Retailers extend rally as consumer spending intentions bounce
Shares edged higher by 0.3pc, with tech and retail names outperforming and 28 companies notching new record highs.
- Fortescue unveils record profit, raises payout
- Murray quits, Pahari demoted at AMP
- NIB postpones premium increase
- Rio caves blast costs chief $5m bonus
That’s all from the Trading Day blog for Monday, August 24. The ASX has finished near the best levels of the day, up 0.3pc as consumer-exposed stocks set new records.
AMP shares edged higher after chair David Murray quit and Boe Pahari was demoted. In the latest earnings releases, Fortescue unveiled record profits and lifted its payout, while Reliance posted a profit drop despite US resilience and Super Retail cheered online sales strength.
John Stensholt 8.44pm: Big dividends for Fortescue’s Forrest
Andrew Forrest has made more than $3.2bn in dividends in less than two years after another big payday from his Fortescue Metals.
The iron ore giant announced a $1 per share final dividend on Monday, which will see Mr Forrest and his family receive about $1.16bn when the dividend is paid on October 2.
Fortescue reported a record annual profit and raised its dividend after shipping more iron ore than ever before as prices of the commodity headed towards a more than six-year high. The company’s net profit soared 49 per cent to $US4.73bn ($6.5bn), exceeding analyst forecasts. Revenue reached $US12.8bn ($17.9bn) as iron ore shipments increased 6 per cent to 178.2 million tonnes for the year.
Ben Wilmot 7.45pm: Canadian group grab Mooral almond orchard
Canadian group has snapped up the almond orchard Mooral at Hillston in the NSW Riverina in a $98m purchase.
Rural Funds said contracts had been exchanged for the sale of the Mooral almond orchard, with an undisclosed global agriculture and timberland investment manager buying as nominee for a special purpose vehicle that will be owned by pension funds and institutional investors.
The sale is conditional on completion of due diligence and Foreign Investment Review Board approval.
The 3841ha property was sold by the listed investment via real estate agency CBRE. It includes 808ha planted to almond trees, that are established at 12-13 years old, and the asset carries a long-term lease to supply the listed Select Harvest.
CBRE’s Col Medway and Danny Thomas brokered the sale of the institutional grade almond orchard.
Ben Wilmot 7.22pm: Sign-off on Melbourne’s biggest intermodal terminal
The billionaire Tarascio family and the Victorian government have signed an agreement to jointly fund a major intermodal terminal in the Melbourne suburb of Dandenong South that will support 1000 construction jobs.
Salta anticipates the value of new development on an adjoining estate will exceed $1bn over the next three to five years thanks to a new rail link.
Works will start next year on what will become Melbourne’s biggest intermodal terminal, enabling the efficient movement of thousands more containers through the clogged Port of Melbourne.
Operations at the port are limited by the availability and capacity of trucks to transport freight via road causing serious congestion.
Salta founding director Sam Tarascio Snr said the new rail freight terminal would provide opportunities for operators to switch freight transport from road to rail.
“This will ease congestion, reduce costs, and provide greater opportunities for imports and exports in the South-east of Melbourne,” he said.
The project, one of the largest of its type, will generate a further 1,800 indirect construction jobs and another 1600 ongoing direct jobs and 4,500 on-going indirect jobs running the terminal.
Salta Properties and the Victorian and federal governments will jointly invest $28m on government owned land to connect rail to Salta’s site boundary, with the project to help shift more containerised freight.
Salta will concurrently invest more than $50m to build the Dandenong South Intermodal Terminal to be located on Salta’s 180-hectare Nexus Dandenong South Intermodal Estate.
Salta’s additional investment is on top of having already spent more than $200m on land, road, and other infrastructure works, in anticipation of the terminal.
Nexus Dandenong South is already home to major users of freight infrastructure including Woolworths’ $215m Melbourne South regional distribution centre, Bunnings regional distribution centre, plus major logistics businesses, Visa Global Logistics and Silk Contract Logistics.
Salta reckons significant capacity exists for additional tenants to move into the estate and they will benefit from being next to the new intermodal terminal.
Mr Tarascio said he was delighted to reach an agreement with the Victorian government after investing millions developing the Nexus estate.
“This has been a long-term project, where we set out to work with industry and government to provide the best possible inland port infrastructure to Melbourne’s south east, providing an efficient route to market for both importers and exporters,” he said.
Ben Wilmot 6.40pm: Cromwell sale of Rand Distribution Centre
Cromwell’s funds management unit has sold the Rand Distribution Centre in Direk, in the north of Adelaide, to investment bank Moelis for $63.05m as it seeds a new logistics fund.
The sale by the unlisted Cromwell Property Trust 12 was at a price showing a near 19 per cent premium to the asset’s book value, showing the strong demand for cold storage facilities across Australia where prices have soared despite the pandemic.
The Rand Distribution Centre is a modern, purpose-built cold storage facility currently leased to Rand Transport, a subsidiary of private equity firm Anchorage Capital Partners.
The asset carries a lucrative 15-year remaining lease term and Cromwell’s sale shows the surge in values in the sector as Cromwell had picked it up on an ‘as if complete’ value of $32.75m in 2013.
JLL’s Tony Iuliano and Adrian Rowse sold the asset on behalf of Cromwell. Mr Iuliano said there was significant interest from both offshore investors including new entrants wanting to deploy capital into Australia, as well as onshore groups, resulting in a vigorously contested process.
“Refrigeration distribution centres have become an increasingly popular investment class in recent years primarily because of the longer lease stability in income. They have drawn increasing attention in the current environment due to domestic consumer demand and the rise in non-discretionary retailing,” he said.
Moelis said its asset arm had strong fund inflows since June 30, with significant inflows from foreign wealthy investors coupled with increased activity from domestic investors. The company said it had secured a number of seed assets secured for a Real Assets Opportunity Fund and a Prime Logistics Fund.
4.55pm: Records fall for Afterpay, Xero, Appen
The rally in retailers has helped several household names to notch new record highs in Monday’s session, even amid lacklustre trade in the broader benchmark.
In the tech space, news of Afterpay’s expansion into Europe helped shares to close above $80 for the first time – finishing up 4.8pc to $82.73. Rival Sezzle also finished at a high of $8.73, up 9.1pc.
Xero closed up 1.5 per cent to a record high of $98.49, while Appen rose 4.5 per cent to highs of $41.90.
Wesfarmers led the retail sector higher with gains of 1.5pc to $49.44 along with JB Hi-Fi’s 1pc lift to $51.46 while Adairs, Nick Scali, Redbubble, Baby Bunting, Carsales and Breville also reached their best levels on record.
