Shares slip 0.1pc as banks offset mining weakness
The ASX bounced from daily lows to finish down 0.1pc, as Commonwealth Bank, Seek and Transurban felt the sting of results disappointment.
- Gold’s worst day in 7 years dents miners
- Confidence drops 9.5pc near first-wave lows
- Commonwealth Bank profit sinks 11.3pc
- Transurban swings to loss
That’s all from the Trading Day blog for Wednesday, August 12. The ASX finished lower despite an early lift, weighed down by commodity weakness as spot gold fell below $US1900 an ounce.
Locally, Commonwealth Bank reported a 11.3pc slip in annual profit, missing consensus and sending shares down 0.5pc by the close, while Transurban said the collapse in traffic during the pandemic sent it to a $153m loss.
US futures are pointing to gains to come overnight.
John Durie 7.48pm: Comyn impresses with CBA result
Amid the biggest economic crisis since the Great Depression, CBA has earned $7.3bn and a return of 10.3 per cent, underlining the strength of the big bank oligopoly.
After outperforming since its last result, CBA’s “goldilocks” profit sent the stock prices of its three peers higher in a relief rally.
CBA was down slightly because its earnings were below consensus and, as might be expected, revenue fell 2 per cent, which on any read was soft.
Given the Australian economy is still floating on billions of dollars worth of government handouts and the pandemic is both locally and globally seemingly out of control, the relative optimism may be short-lived.
If you listen to Andrew Bassat at Seek he will tell you that without changes to businesses’ preparedness to take risks and the government making direct investment allowances instead of simple tax cuts, many of the jobs lost will never be recovered.
That tells you the banks face a bigger hit next year as the unemployment rate maybe exceeds 10 per cent and the 75 per cent of bank customers on loan deferrals who are still not making interest payments after six months of the crisis are in danger of becoming bad loans.
James Kirby 6.43pm: Diminished dividend dilemma for CBA
Income seeking investors now have a conundrum when it comes to Commonwealth Bank. They are looking at a very strong financial institution in an appalling market where the outlook presents real risks to an already reduced dividend stream.
As stockbrokers UBS have put it, “the yield is not particularly attractive given the risk profile”.
There’s the rub.
For a dividend yield of around 4 per cent you are buying a bank where all the key numbers are going the wrong way.
Profits are falling, costs are rising and margins are shrinking.
You can get a 4 per cent dividend yield in other places — including the big listed miners that are actually enjoying upgrades just now on the back of a second wind for iron ore prices.
David Ross 6.16pm: Computershare has ‘social obligation’
Australian data registration company Computershare has laid out how it saved staff during the pandemic with its CEO saying they had “a social obligation” in times like these.
Speaking at a results presentation, the Melbourne-based business outlined how despite double digit declines in revenues staff had not been cut nor forced to take leave.
ASX-listed Computershare on Tuesday night posted a net profit of $232.7m for the 12 months through to June, compared with a $415.7m profit in the year prior.
Richard Gluyas 5.26pm: NAB expects ‘to cut’ jobs
National Australia Bank chief executive Ross McEwan has stressed the critical importance of lowering costs, revealing that jobs will go in some areas, but hundreds of others will be added to support customers.
In an email to all staff ahead of NAB’s third quarter trading update on Friday, Mr McEwan again stressed that the bank had to become “far more efficient and simpler”.
This meant prioritising 19 key projects, stopping some work and cutting roles that were no longer necessary.
“At the same time we are creating hundreds of new roles with an emphasis on how we can better support our customers,” the NAB chief said.
Reminding staff of last week’s internal briefing, also delivered to all staff, Mr McEwan said the new jobs would be in such areas as NAB Assist, across the business and private banking division, and in the anti-money laundering and know-your-customer compliance operations.
Staff could also be retrained for customer-facing roles.
Damon Kitney 5.17pm: Magellan’s Douglass warns of market ‘shock’
Magellan chairman Hamish Douglass said markets were potentially mispricing a best-case global scenario where work on a COVID-19 vaccine progressed and governments and central banks continued to provide fiscal and monetary support.
Any false starts in vaccine trials could deliver a shock markets, warned Mr Douglass who oversees the $95.5bn fund.
“There is still considerable uncertainty here if we are going to get to a timely vaccine to get us out of this through 2021 through vaccination. The market has put a much higher probability on that case than the scientific information guides you at the moment. The only thing that will guide us is the scientific data,’’ Mr Douglass told The Australian.
“If some of this is bad, the market could be well over its skis here. The economic outcomes are very different between it (the vaccine) working and not working.”
“If you saw in a few months some failures of these vaccine trials, I think the market would be deeply shocked,’’ he said, while adding that even in the best case vaccine scenario there was “a lot of uncertainty about what the real economy looks like once all the stimulus has been withdrawn.”
Mr Douglass, the co-founder of Magellan, also reiterated his previous warnings about the US high yield debt market and the prospect of a wave of bankruptcies “when the tide goes back out and we see the absence of Government and central bank support.
4.46pm: UK in record recession
Britain’s economy contracted by a record 20.4 per cent in the second quarter with the country in lockdown over the coronavirus pandemic, official data showed Wednesday.
“It is clear that the UK is in the largest recession on record,” the Office for National Statistics said.
AFP
4.42pm: Miners hit as gold falls below $US1900
Miners were the biggest drag on the market on Wednesday, after commodities took a hit from rising US Treasury yields and reports of a potential Russian coronavirus vaccine.
Spot gold, often seen as a safe haven amid uncertainty, fell 4.5 per cent for its biggest drop in 7 years overnight, and traded below $US1900/oz during the day, pressuring local producers.
Newcrest lost 3.2 per cent to $34.10, Northern Star slipped by 5.4 per cent to $14.50 and Saracen wound back by 4.4 per cent to $5.41.
On top of commodity weakness, Evolution said it had evacuated its Ontario mine due to a wild fire scare, sending its shares down by 5.3 per cent to $5.54.
