Shares surge to cap best week since December 2011

The ASX is up 6.3pc for the week, and 11pc for the past two weeks amid optimism of early signs of a coronavirus turning point.

An employee at a foreign exchange dealing room in Seoul. Picture: AP

• Seven, Bauer reach temporary ceasefire
• G8 Education raising $301m
• Petrol sales slump by 40pc at Viva servos
• Job ads drop by 65pc

That’s it for the Trading Day blog for Thursday, April 9. Australian stocks surged to four-week highs in a late rally, capping a 6.3 per cent weekly rise on positive signs that the spread of coronavirus could be stabilising.

The Reserve Bank today released its financial stability review, warning banks are likely to breach their minimal capital requirements if the downturn is ‘severe’.

Overnight, the Dow and S&P 500 both rose 3.4 per cent to cap their second shortest bear market on record, while the Nasdaq added 2.6 per cent.

4.11pm: Shares surge to four week high

Markets were optimistic to finish the shortened week – rallying at the close finish its best week since December 2011 and its biggest two-week rally since in 20 years after early signs growth in coronavirus cases was reaching its peak at home and overseas.

A strong lead from US markets, which capped their second shortest bear market on record, helped the ASX to pop higher early, with momentum building through the day and ultimately sending the ASX200 to a 180 point or 3.46 per cent gain at 5387.3.

That’s a 6.3 per cent gain for the week – helped by Monday’s solid 4.3pc jump on a bounce back in oil prices.

Meanwhile, the All Ordinaries added 181 points or 3.43 per cent to 5439.4.

3.18pm: Pessimism to dominate June quarter

While markets are currently being buoyed by government stimulus packages, “economic damage and pessimism about the virus will dominate” this quarter as stimulus packages fade into the background, according to Westpac.

The Australian dollar is at risk of slipping back below 60 US cents in the near–term, ahead of a modest recovery over the second half of 2020, Westpac economists say.

They see short-term interest rates anchored at 0.25pc but expect longer maturities to come under pressure (pushing yields higher) when confidence returns later this year and on a sharp rise in bond supply.

For Australia, they still see a “deep recession” in 2020.

Output is expected to contract 0.7pc in the March quarter, 8.5pc in the June quarter, 0.6 per cent in the September quarter, before a 5.2pc rise in the December quarter as social distancing measures are eased, leaving growth still down 5pc on a year on year basis.

2.45pm: ASX at two-day high

The ASX 200 is showing its true form now, surging 2.6pc to a two-day high of 5341.1.

The 38.2pc retracement of the Feb-Mar bear market – at 5470 – is a potential short-term target.

If it closes at or above 5455.2, the index will be back in a bull market, following a similar move in the S&P 500.

Of course that doesn’t mean it can’t reach new lows as the terrible economic reality of the pandemic sets in.

Most sectors have extended their early gains, with Transurban up 10pc, ANZ up 4.3pc, Macquarie up 5.4pc, Scentre Group up 7.5pc, Stockland up 8.3pc and Lendlease up 8.8pc.

Iron ore miners are still restraining the market with BHP and Rio Tinto both down 0.3pc after ANZ and Goldman trimmed their iron ore price forecasts.

Gerard Cockburn 2.05pm: CBA reports cashless surge

Commonwealth Bank says it has witnessed a surged in digital transactions with more spenders turning to cashless payments in a bid to curb coronavirus transmission rates.

Consumer analysis provided to CBA from Visa and Mastercard indicates cashless transactions made through digital wallets equated to $1bn for the month of March, an increase of 17 per cent compared to February.

The use of CBA’s tap and pay, phone and smart watch payment applications outpaced the average monthly compound growth rate of 6.7 per cent for the last six months, with the average March transaction equating to $28.

CBA general manager of everyday banking Kate Crous, said cashless transactions are becoming an important measure to prevent the spread of coronavirus.

Read more: Retailers rejecting cash must not surcharge customers

Nick Evans 1.36pm: Iluka to push ahead with spin-off

Mineral sands major Iluka Resources has withdrawn its 2020 financial guidance, citing the uncertainty in the markets for its zircon products, but says it will push ahead with the spin-out of a lucrative iron ore royalty later this year.

Iluka boss Tom O’Leary told shareholders on the company’s annual meeting on Thursday, conducted via webcast due to the coronavirus crisis, that the impact of the virus crisis on its Chinese zircon customers made Iluka’s financial future difficult to predict for the year.

While Iluka has substantially more revenue certainty from sale of titanium dioxide and rutile into the paint pigment market, where the company has made a concerted effort to lock in more sales through take-or-pay contracts, Mr O’Leary said it was not yet clear what impact the global impact of COVID-19 would have on its zircon sales.

While most of Iluka’s zircon product is sold into China, many of the end users – particularly tile-makers – are in hard-hit parts of Europe such as Spain and Italy.