Tech providers NextDC and Hub24 both set records also, ahead of the release of their results later this week, along with peer Megaport who reported solid results last week.
4.12pm: Shares close near daily highs
Shares fought back from early losses as consumer-related stocks rose to fresh heights, helping the ASX to notch its first gain in three days.
Earnings from Fortescue and insurer NIB were in focus, along with board and management upheaval at AMP in the wake of the group’s sexual harassment scandal, but it was Afterpay and the bulk miners that did most of the heavy lifting.
By the close on Monday, shares were up by 18 points or 0.3 per cent to 6129.6, driven by heavyweight weakness, with the broader All Ords gaining a larger 30 points or 0.47 per cent to 6300.3.
Meanwhile, the market’s top 50 stocks finished in the red, down 3 points or 0.05 per cent to 5930.
Ben Wilmot 4.11pm: Ivanhoé, LOGOS plan $230m logistics estate
Canadian giant Ivanhoé Cambridge and industrial property manager LOGOS have snapped up a strategic development site in Broadmeadows in western Melbourne.
The pair bought the site from the listed Growthpoint Properties Australia for $50.2m and will look to transform the vacant property into a major industrial project.
Ivanhoé Cambridge plans to develop the site into a $230m logistics estate with LOGOS to act as manager and developer.
Prior to the outbreak of the COVID-19 virus, Growthpoint had been progressing development plans but as part of its response to the pandemic, the company delayed all non-essential capital projects and instead sold the property.
Building on the estate will kick off in early 2021, and will be focused on the core logistics sectors of e-commerce, distribution, food and cold storage.
The transaction was brokered by CBRE’s Chris O’Brien and Daniel Eramo. The LOGOS Asia Pacific portfolio comprises one hundred logistics estates across nine countries with assets of about $13.8bn.
3.46pm: Business Council calls for border clarity
Business Council chief Jennifer Westacott has slammed a lack of co-ordination between state governments on border policies, calling for a unified response to give Australian businesses a better shot at recovery.
In an open letter to the Prime Minister and National cabinet, Ms Westacott described the current border restrictions as “a patchwork of inconsistent state and territory-based rules that ignore the reality of the way small and large businesses operate across borders”.
“We accept that states and territories have the right to ease – or reimpose – restrictions at a different pace based on medical advice among other factors. However, many of the border measures imposed to date appear to be arbitrary and lacking time frames and review or end dates,” she said.
“The administration of domestic border controls varies significantly across the country with massive differences in processes for border pass applications, quarantine requirements, and essential worker/ traveller exemptions.
“This has caused unintended consequences and exposed Australians to unnecessary risk. It has also significantly impacted on health services, local communities, supply chains, and the ability of businesses to safeguard and create jobs.”
2.55pm: Murray leaves AMP with 290,000 shares
As AMP chairman David Murray quits the financial services group, he leaves with over 290,000 shares.
In his final directors interest notice lodged this afternoon, Mr Murray has interests in 11,375 shares directly, as well as 280,000 shares through his Lyndcote Super fund.
At today’s prices, his holding is worth roughly $421,000.
Mr Murray last bought shares in the group at $1.60 apiece through AMP’s share purchase plan in September last year, and before that at $2.36 apiece in February 2019.
Read more: Murray quits as AMP chair over Pahari
Bridget Carter 2.39pm: Nuix headed for IPO
DataRoom | Technology company Nuix is booking in investor meetings for its initial public offering through Morgan Stanley and Macquarie Capital.
Meetings are being scheduled for Wednesday September 2.
The company provides investigative analytics and intelligence software to more than 1000 clients in 79 countries.
It has long-term relationships with high profile government and law enforcement agencies, large enterprises, advisory and law firms.
The sale of the business comes as demand remains strong for Nuix’s software due to growth in data volumes being created and stored, an increased focus on governance, risk and compliance functions, as well as more significant consequences associated with data and privacy breaches.
The company generated revenue of $175m in the 2020 financial year, growing at about 16 per cent annually since 2018.
It had a gross profit margin of more than 85 per cent in fiscal 2020.
2.05pm: Downside risks remain for AMP: S&P
Global ratings agency S&P notes that risk remain skewed to the downside for AMP, after chairman David Murray quit and Australia chief Boe Pahari was demoted.
The financial services group this morning announced the sweeping changes after pressure from key investors in the wake of the group’s sexual harassment scandal.
S&P notes that “changes highlight governance challenges as well as potential dependency on key individuals within the group”.
“We will continue to monitor the degree to which these challenges may disrupt the overall strategic direction of the group as well as the group’s ability to effectively execute its strategy.”
AMP last traded up 0.7pc to $1.44.
Read more: Murray quits as AMP chair over Pahari
1.43pm: Redbubble tops $1bn valuation
Online marketplace Redbubble is the latest listed company to crack a $1bn market valuation, as sales of its printed T-shirts and masks surge during the pandemic.
Shares in the group rose to new heights of $3.94 apiece on Monday, giving it a market capitalisation of $1.05bn.
Compare that to ailing department store Myer, whose market cap is just $172m.
It comes as chief Martin Hosking told investors the rapid shift to online retail would not reverse, even after the coronavirus pandemic passed.
“More consumers that have adopted online shopping will continue to shop in this way. The underlying trend has been accelerated — it has not changed. Bricks and mortar were already struggling. That is not going to reverse,” he said.
Mr Hosking is the largest Redbubble shareholder, with a 12.2pc stake now worth $127.7m.
Goldman Sachs has a Buy rating on the stock, and a $5.45 price target, with analysts noting that the FY20 result was ahead of forecasts, with strong customer growth and buoyant demand.
RBL last up 3pc to $3.74.
Read more: Retailing will never be the same, says Redbubble
1.32pm: Spending favours retail, banks: UBS
The UBS Evidence Lab consumer survey for the first two weeks of July (pre-VIC lockdown) showed spending intentions and income expectations improved since the last survey in April, with the biggest rise in high-income households.
More consumers are looking to buy property and cars despite higher unemployment since the coronavirus pandemic, UBS analysts also found.
While noting that the October survey will show if the bounce in spending intentions was sustained after the VIC lockdowns, UBS argues that the results are positive for Bapcor, Harvey Norman. Metcash, Woolworths and Banks.
They like Bapcor as consumers report strong car buying intentions, Harvey Norman due to higher furniture/appliances spending and rising home improvement intentions, while robust trends in spending on groceries are positive for supermarkets and rising property purchase intentions are positive for Online Media.
