue.
At the company’s Las Vegas operations revenue per available room, or “RevPAR”, a key metric in the hospitality industry, increased 9.5 per cent to $US300 from $US274.
Chinese territory Macau , the world’s largest gambling hub, is expected to increase revenue by $US277 million, while Las Vegas is expected to rise by $US211 million.
Wynn’s results come as its would-be takeover target Crown fights against allegations about the methods it used to court high-rolling gamblers for its Australian casinos.
Dow Jones
12.28pm: $A crashes to 10-year low
The Australian dollar has tumbled amid weakness in the $NZ after its central bank cut its cash rate more than expected to 1pc.
Ahead of the 12pm announcement, the Aussie dollar was trading at US0.6781, but has since shed 59 points to hit a new decade low of 0.6722.
At this level, the currency has surpassed even its “flash crash” in January when the currency dropped more than 4pc in a few minutes but quickly recovered.
AUDUSD last US0.6726.
Aussie Dollar $AUD trades at circa 67.30 US cents - gets caught in the cross fire of selling as Kiwi Dollar $NZD sinks in response to a bigger than expected rate cut from the RBNZ a short time ago #ausbiz pic.twitter.com/hDhjUbcynN
— CommSec (@CommSec) August 7, 2019
Cliona O’Dowd 12.26pm: Suncorp jumps $1bn capital return
Shares in Suncorp have risen more than 4 per cent after the banking and insurance giant turbocharged its returns to shareholders and signalled a retreat from its unpopular ‘marketplace’ strategy.
Handing down an 84 per cent drop in full-year profit, acting CEO Steve Johnston said the company plans to pay shareholders a special distribution of 39 cents per share from the proceeds of the sale of its life business. Investors will also receive a 44c per share fully franked final dividend, bringing the full year dividend payout to 70c per share.
“This means we will be returning over a billion dollars of capital to shareholders, equivalent to 83 cents per share, over the next ten weeks,” Mr Johnston said.
Suncorp shares were up 4.45 per cent at $13.28 in late morning trade.
The sharp decline in net profit, to just $175 million, was largely due to a $910m non-cash loss on the sale of the life business, as well as increased natural hazard, regulatory and compliance costs. The insurance and banking giant posted a cash profit of $1.115bn, up 1.5 per cent from the year prior.
12.08pm: $NZ plunges as rates cut 0.5pc
The New Zealand dollar has plunged more than one per cent to 0.6448 after its central bank cut rates by 0.50 per cent.
The move was a surprise, with economists expecting just 25bps.
The RBNZ said its estimates of the neutral policy rate have continued to decline and that:
“The Committee reached a consensus to cut the OCR by 50 basis points to 1.0 per cent. They agreed that the larger initial monetary stimulus would best ensure the Committee continues to meet its inflation and employment objectives”.
The Aussie dollar has sunk just over 36 basis points to $US0.6746 on the news since the RBA faces similar economic challenges, a new decade-low for the currency outside of the January “flash crash”.
The Kiwi's are getting it done, the #RBNZ cutting 50bp to 1%(market looking for 25bp), aggressively pursuing its inflation target and desire to keep employment at its maximum sustainable level #ausbiz #NZD pic.twitter.com/30oq6eXdPD
— Alex Joiner (@IFM_Economist) August 7, 2019
12.04pm: First lending rise in 12 months
The value of new lending commitments to households rose 1.3 per cent in June, a pick up from a 1.6 per cent fall in May.
Figures from the Australian Bureau of Statistics showed a rise in new lending for owner occupier dwellings across all state, but falls for the territories.
Meanwhile, lending for investment dwellings in NSW posted its first rise since April 2018, up 2.4pc.
“In June we saw rises in new lending commitments for both owner occupier and investor dwellings for the first time in over a year. Investor lending, however, remains well down from its peak and the rise in June was relatively small, up 0.5 per cent,” director of financial statistics Ben Dorber said.
The number of loans to owner occupier first home buyers rose 2.1 per cent in June and has now recorded increases in five of the six months to start 2019.
Personal finance rose 4.9 per cent in June following a 0.2 per cent fall in May, but is down 10.9 per cent on June 2018.