“In terms of our key commodity markets, the first quarter is traditionally a seasonally low period for zircon sales. This year, the impact has been exacerbated by the widespread factory shutdowns that occurred in China – where we sell around 60% of our zircon – in January and February,” he told shareholders.

ILU shares last down 1 per cent to $7.05.

1.13pm: NZ contraction may be worst on record: Treasury

The expected contraction of New Zealand’s economy during the April-June quarter may become the deepest the country has ever experienced, the Treasury department said Thursday.

The government’s key economic policy department said a national lockdown to curtail the spread of the new coronavirus will have an “unprecedented impact” on economic activity.

“It is becoming more likely that New Zealand will see a deeper economic contraction in the June quarter than we have seen in our recorded history,” Treasury said.

It didn’t provide a specific forecast. Economists at the country’s main banks have forecast the economy to contract 10pc or more in the second quarter of 2020.

Treasury said some industries will bounce back quickly, but those with an international focus could take years to recover.

Dow Jones Newswires

Michael Roddan 1.09pm: Banks stability a risk in ‘severe’ downturn: RBA

The Reserve Bank saw early signs of a run on banks in the last two weeks of March, with some customers pulling out millions of dollars in cash, which caused the central bank to work with local lenders and cash-in-transit firms to stock up cash supplies in branches.

According to the RBA’s financial stability review released on Thursday, the “elevated demand” for cash withdrawals as financial markets tanked due to a ratcheting up of government shutdowns affecting the economy has “since abated”.

But the central bank warned if the economic downturn is “severe” and lasts for longer than 12 months with unemployment rising beyond 10 per cent, the Australian banking sector would breach its minimum capital thresholds.

“Top-down’ stress tests indicate that even if there is no economic recovery in the second half of 2020 (so that asset quality issues grow) banks will remain above their minimum capital ratios, although they may need to make use of their capital conservation buffer,” the RBA said.

1.02pm: ASX rides wave of optimism

Shares are holding higher as risk assets remain hopeful of an earlier-than-expected end to social distancing amid falling coronavirus infection rates, while also expecting major supply cuts from the emergency OPEC+ and G20 energy minister’s meetings in the next two days.

Additionally, about half of the 3.4pc rise in the S&P 500 overnight followed FOMC minutes saying the Fed would keep the cash rate at 0-0.25pc until it’s “confident that the economy has weathered recent events”.

At 1pm, the benchmark ASX200 is higher by 1.7 per cent to 5297.

“The Fed comments are nothing new but when combined with the fact that the White House will soon communicate a road map for relaxing social distancing, this is driving a more positive tone in risk sentiment,” says AxiCorp chief global markets strategist, Stephen Innes.

“Risk assets continued to rally on the perception that the global economy will open up again quicker than expected (and) the icing on the cake will be a ‘good’ outcome for oil prices from the OPEC+ meeting would be a global agreement to cut output beyond OPEC and Russia, although demand concerns will persist.”

Here are the biggest movers at 1pm:

12.42pm: Oil prices buoyant ahead of OPEC+

Oil prices extended gains Thursday after Russia signalled it was ready to cut output before a key producers’ meeting aimed at boosting energy markets as the coronavirus pandemic strangles demand.

US benchmark West Texas Intermediate rose 4.6 per cent to $US26.26 a barrel, while Brent crude, the international benchmark, jumped 2.7 per cent to $US33.73.

Oil exporting group OPEC, led by top producer Saudi Arabia, and others — including Russia — will meet via video conference later Thursday and expectations are growing they will agree to reduce output to support prices.

Prices are at near-two-decade lows with travel restrictions and lockdowns around the world throttling demand, and Riyadh and Moscow locked in a vicious price war.

But Saudi Arabia and Russia, the world’s second-biggest producer, now look set to draw a line under their dispute to help stabilise battered markets.

Moscow said Wednesday it is willing to cut output by about 1.6 million barrels a day, or about 15 per cent, Bloomberg News reported, smoothing the path towards a deal.

A key question had been whether the US would join any deal, but analysts say a fall in America’s crude output forecast released earlier this week is likely enough to satisfy Riyadh and Moscow for now.

AFP

12.36pm: RBA bond buying dip ‘surprising’: ANZ

ANZ says today’s reduction in bond purchases by the Reserve Bank is a “surprise”, noting risk the action could lead to a steeper curve and underperformance versus other markets.

The RBA reduced its level of bond purchases to $1.5bn, from the recent pace of $2bn per day, following comments at its April meeting that it could taper back its purchases.

“We had expected the RBA to maintain its purchases at $2bn for a few more weeks, though with a reduction in the number of purchases to four per week,” head of Australian economics David Plank says.

“A similar reduction in the level of semi purchases next week must now be on the cards. This may be interpreted as implying a degree of comfort with the current level of semi-to-bond spreads.”

Jared Lynch 12.28pm: Mesoblast steps up virus fight

Australian biotech Mesoblast is stepping up its fight against coronavirus, with its new stem cell treatment ready to be tested on people battling severe complications from COVID-19.

