Trading Day: ASX hits 10-month high as jobs surge, Rio names CEO
Stocks hit a 10-month high amid jobs surge and budget improvement, while Rio Tinto names its new CEO.
- Transurban sells US toll road stake
- Nine lifts guidance
- Fed updates bond buying plans
- Bitcoin tops $US20,000
That’s all from the Trading Day blog for Thursday, December 17. Australia’s sharemarket surged to a 10-month high amid buoyant global markets, stronger-than-expected employment data and a better-than-expected budget position which highlighted the economic rebound. The Dow lost 0.2 per cent, the S&P 500 gained 0.2 per cent and the Nasdaq added 0.5 per cent.
Cliona O’Dowd 7.40pm: Crackdown warning for underperforming super funds
The prudential regulator has hit out at poor performing superannuation funds ahead of the release of its updated MySuper heatmap, warning that it will crack down on funds that repeatedly underperform and fail to best serve member interests.
Speaking a day out from the release of its refreshed heatmap that assesses super funds on fees and investment performance, APRA deputy chair Helen Rowell revealed that this year’s underperforming funds were largely the same as those that were named and shamed last year.
“These entities have had a year to lift their game. But it’s clear that a stronger approach is needed to protect the members of those funds,” she said as she flagged plans by APRA to step up its action against poor performing funds.
Perry Williams 6.58pm: Rio’s inside hire surprises
Rio Tinto’s appointment of an insider to take over the top role at the mining giant appears to have surprised analysts who had expected an external hire.
Chief financial officer Jakob Stausholm will succeed Jean Sebastien Jacques in the new year and faces a big task to rebuild trust after the Juukan Gorge calamity caused global outrage and sparked an executive shake-up.
“Given some level of concern in the market related to Rio’s past operational issues, we think the market may have been expecting an external appointment,” Morgan Stanley said. “Some may perceive Mr Stausholm’s appointment as potentially indicating little change in overall strategy.”
Rio’s board bowed to shareholder fury with Mr Jacques, iron ore boss Chris Salisbury and corporate affairs chief Simone Niven all departing the company.
Elise Shaw 5.55pm: Feeling rich? Household wealth hits record high: CommSec
Feeling rich? Aussie household wealth hit record highs in the September quarter, notes CommSec senior economist Ryan Felsman.
“Total household wealth (net worth) rose by 1.7 per cent to a record high $11,351.1 billion in the September quarter to be up 3.5 per cent on a year ago.
Average (per capita) household wealth rose by $6850 (1.6 per cent) in the September quarter to $441,649 to be up 2.7 per cent over the year. Why? Residential assets, deposits and superannuation balances all grew.”
The Bureau of Statistics noted in a media release: “Increases in residential assets (1.2 per cent), deposits (5.4 per cent), and superannuation balances (1.1 per cent) were the main contributors to the growth in household wealth.”
“Residential assets rose $86.8 billion, recouping the losses experienced in the June quarter. Holding gains of $73.6 billion on residential assets reflected a rebound in property prices as social distancing measures (restrictions on auctions and open house inspections) eased and economic conditions began to improve.
“Household deposits increased a record $63.7 billion as households continued to save at elevated levels during the September quarter. Continuing government income support packages such as JobKeeper, economic support payments, and early access to superannuation were key drivers of the increase in deposits. This was in addition to the normal increase in deposits in September quarters due to tax refunds.
“Households held a record $1,293.6 billion in cash and deposits at the end of September. Cash and deposit holdings represented 22.1 per cent of financial assets. The share of cash and deposits stands near the 21.5 per cent average since the global financial crisis and long-run average of 21.4 per cent.
“Households held $1,057.4 billion in shares, up 0.1 per cent in the September quarter. Listed share holdings were 18.1 per cent of all financial assets in the September quarter, down from 18.4 per cent in the June quarter, and below the 19.5 per cent average since the global financial crisis as well as the long-run average of 22.1 per cent.
“Pension fund (superannuation fund) assets rose by $36.0 billion to $2,411.4 billion in the September quarter. Cash and deposits stood at 11.1 per cent of assets, below the 12.2 per cent average since the global financial crisis, but above the long-term average of 9.2 per cent.
“Foreigners held $627.4 billion of Aussie listed shares in the September quarter, up by $15.8 billion in the quarter. Foreigners held 32.3 per cent of total listed shares, just below the 32.5 per cent average since the global financial crisis and below the long-term average of 34.8 per cent.
Felsman adds that the forecasts in MYEFO included the impact of slower population growth.
Data from the Bureau of Statistics (ABS) shows that annual population growth slowed to a 15-year low of 1.27 per cent in June 2020.
“Australia’s population lifted by just 321,296 people over the year to June – the smallest increase in 9 years. Annual population growth is below 1 per cent in NSW for the first time in 13½ years!” Felsman notes.
“Over the year to June, population growth was strongest in Queensland (1.58 per cent), followed by Victoria (1.49 per cent), Western Australia (1.47 per cent), the ACT (1.13 per cent), Tasmania (1.12 per cent), NSW (0.95 per cent), South Australia (0.95 per cent) and the Northern Territory (-0.07 per cent).”
READ MORE: Long unpredictable economic path to tread
Elise Shaw 5.36pm: ‘Significant risks remain’ around economic outlook: Moody’s
Martin Petch, vice president, Moody’s Investors Service, says: “The $15.9bn improvement in Australia’s underlying cash balance for 2020-21 compared to October’s budget primarily reflects the solid recovery in the economy with better than expected growth, employment and key commodity price outcomes.