Here’s the biggest movers at the close:
4.13pm: Shares slip 0.1pc
Australian shares fell from two-week highs in Wednesday’s trade, as a sharp drop in commodity prices and offshore weakness dampened optimism from earlier in the week.
Still, bank shares pushed higher, taking the recent streak in the sector to four days, even as Commonwealth Bank shares retreated by 0.5pc after disappointing results.
By the close, the benchmark ASX200 was lower by 7 points or 0.11 per cent to 6132 - paring earlier losses as much as 0.6pc.
On the All Ords, shares fell 15 points or 0.24 per cent to 6257.
3.55pm: DUG lifts 7pc in ASX debut
High performance computing group DUG Technology has edged higher on its ASX debut, after raising $34m in its IPO.
The group offers software solution for the global tech and resources sectors, with a focus on analysis on large datasets, and was founded by Matthew Lamont and Troy Thomson out of a garage in Perth.
DUG raised capital at $1.35 apiece in its IPO, to fund network expansion, storage and computres.
Shares traded as high as $1.525 in Wednesday’s trade and, ahead of the close, were trading at $1.45 - representing a 7pc premium.
2.58pm: Cathay Pacific posts $US1.3bn first half loss
Hong Kong carrier Cathay Pacific said Wednesday it lost $HK9.9bn ($1.8bn) in the first half of this year, making it the latest major airline to reveal how badly the coronavirus pandemic has eviscerated its business.
“The first six months of 2020 were the most challenging that the Cathay Pacific Group has faced in its more than 70-year history,” chairman Patrick Healy said in a stark statement announcing the results.
“The global health crisis has decimated the travel industry and the future remains highly uncertain, with most analysts suggesting that it will take years to recover to pre-crisis levels,” he added.
Like airlines worldwide, Cathay has been battered by the evaporation of global travel during the pandemic.
The firm said it carried 4.4 million passengers in the first six months of 2020 -- a 76 per cent plunge on-year -- as the pandemic burst out of central China and then spread around the world.
At the height of the global lockdowns in April and May, its entire fleet was averaging just 500 passengers a day.
Cargo remained the lone bright spot, bringing in HK$11,177 million and rising nine percent on year.
AFP
2.41pm: Raise may prompt Syd Airport reversal: Citi
Sydney Airport’s $2bn capital raise has prompted a broker upgrade from Citi, who notes the fresh funds could relieve the credit pressure on the airport.
As the company’s shares remain halted to complete the placement, analyst Suraj Nebhani lifts the stock to Neutral, but trims its target price from $5.87 to $5.61.
He notes that while the company cited increasing uncertainty on the shape and pace of any passenger recovery, credit rating pressure likely also played a part, but the raising now gives Sydney Airport enough headroom.
“We believe the large equity raising strengthens the capital position for SYD, relieving much of the pressure on credit metrics,” Mr Nebhani writes.
“This could lead to a reversal of near-term underperformance. However, uncertainty on the revenue outlook is preventing us from getting more positive, given international travel restrictions remain in place and a nascent domestic recovery is being impacted by a second wave of virus infections in Melbourne.”
SYD last traded at $5.39.
Read more: Airport demands clearer rules after loss, $2bn raising
1.58pm: SkyCity Auckland shuttered again
Auckland’s SkyCity casino and entertainment facility has again been shuttered today as the city returns to Stage 3 restrictions.
The government last night made the announcement that the city would return to a strict lockdown after reporting four new cases of COVID-19, likely involving community transmission.
The ASX-listed SkyCity said today its casino would close, but the hotel would remain open to accommodate existing guests, while physical distancing and hygiene requirements would be stepped up at its Hamilton and Queenstown sites.
“SkyCity is fully complying with this latest update from the New Zealand Government. SkyCity is well prepared to respond quickly to these changes and is in a strong financial position to withstand the financial impacts of these temporary restrictions,” chief Graeme Stephens said.
SKC shares last down 3.9pc to $2.25.
1.49pm: Computershare sees ‘social obligation’ for staff
Computershare chief executive Stuart Irving on why the share registry company didn’t cut jobs during the height of the COVID-19 crisis:
“We looked after our employees. This was our number one priority. It was a frightening time for many. We looked after them by preserving jobs and not slashing headcount or demanding large scale furlough or government grants,” Mr Irving tells investors.
“We provided flexibility, so our staff could become home carers and educators. At difficult times like these as a corporate we have a social obligation to our employees and the wider community. This may have a modest impacted on short-term earnings but I guarantee we will get a better return over time for having done the right thing”.
“We have continued to deliver high levels of service to our customers, most often remotely. We have maintained our sharp focus on execution and getting the job done. Projects need to carry on, I have expectations they will be completed as do our clients and we have done so. We are also continuing to execute on our own long-term growth strategies.”
ASX-listed Computershare on Tuesday night posted a net profit of $232.7m for the 12 months through June, compared with a $415.7m profit in the year prior. Revenue fell 7.6 per cent to $2.3bn.
Computershare said its events and market-facing businesses are showing early signs of recovery following the COVID-19 crisis which triggered a 44 per cent plunge in its net profit for the year.
Computershare shares last traded down 3.6 per cent $13.18.
Read more: Early signs of recovery for Computershare
1.33pm: Bell Financial boasts profit without handouts
Stockbroking and investment group Bell Financial has posted 5pc profit growth for the first half as its brokerage revenue spiked, all without relying on any government assistance.
Handing down its first half results this afternoon, Bell reported profit before tax of $23.5m, up 5pc, and declared a 4 cents per share fully franked dividend.
Chairman Alastair Provan touted the firm’s strength amid the pandemic saying its tech allowed the group to efficiently operate remote, adding that “our result has been achieved without having to apply for Government assistance of any description”.
The group said it had successfully executed more than 50 transactions in the first half, raising in excess of $1.1bn in new capital, while its gross brokerage revenue was up by 17pc to $54.2m.