The Anthony Pratt and Thorney Investment-backed company announced on Thursday it would begin a clinical trial in the US, with the support of the National Institutes of Health, to test whether its new therapy can fight a potentially lethal immune reaction resulting from coronavirus.

The trial will involve 240 patients who have developed acute respiratory syndrome (ARDS) as a result of a COVID-19 infection.

Mesoblast chief medical officer Fred Grossman said the death rate in moderate to severe ARDS was as high as 80 per cent, highlighting the need for a treatment to combat the condition.

MSB last traded up 12.8pc to $2.07.

Mesoblast CEO Silviu Itescu. Picture: Stuart McEvoy / The Australian.

12.08pm: ASX regains daily high

It’s just after midday and the Australian sharemarket is almost back up to its opening high.

The S&P/ASX 200 is up 2.2pc at 5316, almost regaining its early high of 5320.1 after an intraday retreat to 5241.7 in choppy trading.

Anything is possible these days but the index shows no sign of closing in the red as some expected after the morning rally.

And clearly it would be much higher today if not for substantial underperformance from Materials and Consumer Staples.

Tech, Energy, Industrials, Consumer Discretionary, Real Estate up more than 4pc, while Financials and Utilities are up at least 2pc.

WTI futures are up 4pc and holding most of their early rise while S&P 500 futures gave up an early rise of 0.8pc.

11.29am: RBA makes smallest bond purchase yet

The RBA is buying just $1.5bn of May 2028 and Nov 2029 ACGS today, its smallest “QE” yet under the policy of targeting 0.25pc for the 3-year bond announced in its emergency meeting on March 19.

At the time, Governor Philip Lowe said the RBA will buy “Government bonds and semi-government securities across the yield curve will be conducted to help achieve this target as well as to address market dislocations”.

This week he flagged a tapering of bond purchases saying: “if conditions continue to improve, though, it is likely that smaller and less frequent purchases of government bonds will be required.”

With the 3-year yield hovering around 0.25pc for the past 10-days, the RBA seems to be aiming to flatten the bond curve, which has steepened particularly in the 8-9 year area in the past week.

11.35am: Office rents to drop by 30pc: Goldmans

Rising vacancy rates and completion of new developments will drive double-digit rent reductions in the Sydney and Melbourne office market in the next two years, according to Goldman Sachs.

Analysts led by Ian Randall calculate that Melbourne rents are set to drop by 30pc and Sydney rents by 34pc up to December 2022.

Adding to that, tenants needing financial assistance through the government’s code of conduct for tenants and landlords, is set to pull net operating income down by 25 per cent across all office portfolios.

“As the Australian economy moves further into recession (based on GS economists’ forecasts), we expect Sydney CBD net absorption to remain negative over the balance of CY20 and through CY21,” Mr Randall writes.

“Although we expect precommitments to result in positive net take-up for Melbourne in CY20, we expect demand to be dwarfed by Melbourne’s largest net increase in supply (in percentage terms) in the last 29 years. We now expect vacancy to peak this

cycle at 10pc+ in both markets (vs 7-8pc previously).”

Goldmans retains a Buy on Scentre and GPT, Neutral on Mirvac and Sell-rated on Dexus.

Goldmans tips Melbourne office rents to drop by 30pc. Picture: Josie Hayden.

11.20am: Analysts slash commodity outlook

ANZ and Goldman Sachs are among major forecasters lowering their metal price forecasts today amid a worsening global outlook.

ANZ commodity strategist Daniel Hynes cut its year-end iron ore price forecast to $US68 from $US75 a tonne on expectations of a slump in steel demand.

He estimates demand in China alone has fallen more than 10 per cent from levels seen in Q4 2019 but there are signs of recovery, with real estate sales now nearly 70pc of normal levels, while auto purchases have rebounded sharply. 

A lack of steel scrap should see China’s iron ore imports unchanged from 2019, which “should hold iron ore prices up relatively well”.

Copper demand is also expected to be hit by the broader slowdown, though ANZ expects copper demand to contract more outside China.

Meanwhile GS commodity strategist Paul Young has made cuts to his estimates – December quarter iron ore forecast is unchanged at $US85, but is expected to slip by 6pc in the third quarter to $US75 a tonne.

Similarly, he his third quarter aluminium, copper and coking coal forecasts have been trimmed 3, 9 and 6pc for 2020.

He now expects commodity prices to bottom “sometime” in the June or September quarters, while iron ore is preferred over base metals on lower exposure to weak demand outside of China.

GS keeps Buy ratings on BHP, RIO, Coranado and Alumina.

11.07am: Penfolds spin-off a ‘distraction’: Citi

Treasury Wine’s proposal to spin-off Penfolds has been described by Citi analysts as a “distraction”, unlikely to provide shareholders any further value.

After Treasury yesterday unveiled the plans for the demerger, tipped to be worth at least $7.5bn, Citi highlights that falling volumes in Treasury’s other brands would likely negate any value.