“Significant risks remain around the outlook on Australia as it continues to face a challenge in terms of fiscal repair. However, we continue to expect that repair will proceed as the impact of the coronavirus recedes and in line with past experiences of fiscal consolidation following major economic shocks.”
Elise Shaw 5.25pm: Sydney freight capacity ‘needs a re-think’
The Sydney Business Chamber says with Sydney’s freight movements set to increase by 50 per cent come 2036, and as product shortages during Covid highlighted, the city’s freight capacity is already strained and needs re-thinking to meet the future demands of online shopping and a growing city.
“With freight movements in Sydney expected to increase 50 per cent in the next 15 years, now is the time to start working on ways to use the latent capacity that exists, making the system more efficient and customer-focused,” said Katherine O’Regan, Executive Director, Sydney Business Chamber.
“Freight is taken for granted until essentials are suddenly not available on shelves - as happened this year across Sydney. It showed how heavily we rely on an efficient freight system with capacity to meet demand,”
“As our paper ‘Freight and the City’ says, exponential growth in online shopping will continue and along with increased localisation, we need to improve the performance of the last mile of the supply chain - from factory floor to front door.”
“There are latent inefficiencies in our current freight system that could really improve the customer experience, especially as we spend more time working from home and in our local area, relying more on deliveries to our door.”
“We need to make better use of data technologies to drive greater certainty like real-time tracking so that individuals and businesses aren’t waiting around all day to meet a delivery.”
“Thinking about people and goods, other big moves include providing better kerbside access in local streets so that delivery trucks don’t have to drive around finding a park to complete the last-mile of the freight process.”
“Covid has caused a reduction in public transport use resulting in spare capacity and research at Sydney University is exploring how this could instead be used to transport parcels across the city.”
“With modern security scanning and tracking technology this may be a safe and efficient way to transport freight, employing the spare capacity on buses and trains and cutting congestion on our roads.”
Elise Shaw 5.05pm: $A hits highest since June 2018: CBA
Commonwealth Bank’s Global Markets Research team notes USD softened as market participants shifted their attention back to the US and global economic recovery.
“Significant progress has been made towards the $US748bn coronavirus relief bill, weighing on the USD. The Congress will need to pass the bill before the end of this week to avoid a government shutdown.
The team says AUD/USD hit the highest level since June 2018 near 0.7585 following an upbeat labour force report.
“The lift in employment in November of 90k was much stronger than the consensus (+40k) and CBA (+50k) expectations.
“The unemployment rate fell to 6.8%. Our CBA economics team expect solid employment growth in 2021.
“As expected, the Australian federal government’s Mid‑Year Economic and Fiscal Outlook (MYEFO) indicated an upgrade to 2020/21 real GDP and budget outlooks. The MYEFO is consistent with the ongoing Australian economic recovery.”
4.36pm: ASX ends +1.2% at 10-month high
Australia’s sharemarket surged to a 10-month high amid buoyant global markets, stronger-than-expected employment data and a better-than-expected budget position which highlighted the economic rebound.
The S&P/ASX 200 index closed up 77.5 points or 1.2pc at 6756.7 points, its highest point since February 26th.
After bouncing 54pc from its March low, the index was 5.5pc below the record high of 7197.2 points it reached on February 20th.
After the S&P 500 rose 0.2pc on signs that US lawmakers were close to approving a $US900bn fiscal stimulus, S&P 500 futures rose 0.3pc in Asia, pointing to a new record high for the US benchmark.
Commodity price gains helped, with WTI crude futures up 1.2pc and iron ore futures up 1.5pc in APAC trading.
Tech was strongest with Afterpay up 5pc and Xero up 2.2pc to record high closes at $120.31 and $154.00 respectively.
Value plays also outperformed with Woodside up 3pc, Fortescue up 2pc and ANZ up 1.3pc.
November jobs growth was more than twice as strong as expected at 90,000 - mostly in full time jobs - with the unemployment rate falling to 6.8pc versus expectations that it would stay at 7%.
The FY21 budget deficit projection of $197.7bn was well below the consensus estimate that it would fall to $204bn versus the budget estimate of $214bn.
Perry Williams 4.10pm: Rio Tinto names new CEO
Rio Tinto has named finance boss Jakob Stausholm as its new chief executive, replacing outgoing boss Jean-Sebastien Jacques who was forced to quit amid outrage over the destruction of 46,000-year-old heritage sites at West Australia’s Juukan Gorge.
The appointment of a Danish executive will be closely scrutinised by both Rio’s powerful investors and senior Morrison government figures after a rare intervention by Treasurer Josh Frydenberg who demanded the next CEO should be Australian along with the majority of the board.
Mr Stausholm faces a tough test to rebuild trust in the mining giant after the Juukan Gorge calamity caused global outrage that ultimately cost Mr Jacques his job.
4.02pm: Hewson, Watkins appointed to RBA board
Coca-Cola Amatil chief executive Alison Watkins and former investment banker and current CSL director Carolyn Hewson have been appointed as members to the Reserve Bank of Australia Board.
The two have been appointed for a five-year term and follows the recent retirement of former Macquarie Group chief Allan Moss and Energy Australia chief executive Cath Tanna from the board.