11.58am: ALE Property profit dips
Australia’s largest freehold pub owner says its profit dipped 2.4 per cent to $28.3 million in the year ending June 30 due to higher management expenses and land taxes in Queensland.
ALE Property Group said on Wednesday it made $60.2 million in revenue on leases, up from 3.6 per cent from last year.
ALE leases its 86 freehold pubs to Australian Leisure and Hospitality Group (ALH), a joint venture between Woolworths and rich-lister Bruce Mathieson. ALE said its management expenses had increased in preparation with a major rent review on 79 of those 86 investment properties.
ALH has accepted a 10 per cent increase in rent on 36 pubs and rejected a similar increase on 43 so they will go to independent determination.
AAP
11.32am: Yuan fixing weakest since ‘08
After surprising on the upside yesterday, the PBoC surprised on the downside today, setting its yuan reference rate 0.45pc higher at 6.9996 versus 6.9977 expected.
That’s the highest since 2008 but the market still feels the PBoC is showing restraint since the latest US-China trade truce ended last week.
USD/CNH jumped to CNH7.0825 but remains well below the CNH7.1400 peak hit yesterday after the US labelled China a “currency manipulator”.
Still, both offshore and onshore renminbi are sustaining the recent move above 7.0000 and some expect monetary easing to push it further.
10.58am: Energy sector drags on oil drop
The energy sector is the only trading in the red on Wednesday as markets rebound after two days of heavy losses.
Overnight, oil prices fell more than one per cent, and Brent settled near seven-month lows below $US60 a barrel as ongoing trade tensions fuelled fears of weakening global demand.
On the local market, Energy stocks are down by 0.8 per cent, while the broader market is edging higher by 0.1pc.
Caltex is lower by 1.3pc to $26.10, Whitehaven Coal is down by 2.92 per cent and Oil Search is lower by 1.37 per cent while Santos and Origin are down 1.28pc and 0.57pc respectively.
10.44am: CBA ‘soft result with headwinds’: Citi
Commonwealth Bank reported “a soft result with difficult headwinds on both revenues and costs”, says Citi analyst Brendon Sproules.
Despite that, CBA shares are bouncing back from a 2.9pc fall, last down 1.7pc at $78.48.
Mr Sproules notes FY19 cash profit was 2pc below consensus estimates, while the 431cps dividend and CET1 of 10.7pc were in line with Citi estimates.
Weak revenues were a “clear issue” he notes, after FY19 revenue came in 0.5pc below expectations, driven by net interest income and other operating income.
Institutional lending continued to decline, and trading income was lower than expected on an unfavourable derivative adjustment.
The net interest margin was flat at 2.10pc but management guided to FY20 headwinds from lower rates and accounting changes.
There was also no relief on costs with operating expenses 1pc more than expected but bad debts were in line with expectations with an improvement in 4Q.
“With little further detail on the longer term cost base or potential capital management, this result will leave the market stretching for positives for a stock trading greater than 16 times PE ratio,” Mr Sproules says.
10.39am: Qantas gaining corp market share: Joyce
Qantas chief executive Alan Joyce has told a conference in Sydney the airline was seeing “quite significant” gains in corporate market share, according to reports from Bloomberg.
Speaking to the Australia Pacific Aviation Summit, Mr Joyce said the low Aussie dollar was a net positive for the business and “even without capacity growth, there are plenty of sources of revenue growth”.
QAN last down 0.1pc to $5.53.
10.29am: ASX flat as CBA pulls back
The Australian sharemarket has been restrained by a dive in CBA after its results today.
The market had been expected to open up 0.5 per cent after strong offshore gains, but the S&P/ASX 200 has only risen 0.1pc to 6485 so far.
CBA is down 2.5pc after disappointing margins and remediation costs saw it miss earnings estimates despite being priced for perfection.
Suncorp is up 4.3pc on a $506m capital return with results while Transurban shares have been halted for a capital raising to buy the rest of the M5 motorway.
The local market has also been restrained by a 0.3pc afterhours fall in the S&P 500, with Disney shares down 3.7pc on disappointing results.
ASX last at 6477.2.
10.12am: Don’t rely on speculation: Lynas
Lynas Corporation has told shareholders not to rely on speculation, saying it remains actively engaged wtih the Malaysian government.
Shares in the company defied the market sell-off yesterday, gaining 7.8 per cent after a Reuters report citing people close to the matter.