Analyst Craig Woolford points out that Penfolds would have to prove it can successfully create a French and/or US label to extend its growth, and would have to lift marketing costs to support its premium price position.

He values the potential new Penfolds at $6.5bn at an EV/EBIT of 17x, while the new Treasury is valued at $2.9bn or 11x EV/EBIT.

“Unfortunately, the combination of valuation for these two contrasting businesses leads to an overall value of $11.06, near the current share price,” Mr Woolford says.

“We see upside if there is corporate interest in the Penfolds brand. However, there is also downside risk if this demerger does not proceed and earnings weakness in luxury persists longer than 12 months.”

TWE last traded down 0.3 per cent to $10.58.

A bottle of Penfolds Grange Hermitage BIN 95 Vintage 1969 and Two bottles of Taylors The Pioneer Siraz 2014. Picture: Alex Aleshin.

10.56am: oOh! shares jump as HT&E lifts stake

HT&E has confirmed it has spent $15m to lift its stake in media rival oOh!media to 4.2 per cent, a move that has sparked a rally in the stock this morning.

In a statement to the market HT&E said the interest was acquired as an equity investment “in a sector and assets it is very familiar with”.

“HT&E looks forward to supporting oOh!media as a constructive significant shareholder,” the company said.

OML shares are higher by 17.3 per cent in early trade to 74.5c.

10.30am: ASX lift stronger than tipped

Australia’s sharemarket has been a bit stronger than expected so far today, up as much as 2.2pc to 5320.1 in early trading versus a 1.3pc rise implied by overnight futures, but has remained below Wednesday’s high of 5321.

It has since retreated to be up 1.6pc at 5290 as US futures have also pared some of their early gain.

Strength in crude oil futures helped the positive mood afforded by optimism from US officials about the outlook for the coronavirus pandemic.

Energy stocks are outperforming with Beach up 3pc before the emergency OPEC+ meeting tonight and the G20 finance ministers meeting on Friday which may see production cut back.

Transurban is up 5.6pc – its one of several companies that Morgans Financial now recommends buying as its business model should allow a strong recovery.

Major banks are up about 2pc after falling sharply Wednesday on expected dividend cuts after guidance to that effect from APRA.

Iron ore miners are lagging the broader market with BHP near flat, though South32 is up about 4pc.

Gerard Cockburn 10.18am: Job ads drop by 65pc: SEEK

Job ads across the country have dropped by almost two thirds as the labour market continues to take a beating from the economic shutdown caused by coronavirus.

National job ads data obtained from online recruiting platform SEEK indicate job ad volumes have progressively worsened since the start of March, hitting a 65.3 per cent drop for week to April 5, compared to the same period last year.

SEEK managing director Kendra Banks described the virus impact on jobs as “swift and extreme”, adding to pressure from bushfires earlier in the year and already weak economic outlook.

She said Victoria and New South Wales had experienced the largest declines, which were down 71.6 per cent and 67.4 per cent, respectively.

“Two distinct changes are occurring in Australia’s labour market right now,” Ms Banks said.

“Unsurprisingly and unfortunately there is a mass reduction in the number of jobs available at a national level, while simultaneously there is an urgent demand for workers in specific industries.”

A job prospect survey conducted by SEEK found that only 53 per cent of Australian’s feel positive about their future job prospects.

The survey also indicated job security had dropped from 66 per cent in January to 53 per cent at the end of March.

Job advert category changes via Seek. pic.twitter.com/Q701kQZaoX

— Peter Morgan (@psimpsonmorgan) April 8, 2020

10.12am: Shares follow strong US lead

Shares are following a strong US lead on hopes the coronavirus outbreak has reached its peak.

Broad optimism is helping all sectors higher, pulling the ASX200 up 107 points or 2.05 per cent to 5313.7.

Energy is outperforming – up 3.7pc after a lift in oil futures while Industrials are up 3.4pc.

10.02am: ASX futures jump

ASX200 futures jumped 0.9pc after reopening at 9.50am AEST.

It comes as S&P 500 futures rise 0.6pc with WTI futures up 5.2pc before the emergency OPEC+ meeting tonight.

This now looks like one of those days when the ASX200 shoots higher, possibly before forming a durable top after the OPEC meeting.

If so, the 38.2pc Fibonacci retracement of the Feb-Mar fall – at 5470 – might be a short-term target, implying a potential 5pc rise.

9.57am: HT&E scoops oOh!media shares

Media group HT&E has swooped on oOh!media group after recent share price weakness – buying 11 million shares or a 1.8 per cent stake.

In a statement to the market, oOh! said it had not had any communication with its rival, saying it “regards the purchase as totally opportunistic”.

“oOh!media is the leader in the Out of Home sector in Australia/New Zealand and the acquisition of oOh!media shares by another participant in the Australian media sector highlights the strategic value of oOh!media’s assets and in the Board’s view the company remains significantly undervalued based on current trading prices,” the company said.

OML last traded at 63.5c.