They note that a positive data point for banks was the fact that fewer respondents were looking to refinance than in April after activity peaked in Q2, and lower interest rates have reduced refinancing incentives.
Although more respondents were using CBA as their main financial institution, UBS prefers ANZ, Westpac and NAB over CBA on valuation grounds.
“The survey supports our view that consumers should draw down savings in the December quarter, providing some support to spending, but still only partly offsetting the ‘fiscal cliff’ (and if) lockdowns persist, spending will weaken regardless,” the analysts say.
“We still like cyclical sectors, including Discretionary Retail, as signposts are OK for now.”
Eli Greenblat 1.18pm: Myer, AusPost ink fulfilment deal
Department store Myer has entered into a multi-year agreement with Australia Post to provide warehousing and online fulfilment services, as the online war between retailers heats up in the wake of shoppers increasingly turning to online amid the COVID-19 pandemic.
Myer said the delivery of this new third party logistics arrangement is a critical next step in Myer’s Customer First Plan, under the ‘Factory to Customer’ initiative, to put in place a more efficient and streamlined supply chain for online.
The department store, which will report its full-year results next month, said its online business had delivered strong, profitable growth in recent years, and this growth had accelerated significantly during the COVID-19 pandemic, as the online channel continues to represent a key strategic pillar of the business.
“These new warehouse and fulfilment arrangements will underpin the next stage of growth in Myer’s online business, to further strengthen the fulfilment capacity and improve efficiency, delivering benefits to Myer’s customer as well as providing significant cost savings,’’ Myer said on Monday.
The partnership with Australia Post will also provide extra capacity to support online growth, particularly during peak trading periods, with more than 90,000 products to be housed at the 26,000 sqm Australia Post facility in Tullamarine with close links to the airport and key road networks.
MYR shares last up 7.1pc to 22.5c.
1.02pm: Ex-dividend trade weighs on ASX
Shares are trading flat at lunch under the weight of bank losses and ex-dividend drag, even as tech shares rally.
At 1pm, the benchmark ASX200 is holding higher by just 2 points to 6113.1 – after hitting highs as much as 6125.9.
Ex-dividend trade in ANZ, Evolution, Aurizon and Woodside is pulling the ASX lower by roughly 6 points, while Fortescue, Wesfarmers and Afterpay support shares with a combined almost 10 point uplift.
AMP shares are up by 1.1pc to $1.45 after its management overhaul announced this morning, while Reliance outperforms with a 16.7pc jump.
Here are the biggest movers at lunch:
Patrick Commins 12.48pm: Aussies tap support payments for bills
A further 590,000 Australians received a government COVID-19 stimulus payment in June, bringing the total number of adults leaning on the government for support to nearly 7 million.
The Australian Bureau of Statistics’ detailed analysis of its household surveys in June showed the proportion of respondents saying they had received a special payment reached 35 per cent, from 32 per cent in May.
Of those who received a payment in June, the leading primary use for the extra money was to pay household bills, at a third of those surveyed. Around 43 per cent said their main use of the income support was to either pay mortgages or rent, household bills, or repay other personal debt. More than a quarter said the money primarily went to savings, while 30 per cent said it went to buying goods or services.
Nine per cent said the main use for the COVID-19 payments was to buy food or non-alcoholic drinks, and 7.5 per cent on “other household supplies”. Close to 5 per cent said they mainly used the money to buy furnishings or household equipment.
By state, Tasmanians were most likely to have received support, at 40 per cent, with those in the ACT and Northern Territory the least likely, at 20 per cent. Around 36 per cent of respondents in NSW and Queensland said they got a COVID-19 payment in June, versus 33 per cent in Victoria.
12.27pm: Reliance jumps 18pc on results beat
Reliance Worldwide shares are leading the market’s best performers, even after posting a 33pc profit drop, with the result seemingly not as bad as expected.
Ord Minnett writes that the net profit and cash performance was overall better than they had tipped, with profit coming in at $130.3m – up 10.4pc from its own forecasts.
“July and August trends very encouraging and cost-out program for FY21 is positive,” Ords said.
“Operating cash performance was very strong, resulting in net debt of $302.2m at year-end versus our $359m estimate.”
RWC last traded up 17.8pc to $3.38, and as high as $3.54.
Here’s the leaderboard of reporting companies at midday:
| COMPANY | % CHANGE | LAST TRADED |
| Reliance Worldwide | 17.6 | $3.38 |
| oOh!media | 10.4 | $0.98 |
| Omni Bridgeway | 3.02 | $4.43 |
| Chorus | 3.02 | $7.51 |
| Fortescue | 3.00 | $18.53 |
| Super Retail | 1.43 | $10.66 |
| St Barbara | -0.59 | $3.37 |
| Austal | -0.83 | $3.58 |
| G8 Education | -8.76 | $0.89 |
12.03pm: Super Retail primed for catch-up rally: Citi
Citi’s Bryan Raymond reiterates his Buy rating and $10.80 price target on Super Retail Group amid improving sales trends in its results today.
He notes that while the recent share price rally has driven a rerating to 15.8 times versus pre-COVID-19 levels around 12-13 times, its shares are still trading at a 35pc discount to the ASX200 ex resources and at the lower end of retail peers.
Moreover, the acceleration to 32pc like-for-like sales growth in the July/August trading update versus 26.5pc in May and 27.7pc in June is consistent with broader retail trends, and that period included two weeks of Melbourne closures.
“No earnings guidance was provided, however we note consensus EBIT growth stands at just 1pc, despite delivering 1pc EBIT growth in FY20,” Mr Raymond says.
“Each month of strong momentum results in upside risk to these modest consensus earnings expectations.”
SUL shares last up 1.8pc at $10.70 after rising 4.4pc to a 4-year high of $10.97.
Read more: Online boom lifts Super Retail
Lachlan Moffet Gray 11.53am: Early super withdrawals slowing
The rush of Australian’s tapping into their super savings is slowly tapering off, with the weekly amount withdrawal falling to a second consecutive new low last week.
The scheme, which allows Australians who have had their incomes reduced during the pandemic to access up to $20,000 of their super in two tranches of $10,000 – once last financial year and once this financial year – has now seen a total of 4.1 million fund members access $31.7bn of their retirement savings early.
Data from the Australian Prudential Regulation Authority shows that just $600m was paid out to applicants to the scheme in the most current reported period – the week to August 16 – supplanting the $710m doled out a week earlier as the record low payout figure.
The most amount of money paid out during the scheme was during the week to May 3, when $6.3bn was paid out to fund members.
However, unless the weekly amount paid out slows further still, the scheme is still on track to exceed the federal government’s total withdrawal target of $41.9bn by the December 31 cut-off date for new applications.