The appointments of Ms Watkins and Ms Hewson will help ensure that monetary policy continues to support Australia’s economic resilience and prosperity through the recovery phase of the COVID-19 pandemic and beyond, Treasurer Josh Frydenberg said in a statement.
Mr Frydenberg also thanked Mr Moss and Ms Tanna for their service on the RBA board, saying they “made valuable and significant contributions to Reserve Bank Board deliberations”.
Their appointment comes as the official cash rates remain at record low level of 0.1 per cent in the wake of the Covid pandemic as the central bank attempts to fire up the economy.
3.20pm: ASX surges 1.2% to 10-month high
Australia’s S&P/ASX 200 share index has surged 1.2pc to a 10-month high of 6755.9, tentatively breaking its November 9th high of 6745.3.
After bouncing 53pc from a 7.5-year low of 4402.5 in March, the index is just 6.5pc away from the record high of 7197.2 that it reached in February.
It comes amid buoyant equities and commodities markets, stronger-than-expected domestic jobs data and overall economic strength highlighted by big downward revision to the FY21 budget deficit forecast.
2.12pm: Retailers set for great Christmas: Citi
Citi analyst Craig Woolford says conditions are ripe for a great Christmas for Australian retailers.
After a difficult year due to COVID he sees no shortage of Christmas cheer.
“Australian consumers are very well placed to spend up this Christmas,” he says.
He notes that the typical household spends $3700 in December on food and non-food retail items.
But over the past year, the average bank balance has lifted by $12,500 and credit card debt has reduced by just over $500.
“Online sales growth is tapering off, but overall spending looks strong with a late surge likely next week,” he says. “Our strongest feedback is in liquor, electronics and sports.”
He remains bullish, particularly for retailers where industry conditions are more resilient.
He has buy ratings on Baby Bunting, Bapcor, Metcash, Super Retail Group, Harvey Norman and Woolworths.
Separately, Citi has reviewed the gifts most likely to be under the Christmas tree.
The top ten are: Google Net Mini/Hub, Apple Airpod/Pro, Nintendo Switch Console, UE Wonderboom 2, Lego Super Mario, Oodie, Garmin Vivo Active Sports Watch, NutriBullet, personalised gifts and Nespresso coffee machines.
1.30pm: Synlait awaits A2 Milk announcement
The cream thickens in A2 Milk’s potential earnings outlook issue.
A2 entered a trading halt earlier Thursday having become aware of information which may require it to revise previously issued guidance to the market, but was not specific.
Synlait, noting that The a2 Milk Company is a strategic customer, said: “Once an announcement is released by The a2 Milk Company, Synlait will assess this information, and the impact on its own company, and provide a further update to the market if necessary.”
Shares in Synlait are down 5.1 per cent at $4.79.
Bridget Carter 1.25pm: Cooper, Morgan Stanley firm in Eni sale
Cooper Energy and Morgan Stanley Infrastructure Partners are believed to be closing in on Eni’s Australian portfolio of oil and gas assets, according to sources.
It is understood that the consortium is now the preferred bidder in the sales process run by investment bank Citi.
The parties are believed to have put forward an offer that values the portfolio at more than $500 million.
An outcome is said to now be only days away, after final bids were due on November 27.
The other consortium understood to have lobbed a final offer is Neptune Energy, which has the China Investment Corp as a 49 per cent owner, and The Carlyle Group and CVC Capital Partners also owning a substantial stake.
Neptune was teaming up with Macquarie Group.
The Cooper Energy consortium is advised by Bank of America.
More to come.
1.08pm: Recovery, iron ore trim forecast budget deficit
Australia’s budget deficit will be $197.7bn in FY21, according to the mid-year fiscal and economic outlook.
That’s a $16.3bn improvement on the budget forecast just over 10 weeks ago.
It’s also at the low end of economists expectations - most expected an improvement of only about $10bn.
It comes as much higher-than-expected iron ore prices are set to boost GDP growth by 4.5pc in FY21.
The share market extended its intraday gain, with the S&P/ASX 200 on track for its best daily close in 10 months after rising 0.8pc to a 6-day high of 6733.8.
Ten-year bond yields slipped about 1.5bps to 0.998pc, while the Australian dollar was little changed around US75.8 after hitting a 30-month high of US75.91 on strong employment data.
12.10am: ASX extends rise to noon, hits 5-day high
Australia’s share market rose throughout the morning with a new 10-month high within reach amid optimism about US fiscal stimulus and COVID vaccinations.
The S&P/ASX 200 rose as much as 0.7pc to a five-day high of 6727.0, exceeding a 0.4pc rise projected by overnight futures, with help from much stronger than expected November employment data.
Technology remains the strongest sector with Afterpay up 3.2pc at $118.32 after hitting a record high of $119.30.
But the tilt to value shares also continues with BHP, Rio Tinto, Fortescue and Woodside up 1.2-1.8pc and the major banks up 0.6-1.1pc.
This is despite news of three new locally-acquired COVID cases in Sydney in the past 24 hours after a long stretch of no cases.
Focus turns to the federal government’s mid-year fiscal and economic outlook from 12.30pm (AEDT).
A close in the index today above 6728.47 points would mark a 10-month high on a daily closing basis.
A break of 6745.3 would set at 10-month high on an intraday basis.
The index was last up 0.7pc at 6724.5.