9.44am: ASX to rise on virus optimism

Australia’s sharemarket is set to rise on US optimism about the coronavirus pandemic.

Overnight futures relative to fair value suggest the S&P/ASX 200 will open up 1.3pc at 5275 after falling 0.9pc on Wednesday. But there’s a risk of a top forming today in line with the recent pattern, before the Easter long weekend.

The S&P 500 rose 3.4pc to 2749.98 points and closed near its high amid hope of an early restart of the US economy, joining the Dow Jones index in entering a bull market after its second shortest bear market in history.

The shortest ever S&P 500 bear market ended in November 1929, but the S&P 500 peaked in April 1930 and went on to fall 86pc before bottoming in July 1932.

After a further decline in the rate of US COVID-19 infections, US director of the US National Institute of Allergy and Infectious Diseases, Anthony Fauci, said the start of a turnaround in the fight against the coronavirus could come after this week.

Still, after initial success, Japan and Singapore have now tightened their containment measures and even in Europe talks of easing measures are only gradual.

Talk of another US fiscal package also helped the US market with Democrats calling for another $US500bn package.

Energy was the second strongest S&P 500 sector after WTI crude rose 6.2pc to $US25.09 a barrel. WTI is up 4.7pc at $US26.28 this morning, lifting S&P 500 futures 0.4pc ahead of the emergency OPEC+ meeting tonight,

But European shares mostly fell slightly as EU finance ministers failed to reach agreement on a united stimulus package.

Gerard Cockburn 9.36am: G8 unveils virus survival plan

Childcare provider G8 Education has laid out its comprehensive plans to wade out the coronavirus outbreak, leaning on state and federal government assistance to keep its centres open and staff employed.

In a notice to the market on Thursday, after a week-long trading halt, G8 launched a $310m equity raise to strengthen its balance sheet and provide liquidity while also updating its debt facilities to provide relief for the next two testing periods in June and December.

Additionally, the group spelt out how each of the government stimulus packages would bolster its books including the early childhood education relief package to pay 50pc of centre fee levels, the JobKeeper wage subsidy package for workers and state-based support in the form of tax deferral scheme.

“The strong fundamentals underpinning the early childhood education and care sector and the essential nature of our services have been validated by recent Federal Government announcements,” chief Gary Carroll said.

“The support measures that have been introduced provide stability for the sector and, importantly, increased security to our families and teams during a period of heightened uncertainty.”

GEM last traded at $1.08.

Perry Williams 9.29am: 40pc sales slump at Viva servos

Petrol sales have fallen by up to 40 per cent across Coles Express service stations as COVID-19 slows traffic use on Australian roads with owner Viva Energy lowering spending guidance and delaying the on-market portion of a $680m share buyback.

After Caltex flagged a sharp fall in petrol sales on Monday, its chief rival Viva said volumes had declined by 30 per cent to 40 per cent at its 1290-strong Coles Express network following measures taken by governments to contain the spread of COVID-19.

Viva has also delayed plans for the on-market portion of its $680m buyback after deferring the off-market component on March 27.

The buyback was sparked on February 24 after it sold out of its petrol station property trust, but Viva said it was now on hold due to economic volatility.

“Due to the ongoing economic uncertainty, the Company has determined to delay the commencement of the on-market buyback to allow it to monitor the longer-term impacts of COVID-19,” Viva said.

Read more: Petrols sales fall up to 50pc as Caltex considers asset sale

Viva says its Coles Express servos have seen a 40pc drop in petrol sales.

Bridget Carter 9.22am: G8 Education raising $301m

DataRoom | G8 Education is raising $301m through investment bank UBS.

Shares are being sold at 80c each, a 25.9 per cent discount to the last closing price of $1.08 on April 2.

The group will raise $167m for a 1 for 2.2 underwritten entitlement offer and $134m through an underwritten placement.

The funds will be used to strengthen the company’s balance sheet.

More to come

Bridget Carter 9.20am: Centuria Industrial prepares $130m raise

DataRoom | Centuria Industrial REIT has entered a trading halt as it prepares to tap the market for $130m.

The company will launch a Bookbuild for the raise, with shares sold from a floor price of $2.54.

Working on the deal is investment bank JPMorgan.

More to come

9.14am: Netwealth FUA lifting despite volatility

Investment platform provider Netwealth posted record quarterly net inflows for the march quarter, increasing its funds under administration despite volatile market conditions.

In an update to the market, Netwealth said it had net inflows of $3.2bn for the quarter, an 11.3 per cent increase from the previous.

While the flows were offset somewhat by the sharemarket rout, the group’s funds under administration still posted a lift to $6.3bn at March 31.

The company said its revenue and profitability continued to be resilient due to “increased transaction and ancillary revenue, as well as a focus on expenses”.

As such, it maintained its profit and FUA guidance for the full year – with revenue to be in the range of $116m to $120m.

NWL last traded at $7.32.