BFG shares last up 1.6pc to $1.26.
1.22pm: Job security concerns spike: Westpac
Melbourne’s lockdown has heightened concerns around job security, with the unemployment expectations subindex of the Westpac consumer sentiment data spiking to a new cycle high.
The latest data from the bank shows unemployment expectations up 14.6pc in August to 163.4 – the higher reading indicating that more consumers expect unemployment to rise in the year ahead.
Drilling down on the data shows concerns aren’t correlated with states experiencing the worst of the restrictions – Victoria’s index posting a milder 5.3pc gain as compared to an 18pc spike across the rest of the country.
“Labour market pessimism is seemingly out of step with local prospects for many smaller states where economies remain on track for further reopening,” chief economist Bill Evans says.
“Sentiment around jobs may also be affected by the planned wind down of the Federal government’s JobKeeper and JobSeeker payment schemes.”
CBA’s Belinda Allen adds that the bank’s own data shows accounts receiving JobSeeker payments was trending higher as at the end of July.
Read more: Victorian lockdown sinks east coast confidence
Bridget Carter 1.04pm: Buyers sizing up Optus towers
DataRoom | Prospective buyers of Singtel’s $2bn Optus telecommunications towers have started sizing up the portfolio of assets that are expected to shortly come up for sale and among them is understood to be Axicom, Morrison and the Future Fund.
DataRoom understands that the Future Fund, with $168bn of assets under management, is teaming up with Morrison & Co as part of its effort to acquire the assets, while Axicom has tapped Credit Suisse and Macquarie Capital as its advisers.
The towers were expected to hit the market this month through Bank of America, but that could now be delayed as Victoria continues to wrestle with strict lockdown measures to curb the spread of the coronavirus and due to the timely process of separating the assets, which requires approval from the Foreign Investment Review Board.
Parties are still to learn of the exact nature of the offering, with some suggestions now surfacing that a 70 per cent interest in the portfolio could be placed on the block rather than the assets in their entirety.
1.02pm: Shares fall to daily lows
Shares are falling to their worst levels of the day at lunch, amid weakness in gold miners and health heavyweight CSL.
At 1pm, the benchmark ASX is down by 31 points or 0.5 per cent to 6108.1.
Commonwealth Bank is dragging by 0.8 per cent to $74.11 – lagging the rest of the big four who are up by between 1.7pc and 1.8pc.
Afterpay is edging higher by 1.9pc, while WiseTech shares are pulling back by 8.2pc after Citi said expectations for its results were too optimistic.
Here’s the biggest movers at 1pm:
12.45pm: CBA results show resilience: S&P
Commonwealth Bank’s results show resilience to COVID-19, says ratings agency S&P, noting also that the bank retains a “good buffer” to absorb higher loan loss provisions.
After the bank disappointed in its earnings this morning with an 11.3pc profit drop, S&P notes that they expect the credit losses to rise over the next year as COVID-19 bites on employment levels, but “earnings remain sufficient to absorb increased credit losses”.
“We expect that CBA’s credit losses will ease to about 50 bps of gross loans and advances in fiscal 2022 – broadly in line with our expected long-term average for the Australian banks – on the back of improving economic growth and falling unemployment,” S&P says, adding that it expects capital levels to remain strong.
CBA last traded down 0.8pc to $74.11.
Read more: CBA profit falls 11.3pc, dividend sliced
12.20pm: NZ dollar dives as RBNZ expands QE
The New Zealand dollar is diving after the country’s Reserve Bank expanded its large scale asset purchasing or quantitative easing program amid increasing debt issuance to fund COVID-19 expenses.
NZD/USD fell 0.7pc to 0.6525 and NZD/AUD fell 0.5pc to 0.9159 after the RBNZ said it will increase its LSAP program to $NZ100bn until June 2022, a 67pc increase from the LSAP program in May, which was worth $NZ60bn over the next 12 months.
The RBNZ also said extra policy tools will be deployed if extra stimulus is needed and board members agreed that any move to negative interest rates could be effective.
Eli Greenblat 12.15pm: Microcap brewer scores CUB deal
Brewing minnow Broo has scored a giant win with the big end of town, signing a contract with the $16b Carlton & United Breweries for the production of its Broo Premium Lager and Australian Draught.
Broo, which has a market capitalisation of just $12m, produces its beer at its Mildura brewing facility, but allowing CUB to brew its two beers will give it a much larger access to capacity and meet growing consumer demand.
CUB will brew the Broo beer at its Queensland site in Yatala.
It comes as Broo was forced to close its hospitality business in Victoria as part of the COVID-19 restrictions.
The deal with CUB kicks off this month and will continue for 24 months, expiring at the end of August in 2022. Broo anticipates placing orders with CUB for a minimum of 48,000 cases on a quarterly basis during the term of the deal.
Shares in Broo this morning rose more than 35 per cent to 2.3 cents.
Read more: Asahi unites brewers under CUB name
12.05pm: Biggest gold fall in 7 years dents miners
A sharp dive in spot gold prices is denting gold miners in lunch trade, adding to pressure on the mining sector.
Overnight, spot gold prices fell by the most in seven years after US 10-year yields spiked amid a surge in debt issuance from the US government and American companies along with a higher-than-expected increase in the US producer price index in July.
“We’re not yet convinced that the sharp fall in gold prices yesterday signals a U‑turn in the precious metal,” CommSec resources analyst Vivek Dhar says.
“The overarching themes of i) falling US 10 year real yields, ii) a weaker US dollar and iii) safe haven demand still remains intact for the most part.
“Gold though is an unprecedented environment and the sharp correction yesterday goes to show that gold price volatility is likely to stick around for a while.”
At midday Northern Star shares were down 6.7pc to $14.30 as Newcrest lost 3.6pc to $33.97 and Saracen lost 6.3pc to $5.31.