“Lynas remains actively engaged with the Malaysian government. The government continues to work through due process and has indicated that an announcement is expected in mid-August,” it said.
Chief executive Amanda Lacaze is set to present to Diggers and Dealers later this morning.
LYC shares have opened up 1.1 per cent to $2.78.
10.05am: CBA falls 2.8pc early
Commonwealth bank shares have opened down 2.8 per cent in early trading, after reporting a profit slip of 8.1 per cent to $8.57 billion.
9.58am: Lynas halted
Shares in Lynas have been paused ahead of the open, pending a further announcement.
Earlier this week, the company was reported to be nearing Malaysian licence approvals, what boosted its share price by 8 per cent on Monday.
Lynas chief executive Amanda Lacaze late last month said she expected to receive the new licence by the middle of August. Reuters on Monday reported that the Malaysian government had decided to grant the extension.
9.31am: Galaxy flags lithium impairment
Galaxy Resources has flagged a first-half non-cash impairment charge of between $US150 million and $US185 million ($222m and $274m) as it reviews its flagship project in Western Australia.
The lithium miner attributed the charge to the Mt Cattlin mine project’s development costs related to its acquisition of General Mining.
Galaxy shares were valued at $1.14 before the start of trade on Wednesday.
Reuters via AAP
9.28am: What’s impressing analysts, what’s not
- ALS raised to Buy - Citi
- Amcor target price raised 15pc to $18.50 - Morgan Stanley
- AP Eagers raised to Overweight, target price raised 83pc to $12.80 - Morgan Stanley
- BHP cut to Hold - Jefferies
- Cooper Energy rated New Neutral - Credit Suisse
- Domino’s Pizza raised to Buy - UBS
- Fortescue cut to Hold - Jefferies
- Inghams raised to Hold - Morningstar
- REA Group price target raised 13pc to $105.50 - Macquarie
- Rio Tinto cut to Hold - Jefferies
- Santos raised to Buy - Morningstar
- Technology One raised to Hold - Ord Minnett
- Telstra target price raised 19pc to $3.20 - Morgan Stanley
- TPG cut to Equalweight - Morgan Stanley
9.25am: ASX to bounce in results rush
Australia’s S&P/ASX 200 share index is set to open up 0.5 per cent at 6511 based on overnight futures relative to fair value, marking the bottom of the 6511 to 6527 resistance band from the May high and June Low.
Short-term risk is for a bounce to the 50-day moving average near 6625 and the July low at 6627.
Tuesday’s low of 6444.4 and the 100-DMA at 6453 now offer fairly significant support on the charts following the first strong recovery in global risk appetite since the recent truce in the US-China trade war ended last Thursday.
With the S&P 500 up 1.3pc after a massive 3pc fall on Monday, latent buying of shares could be unleashed after a massive year-long rally without significant pullbacks until now.
China calmed markets by acting like the “adult in the room” on its currency yesterday, another trade truce appears unlikely without a further selloff in markets.
Moreover, stretched valuations, positioning and worrisome signs on global manufacturing suggest the US and Australian markets may struggle to break recent highs, even with more rate cuts.
Results from CBA, Transurban and Suncorp are in focus today along with domestic home loans data and China’s daily currency fixing and market action.
A 3.6pc afterhours fall in Disney shares could take the edge of US index futures after it earnings missed expectations.
Joyce Moullakis 9.12am: CBA results ‘a nasty miss’
Morgan Stanley’s institutional equities desk labelled Commonwealth Bank’s result “a nasty miss”, given the profit missed expectations.
Unveiling its results this morning, the bank reported annual profit of $8.49 billion, as it flagged capital management initiatives were on the board’s agenda.
Credit Suisse analyst Jarrod Martin said: “A disappointing result given the expectations that had been built in the market around costs and capital management that now appear delayed.”
9.07am: Regulator takes AGL to court
The Australian Energy Regulator is going after AGL and other wind farm operators in the federal court over allegations of breaches of the National Electricity Law.
In a notice to the market this morning, AGL said the allegations related to the performance of its wind farms in South Australia during a state-wide black out in September 2016.
“The allegations, which are highly technical in nature, relate to the response of the Hallett 1 (Brown Hill), Hallett 2 (Hallett Hill), North Brown Hill and The Bluff wind farms during the weather event,” it said.