The latest reported week was also the first time new applications exceeded “repeat” applications made by people who accessed their Super during the first tranche.
Of the 70,000 applications that were received in the week to August 16, 40,000 were first-time applications, while 30,000 were “repeat” applications.
The average amount paid out to repeat applicants remained significantly higher than that paid out to initial applicants, at $8468 and $7402 respectively.
11.43am: Risk of Boral capital raise: Citi
Citi’s Lisa Huynh keeps her Neutral rating and $4.22 price target on Boral after its trading update revealed a massive $1.356bn writedown mainly of its North American operations and guided to FY20 NPAT of $175m-$180m – 8pc below consensus.
While noting that an impairment was “somewhat expected” in North America given a deterioration in the outlook since acquisition, this only reflects approximately half of $2.1bn of Headwaters goodwill and implies about $1bn in goodwill will be still outstanding at a group level.
In her view a further $2.2bn of equity would need to be written down to breach covenants and says that’s unlikely as it would mean the entire outstanding balance of intangibles would need to be impaired.
While noting that Boral doesn’t have earnings-based covenants and its earliest debt repayment in FY23, she cautions that gearing is high and net debt/EBITDA of 3.1 times is twice the level of domestic peers.
A capital raising could see the company pay down elevated debt levels, and unlock further balance sheet flexibility to manage the turnaround.
“While the outcomes of a strategic review could streamline Boral’s business and drive a rerating, investors may have to wait until October 2020 for the portfolio review,” she says.
There remains a risk of an earnings rebase and potential capital raising in our view.”
BLD was last up 0.8pc at $3.69 after initially falling to $3.53.
11.35am: Austal lifts dividend amid record profit
Shipbuilder Austal has lifted its final dividend after net profit for the year rose by 45pc, off the back of strong momentum in key contracts with the US and Australian Navies.
The group posted net profit after tax of $89m for the year, off earnings of $130.4m, up 41pc from last year.
As such, Austal increased its final dividend to 5c per share, taking the total FY20 dividends to 8c, from 6c in FY19.
Chief operating officer and incoming CEO Patrick Gregg said the results showed the success of its strategy to grow its defence business, which was largely shielded from the fallout of the pandemic.
“These record earnings have translated into significant cash flow, enhancing our strong balance sheet position with $397m of cash. This financial strength is enabling Austal to target strategic investment opportunities to drive the Company’s next phase of growth while at the same time increasing dividends and considering debt reductions in FY2021,” he said.
Still, the group held off from providing any earnings guidance for 2021, given the economic uncertainty of COVID-19.
ASB last traded flat at $3.61.
11.18am: Zip’s QuadPay posts record month
Buy now, pay later platform Zip has reported a record month for its proposed acquisition target QuadPay, as it prepares for a shareholder vote on the deal later this month.
In an update this morning, Zip said QuadPay had achieved record monthly transaction volumes in excess of $US70m in July, a 30pc increase on the June quarter average.
The group established a strategic partnership with Nasdaq listed Fiserv to offer its BNPL services across their US based merchant base, and secured a credit line up to $US200m from Goldman Sachs and Oaktree Capital.
Shareholders will vote on the QuadPay acquisition at an EGM on August 31.
Z1P shares are lifting on the news, last up 8.4pc to $7.14.
11.12am: ASX ekes into positive territory
Australia’s share market just turned slightly positive after falling intraday.
The S&P/ASX 200 turned up 5 points to 6115.6 after falling 0.3pc to 6094.7.
The rise came as CSL pared a 2.2pc intraday fall to 0.6pc, Afterpay extended its rise to 5pc on European expansion plans and Fortescue Metals also extended its rise from 2 to 3pc as investors reacted favourably to the dividend beat in its full-year results.
The major banks have also pared some of their intraday falls.
Reliance Worldwide faded a touch but $3.30-$3.40 is now a potential support.
Jared Lynch 11.04am: Bubs inks Chinese manufacturing deal
Bubs plans to start manufacturing its goat’s milk infant formula in China and acquire a stake in a Chinese factory to combat increased regulatory tightening from Beijing and growing hostility towards Australian products.
Bubs announced on Monday it had signed a memorandum of understanding with Chinese infant formula giant Beingmate to start the Chinese manufacturing of infant formula used from Australian sourced goats milk.
The strategy is at odds with the seemingly insatiable appetite from Chinese parents for foreign infant formula, particularly from Australia and New Zealand, which has a clean and green image. Memories are still fresh from a 2008 scandal, in which a Chinese produced infant formula was contaminated with melamine, killing six babies and putting another 54,000 in hospital.
But Bubs chief executive Kristy Carr said China had tightened regulation around the sale of infant formula, which involved limiting the number of brands available via accreditation from the State Administration for Market Regulation (SAMR).
“Since April 2019, 92 product applications have been successful in obtaining SAMR registration. Of these, 77 are manufactured in China. Of the 15 products that are manufactured outside of China, nine are Chinese owned brands manufactured in France,” Ms Carr said.
“The only international brand to achieve certification during this period was Wyeth for six products manufactured in Singapore.”
BUB last traded up 4.5 per cent to 96.7c.
Bridget Carter 10.58am: Qantas in $400m refinancing
DataRoom | Qantas has hired Citi, CBA, Westpac and NAB to tap the bond market in an issue that is expected to be worth more than $400 million.
The plans were unveiled Monday, where the national carrier told participants in the bond market it would refinance medium term notes due in 2021. The plan is to issue 7-year bonds and or 10-year bonds.
Qantas currently has $400m worth of 7.5-year bonds due in 2021.
It comes after Qantas dived to a $2.7 billion loss for the 2020 financial year due to the global COVID-19 pandemic that has halted most international and domestic air travel.
It’s shares have fallen from more than $7 at the start of the year to just under $3.80.
The airline has also shed 6000 workers including Qantas International chief executive Tino La Spina, with the departure announced Monday.
Read more: Qantas International chief exits
David Ross 10.54am: 24 companies suspended over listing fees
The ASX has suspended 24 companies from trading after failing to pay their annual listing fees by last Friday.
If these companies fail to pay up by close of business Friday, August 28 they will be delisted from the bourse.
Companies such as embattled insurer Freedom Insurance and coal miner Moreton Resources are included in the warning, along with CropLogic Limited who is currently subject to administration.
Annual listing fees for companies range from $26,376 for a company with a $10m market capitalisation to more than $61,729 for companies with a market capitalisation of $500m.