Evolution lost 6.5pc to $5.47 as the miner said it had evacuated its Red Lake mine in Ontario, due to the threat of a nearby forest fire.
11.35am: Wage growth slowest on record: ABS
Australia’s wage price index fell just short of expectations in the second quarter, up by 1.8pc year-on-year versus 1.9pc expected, still the slowest annual growth on record.
The index, which measures changes over time in wages and salaries, rose by 0.2pc in the June quarter from March.
“After a steady period of wage growth over the previous 12 months, wages recorded the lowest annual growth in the 27-year history of the WPI,” head of price statistics Andrew Tomadini said.
“The June 2020 quarter was the first full period in which COVID-19 social and business restrictions were captured in the WPI.
“The June 2020 quarter rise was mainly in the public sector (0.6pc). Private sector wage growth eased to 0.1 per cent as businesses adjusted to changes in the Australian economy.”
11.22am: Further pain for Mesoblast
Mesoblast shares are headed lower by 10pc, adding to yesterday’s 30pc drop after concerns were raised ahead of its FDA meeting scheduled for Thursday US time.
MSB shares hit $2.98, the lowest level since last April, and last traded down by 9.2pc to $3.05.
In briefing material from the regulator’s Oncologic Drugs Advisory Committee released ahead of the meeting, the committee said that while remestemcel-L and other Mesenchymal stromal cell-based investigational products have demonstrated “apparent immunomodulatory effects in vitro experiments, the ability of remestemcel-L to reduce inflammation as measured by inflammatory biomarkers in humans receiving the product has not been demonstrated.”
Still, Mesoblast yesterday afternoon released a response, saying the final FDA decision was for the board alone and the committee’s recommendations were non-binding.
Current levels mark a 37pc drop in shares over the past two sessions.
Read more: Mesoblast shares plunge after FDA questions treatment
Nick Evans 11.15am: Whitehaven’s Vickery mine gets green light
The NSW Independent Planning Commission has ticked off on Whitehaven Coal’s plans to build its 10 million tonne a year Vickery coal mine in NSW, saying on Tuesday the proposal could go ahead.
Whitehaven still needs to win federal environmental approvals for the $700m development, and minor works approvals from the NSW govt, but managing director Paul Flynn welcomed the IPC decision on Wednesday, saying the decision would help cement the company’s future plans.
Whitehaven won approval for a 4.5 million tonne operation some years ago and its attempts to win approval for the larger mine footprint were stalled in the controversies around the operations of the IPC.
The coal miner is still optimising its plans for the development of the mine, and has said falling prices and difficult conditions in global coal markets mean its board won’t make a decision on construction of Vickery until at least next year.
“Whitehaven continues to be cautious in allocating capital to expansion noting the evolving impacts of COVID-19 on coal markets and pricing. While there are still considerable risks and uncertainties for the global economic outlook given the continued spread of the virus, the fundamentals of our business model continue to remain robust,” the company said.
Vickery will primarily produce metallurgical coal for the steelmaking industry, the company says, and will employ about 450 people when it comes into operation.
Whitehaven shares were last up 0.4pc to $1.38.
Read more: Whitehaven puts off Vickery mine decision
10.45am: Confidence drops 9.5pc near first-wave lows
Melbourne’s stage four lockdown has sent consumer sentiment levels back near April’s extreme lows, with concern rising across the whole of the nation, according to Westpac’s latest survey.
The Westpac-Melbourne Institute index of consumer sentiment fell 9.5pc to 79.5 in August, from 87.9 in July – and back near the 75.6 seen at the height of the early pandemic panic and national lockdown in April.
Westpac chief economist Bill Evans described the data as a “major surprise”, noting that sentiment in NSW plunged more than in Victoria, where the worst of the restrictions were imposed. Sentiment fell 15.5pc in NSW, well in excess of Victoria’s 8.3pc fall.
Queenslanders too felt the skittishness, with sentiment down by 8.1pc despite largely beating the virus.
“While some of the weakness in NSW and Queensland will reflect the direct economic drag from Victoria’s lockdown and the closure of interstate borders, the overall response seems disproportionate to the evidence on developments around the virus,” Mr Evans says.
“This emphasises the fear of the unknown.”
Read more: Victoria lockdown sinks east coast confidence
Lachlan Moffet Gray 10.40am: Centuria lifts profit as assets double
Listed commercial real estate fund Centuria Capital has posted a full year profit of $53.3m, up from $45.7m last year while almost doubling its assets under management.
Handing down its results this morning, Centuria said it had made a record direct real estate acquisitions of $1.2bn over the year, and was off to a strong start for FY21.
The $1bn fund recently won a competitive race to purchase Telstra’s Clayton data centre in Melbourne for $416m at a record-low 4.2 per cent yield through it’s Centuria Industrial REIT.
It also last week announced a full takeover of New Zealand-based real estate fund Augusta Capital for $130m, bringing total assets under management to $9.4bn.
The company will distribute a final dividend of 9.7 cents per share, a 4.9 per cent increase on 2019, resulting in a total 12 month return of 6.1 per cent.
In the 2021 financial year the company will seek to distribute a dividend of 8.5 cents per share.
CNI shares last down 1.9pc to $1.86.
10.36am: Bumper Magellan payout lifts shares
Magellan Financial Group has reported a slightly bigger-than-expected profit and a substantial lift in dividends amid strong gains in funds under management as it proposes new products.
The global fund manager, co-founded by chairman Hamish Douglass, announced a net profit after tax of $396.2m for the year to 30 June, a 5 per cent increase from $376.9m a year earlier.
Adjusted net profit after tax rose 20 per cent to $438.3m from $364.2m a year earlier.
The result exceeded Bloomberg’s consensus estimate of $390.9 million by 2.1 per cent.
Magellan will pay a final dividend of 122 cents a share including a performance fee dividend of 30.4 cents a share. Its full-year dividend of 214.9 cents a share is up from 184.2 cents a year earlier.