Ewin Hannan 11.50am: Qantas wins JobKeeper appeal
Qantas will not have to reimburse thousands of dollars to employees after the airline successfully appealed a Federal Court judgment that it had misused the JobKeeper scheme.
A full Federal Court on Thursday ruled 2-1 in favour of Qantas and set aside the September judgment which would have had significant implications for other companies receiving JobKeeper if it had stood.
Instead of paying overtime in the fortnight when the employee had worked, the court heard Qantas made the payment the following fortnight when the worker was stood down and on JobKeeper.
By doing so, Qantas was able to cover the wages and overtime earned by an employee in a fortnight over a monthly period using the JobKeeper allowance.
Welcoming the majority decision upholding the appeal, Qantas said it had “always made JobKeeper payments to our employees according to advice from the Australian Tax Office”.
“Most of the JobKeeper payments Qantas has received went straight to employees who were stood down,” the company said.
Unions said the decision allowed Qantas to “continue underpaying workers and manipulating their rosters” to pay them not a cent more than the wage subsidy of $600 a week for full time and $375 a week for part time workers before tax
11.40am: Full-time jobs growth remain strong
The amazing thing about the November jobs data is that full-time jobs growth remained so strong.
Full-time jobs rose 84,200 after an upwardly-revised 98,700 in October.
Part-time jobs rose by just 5,800 from a downwardly-revised 81,700 in October.
The surge in full-time jobs drove the surprisingly strong 90,000 rise in total employment.
11.31am: Jobs figures smash forecasts
Australia’s unemployment rate unexpectedly fell in November after a massive rise in jobs.
The unemployment rate fell to 6.8pc - the lowest since April and below the consensus estimate of 7pc.
It came as employment surged by 90,000 versus a 40,000 rise forecast by economists.
The participation rate actually rose to 66.1pc from 65.8pc, exceeding the expectation of 65.9pc.
The Australian dollar rose from US75.72c to US75.87c, its highest since June 2018.
11.19am: ASX hits five-day high
One only need look at the flood of IPOs to confirm that Australian shares are in a bull market.
Westar Resources opened at $0.25 versus an IPO price of $0.20, and playside Studios opened at $0.35 versus an IPO price of $0.20.
That makes nine IPOs so far this week alone. There were seven last week and five the week before.
Almost all of them have generated solid stag profits for IPO investors.
The S&P/ASX 200 is up 0.5pc after rising 0.7pc to a five-day high of 6626.40.
10.34am: MYEFO due at 12:30pm
The federal government’s mid-year fiscal and economic outlook is due at 12:30pm (AEDT).
Australia’s economic resurgence has shaved $11.2bn off the projected cost of JobKeeper payments, with 640,000 fewer people expected to need wage subsidy support in the final three months of the year ahead of the COVID-19 welfare package ending in March, The Australian reported.
Josh Frydenberg will reveal Treasury has revised the total cost of the JobKeeper payment from $101.3bn to about $90bn, reflecting improved forecasts on Australians returning to work.
The number of Australians expected to rely on JobKeeper during the December quarter has been reduced from 2.24 million in the October budget to 1.6 million in the mid-year economic and fiscal outlook.
10.26am: ASX opens higher than expected
Australia’s S&P/ASX 200 rose 0.7 per cent in early trade to a five-day high of 6723.8, after
a 0.4pc rise was projected by overnight futures.
The market has been unfazed by a small COVID outbreak in Sydney’s northern suburbs.
Afterpay is the biggest points contributor with a 4pc rise.
Others in the top five include CBA, BHP, Macquarie and Goodman with gains of 0.6-1.6pc.
Bapcor is strongest with a 10pc gain after predicting its FY21 earnings will rise 50pc on year.
Transurban is up 0.9pc after announcing a toll roads sell down for $2.8bn.
Tabcorp remains buoyant with a 1pc rise to $4.10 in early trading.
Eli Greenblat 10.18am: Freedom sells cereals, snacks to Arnott’s
The embattled Freedom Foods Group has announced the sale of its cereal and snacks operations to The Arnott’s Group for $20m.
The sale, flagged by The Australian’s DataRoom, comes after the diversified foods business last month announced almost $600m in writedowns and impairments.
It said then was reviewing all strategic options for the cereal and snacks business – the market-leading producer of allergen-free and healthy breakfast cereals and snacks.
“While actively pursuing a ‘fix and retain’ strategy, the group has also been exploring a potential divestment,” the company said in an ASX statement on Thursday.
Freedom Foods has now agreed with The Arnott’s Group for the sale of certain assets and liabilities of the cereal and snacks business for $20 million in cash. Net cash proceeds are estimated at $11 million after deducting costs associated with the transaction and associated equipment leases.
Net assets of approximately of $20 million are included in the sale.
The sale includes the cereal and snacks manufacturing facilities in Leeton and Darlington Point in NSW and in Dandenong in Victoria, as well as all brands associated with the business, including Freedom Foods, Messy Monkeys, Heritage Mill and Arnold’s Farm.
The sale does not include the Crankt Protein brand, which will remain a valuable part of the Freedom Foods product portfolio. The majority of cereal and snacks employees will transfer to the new owners, although there are likely to be some redundancies, which will be managed by Freedom Foods Group.