Robyn Ironside 10.37am: Qantas International chief exits
Qantas International chief executive Tino La Spina has become the highest ranking casualty of the impact of COVID-19 on the airline as it sheds 6000 workers.
The former chief financial officer, who was only promoted to head up the international division last year, will leave Qantas after 14 years of service in light of the current absence of overseas services.
His responsibilities will transfer to Qantas Domestic CEO Andrew David with the group management committee to shrink to ten executives, from 11.
Qantas CEO Alan Joyce said the COVID crisis was forcing the airline to rethink the business at every level.
“It’s increasingly clear that our international flights will be grounded until at least mid-2021 and it will take years for activity to return to what it was before,” Mr Joyce said.
QAN last traded down 2.6 per cent to $3.80.
Read more: Qantas International chief exits
Ben Wilmot 10.29am: Aus Unity’s suburban focus pays off
Former takeover target the Australian Unity Office Fund says it is well positioned as a suburban office landlord as office workers stay away from CBDs.
The AOF gave fiscal 2021 distribution guidance of 15 cents per unit with fund manager James Freeman saying its portfolio had demonstrated resilience in the face of a challenging environment due to COVID-19.
“We are maintaining distribution guidance for fiscal 2021 in line with fiscal 2020 actual distributions of 15 cents per unit.,” he sad, noting the distributions were underpinned by high quality tenants such as Telstra and state and federal governments.
“We believe AOF is well positioned as we enter fiscal 2021, with only 4 per cent of the portfolio expiring during the year and the portfolio allocation sitting at 59 per cent to metro markets and 41 per cent to the smaller CBDs,” he said.
Mr Freeman said that as businesses reassess their cost bases and employees seek to work closer to home, reducing travel times on public transport, we expect these markets will outperform given their cost advantage to the larger CBDs of Sydney and Melbourne.
AOF delivered Funds from Operations of $27.6m, or 17 cents per unit, and distributions of $24.4m, or 15 cents per unit. The portfolio was valued at $669.65m, an increase of $1.25m over the year.
Citing current uncertainty relating to COVID-19, AOF said it would not be providing FFO guidance.
Lilly Vitorovich 10.27am: Ad wipe-out smashes oOh!media earnings
The sharp drop in advertising spending during the coronavirus crisis has smashed outdoor ad company oOh!media’s first-half earnings.
The group, which raised $167m at the start of the pandemic to beef-up its balance sheet, has reported a near 81 per cent drop in underlying earnings of $10.8m for the six months to June from $56m a year earlier.
oOh!media swung to a net loss of $27.5m from a net profit of $608,000 following a 33 per cent drop in revenue to $205m and a higher depreciation and amortisation expense.
Amid the difficult environment, chief executive Brendon Cook says the group has “maintained market share while strengthening” its balance sheet during the COVID-19 crisis.
“While revenue and profits predictably declined, our decisive early action to raise additional equity, reduce costs and capital expenditure and manage cash flows has reduced debt by 67 per cent and positioned the company well for the future.”
oOh!media’s capital raising in March, together with cuts to costs and capital expenditure, helped the group cut its net debt by 67 per cent to $115.2m.
The company won’t pay an interim dividend, as flagged at the time of its capital raising.
OML is trading higher by 8.5pc to 96c in early trade.
Bridget Carter 10.24am: Emeco taps Macquarie, Goldmans to raise $149m
DataRoom | Emeco has called on Macquarie Capital and Goldman Sachs to raise $149 million of equity.
It comes as the company also embarks on a refinancing of its bonds, gaining support from existing hedge fund investor Black Diamond which is providing 40 per of the funds.
For the equity raising, shares are being sold at 85c each.
The raise by way of an entitlement offer comes after DataRoom revealed the group had been trying to raise funds in the United States to refinance its debt due in March 2022.
Shares are being sold at a 17.9 per cent discount to the last closing price of $1.035.
More to come
10.16am: Tech surge leads ASX higher
The local market is slipping early, under the drag of energy and bank stocks, as AMP investors cheer the company’s management shake-up.
At the open, the ASX200 is lower by 9 points or 0.14 per cent to 6102.6.
Tech is the best performing sector, up 2.1pc, as Afterpay adds 4.4pc on its expansion into Europe, while Fortescue lifts by 2pc after reporting record profit and higher payouts.
AMP shares are up by 1pc to $1.47 after chair David Murray stood down over his involvement in the promotion of Boe Pahari.
Ex-dividend trade in ANZ, Evolution, Aurizon and Woodside is weighing on trade.
9.56am: Stocks to watch
- Audinate cut to Hold – Shaw and Partners
- BWX raised to Positive – Evans and Partners
- Michael Hill cut to Neutral – Citi
- Suncorp raised to Neutral – Credit Suisse
- Suncorp raise to Equal-weight – Morgan Stanley
- TPG cut to Neutral – JP Morgan
- TPG raised to Neutral – Credit Suisse
- TPG raised to Outperform – Macquarie
David Ross 9.46am: Afterpay’s makes push into Europe
Afterpay is pushing into the lucrative €300bn ($494bn) European buy now, pay later market with the acquisition of Pagantis and PMT Technologies, as it extends its rapid expansion strategy.
The acquisition of the Spanish technology company Pagantis by Afterpay subsidiary Clearpay, gives Afterpay access to Spain, France, and Italy, with regulatory approval to begin operations in Portugal.
Pagantis’ products will be rebranded to Clearpay and legacy technology from Pagantis will be integrated to provide the Afterpay core product.
Existing Pagantis credit card and consumer fee instalment products will be discontinued, with the existing loan book to be retained by NQB Corporate SLU.
Completion of the acquisition is subject to the approval of the Bank of Spain, but would allow Afterpay access to all core-European markets due to banking license passporting rules.
NBQ will receive €50m ($82.3m) in consideration as part of the deal, with €5m to be paid at the conclusion of the deal and the remainder payable three years after the conclusion of the deal.
Afterpay will be indemnified for losses from the operation of Pagantis legacy businesses by NBQ. Pagantis has approximately 1400 merchants and 150,000 customers.
Afterpay shares last traded at $78.95 each, double their highs around $39.44 hit prior to the sharemarket’s collapse in March.
Read more: Afterpay doubles full-year earnings guidance
9.42am: Shares likely supported on dips
Australia’s share market should remain well supported on dips after Wall Street set record highs, albeit gains were narrow based on gains by tech giants like Apple.
Futures suggest the S&P/ASX 200 will open down 0.3pc at 6093 and major stocks including ANZ, Woodside, Evolution and Aurizon will trade ex-dividend.