Average funds under management for the year increased 26 per cent to $97.2bn by 30 June 2020, generating a 25 per cent increase in management and services fees to $591.6m.
MFG shares last up 2.3pc to $63.07.
Read more: Magellan lifts profits, payout
10.14am: Bank surge supports shares
Strength in the major banks is supporting shares early, albeit slightly less than earlier projections from futures.
At the open, the ASX200 is up 5 points or 0.08pc to 6143.4 – after touching as much as 6149.
All four of the big banks are leading the market higher – even Commonwealth Bank after it reported an 11.3pc slump in profit for the year. Still, its final dividend of 98c per share – at the top end of APRA’s allowable level – is likely a relief for some.
CBA shares are up by 1.8pc, ANZ higher by 2.8pc, Westpac adding 3.2pc and NAB rising by 2.7pc.
Gold miners are the key detractor after prices dropped overnight – Newcrest is off by 3.4pc as Saracen and Northern Star drop by more than 6pc.
10.09am: CBA still higher despite results miss
Commonwealth Bank’s profit drop came in greater than UBS estimates, with the broker noting the bank still faces “significant headwinds”.
Following the release of the bank’s results this morning, UBS banking analyst Jon Mott writes that “there was no incentive for CBA to deliver a strong result in this environment”.
“Lots of moving parts and one-offs. Underlying business momentum is solid but it faces significant headwinds,” he says.
“Consensus forecasts likely to move lower.”
He noted that the bank’s final dividend of 98 cents per shares was in line with estimates, but “a 2.5pc yield is not relatively attractive for the risk profile, in our view”.
CBA shares are higher by 2.5pc early to $76.54.
Read more: CBA profit falls 11.3pc, dividend sliced
Cliona O’Dowd 9.59am: Early signs of recovery for Computershare
Share registry group Computershare delivered its results after the close yesterday, with shares to react this morning.
The group says its events and market-facing businesses are showing early signs of recovery following the COVID-19 crisis which triggered a 44 per cent plunge in its net profit for the year.
Computershare posted a net profit of $232.7m for the 12 months through June, compared with a $415.7m profit in the year prior. Revenue fell 7.6 per cent to $2.3bn.
The result was marred by a decline in margin income on the back of lower interest rates, as well as reduced activity levels across its businesses, including corporate actions, as the pandemic hit at the start of the year.
Flagging the prospect of operating profit growth in 2021, Computershare chief executive Stuart Irving said all of its business lines saw improved performance over the last two months of the 2020 financial year.
“I am pleased to report that our operating business has proven its resilience, continuing to perform during the last few months of the financial year despite the deepening impact of COVID-19 and the associated volatility it’s brought to our markets,” he said.
Computershare is targeting positive operating profit growth for 2021, with earnings before interest and tax (excluding margin income) to be up around 10 per cent.
CPU last traded at $13.67.
Bridget Carter 9.45am: Coronado Global to tap market for $US150m
DataRoom | Coronado Global Resources is expected to shortly enter a trading halt ahead of an equity raising through Credit Suisse, Goldman Sachs and Citi.
The coal miner plans to tap the market for up to $US150m through a placement.
It is understood that its major shareholder, Energy and Minerals Group, which holds almost 80 per cent of the stock, will not participate.
More to come
9.36am: Evolution evacuates Canadian mine
Gold miner Evolution has evacuated its Red Lake gold mine in Ontario, due to the threat of a nearby forest fire.
In a note this morning, Evolution advised that resides of the Red Lake community had evacuated on Monday night, and the group’s emergency response plan had been activated.
Operations at the mine have been suspended and all employees and contractors evacuated, but the disruption was not likely to materially impact the mine’s September quarter gold production.
Residents of Red Lake, Ont., ordered to evacuate as forest fire rages nearby https://t.co/9ShcG8BSaU pic.twitter.com/VfMJSPutY0
— CBC Canadian News (@CBCCanada) August 11, 2020
9.11am: Results could pare ASX lift
Australia’s share market was expected to rise slightly after mixed leads from offshore markets but results are the main focus today with six of the top 200 companies handing down their earnings – most of which have been disappointing so far.
There is also some risk of a pullback on a technical basis after the S&P/ASX 200 shied off its 200-day moving average at 6180 points yesterday after hitting a two-month high of 6186.1.
Overnight futures relative to estimated fair value suggest the S&P/ASX 200 will rise 0.3pc to 6157 despite relatively sharp falls on Wall Street.
The S&P 500 fell 0.8pc to 3333.69 – its first fall in 7 days – after Senate Republican leader Mitch McConnell confirmed that talks on US fiscal stimulus had reached a deadlock last week. The Euro Stoxx 50 rose 2.2pc after a big rise in Germany’s ZEW survey of business expectations and Russia’s regulatory approval of a COVID-19 vaccine.
Spot gold dived 5.7pc to $US1911.89 – its biggest fall in 7 years – and Brent crude fell 1.1pc to $US44.50, but spot iron ore rose 2.2pc to a 12-month high of $US121.45.
Results have disappointed so far, with Commonwealth Bank’s $7.3bn full year net profit from continuing operations missing Bloomberg’s estimate by 1.2pc, and margins also below estimates, albeit with a dividend payout near the maximum allowable 50pc.
Transurban reported a FY20 net loss of $101m versus Bloomberg’s consensus estimate of a $128.5m profit while Downer reported a FY20 net loss of $150.4m versus Bloomberg’s consensus estimate of a $261.8m profit.
Ben Wilmot 9.02am: Primewest buys celery producer
Property funds manager Primewest has snapped up a second property for its new agricultural trust, purchasing Lamattina on Victoria’s Mornington Peninsula for $42m.
The 385 hectare property, one of the largest land holdings and most significant high value food producers on the peninsula, will be part of Primewest’s growing rural collection.
It is aiming to get the fund to up to $100m worth of assets and it will provide a cash distribution of 7.5 per cent per annum.