The Arnott’s Group was carved off from US giant Campbell Soup Company last year and is owned by private equity firm KKR. It owns the iconic Australian Arnott’s biscuit range such as Tim Tams and Mint Slices as well as the local licence to the Campbell range of soups and cooking stocks.
10.13am: NZ GDP lifts 14pc in quarter
New Zealand’s economy bounced back in the third quarter from a strict pandemic lockdown earlier in the year, but is expected to fade over the summer as the border closure halts the usual influx of international tourists.
Gross domestic product for the July-September quarter expanded 14.0pc from the previous quarter, the New Zealand statistics agency said Thursday.
The median forecast in a Wall Street Journal poll of economists was for an expansion of 13.5pc. Over a 12-month period, the economy was 2.2pc smaller, which was the largest-ever annual decline, the agency said.
The economy had contracted by a record 11.0pc in the second quarter when a six-week lockdown shuttered most businesses and kept people at home.
Analysts say the economy could struggle in the final quarter of the year and in early 2021 as it misses out on the annual boost from international tourism as well as foreign students.
“New Zealand is experiencing a two-speed recovery,” said ANZ. “Activity in some industries is off the chain, while others are really struggling.”
Dow Jones Newswires
Lilly Vitorovich 10.00am: Nine lifts earnings guidance
Nine Entertainment has lifted its first-half underlying earnings guidance in the wake of improving trading conditions, particularly across its television network.
In a surprise trading update, the group has forecast growth of more than 40 per cent in underlying earnings before specific items for the six months to December, compared to last month’s guidance of 30 per cent growth.
For the three months to December, Nine’s metropolitan free-to-air television advertising revenue is forecast to be up “almost 20 per cent”, compared with last month’s guidance of around 15 per cent.
As a result, the group’s metro TV ad revenues in the first-half is now forecast to be up by around 1 per cent from a year earlier.
“Nine continues to believe that, given limited visibility of the second half advertising market, it is not in a position to provide guidance on earnings for the full year.”
Nine, which also owns newspapers and streaming service Stan, expects to be in a “better position” to provide further details at its interim results in February.
9.49am: ASX to rise, may test recent high
Australia’s share market may test its December 9th peak at 6745.3 after gains in US equities and industrial commodities.
Overnight futures relative to fair value suggest the S&P/ASX 200 will open up 0.4pc at 6706 but it may exceed that point as the US sharemarket looks poised to surge above record highs on expectations of a year-end fiscal stimulus deal.
The S&P 500 rose 0.2pc to 3701.17 points - its second-highest close on record - while the Nasdaq rose 0.5pc to a record high of 12658.4 points and the Dow Jones index.
Gains in the S&P 500 and Nasdaq came as US lawmakers were on the verge of a $US900bn stimulus deal and the FED tweaked its guidance to require “substantial further progress” before any lessening of its asset buying.
WTI crude rose 0.6pc to $US47.88 a barrel as US crude inventories fell by a surprise 3.1 million barrels last week versus an expected 1.9 million barrel fall.
Spot iron ore rose $US1.30 or 0.8pc to $US157.05 a tonne.
Employment data for November are due at 11.30am with economists expecting a 40,000 rise in jobs and unchanged 7pc unemployment rate.
The other main point of interest will be the mid-year fiscal and economic outlook which is expected to confirm a stronger economy has improved the bottom line.
Transurban should outperform after selling a stake in toll roads for $2.8bn.
Tabcorp remains in focus after a strong rise on Wednesday.
Perry Williams 9.41am: Transurban in $2.8bn US toll road sale
Transurban will sell a 50 per cent stake in its US toll roads for $2.8bn to a consortium of Australian Super, UniSuper and the Canada Pension Plan Investment Board.
The “Chesapeake” consortium deal comprises Transurban’s roads in the Greater Washington Area including the 495 Express Lanes, 95 Express Lanes and 395 Express Lanes.
The super investors will also gain exposure to three projects in delivery and development: the Fredericksburg Extension, 495 Express Lanes Northern Extension and the Capital Beltway Accord.
“This transaction realises significant value for security holders while enabling accelerated growth in North America and Australia, where we see a number of opportunities starting to materialise,” Transurban chief executive Scott Charlton said.
“The Transurban Chesapeake partners are committed to growing alongside Transurban in North America and we look forward to pursuing new opportunities with their financial and strategic support.”
Transurban notes traffic on its Australian network has also improved in October and November as lockdowns lifted.
“On CityLink in Melbourne, traffic has shown progressive improvement as government restrictions have been gradually eased over that period, and in Sydney the NorthConnex tunnels opened to traffic on 31 October 2020.”
Traffic on Transurban’s North American roads remains subdued, however, given the continued impacts of COVID-19, particularly on the Express Lanes toll roads.
9.29am: Victoria brings forward Crown casino review
The Victorian Commission for Gambling and Liquor Regulation will bring forward the seventh review of Crown’s suitability to hold a Melbourne casino licence, to be conducted by a “dedicated” commissioner.
It follows damaging evidence at an inquiry into Crown’s Sydney licence.
“We’re making sure Crown Melbourne conducts its business in a transparent and appropriate manner,” said Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne.
“This review is needed given the evidence we’ve seen come out of the NSW inquiry.”
“While we await the findings of that investigation, it’s appropriate to bring forward the next review to ensure Crown Melbourne is suitable to hold a licence in Victoria.”