But resources sector heavyweight, Fortescue Metals has reported an almost 50pc rise in full-year profit to $4.74bn as expected, driving what looks to be a higher-than-expected final dividend of $1.00 a share versus Bloomberg’s projection of $0.69 cents a share.
Afterpay should be a further boost from European expansion plans with its agreement to buy Pagantis giving it an extra addressable e-commerce market of over EUR150bn.
Super Retail Group has reported strong sales growth in the first seven weeks of 2020-21, but there’s more bad news for Boral with a $1.35bn impairment charge on its North American operations, the Meridian Brick joint venture and Boral Australia assets.
Local coronavirus trends are encouraging with Victoria reporting 116 new cases, the lowest increase since July 5.
Ben Wilmot 9.41am: McGrath posts $10m earnings turnaround
Real estate agency McGrath has announced a $10m earnings turnaround and appointed a former ANZ bank executive as its new chief to lead the company in which founder John McGrath retains a major stake.
The agency said dwelling prices are expected to decline over coming months but government stimulus packages, which are supported by banks, and record low interest rates are likely to cushion the extent of decreases.
McGrath chief executive Geoff Lucas will resign after delivering the results, capping a two and a half year stint at the company. Edward Law will become chief executive after a 14-year career at ANZ, where he was global head of institutional property. He was most recently an executive director of Newground Capital Partners and investment director of MaxCap Group.
Chair Peter Lewis said the exiting Mr Lucas had steered the company through a difficult period and had taken McGrath from losses to profitability through the COVID-19 crisis.
Mr Lucas said the business was now in a strong financial position to “navigate through the uncertainty of the current environment”.
McGrath said revenue was up 11 per cent to $91.69m and it had EBITDA of $3.7m, a $10.1m turnaround from underlying an EBITDA loss of $6.4m in 2019.
It also recorded a net profit after tax of $700,000, a significant turnaround compared with the 2019 loss of $9.7m, partly as it received the JobKeeper benefit of $2.2m.
There was a 31 per cent jump in sales per agent for the period, despite the negative effects of the COVID pandemic on the residential property sector in the last quarter.
John Stensholt 9.38am: Twiggy rakes in $2bn in dividends
Andrew Forrest’s dividend income from his Fortescue Metals Group was about $2bn for the 2020 financial year, after the iron ore giant announced a $1 per share final dividend.
Mr Forrest owns about 36pc of the group he chairs, and the big payday on Monday – representing about $1.16bn – will mean huge amounts flow to his charitable Minderoo Foundation.
It also means Mr Forrest has received more than $3bn in the past two years in Fortescue dividends, after he was paid about $1.24bn in dividends in 2019.
The fully franked final dividend of $1 per share announced on Monday lifted total dividends in 2020 to $1.76 per share, which Fortescue said equated to about $US3.7bn and a 77pc payout of full year net profit after tax.
Mr Forrest’s shareholding in Fortescue has breached the $20bn mark in recent weeks and put him on track for top position on The List – Australia’s Richest 250, published by The Australian, as the iron ore miner’s shares surge in line with an increase in prices for the commodity and the continuation of big exports to China during the COVID-19 pandemic.
The latest dividend is payable on October 2.
Read more: Fortescue posts record profit, lifts dividend
Eli Greenblat 9.21am: Online boom lifts Super Retail
The COVID-19 pandemic has put a rocket under online sales for Super Retail Group, whose retail chains include Supercheap Auto, Rebel Sport and BCF, with its digital platform generating almost a 50 per cent sales boost in fiscal 2020.
However, more than $50m in one-off costs cut into profit and prompted the retailer to slash its final dividend by around one third.
The company said trading had rebounded strongly in the fourth quarter as like-for-like sales jumped 27.2 per cent, benefiting from the opening up of some state economies as the pandemic eased and pent up demand for camping equipment, auto parts, leisure and sporting goods translated into stronger sales.
This has continued into 2021 with group like for like sales growing by 32 per cent in the first seven weeks of the year,
Super Retail on Monday reported a 20.9 per cent fall in full-year net profit to $110.2m, pushed lower by one off items of $54m – including the backpay of wages to staff, the exit of non-core businesses, support office restructure costs and the accelerated write down of assets.
The company said that normalised profit was $154.1m, up 1 per cent.
Total sales for the year rose 4.2 per cent $2.83bn while online sales improved by 44.4 per cent to $290.5m. Group like-for-like sales were up by 3.6 per cent.
Super Retail declared a final dividend of 19.5 cents per share, down from 28.5 cents per share, and payable on October 2.
Bridget Carter 9.17am: TPG exits Inghams with 9.9pc sell down
DataRoom | TPG Capital has staged its final exit out of poultry producer Inghams Enterprises, offloading a 9.9 per cent interest before the market opened on Monday.
Working on the selldown of 36.7 million shares was JPMorgan.
Shares were sold at $3.32 each, a 2.1 per cent discount to Friday’s $3.39 closing price.
Stock crossed between 7am and 8am and the total trade amounted to $122m.
In March TPG sold a 5 per cent stake in the poultry producer Inghams for $3.60 per share.
The private equity firm had an escrowed interest in Inghams when it was listed in 2016 as a business worth $2.2bn at $3.15 per share.
TPG, a US-based private equity firm, then had a 47 per cent interest in Inghams.
Read more: TPG sells down Inghams stake
Nick Evans 9.12am: Rio caves blast costs chief $5m bonus
Rio Tinto’s decision to blow up a priceless archaeological site to access iron ore worth more than $1bn at current prices will cost chief executive Jean Sebastien Jacques about $5m in lost bonuses.
Rio released its board-led internal review into the decision making around the destruction of the 46,000 year-old rock shelters at Juukan Gorge in the Pilbara, with chairman Simon Thompson saying the review found “no single individual or error was responsible for the destruction of the Juukan rock-shelters”.
“It was the result of a series of decisions, actions and omissions over an extended period of time, underpinned by flaws in systems, data sharing, engagement within the company and with the PKKP, and poor decision-making,” Rio said in a statement on Monday.
“The board review concluded that while Rio Tinto had obtained legal authority to impact the Juukan rock-shelters, it fell short of the Standards and internal guidance that Rio Tinto sets for itself, over and above its legal obligations.”
Rio submissions to a Parliamentary inquiry into the debacle said the company had originally applied for permission to mine the area containing the rock-shelters in order to mine about 8 million tonnes of high-grade iron ore – worth about $US1bn at current iron ore prices.
Read more: Heritage rethink as Rio Tinto blasts Pilbara ruin caves
Jared Lynch 9.08am: NIB postpones premium increase
Listed health insurer NIB will postpone its premium increase for another six months despite rival Medibank saying delaying policy price hikes is unnecessary.