Primewest director David Schwartz said Lamattina was a rare, investment grade, agricultural asset secured on a long term, triple net lease back to one of Australia’s largest celery producers with supply agreements to major supermarkets including Coles and Woolworths.
Lamattina provides more than half of Australia’s celery market and benefits from water security and blue chip supply agreements, Mr Schwartz said.
The property also features 120ha of land with greenfield development potential.
In its first acquisition the new agricultural trust had bought “Pinegatta” in the NSW southern riverine region for $4.8m.
8.53am: Transurban CFO resigns
Transurban chief financial officer Adam Watson has resigned from the toll road operator, effective from mid-November.
The group said this morning that a global search had commenced for his replacement, as Mr Watson jumped to another ASX-listed company.
“Adam joined Transurban Group in 2014. During this time Adam has played an important role in executing a number of significant transactions for the Group and made a substantial contribution to Transurban’s recent success,” chief Scott Charlton said.
It comes after Transurban earlier this morning posted a net loss of $111m., compared to a profit of $171m a year ago.
Read more: Transurban swings to loss
8.49am: What’s on the broker radar?
- Challenger raised to Outperform – Macquarie
- Cleanaway cut to Neutral – Goldman
- James Hardie raised to Neutral – Citi
- Mako Gold rated new Speculative Buy – Blue Ocean
- Origin Energy cut to Hold – Morningstar
- Qantas cut to Hold – Morningstar
- Sydney Airport raised to Neutral – JP Morgan
- Sydney Airport raised to Neutral – Citi
- WiseTech cut to Sell – Citi
Samantha Bailey 8.37am: Seek posts loss, warns on outlook
Online recruitment platform Seek has swung to a full-year loss and warned that near term profits will be impacted by the uncertainty created by the coronavirus crisis.
The company unveiled a reported net loss of $111.7 million for the full-year through June, compared to a net profit after tax of $180.3m a year ago. Seek’s directors did not declare a final dividend.
“The current macro outlook is highly uncertain,” said chief executive and co-founder Andrew Bassat. “Our near-term profits will be impacted by COVID-19 but our focus is on executing and investing for the long-term.
“We are confident our investment and long term focus is the right approach as SEEK’s revenue opportunity remains large and under-penetrated.
“If we invest and execute well, we can take advantage on improving conditions in the near-term but also a much larger longer-term revenue opportunity.”
The company said it could not provide a guidance for the new financial year.
8.32am: Downer EDI sinks to loss
Downer EDI has posted a full year net loss of $150.3m and says it won’t pay a final dividend.
The services company says revenue fell 0.2 per cent to $134.17bn for the year. EBITDA was down 94 per cent to $30m.
8.03am: Transurban swings to loss
Toll road giant Transurban has sunk to a $153m statutory annual loss as traffic slumped on its road network and as it warned of near-term COVID-19 volatility amid Victoria’s six-week lockdown.
Transurban’s $153m loss – following a net profit of $170m a year earlier – came after taking a bigger depreciation and amortisation charge in the 12 months to June 30.
Earnings before significant items fell 6.4 per cent to $1.88bn from $2.01bn in 2019, just ahead of a RBC forecast of $1.85bn, while proportional toll revenues slipped by 3.4 per cent to $2.49bn.
The transport operator sliced its dividend in half, with plans to pay a distribution of 16c per security for the six months through June after pulling its 31c per security guidance in March based on an uncertain trading outlook.
Transurban said traffic would continue to be sensitive to the way governments responded to subsequent outbreaks of the pandemic. “Transurban, like most businesses, has seen significant impact to our revenue as a result of COVID-19 and the associated government actions,” chief executive Scott Charlton said.
Read more: Transurban posts $153m loss
7.34am: CBA profit sinks 11.3pc
Commonwealth Bank has posted an annual cash net profit of $7.29bn, down 11.3 per cent.
The bank said the cash net profit, a little lower than expectations, was “largely due to higher COVID-19 loan impairment expense”.
Statutory net profit was up 12.4 per cent to $9.63bn.
Australia’s biggest bank declared a final dividend of 98c per share for a total of $2.98 per share, down 31 per cent, after APRA told banks to cap their payouts.
Loan impairment expense of $2.5bn was up $1.3bn on the previous year.
Analysts had expected CBA to report an annual profit of about $7.4bn. Expectations for dividends had varied widely, following the banking regulator’s revised and less-restrictive guidance advising banks to retain at least half their earnings.
CEO Matt Comyn said the bank was preparing for uncertain times ahead.
“We anticipate that lower credit growth and low interest rates will continue to put pressure on our revenue, requiring a focus on performance, efficiency and capital allocation.
“The next few months will be critical and some sectors will take longer to recover than others, however, we remain positive about Australia’s long-term prospects.”
The full year net interest margin was down 0.02 per cent.
Read more: CBA profit falls 11.3pc, dividend sliced
7.17am: Apple poised for $US2 trillion milestone
Apple is on the verge of becoming the first $US2 trillion American company following a gravity-defying surge that has highlighted the value of its iPhone ecosystem during the global pandemic.
Shares in Apple have roughly doubled from March lows, an astonishing performance which has lifted chief executive Tim Cook’s net worth to $US1 billion for the first time, according to a Bloomberg Billionaires Index calculation.
A dip in Apple shares left its market value at around $US1.87 trillion Tuesday, ahead of Big Tech peers Amazon and Microsoft (both at $US1.54 trillion) and Google parent Alphabet ($US1.0 trillion).
If it reaches $US2 trillion, Apple would be the only company other than Saudi Aramco to hit the milestone.
AFP
7.05am: ‘Positive start’ for super
Super funds have started the new financial year with positive momentum but face uncertainty amid the coronavirus pandemic, says research house SuperRatings.
It says markets have stabilised since the early blows as the pandemic hit, but remain vulnerable to further shocks, and says super fund performance depends on further waves of infections.