“AGL has previously stated that it considers that it has complied with its legal obligations in relation to the events of 28 September 2016 but will review the allegations made by the AER and consider its position.”
Cliona O’Dowd 9.05am: Suncorp cans ‘marketplace’ strategy
Suncorp has retreated from its unpopular ‘marketplace’ strategy and says it will return to its core banking and insurance activities as it handed down an 84 per cent drop in full-year profit.
The sharp decline in net profit, to just $175 million, was largely due to a $910m loss on the sale of the group’s life business, as well as increased natural hazard, regulatory and compliance costs, it said. The insurance and banking giant posted a cash profit of $1.115bn for the year, up 1.5 per cent on the prior corresponding period.
Commenting on the shift away from its ambitions to be the Amazon of financial services, acting CEO Steve Johnston admitted the group ‘hadn’t always got it 100 per cent right’.
“We acknowledge the more aspirational elements of the marketplace component of the strategy, and the associated third-party revenues that were assumed to flow from those activities, have been too ambitious relative to where our business is at and the funds we have available to invest,” Mr Johnston said.
Mr Johnston’s comments come just two months after the man who initiated the strategy, Michael Cameron, stepped down as CEO.
9.01am: Construction fall sharpest since ‘13
A slump in demand for new houses and apartments in July caused the sharpest contraction in home building in six years, a survey of businesses in the construction industry suggests.
The Australian Industry Group/Housing Industry Association Performance of Construction Index (PCI) report released on Wednesday said activity fell 3.9 points on the previous month to 39.1 - a slide that leaves the measure well below the 50-point mark separating expansion and contraction.
“Looking ahead, conditions look more fragile than they have for some time with new orders dropping further into negative territory driven by particular weakness in the pipelines of new work in the housing and apartment sectors,” Ai Group policy head Peter Burn said.
AAP
8.44am: Transurban lifts M5 stake, profit drops
Toll operator Transurban has more than halved its profit for the full year, amid steep acquisition costs and launched a raising to take full control of the M5 West toll road.
Unveiling its full year results, Transurban said profit from ordinary activities after tax had decreased by 63.7 per cent on the previous year to $170 million, while earnings increased 21 per cent to $2 billion.
Proportional toll revenue - ts preferred measure of the performance of its roads - rose by 10 per cent to $2.58 billion in the year through June.
It said it was lifting its stake in M5 West by 34.62 per cent for $468 million, to take full control in the project, and launched an institutional placement and security purchase plan with shares offered at $14.70, a 3.5pc discount to Tuesday’s close.
The company decalared a distribution of 30 cents per share, to be paid on August 9 for the past half and said its FY20 distribution guidance was for 62 cents per share, including 4c fully franked.
Shares in the company are halted, last traded at $15.23.
Joyce Moullakis 8.40am: CBA buys into buy now, pay later
CBA has unveiled a big push into the global buy now pay later industry, which has potential to dramatically shake up the local market.
The bank has committed an investment of $US100 million ($148m) into Klarna Holding AB, as part of their $US460 million capital raise.
“We will become Klarna’s exclusive partner in Australia and New Zealand and intend to further invest at the parent and local level to support this partnership,” the results announcement said.
Klarna has more than 60 million customers and 130,000 merchants. Klarna generated US$627 million of revenue in 2018.
The Australian last week flagged that the Asia-Pacific region was part of Klarna’s strategic growth agenda.
Richard Ferguson 8.34am: Frydenberg urges calm
Josh Frydenberg has urged Australians not to overreact to the turmoil on world markets as he moved to smooth concerns the US-China trade war could hurt Australian retirees and the government’s budget surplus.
The Treasurer said this morning that the government was concerned about the US-China trade war but noted that Australia’s superannuation funds were still performing well and the nation was still on track to achieve a surplus.
“We shouldn’t overreact,” the Treasurer told ABC radio.
8.19am: Suncorp slugged by life sale
Suncorp Group has reported a sharp contraction in annual profit, squeezed by the sale of its life insurance business, but said it remained committed to returning surplus capital to shareholders.