NIB announced on Monday it would postpone premium rise, which was expected in October, for those on JobKeeper and JobSeeker for another six months, joining Bupa and smaller not-for-profit insurers.
It comes as NIB’s profit dived 40 per cent to $90.1m for the year to June 30, with chief executive Mark Fitzgibbon blaming volatile equity markets and the COVID-19 pandemic. The group’s investment income plummeted 54 per cent to $16.6m.
Meanwhile, benefits paid – including a $98.8m provision for deferred claims as a result of COVID-19 enforced elective surgery cancellations – rose 6.7 per cent to $1.9bn. This compared with a 3.4 per cent rise in total group revenue to $2.5bn.
On an underlying basis, net profit fell 25.6 per cent to $150.1m, which was in-line with previous guidance.
NHF last traded at $4.81.
Eli Greenblat 9.02am: Shaver Shop profit lifts by 45pc
Shaver Shop Group says its business model has been proven in the wake of the COVID-19 pandemic as consumers chose to switch to online and purchase grooming products while isolated at home, with the retailer’s full-year net profit up 44.6 per cent to $10.6m.
The retailer, which owns a portfolio of retail stores specialising in personal grooming products for men and women, said that total sales for the year were up 16.4 per cent to $194.9m with like-for-like store sales better by 15.3 per cent and online sales rising by 103.5 per cent to $47.8m, representing 22.7 per cent of total group sales.
Shaver Shop chief executive Cameron Fox said: “We backed up a strong first half result with an even stronger second half. Our omni-retail strategies are delivering strong online and in-store results, evidenced by 15.3 per cent growth in annual same store sales. Our key customer service metrics are also trending at all-time highs.”
The company declared a final dividend of 2.7 cents per share, up 8 per cent, payable on September 24.
9.01am: S&P500 breadth casts doubts: IG
IG market analyst Kyle Rodda says a lack of increase in the breadth of US share gains on Friday cast doubt about the rise to record highs.
“Once again, the US stock market defied concerns about the global economy, as well as a week of declines in European and Asian equities, to crack fresh record highs last week,” Mr Rodda says.
“While the recovery from March’s bear-market lows has been generally cheered as the fastest in history, market participants carry doubt into the new trading week about its underlying strength.”
He notes that the US stock market’s gains are increasingly being driven by a narrow set of mega-cap tech-stocks, with Tesla’s surge above $US2000 per share, and Apple Inc’s climb to a $US2 trillion valuation last week stoking fears US tech shares are approaching “bubble-like territory”.
Samantha Bailey 8.50am: Reliance profit drops as construction slows
Plumbing supplies company Reliance Worldwide recorded a 32.7 per cent drop in net profit after its Americas business fared well through the coronavirus crisis but construction slowed through the rest of its key markets.
The company declared a final dividend of 2.5 cents a share, as it unveiled a 5 per cent lift in net sales for the full-year through June.
Still, Reliance recorded a 32.7 per cent profit drop to $89.4m. Adjusted net profit after tax dropped 17.7 per cent to $130.3m, reflecting charges for restructuring and asset impairments, Reliance said.
“Our performance this year has been impacted by what occurred in the second half with COVID‐19, with sales trends varying by region reflecting the differing market responses to the pandemic,” chief executive Heath Sharp said.
Reliance Worldwide said that the company has seen strong sales growth in the US for the first few months of the new financial year, while sales in the Asia-Pacific region were up on the prior year.
Sales in Europe, the Middle East and Africa were down slightly, reflecting satisfaction of pent‐up demand which was artificially suppressed during the lockdown, the company said.
8.42am: Fortescue unveils record profit, raises payout
Fortescue Metals reported a record annual profit and raised its dividend, as it shipped more iron ore than ever before as prices of the commodity headed toward a more than six-year high.
The world’s fourth-biggest exporter of iron ore reported a net profit of $US4.74bn for the 12 months through June, up from $US3.19bn a year earlier. Directors of the company declared a final dividend of $1.00 a share, bringing the full-year payout to $1.76. That represents a payout ratio of 77pc, at the top end of its policy to return 50-80pc of net profit to shareholders.
Fortescue shipped a record 178.2 million tonnes of iron ore in the 12 months through June, benefiting from China’s economic recovery after it brought a local outbreak of coronavirus under control and supply disruptions in Brazil. That was above the top end of recently revised guidance of 177.0 million tonnes and 6pc more than a year ago.
Annual revenue rose by 29pc to $US12.82bn as Fortescue’s iron ore fetched an average realised price of $US79 a tonne, up from $US65 a tonne in the 2019 fiscal year.
Net debt totalled $US300m at the end of June, even as Fortescue invested in growth projects such as Iron Bridge and the Eliwana Mine and Rail Project while also introducing safety measures at its operations after the coronavirus pandemic reached Australia.
Dow Jones Newswires
7.50am: Murray quits, Pahari demoted at AMP
David Murray has resigned as MP chairman and Boe Pahari has stood down has CEO of AMP Capital in the wake of the handling of sexual harassment allegations against Mr Pahari.
Debra Hazelton has been appointed as chairman of AMP Limited, effective immediately.
Board member John Fraser has also stood down from the board.
AMP said the changes “respond to feedback expressed by some major shareholders regarding the appointment of Mr Pahari as AMP Capital CEO on July 2020”.
Mr Pahari, who was appointed despite findings of sexual harassment against him, will resume work at his previous level with a focus on AMP Capital’s infrastructure equity business.
AMP chief executive Francesco De Ferrari will assume direct leadership of the AMP Capital
business on an interim basis while a search process is conducted for a new CEO of AMP Capital.
Mr Murray said: “AMP needs to continue its transformation under chief executive Francesco De Ferrari with the support and confidence of its investors, institutional clients, employees, partners and clients, without distractions.
“The board has made it clear that it has always treated the complaint against Mr Pahari seriously. My view remains that it was dealt with appropriately in 2017 and Mr Pahari was penalised accordingly.
“However, it is clear to me that, although there is considerable support for our strategy, some shareholders did not consider Mr Pahari’s promotion to AMP Capital CEO to be appropriate.
“Although the board’s decision on the appointment was unanimous, my decision to leave reflects my role and accountability as chairman of the Board and the need to protect continuity of management, the strategy and, to the extent possible, the board.”
AMP shares closed on Friday at $1.43, down 0.35 per cent.
Read more: Murray quits as AMP chair over Pahari
7.05am: Chorus signals dividend growth
New Zealand telecommunications company Chorus signalled its earnings would be broadly flat in the current year, although it aims to increase its dividend assuming the coronavirus pandemic doesn’t worsen the outlook.