SuperRatings says the median balanced option returned 0.9 per cent in July as markets continued to rebuild.
“Overall, super funds have made it through in good shape but are preparing for more market ups and downs through the rest of the 2020 calendar year,” SuperRatings said.
SuperRatings executive director Kirby Rappell added: “The outlook is still unclear but based on recent performance super funds have shown they can weather the COVID-19 storm.”
6.55am: ASX to open modestly higher
Australian stocks are set to open a little higher after Wall Street reversed course in late trade to close down, ending a winning streak.
Shortly before 7am (AEST) the SPI futures index was up eight points.
Yesterday, Australian stocks gained as much as 1.2pc through the day to hit a two-month high, but closed just 0.5pc higher.
The price of gold fell 4.5 per cent, its biggest one-day loss in five months.
The Australian dollar was lower at US71.38c.
6.10am: US stocks snap winning streak
The S&P 500 turned lower, ending a seven-day winning streak.
The broad stock market index fell 0.8 per cent as of the 4pm close of trading in New York, after rising for most of the session and flirting with setting its first record since February. The Dow Jones Industrial Average dropped about 104 points, or 0.4 per cent, while the technology-heavy Nasdaq Composite Index slid 1.7 per cent.
Investors continued to closely watch developments in Washington where Democrats and Republicans remained at odds over a broad economic relief package.
Shares of companies that are particularly sensitive to the direction of the US economy — such as banks, energy firms, cruise operators and airlines — had helped pull indexes higher for much of the session.
Investors, however, sold shares of fast-growing technology companies like Amazon.com and Netflix, a reversal of what has been a hugely popular trade in recent months fuelled by a belief that those companies are relatively shielded from the pandemic’s economic damage.
Other assets viewed as havens also declined.
The price of gold price of gold fell 4.5 per cent to $US1932.60 a troy ounce, its biggest one-day percentage decline since March. And the yield on the benchmark 10-year U.S. Treasury note rose to 0.657 per cent from 0.573 per cent on Monday, marking its highest close since early June. Yields rise when bond prices fall.
In Washington, administration officials and Democratic leaders urged each other to return to the negotiating table after Mr Trump issued executive actions on jobless aid and other relief over the weekend.
Mr. Trump also said late Monday that he was “very seriously” considering a cut to capital-gains tax and paring taxes for middle-income families.
A recent surge in coronavirus cases continued to show signs of abating. The US reported fewer than 50,000 new cases for the second day in a row Monday, pushing the total number close to 5.1 million, according to Johns Hopkins University. However, investors are concerned by a pick-up in infections in parts of Europe that had appeared to bring the virus under control.
Overseas, the Stoxx Europe 600 jumped 1.7 per cent. Hong Kong’s Hang Seng index snapped three days of losses to rise 2.1 per cent. The increase was driven partly by a rally in shares of Macau casino stocks, which jumped after the semi-autonomous territory’s government eased quarantine requirements for visitors from mainland China.
Elsewhere, Japan’s Nikkei 225 gained 1.9pc, while the Shanghai Composite Index lost 1.2pc.
Dow Jones Newswires
6.00am: US court overturns Qualcomm defeat
An appeals court overturned a judge’s ruling that Qualcomm “strangled competition,” undoing a major victory scored last year by US antitrust enforcers.
Shares in the California-based mobile chip giant jumped more than four per cent on word that an appellate court was not convinced that Qualcomm’s tactics in the market unfairly stifled competition, hurting consumers and device makers.
The appeals ruling “validates our business model and patent licensing program and underscores the tremendous contributions that Qualcomm has made to the industry,” Qualcomm general counsel Don Rosenberg said.
US District Judge Lucy Koh in May of last year ordered Qualcomm to change its pricing and sales practices, after finding it “engaged in anti-competitive conduct” toward customers like device makers Huawei of China, South Korea’s Samsung and Japan’s Sony.
Qualcomm’s licensing practices “strangled competition” in the chip market “and harmed rivals,” Koh concluded in a ruling in the lawsuit brought by the US Federal Trade Commission.
AFP
5.50am: Gold price sinks 4.5pc
Gold futures fell by more than 4pc to post their largest one-day percentage loss in nearly five months, as investors focused attention on a rally in US Treasury yields and a climb in the S&P 500 toward its all-time closing high.
December gold fell $US93.40, or 4.58pc, to settle at $US1946.30 an ounce. The percentage loss for the session was the largest for a most-active contract since March 13, when prices posted a decline of 4.63pc, according to FactSet data.
Dow Jones
5.40am: Mesoblast ADRs fall
Mesoblast’s American depositary receipts were down sharply ahead of a meeting with a US Food and Drug Administration committee reviewing its biologics license application for Ryoncil, which it wants approved for the treatment of a severe immune response that can occur after a bone-marrow transplant in children.
The US regulator’s Oncologic Drugs Advisory Committee is due to meet Thursday to consider evidence of the effectiveness of Mesoblast’s remestemcel-L product in the treatment of steroid-refractory acute graft versus host disease. The committee is scheduled to vote on whether the data support efficacy in paediatric patients.
In morning trading, the ADRs were 35pc lower at $US11.29. They are up 53pc year-to-date.
Earlier, Mesoblast shares sank 31pc in Australian trade.
In briefing material released ahead of the meeting by the FDA, the regulator said that while remestemcel-L and other Mesenchymal stromal cell-based investigational products have demonstrated “apparent immunomodulatory effects in vitro experiments, the ability of remestemcel-L to reduce inflammation as measured by inflammatory biomarkers in humans receiving the product has not been demonstrated.”
The FDA also said that its position, considering the available data, was that while the critical quality attributes identified by Mesoblast may have some value in assuring a consistent manufacturing process, they don’t have a demonstrated relationship with clinical potency and may not by themselves ensure adequate control of clinical effectiveness of individual lots of the product.