9.16am: Ex-APA boss McCormack on Origin board
A twist as Mick McCormack, the former long-serving boss of gas pipeline play APA, is set to join the board of energy interest Origin.
Origin is a long standing customer of APA, using its pipeline network to move gas around the country and Origin has sold several assets to APA over the past decade.
Mr McCormack stepped down from the APA role in June 2019 after nearly 15 years as CEO. Long-serving APA executive Rob Wheals took over as CEO of the pipeline play.
Origin Chairman Scott Perkins said: “We are delighted to welcome Mick to the Origin board, as we continue our process of board renewal.
“Mick’s extensive knowledge of the Australian energy and infrastructure sectors and deep operational and strategic experience will further strengthen the Origin board and complement the expertise of the existing directors in oversight of the company.”
Origin last traded Wednesday at $4.93.
9.06am: Perpetual switching to Tabcorp?
Could Perpetual be switching from Crown Resorts to Tabcorp?
There is speculation to that effect in the market this morning.
A change in substantial shareholder notice on Monday showed Perpetual trimmed its stake in Crown back to 8.19pc last Thursday after increasing it to 9.33pc in April.
A change of substantial shareholder notice in July 2019 showed Perpetual trimmed its stake in Tabcorp to 7.04pc from 8.10pc.
Tabcorp shares surged 3.8pc to $4.06 on good volume on Wednesday.
9.00am: Zip completes $120m insto placement
Buy now, pay later interest Zip Co is in focus after completing its $120m overnight institutional placement, as part of its $150m capital raising unveiled late on Wednesday.
Zip will now push ahead with the retail share purchase plan of $30m.
The institutional leg of the raising was oversubscribed, with new shares issued under the placement at $5.34 per share, which represents a 4.1 per cent discount to Zip’s Wednesday closing price.
The placement is to fund Zip’s US growth and product expansion including the recent acquisition of QuadPay, its UK expansion and moving into the small business market in Australia, including the launch of Zip Business.
“We are grateful for the support of existing shareholders that participated in the raise, as well new long-term shareholders that joined our register, supporting our objective of making Zip the first payment choice everywhere and every day,” said Zip Co CEO Larry Diamond.
The retail leg of the share purchase plan will be priced at the lower of the price under the placement of $5.34 and a 2 per cent discount to the 5-day VWAP of Zip’s shares up to and including the date the share purchase plan is scheduled to close, expected to be January 13.
The institutional placement was fully underwritten by Merrill Lynch and Shaw.
Lilly Vitorovich 8.53am: WPP AUNZ ‘control’ offer lifted
UK advertising giant WPP PLC has increased its proposal to buy the remaining shares in WPP AUNZ that it doesn’t already own by 27 per cent, gaining the backing of the local group’s independent board directors.
The London-based company has increased its proposal to 70c a share from 55c, valuing Australia’s biggest ad group at $717m.
In a statement to the ASX, WPP AUNZ says its independent board committee believes the revised offer is in the best interests of minority shareholders. It also calls for a scheme meeting be held to recommend WPP PLC’s revised proposal to shareholders.
Separately, WPP AUNZ issued a trading update for 2020 and next year, with net sales forecast to be down between 14 and 15 per cent to $607m and $610m this year, largely due to the impact of the coronavirus crisis.
For 2021, net sale sales are tipped to rise to between $630m and $650m.
8.45am: Bapcor tips profit, revenue rises
Car parts retailer Bapcor has forecast first-half growth in net profit of at least 50pc, pointing to strong demand from trade-focused businesses amid a weak national economy.
Bapcor reported a net profit of $45.6 million in the first half of fiscal 2020.
Bapcor said it also expected revenue to rise by at least 25pc in the six months through December compared to a year earlier, having achieved around 26pc growth in the first five months of the fiscal year.
“In addition the changes that have been implemented in our retail business continue to gain momentum with revenue up circa 40pc over the prior corresponding period,” said chief executive Darryl Abotomey. “Initiatives include the recently launched new Autobarn store format that is delivering a significant uplift in sales.”
Management also said market consensus forecasts for the company’s annual net profit are $110 million to $115 million “which prima facie does not appear unreasonable.”
Bapcor said it would update investors on its full-year outlook at the time of its half-year result in February.
Dow Jones Newswires
8.30am: Adbri to upgrade WA cement production
Adbri says it will spend $199m on a modern state-of-the-art facility to consolidate its two existing cement production sites near Perth into a single operation.
It says the move will increasing annual production capacity to 1.5 million tonnes, from
1.1m tonnes, and mean cash cost savings of about 19m a year.
8.23: ASX tipped to open higher
Australian stocks are poised to open higher, as Wall Street closed mixed while markets await progress on a US stimulus deal.
At about 8am the SPI futures index was up 27 points, or 0.4 per cent.
Yesterday, Australia’s sharemarket reacted positively to strong gains on Wall Street but closed on an intraday low, up 0.7 per cent.
Spot iron ore is up 0.8 per cent to $US157.05 a tonne, while Brent oil added 0.6 per cent to $US51.08 a barrel.
The Australian dollar is up at US75.6c.
8.20am: What’s impressing analysts?