The company said it was also hit during the year by higher natural-disaster claim costs, though it benefited in the second half from reinsurance cover. Its banking and wealth businesses faced challenging operating and economic conditions that were exacerbated by higher regulatory and compliance costs, management said.
Dow Jones - read more
8.15am: ASX tipped to bounce at open
The Australian share market is expected to open higher after Wall Street clawed back some of its losses of the previous day.
The SPI200 futures contract was up 47 points, or 0.74 per cent, at 6,437.0 at 8am AEST, suggesting an early bounce for the benchmark S&P/ASX200 on Wednesday. In the US, the Dow Jones Industrial Average finished up 1.21 per cent, the S&P 500 was up 1.30 per cent and the tech-heavy Nasdaq Composite was up 1.39 per cent.
The Aussie dollar is buying US67.59c from US67.83c on Tuesday.
AAP
8.05am: Copper taps two-year low
Copper prices hovered around a two-year low overnight as further escalation in the US-China trade conflict delayed resolution to a dispute that has depressed economic growth and increased fears about metals demand.
Three-month copper on the London Metal Exchange (LME) ended mostly unchanged at $US5,685 a tonne, failing to achieve any real distance from the $US5,640 two- year low touched in the previous session.
China’s central bank on Tuesday said the US decision to label Beijing as a currency manipulator would “severely damage international financial order and cause chaos in financial markets”.
ING commodities analyst Warren Patterson said prices would continue to be dictated by macro events and that Tuesday’s prices were “a bit of a correction” after the previous session’s plunge.
Reuters
Joyce Moullakis 7.30am: CBA cash earnings slip
Commonwealth Bank recorded a decline in its full-year profit as its closely watched net interest margin contracted and loan impairments rose, but it maintained its dividend and said there were improvements in the country’s housing market
The bank (CBA), Australia’s largest by market value and the country’s biggest mortgage lender, on Wednesday said its net profit declined by 8.1 per cent to $8.57 billion in the 12 months through June from $9.33 billion the year before.
Cash earnings — the measure followed by analysts that strips out items including hedging volatility and losses or gains on asset sales — fell by 4.7% to $8.49bn.
Commonwealth Bank, which has a market value of about $141bn, said it would pay a dividend of $2.31 per share for the second half of the year, bringing the annual total to $4.31, steady on last year.
7.29am: Gold eyes six-year peak
Gold prices strengthened overnight, consolidating near the highest in more than six years as an intensifying US-China trade war threatened global economic growth.
Spot gold rose 0.5 per cent to $US1,470.96 an ounce after hitting $US1,474.81 — the highest since May 2013.
In the previous session, gold jumped as much as two per cent. US gold futures settled up 0.52 per cent at $US1,484.20.
Reuters
7.27am: Brent oil slumps on tensions
Oil prices fell more than one per cent overnight, with Brent crude settling near seven-month lows below $US60 a barrel as trade tensions between the US and China intensified worries about weakening global demand.
During the session, Brent traded at a low of $US58.81 a barrel, down more than 22 per cent from its peak in April.
That decline puts the global benchmark in “bear market” territory. Brent prices have lost more than nine per cent in the past week, with US President Donald Trump vowing to impose new tariffs on Chinese imports and authorities in Beijing making further moves against US agricultural cargoes. The United States also responded to a decline in China’s yuan on Monday by branding China a currency manipulator.
Trump on Tuesday dismissed concerns over a protracted trade war with China, as Beijing officials warned that the US decision the day before would lead to chaos in financial markets.
International benchmark Brent futures fell 87 US cents, or 1.45 per cent, to settle at $US58.94 a barrel.
West Texas Intermediate crude futures were down $US1.06, or 1.94 per cent, at $US53.63 a barrel.
Reuters
7.21am: ASX set to bounce back
The Australian share market is expected to open higher after Wall Street clawed back some of its losses of the previous day.
The SPI200 futures contract was up 47 points, or 0.74 per cent, at 6,437.0 at 7am (AEST), suggesting an early bounce for the benchmark S&P/ASX200 on Wednesday. In the US, the Dow Jones Industrial Average finished up 1.21 per cent, the S&P 500 was up 1.30 per cent and the tech-heavy Nasdaq Composite was up 1.39 per cent.
The Aussie dollar is buying US67.62 cents from US67.83 cents on Tuesday.