Lilly Vitorovich 9.02am: Seven, Bauer reach temporary ceasefire

Seven West Media and Bauer Media have called a temporary ceasefire by agreeing to extend the completion date of its $40m magazine deal to May 1, a day after Kerry Stokes-controlled media group disclosed it had started legal action against the Germany-family owned magazine publisher.

On the day the deal was scheduled to be completed, Seven announced to the ASX on Thursday morning that they had agreed to a revised completion date of May 1 and said “all other terms of sale are unchanged”.

Seven noted the extended date is “not materially adverse as Pacific receives the April revenues, equal to five weeks.

The group’s second announcement in two days to the ASX was authorised by Seven chief executive James Warburton.

Read more: Pacific heads to court to finish magazine deal

8.56am: Woolworths chair confident in outlook

Woolworth’s chairman Gordon Cairns has lauded his “continued confidence in the outlook for the group” as the grocery chain delivers its interim dividend to shareholders today.

In a letter to shareholders, accompanying a 46 cents per share dividend, Mr Cairns acknowledged Woolworths’ role in the COVID-19 pandemic, and touched on the delay of its Endeavour Drinks spin-off as a result of temporary hotel closures.

At a time when many companies are trimming or scrapping their dividends, he noted today’s payout was 2.2p higher than the previous corresponding period, or 9.5pc excluding a bonus from Petrol earnings in the previous period.

Customers wait for Woolworths in Preston to open its doors at 7am. Picture: David Geraghty / The Australian.

8.49am: What’s on the broker radar?

• Altium cut to Hold – Bell Potter
• Bank of Queensland cut to Underperform – Jefferies
• BHP raised to Buy – Clarksons Platou Securities
• BlueScope Steel target price cut 19pc to $10.50 – UBS
• Flight Centre raised to Buy – Bell Potter
• JB Hi-FI raised to Buy – Bell Potter
• Navigator Global Investments cut to Neutral – Macquarie
• Oil Search target price raised 15pc to $3.10 – UBS
• Smartgroup raised to Outperform – Credit Suisse
• Treasury Wine cut to Underperform – Macquarie
• Whitehaven cut to Neutral – Macquarie

8.13am: Virus disrupts CSL

Pharmaceutical company CSL said the coronavirus pandemic is disrupting efforts to collect plasma and would likely delay some clinical trials, but its profit guidance for the 2020 fiscal year remained intact.

CSL said it is implementing a range of initiatives to mitigate the impact of the coronavirus crisis on its collection centres, and there was the potential to accelerate plasma collections in the aftermath of the pandemic. The Australian company added that its centres are designated as essential critical infrastructure.

CSL said it also expects modest delays in capital projects and clinical trials, but activity could accelerate once the coronavirus crisis ends to ensure no material change to management’s original plan.

CSL reaffirmed its profit guidance of $US2.11 billion-$US2.17 billion for the year through June after stripping out the impact of currency swings, and said it has $US1.1 billion in available liquidity.

Dow Jones Newswires

8.00am: Oil up on cut hopes

Oil futures strengthened late in the session, buoyed by hopes that OPEC and its allies will strike a production cut agreement on Thursday.

Crude has collapsed in 2020 because of a slide in demand due to the coronavirus pandemic and excess supply.

Brent dropped to $US21.65, its lowest since 2002, on March 30. Thursday’s video conference meeting between the Organisation of the Petroleum Exporting Countries and allies including Russia – a group known as OPEC+ – was expected to be more successful than their gathering in March, which ended in a failure to extend supply cuts and a price war between Saudi Arabia and Russia. “The pressure is enormous on these countries to cut,” said Phil Flynn, an analyst at Price Futures group.

Market sentiment rose on expectations a deal could be reached after media reports suggested Russia would cut its output and Algeria’s energy minister said he expected a “fruitful” meeting.

Brent crude settled up 97 US cents, or 3.0 per cent, at $US32.84 a barrel. US West Texas Intermediate crude rose $US1.46, or 6.2 per cent, to settle at $US25.09 a barrel.

Reuters

7.55am: S&P 500 ends 2nd shortest bear market

The US sharemarket has entered a bull market after its second-shortest bear market in history.

The benchmark S&P 500 rose 3.4 per cent overnight to 2749.98 to be 22.9 per cent above its bear-market low close of 2237.4 points 13 days ago, exceeding a 20 per cent rise needed to end a bear market.

Australia’s S&P/ASX 200 share index will enter a bull market if it closes at or above 5455.24 points, which is 248.3 points or 4.8 per cent above Wednesday’s close at 5206.9 points.

The S&P/ASX 200 is expected to open up 1.3 per cent at 5275 points, based on overnight futures.

The latest bear market in the S&P 500, which was established on March 11, lasted just 19 days, the shortest since a 15-day bear market ended in November 1929, according to data compiled by Dow Jones.

It took just 12 trading days to recover from the bear-market low close of 2237.4 points, which was reached on March 23. That was the quickest move from bear to bull since the last bear market, when it took 10 trading days ending March 23, 2009.