Mesoblast in a statement said that while the FDA will consider recommendations made by Oncologic Drugs Advisory Committee, approval of the product is made solely by the regulator. The committee is an independent panel of experts that provides recommendations to the FDA based on potential issues highlighted by the regulator, and its recommendations are not binding, the company said.
Dow Jones Newswires
5.35am: Boeing hit with 737 MAX cancellations
Boeing reported another 43 cancelled orders for the troubled 737 MAX in July and, with global aviation in a pandemic-imposed slump, the aerospace giant failed to secure new orders for any aircraft last month.
According to a monthly report, the aircraft manufacturer this year has been hit with 398 cancellations for the 737 MAX, which has been grounded since March 2019 following two deadly crashes.
Boeing delivered just four aircraft in July, two 787 Dreamliners to Air France-KLM and Turkish Airlines, as well as two cargo planes, compared to 19 in the same month of 2019. The delivery rate is key since that is when the manufacturer receives most of the price of the plane.
The company resumed some assembly activity on the MAX in May after halting work for a few months, but has slowed plans to ramp-up production amid the continuing impact of COVID-19, while lowering the output plans for the 777 and the 787 jets.
AFP
5.32am: Markets jump on US stimulus hopes
Stock markets jumped on optimism that politicians in Washington will hammer out a new stimulus package for the crippled American economy.
European equities got an extra shot in the arm from economic surveys painting a brighter picture than had been feared for the area’s recovery prospects from the coronavirus pandemic.
Confidence among investors in Germany soared to its highest level in almost 17 years in August, according to the ZEW institute’s monthly barometer.
Calling the ZEW numbers “very encouraging”, analyst Craig Erlam at OANDA said they “suggest the euro area economy is bouncing back quite well following the lockdown”.
Russia’s announcement that it had approved a coronavirus vaccine helped fuel the optimistic mood across trading floors for a while, analysts reported, but its impact faded as authorities in other countries greeted the news with scepticism.
Global investors, meanwhile, focused “on the prospect of a fiscal stimulus deal from US political leaders … while setting aside concerns about an escalation in US-China trade tensions”, said Michael Hewson, chief market analyst at CMC Markets UK.
As the pandemic roils economies around the world, the US-China stand-off has been a major cause for concern, with the two sides butting heads on several issues that have fanned worries they could renew their damaging trade war.
However, there is some confidence they will stick to their commitments after talks at the weekend to review their January tariffs pact.
“The strong sense is that the Trump administration won’t want to jeopardise the deal this side of the election for fear of alienating the important midwest farming constituency,” said Ray Attrill at National Australia Bank.
China has promised major purchases of US farm produce in the deal. Meanwhile, US politicians remain deadlocked in their pursuit of a new stimulus, though observers say that with an election around the corner, Democrats and Republicans will likely reach a deal.
Trump’s executive orders at the weekend deferring payroll taxes, providing $US400 in weekly unemployment benefits and making it harder to evict people eased immediate concerns, al though markets say a full deal is key.
In Europe, London closed up 1.7 per cent, Frankfurt added 2.0 per cent and Paris gained 2.4 per cent.
AFP
5.27am: UK’s Debenhams cuts 2500 jobs
UK department store chain Debenhams has axed 2500 jobs, a spokesman said, as the coronavirus pandemic piles further pressure onto the long-suffering group.
“Such difficult decisions are being taken by many retailers right now, and we will continue to take all necessary steps to give Debenhams every chance of a viable future,” said a company statement.
“At the same time, the trading environment is clearly a long way from returning to normal and we have to ensure our store costs are aligned with realistic expectations,” it added, with the spokesman confirming there had been “2,500 jobs cut”.
Debenhams was saved from collapse in April after securing a deal with creditors but it had been struggling to survive long before the virus pandemic owing to a surge in online shopping.
AFP
5.25am: German investor confidence soars
Confidence among investors in Germany soared to its highest level in almost 17 years in August, as Europe’s largest economy accelerates its rebound from the crushing impact of the coronavirus pandemic.
The ZEW institute’s monthly barometer measuring investor expectations for the economy leapt to 71.5, based on a survey of 178 analysts, the highest since January 2004. The reading is a rise of 12.2 points from July, when it declined slightly.
AFP
5.20am: SoftBank back to black
SoftBank Group reported a $US12 billion quarterly net profit to June, recovering from eye-watering losses as tech stocks rally and the firm sheds assets to shore up its finances.
The results will be a relief for chief Masayoshi Son, who has faced an increasing drumbeat of criticism after recent record losses for the firm.
Son transformed what began as a telecoms company into an investment and tech behemoth with stakes in some of Silicon Valley’s hottest start-ups through its $US100 billion Vision Fund.
But he has battled opposition to his strategy of pouring money into start-ups — including troubled office-sharing firm WeWork — which some analysts say are overvalued and lack clear profit models.
The 11.9 per cent rise in net profit to 1.26 trillion yen ($US12 billion) puts SoftBank back in the black after a turbulent financial year that saw its investment woes magnified by the coronavirus pandemic and plunges in global stock markets.
Son has insisted that his strategy is sound, and that SoftBank’s portfolio is broad enough to weather the storm, but acknowledged the challenges when the firm reported an eye-watering $US8.9 billion annual net loss in May, hit by the WeWork debacle and stock crashes.
AFP
ASX treads water before US jobs data; CBA and Westpac hit highs
ASX ends flat as markets await key US jobs numbers. CBA and Westpac hit record highs and NAB an 18-year high. Domino's jumps 21 per cent, as Collins Foods and Nick Scali also gain. Amazon falls after earnings disappoint.
ASX ends up 0.5pc; Brookfield enters Insignia battle; former Star CEO cops ban
ASX 200 gains 0.5 per cent, led by resources, tech, property, industrials and communications. Macquarie weighs on financial sector. Google owner Alphabet's earnings disappoint. Brookfield lobs new offer to takeover target Insignia. Amcor lifts on reaffirmed guidance, estimates win. Former Star CFO cops ban.