AAP
6.33am: Wall St gains as yuan settles
Wall Street stocks bounced on Tuesday, ending a multi-session losing streak as China moved to stabilise its currency amid the escalating US-China trade war.
Analysts pointed to steps taken by the Chinese central bank to boost the yuan, which slid below a key benchmark on Monday in a move seen as part of Beijing’s rebuttal to President Donald Trump’s latest tariff announcement.
But the yuan steadied Tuesday while People’s Bank of China Governor Yi Gang vowed that China would not engage in a competitive devaluation in the trade war. The move came after the US Treasury Department late Monday formally designated China a “currency manipulator.” The Dow Jones Industrial Average rose 1.2 per cent to 26,029.52, ending a five-day slide.
The broadbased S&P 500 gained 1.3 per cent to 2,881.77, while the tech-rich Nasdaq Composite Index climbed 1.4 per cent to 7,933.27. Both the S&P 500 and Nasdaq fell the last six days.
Dow Jones — read more
6.29am: Aussie travellers warned on HK
Australians planning on travelling to Hong Kong are being told to “exercise a high degree of caution” after the federal government upgraded its travel advice as pro-democracy protests continue to spark violent clashes. “Protests have become more unpredictable and are expected to continue,” the government’s Smart Traveller website says.
“Tourist areas have been affected. There is a risk of violent confrontation between protesters and police, or criminally-linked individuals, particularly at unauthorised protests.” Australians have also been told the risks are greater at night and on weekends and are “strongly” urged to avoid large public gatherings.
AAP
6.15am: US rates “in right neighbourhood”
US interest rates now are “in the right neighbourhood,” James Bullard, a key member of the central bank policy board, told AFP on Tuesday, seeming to wave off expectations of another cut soon, despite the relentless pressure President Donald Trump.
After cutting the benchmark interest rate last week for the first time in a decade, policymakers have “already done quite a bit” to help deal with the uncertainty surrounding trade wars, Bullard said in an interview, and now will watch how the economy reacts before deciding its next move.
Bullard was the first Fed official to call for the central bank to roll back some of the four rate increases adopted last year, something Trump has been demanding almost daily in a constant stream of tweets. But, in the interview, Bullard did not seem to see an urgent need to move further immediately.
AFP
6.12am: PNG asks China to refinance
Australia’s efforts to counter China’s influence in the Pacific has been struck a blow after it emerged Papua New Guinea has asked Beijing to assist it in refinancing its entire government debt.
The request comes 10 days after PNG Prime Minister James Marape visited Australia at the invitation of Prime Minister Scott Morrison, proclaiming he wanted his nation to move away from an “aid-donor” relationship with Australia. “I don’t envisage this type of aid donor recipient relationship to last, in fact within the next 10 years I want my country to grow into economic self-reliance and independence,” Mr Marape said during a speech in Sydney on July 25. However, on Tuesday, after a meeting with the Chinese ambassador in Port Moresby, Mr Marape requested that China refinance its debts of $11.8 billion, The Australian reports.
6.09am: Apple introduces mobile credit card
The Apple credit card designed primarily for mobile use is here.
Some iPhone users who requested a notification about Apple Card will get invites on Tuesday to apply through Apple’s Wallet app. The company plans to expand sign-ups more broadly in the coming weeks.
The card, announced in March in partnership with Goldman Sachs, is available only in the US Apple promises quick sign-ups and the elimination of most fees. Customers typically get 2 per cent cash back when using Apple’s app to pay. Industry experts say the financial benefits of the card mirror many of those already out there for consumers.
What sets Apple Card apart from other cards is its reliance on the iPhone. Though customers can request a physical card for free, an iPhone is required to apply, check statements and pay balances.
AP
6.03am: Record $3m asbestos payout
A South Australian father of three with terminal cancer has been awarded a record $3 million payout after he was exposed to asbestos dust, including during renovations on his home.
Matthew Werfel, 42, will receive $3,077,187 — the largest amount ever awarded to an asbestos victim in Australia — after building materials company James Hardie was found to have failed to warn the public about ongoing risks posed by their cement products.
Lawyers for Mr Werfel lodged a claim against James Hardie — now known as Amaca — in the South Australian Employment Tribunal seeking damages after he was diagnosed with mesothelioma in 2017.
AAP
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