Adbri cut to Sell: Morningstar
Centuria Capital Group started at Neutral; $2.25 target price: GS
Sezzle started at Positive: Evans & Partners
Zip Co raised to Neutral: UBS
Zip Co started at Negative: Evans & Partners
Northern Star Resources raised to Buy; target price raised 14pc to $15.90: Citi
Saracen Mineral raised to Buy; target price raised 21pc to $6.20: Citi
Perseus Mining raised to Buy/High Risk from Hold/High Risk: Citi
8.05am: Wall Street mixed as investors await stimulus deal
The S&P 500 rose slightly as investors scrutinised lawmakers’ progress toward a stimulus package after new data showed a pullback in retail sales.
The broad US stock index was up 0.2 per cent as of the 4pm close of trading in New York. The Dow Jones Industrial Average was down about 0.2 per cent, dropping 44 points, while the tech-heavy Nasdaq Composite added 0.5 per cent to set a new record high.
The retail sales report was the latest indication the economic recovery may be slowing as coronavirus cases surge in the US. Data showed US retail sales dropped a seasonally adjusted 1.1 per cent in November from the prior month, with restaurants, department stores and vehicle dealerships reporting sharp sales declines.
The pullback by shoppers may intensify attention on negotiations in Washington over another coronavirus relief package. Congressional leaders were closing in on a roughly $US900 billion deal that was expected to include another round of direct payments to households, The Wall Street Journal reported. The package was also expected to include enhanced unemployment insurance.
Hopes for the new stimulus package have become the latest catalyst for a market rally that has sent the S&P 500 index up 14 per cent this year, despite the economic setback triggered by the coronavirus pandemic.
The Federal Reserve provided updated plans for its purchases of large amounts of government debt to support the economy but didn’t change the program to provide more stimulus. Fed officials also released new projections showing most of them expected interest rates would remain near zero at least through 2023.
“If rates are really going to stay this low for this long, if central banks are really going to support the market and are comfortable using all the firepower at their disposal, then for equity markets to be where they are isn’t so crazy,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe, ahead of the release of the Fed policy statement.
In coming weeks, any issues curtailing the rollout of vaccines, such as unexpected side effects or logistical problems, could damp market sentiment, Mr. Kassam cautioned.
Overseas, the Stoxx Europe 600 index rose 0.8 per cent. Surveys of purchasing managers showed that Europe’s economy steadied in the early weeks of December as governments eased some restrictions on the services sector and factory output continued to increase. Businesses were encouraged by the prospect of a widespread deployment of effective vaccines in 2021, and cut jobs at the slowest pace since the pandemic began.
Dow Jones
7.30am: Vaccine offers hope but outlook uncertain: Fed
The recent efforts to distribute a Covid-19 vaccine offer hope to the economy, but the outlook remains “extraordinarily uncertain,” Federal Reserve Chair Jerome Powell said.
“Recent news on vaccines has been very positive,” Mr Powell told reporters after a two-day policy meeting in which central bankers saw a slightly improved growth and jobs outlook.
However, “significant challenges and uncertainties remain” on how quickly the vaccine can be pushed out to populations.
Mr Powell also said there is a “very strong” and “well understood” case for providing more fiscal relief to the US economy, but the components are up to Congress.
“The case for fiscal policy right now is very strong. I think that is widely understood,” he said, noting that expanded jobless benefits and eviction moratoriums are set to expire before the end of the year.
AFP
7.27am: NZ vaccine rollout later than first planned
New Zealand’s government said its coronavirus vaccination program will begin in the second quarter of next year, later than it had initially planned, with border workers first in line for the jabs.
Vaccines will be available to the general public from the second half of 2021, and will be free, the government said in a statement.
Agreements for about 15 million vaccine doses from four pharmaceutical companies have been finalised, it said.
The government had earlier said it was hopeful the vaccine developed by Pfizer and BioNTech would be available in New Zealand in the first quarter of 2021.
Dow Jones Newswires
6.36am: US states file antitrust suit against Google
The Texas attorney general said he was suing Alphabet’s Google unit on behalf of a coalition of states, alleging the company manipulated digital advertising markets in violation of antitrust laws.
“This internet Goliath used its power to manipulate the market, destroy competition, and harm YOU, the consumer,” the office of Texas Attorney General Ken Paxton said on Twitter.
A spokeswoman for Google had no immediate comment.
The Texas-led case raises the legal stakes for Google, which depends on advertising for much of its profits. Its parent company reported digital advertising revenue of $US37.1 billion in its latest quarterly report.
The new complaint against the company’s digital advertising business opens a second major front for government claims that Google is illegally suppressing competition. The Justice Department and a number of states already have brought antitrust claims against the company, focused on its search business.
The Texas-led coalition of state attorneys general has been zeroing in on Google’s dominant presence in the digital advertising market, according to people familiar with the matter, as well as a civil subpoena Mr. Paxton sent last year.
Google’s ad-tech business consists of software used to buy and sell ads on sites across the web. The company owns the dominant tool at every link in the complex chain between online publishers and advertisers, giving it unique power over the monetization of digital content. Many publishers and advertising rivals have accused Google of tying these tools to one another, and to its owned-and-operated properties such as its search engine and YouTube, in anticompetitive ways.
Google has argued that the ad-tech industry is competitive and that moves it has made to merge products were aimed at improving customers’ experience.
Dow Jones
6.22am: US Fed slightly more optimistic on growth
US central bankers are slightly more optimistic about economic growth prospects over the next two years and see an improving employment picture, the Federal Reserve said.