To recap on the recent bear market, it took 23 trading days from the recent high to the bear market low, which was the quickest recent high to bear market low on record.

7.20am: ASX tipped to follow US higher

The Australian sharemarket is set for an early boost after US stocks were buoyed by hopes the coronavirus outbreak has reached a peak.

At 7am (AEST) the SPI200 futures contract was up 70 points, or 1.35 per cent, at 5,248.0 points, suggesting local stocks will rise after back-to-back sessions in the red.

The S&P/ASX200 benchmark index looked set to close flat on Wednesday despite weakness in the financial sector, but lost 38.8 points in the final minute of trade as the Eurozone failed to pass a stimulus measure after 16 hours of talks.

The major US indices jumped overnight after President Donald Trump and New York Governor Andrew Cuomo each expressed hopes Americans might be getting to the top of the coronavirus curve.

Health insurers received an additional lift from Bernie Sanders’ decision to suspend his presidential campaign.

The Dow Jones Industrial Average rose 3.44 per cent, the S&P 500 gained 3.41 per cent, and the Nasdaq added 2.58 per cent.

The Australian dollar was buying US62.30 cents at 7am (AEST), down from US61.32 cents at the close of markets on Wednesday.

AAP

6.10am: US stocks close higher

US stocks rose, building on their gains for the week, as investors parsed signs that the spread of the coronavirus could be stabilising in hard-hit locations.

The Dow Jones Industrial Average added 773 points, or 3.4 per cent. The S&P 500 gained 3.4 per cent, and the Nasdaq Composite rose 2.6 per cent.

After yesterday closing lower, Australian stocks are set to rise at the open. At 6.10am (AEST) the SPI futures index was up 39 points, or about 0.7pc.

The Australian dollar was higher at US62.30c.

In New York, positive signs in data on hospitalisation and intensive care admissions. suggest the number of new COVID-19 cases could be stabilising, though health officials have warned that people can’t let down their guard.

“The market clearly is reacting Monday, to a certain extent yesterday and even today to incremental news that at the margin is a little better in terms of peaking of the virus, perhaps in Italy, perhaps in Spain, perhaps in New York City,” said Hank Smith, co-chief investment officer at Haverford Trust.

Still, the US death toll from the coronavirus has risen, with nearly 50pc more deaths Tuesday than any previous day in the epidemic, according to a Wall Street Journal analysis of data from Johns Hopkins University.

Elsewhere, European countries with falling infection rates began easing their restrictions, while some Asian leaders called for extended lockdowns to fight the pandemic.

Stocks have swung wildly in recent weeks as money managers grapple with how the pandemic has affected the value of businesses in every industry. The S&P 500 has climbed 9.1pc this week but is down 16pc in 2020.

“This is a time of unprecedented uncertainty,” said Brian Yacktman, chief investment officer at YCG Investments. “What we’re seeing is a complete ping-pong match with markets bouncing around so much because nobody knows how things will shake out in the short run.”

The gains in US stocks Wednesday were broad, with all 11 sectors of the S&P 500 gaining, led by the real estate and energy groups.

US crude futures edged up 7.8pc to $25.49 a barrel. American Petroleum Institute data released late Tuesday showed US crude inventories rose by more than expected. The prices are too low for US producers, leading to a significant slowdown in drilling activity, ING strategists said.

European equities were mixed, with the pan-continental Stoxx Europe 600 edging up less than 0.1pc.

Dow Jones

5.45am: Fed warns of ‘major’ risks

The uncertainty around the duration and severity of global coronavirus pandemic creates “major downside risks” to the US economy, the Federal Reserve said.

The United States is sure to take a hit in the near term as businesses are forced to close and consumers are confined to their homes, the Fed said in the minutes of the March 15 emergency policy meeting, when the central bank slashed the benchmark interest rate to zero.

But while the shutdowns imposed to contain the virus create hardship for businesses and households, they should not have the lasting impact that was seen in the wake of the global financial crisis in 2008, Fed officials said.

Though central bankers worried that the containment efforts would spread to other areas of the country and have a ripple effect on the economy, the meeting

AFP

5.40am: Airbus cuts production by third

European aircraft manufacturer Airbus said it had cut production of its planes by around a third, as global airlines scale back their plans in an unprecedented crisis for the industry.

Airbus is “now revising its production rates downwards to adapt to the new coronavirus market environment,” it said in a statement.

It said it would now be making 40 A320s per month, 2 A330s and 6 A350s. “This represents a reduction of the pre-coronavirus average rates of roughly one third,” Airbus said.

“With these new rates, Airbus preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves.”

Airbus aircraft at a German airport. Picture: AFP

AFP

5.35am: European markets struggle

Most European stock markets slid as the economic damage from the coronavirus became apparent.

The euro dropped against the dollar and pound, while oil prices gained ahead of a crucial producers’ meeting on possible output cuts.