Chorus forecast earnings before interest, tax, depreciation and amortisation of between $NZ640 million and $NZ660m in the year through June, 2021. That compares with $NZ648m of Ebitda achieved in the 2020 fiscal year.
Chorus said it expects to declare an annual dividend worth 25 New Zealand cents per share in the 2021 fiscal year. That would be higher than the payout of 24 New Zealand cents per share in the prior 12-month period, which included a final dividend of 14 New Zealand cents.
The guidance was provided alongside an annual profit of $NZ52m in fiscal 2020, down 2 per cent on a year earlier, and a 1 per cent decline in revenue to $NZ959m.
Capital expenditure in fiscal 2020 of $NZ$663m was down 18 per cent, reflecting the rollout of the first phase of its Ultra-Fast Broadband network and the suspension of non-essential connection activity during the first national lockdown to curb the spread of the novel coronavirus.
Chorus said it expects capital expenditure of between $NZ630m and $NZ$670m in the fiscal year now underway.
Dow Jones Newswires
6.20am: ASX tipped to slip at the open
Australian stocks are set for a modest fall at the open ahead of the final week of the reporting season, despite Wall Street ending last week on a high note.
At around 6am (AEST) the SPI futures index was down 11 points.
Wall Street ended last week higher, with the Nasdaq and S&P 500 posting new records while the Dow also gained.
On Friday, Australian shares finished a rollercoaster week slightly lower, its first decline in three weeks, after bank and healthcare gains evaporated on Friday. Optimism midweek pushed shares to a six-month high but earnings momentum and some likely profit taking pulled the index into the red. By the close on Friday, the benchmark ASX200 was lower by 9 points or 0.14 per cent to 6111.2 – marking a 0.2 per cent weekly loss.
Earnings season approaches an end this week, with a few big names still to report.
Fortescue is tipped to pay record dividends when it hands down its result on Monday, while Woolworths and Afterpay also report this week.
Shares of most reporting companies have outperformed on the day of their results, according to AMP Capital’s head of investment strategy and chief economist, Shane Oliver.
“While it’s clear that company earnings and dividends have been hit hard by the coronavirus shock, the hit has not been as bad as feared,” he says.
Later this week, global market attention will be focused on the Jackson Hole Symposium, where major figures will discuss policy responses to the pandemic.
The Australian dollar is lower at US71.60.
5.35am: Investors look past Covid
Corporate Australia is proving resilient and investors are looking past the coronavirus pandemic, with the share prices of most companies outperforming on the day of their reports and the overall market rising in August.
With the June half reporting season about 80 per cent complete by market capitalisation and about 70 per cent by the number of reporting companies, only 33 per cent of companies have reported higher earnings than the year earlier — compared to 66 per cent normally — and 55 per cent have cut their dividends while normally only about 16 per cent do so, according to AMP Capital.
So far the consensus estimate for 2019-20 earnings has fallen to minus 22.3 per cent from minus 21 per cent three weeks ago, making it the biggest fall in earnings since the early 1990s recession.
Financials have been hit the hardest with the consensus expecting a 29 per cent fall in earnings, followed by industrials and resources, with the consensus projecting a 14.4 per cent fall.
But the share prices of most reporting companies have outperformed on the day of their results, according to AMP Capital’s head of investment strategy and chief economist, Shane Oliver.
5.30am: Diversity key as dividends slashed
The pandemic’s dramatic but varied hit on global dividend payments shows the benefits of diversification across industries and regions.
Global dividends plunged by a fifth in the June quarter, but the effects of the pandemic varied enormously around the world and across different industries, according to a leading fund manager.
Janus Henderson’s Global Dividend Index saw total payouts fall $US108.1bn ($129bn) to $US382.2bn, the lowest second-quarter total since 2012.
Dividends fell 19.3 per cent on an underlying basis in the June quarter, making it easily the worst quarterly drop since the index began at the end of 2009, just after the global financial crisis.
More than a quarter of companies cut their dividends and more than half cancelled them outright.
It comes as June half-year dividend payments in Australia haven’t been quite as bad as expected.
Read more
5.20am: ‘No way back’ from EU joint debt
German Finance Minister Olaf Scholz said the European Union’s recovery package financed by joint borrowing was a long-term measure rather than a short-term coronavirus crisis fix, contradicting Chancellor Angela Merkel.
“The Recovery Fund is a real step forward for Germany and for Europe, one we won’t go back on,” Scholz, who is also the centre-left Social Democratic Party (SPD) candidate to succeed Merkel in 2021 elections, told the Funke newspaper group.
Steps taken under the plan, including EU nations agreeing to jointly issue debt “represent fundamental changes, perhaps the biggest changes since the introduction of the euro” single currency around the turn of the millennium, Scholz said.
“These steps forward will inevitably lead to a debate about joint resources for the EU, something that’s a condition for an improved European Union that works better,” he added.
Long and intense debates were needed before the 27 EU countries reached agreement in July on their historic 750-billion-euro ($885 billon) recovery scheme, more than half of which will be paid out as direct grants.
AFP
5.15am: Wall Street recap
Wall Street ended a historically prosperous week on a high note Friday, with the Nasdaq and S&P 500 posting new records while the Dow also gained.
The benchmark Dow Jones Industrial Average rose 0.7 per cent to close at 27,930.33.
The broadbased S&P 500 gained 0.3 per cent to finish at 3,397.16, and the tech-rich Nasdaq Composite Index increased 0.4 per cent to end at 11,311.80, adding to its tally of more than 30 record closes in 2020.
Tech stocks have performed well despite the disruptions caused by the coronavirus pandemic, with Apple making history this week when it became the first company to reach $2 trillion in market value. Its stock was up 5.2 per cent at the close, an all-time high.
Other technology companies, including Amazon, Microsoft and Google-parent Alphabet, all of which now have more than $US1 trillion in market value.
“The market is still attracted to those tech names as concerns over economic growth continues,” said Quincy Krosby of Prudential.
She pointed to minutes of the Federal Reserve’s July policy meeting released this week that highlighted the continuing vulnerability of the US economy.
However, she noted that late August is a notoriously slow trading period, which can produce big price swings on the least bit of news.
The Dow was virtually flat for the week, while the Nasdaq was up 2.7 per cent and the S&P 500 0.7 per cent.
Also fuelling Friday’s rally was the record 24.7 per cent surge in US existing home sales in July, reported by the National Association of Realtors, a sign the housing market is booming even as Congress remains deadlocked on additional fiscal aid.
AFP
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