“European markets have slipped back today as investors got a flavour of the economic destruction being wrought across Europe by the virus,” said Michael Hewson, chief market analyst at CMC Markets UK.

The Bank of France, meanwhile, said the nation’s economy likely contracted six per cent in the first quarter, putting it in recession and marking the worst performance since 1945.

The German economy, Europe’s biggest, is expected to shrink by nearly 10 per cent in the second quarter as the coronavirus paralyses the country, leading research institutes warned.

Meanwhile, EU finance ministers failed to agree on a coronavirus bailout package for hard hit countries such as Italy and Spain.

And the World Trade Organisation said global trade could fall by between 13 per cent and 32 per cent this year.

London fell 0.5pc, Frankfurt slipped 0.2pc and Paris gained 0.1pc.

In Asian trading, Tokyo jumped more than two per cent, helped by a weaker yen and details of Japan’s huge stimulus package worth $1 trillion amid a month-long state of emergency for Tokyo and six other regions in the country following a spike in coronavirus cases.

The remaining markets in the region fell, following on losses overnight from New York.

Oil prices climbed, but the commodity continues to swing as traders keenly await Thursday’s planned meeting of the world’s top producers to discuss a possible output cut.

Crude oil has been seared by the virus as lockdowns around the world bring the global economy to a standstill and dampen demand, while a price war between Russia and Saudi Arabia has compounded the crisis.

With Riyadh and Moscow taking part in the meeting Thursday, there are hopes they might draw a line under their dispute.

AFP

5.30am: Fed eases up on Wells Fargo

Citing the coronavirus pandemic and an unprecedented need for loans and assistance for small businesses, the Federal Reserve is lifting its lending restrictions on Wells Fargo.

The Fed has had Wells under a tight leash due to the bank’s prior scandalous behaviour, including the opening of millions of fake accounts. The Fed will allow Wells to grow its assets, but only for loans that fall under the $US349 billion Paycheck Protection Program and the Fed’s upcoming own small business lending program.

The PPP launched Friday. Wells, one of the largest small business lenders in the country, quickly hit its Fed-imposed $US10 billion threshold on loans. Wells customers who tried to apply for a loan this week were told that Wells was unable to accept more applications, leaving them to scramble to find another bank that would lend to them under the program.

AP

5.28am: Daimler restart

Mercedes-Benz maker Daimler said Wednesday it plans to restart work at factories in Germany from April 20, after a weeks-long interruption due to the coronavirus pandemic.

“In a few selected factories, we are implementing a co-ordinated restart of production,” the group said in a statement.

“From April 20 this will affect the car motor factories in Germany, Mercedes-Benz car factories in Sindelfingen and Bremen and the vans factories.” Truck and bus sites will also open from the same date.

But Daimler also said that it would extend shorter hours for its German workers until April 30, impacting “the majority of production … as well as administration”.

A Mercedes-Benz GLE300d.

AFP

5.25am: France, Germany face historic declines

Germany and France, the EU’s two largest economies, are bracing for a painful recession as the coronavirus pandemic slashes output to the lowest levels in decades, forecasts said.

Gross domestic product in export powerhouse Germany is expected to shrink by nearly 10 per cent in the second quarter as shutdowns aimed at slowing the outbreak paralyse the global economy, the country’s leading research institutes said in a report.

The second-quarter plunge in GDP should be twice as big as any during the 2008-2009 financial crisis and would mark the steepest fall since the institutes’ records began in 1970.

France meanwhile is already in a technical recession, the Bank of France said. Official data showed the French economy shrank 0.1 per cent in the last quarter of 2019, and the central bank estimates it contracted around six per cent in the first three months of 2020.

A recession is defined as two consecutive quarters of economic contraction. According to the central bank, France’s first-quarter performance was its worst since 1945.

AFP

5.15am: Virus rescue failure ‘unthinkable’

French Finance Minister Bruno Le Maire said a failure by his eurozone peers to agree a coronavirus rescue package was “unthinkable” and expressed hope they would overcome their differences at a meeting tomorrow.

“Our collective responsibility is to come to an agreement within 24 hours. A failure is unthinkable,” Le Maire said after marathon overnight eurozone finance minister talks stalled on disagreements about how to fund the package.

“I do not want to point the finger of blame at anyone because I think that would not be useful,” he added.

France has backed Italy and Spain, among the hardest hit countries, in seeking pooled EU debt to raise funds but Germany and the Netherlands oppose this option.

AFP

5.10am: EU rescue talks fail

EU finance ministers failed on Wednesday to agree on a rescue plan to help hard-hit member states face the coronavirus outbreak, after the Netherlands blocked the deal over bailout conditions.

“After 16 hours of discussions, we came close to a deal but we are not there yet. I suspended the Eurogroup and (we will) continue tomorrow Thursday,” said Eurogroup chief Mario Centeno.

Bickering EU finance ministers were unable to bridge differences on how to rebuild their economies after coronavirus, with a North-versus-South split that recalled the worst days of the eurozone debt crisis.

AFP