Member of the policy-setting Federal Open Markets Committee (FOMC) see growth of 4.2 per cent in 2021 and 3.2 per cent in 2021, two-tenths better than the September forecast.
And the consensus forecasts show the unemployment rate falling to 5.0 per cent next year and 4.2 per cent the following year.
AFP
6.20am: S&P 500 wavers ahead of stimulus deal
The S&P 500 wavered as investors scrutinized lawmakers’ progress toward a stimulus package after new data showed a pullback in retail sales.
The broad US stock index was about flat, while the tech-heavy Nasdaq Composite added 0.1 per cent. The Dow Jones Industrial Average slipped 0.3 per cent, or about 97 points.
Data Wednesday showed that U.S. retail sales dropped a seasonally adjusted 1.1 per cent in November from the prior month, with restaurants, department stores and vehicle dealerships reporting sharp sales declines. The November drop, along with a revision that put October sales down slightly, ended several months of growth in retail spending after sharp drops earlier in the year amid widespread business closures triggered by the pandemic.
The weak report may intensify attention on negotiations in Washington over another coronavirus relief package. Congressional leaders were closing in Wednesday on a roughly $US900 billion deal that was expected to include another round of direct payments to households, The Wall Street Journal reported. The package was also expected to include enhanced unemployment insurance, among other measures.
Hopes for the new stimulus package have become the latest catalyst for a market rally that has sent the S&P 500 index up 15 per cent this year, despite the economic setback triggered by the coronavirus pandemic.
Dow Jones
6.05am: Fed updates plans for bond buying
The Federal Reserve provided updated plans for its purchases of large amounts of government debt to support the economy, but didn’t change the program to provide more stimulus.
Fed officials also released new projections showing most of them expected interest rates would remain near zero at least through 2023, as the labour market and economy regain their pre-pandemic health.
They pledged in September to support the economy’s recovery, providing new guidance that set a higher bar to raising interest rates. Today, they unveiled complementary language to clarify their intentions about bond purchases.
Since June, the Fed had been buying $US80 billion in Treasurys and $US40 billion in mortgage bonds per month and pledged to buy assets at least at that pace for “the coming months.”
The Fed updated that guidance in a policy statement released this morning after concluding a two-day meeting. The central bank will continue to increase its asset holdings at the current pace “until substantial further progress has been made toward” its employment and inflation goals.
With interest rates pinned near zero, the asset purchases have become the primary lever with which officials could dial up or down their stimulus.
In recent weeks, investors have focused on whether the Fed might change the composition of its holdings by buying more Treasury securities with longer-term yields in an effort to hold those yields down, as it did during bond-buying programs last decade.
Some analysts said such additional stimulus would provide extra insurance against the risks to the economy from rising coronavirus cases and business restrictions. They say it also would enhance any guidance around asset purchases and demonstrate the Fed’s commitment to seek periods of inflation above the central bank’s 2pc objective.
Fed officials didn’t make those changes on Wednesday. In the runup to the meeting, officials had instead highlighted the importance of fiscal policy in providing support to the economy before COVID-19 vaccines are broadly available. Long-term rates are already very low -- considerably lower than they were during last decade’s bond-buying efforts.
Dow Jones Newswires
5.20am: US stocks waver as investors await stimulus deal
US stocks swung between small gains and losses as investors scrutinised progress toward a stimulus package after new data showed a pullback in retail sales.
In lunchtime trade the S&P 500 hovered around the flatline, up just 0.09 per cent, while the tech-heavy Nasdaq Composite ticked up 0.3 per cent. The Dow Jones Industrial Average edged down 0.2 per cent.
Fresh data showed that U.S. retail sales fell more than expected in November, declining 1.1 per cent. Consumers have pulled back on purchases and limited holiday shopping in recent weeks as the coronavirus pandemic triggered new business restrictions. The decline marked the first month-over-month drop since April.
The weak report may intensify attention on negotiations in Washington over another coronavirus relief package. Congressional leaders were closing in on a deal that was expected to include another round of direct payments to households, The Wall Street Journal reported.
Movement toward a fresh fiscal-stimulus package buoyed sentiment yesterday, allowing the S&P 500 to break a four-day losing streak.
Hopes for the new stimulus package have become the latest catalyst for a market rally that has sent the S&P 500 index up 14 per cent this year, despite the economic setback triggered by the coronavirus pandemic.
Overseas, the Stoxx Europe 600 index rose 0.4 per cent. Surveys of purchasing managers showed that Europe’s economy steadied in the early weeks of December as governments eased some restrictions on the services sector and factory output continued to increase. Businesses were encouraged by the prospect of a widespread deployment of effective vaccines in 2021, and cut jobs at the slowest pace since the pandemic began.
In Asia, most equity benchmarks ended the day on a high note. Hong Kong’s Hang Seng Index climbed almost 1 per cent, while Japan’s Nikkei closed 0.3 per cent higher. The Shanghai Composite Index was relatively flat.
Dow Jones
5.17am: Job ad market returns to positive growth
Seek reports a month-on-month increase of 8.6 per cent in national jobs advertised, as the jobs ads market returns to positive growth.
Comparing November 2019 with November 2020, new job ads have increased by 1.0 per cent.
Job ad growth is being driven by industries recruiting later into the year than usual, Seek says, likely due to the easing of coronavirus restrictions.
November jobs data are reported at 11.30am (AEDT).
5.05am: Cigarette maker BAT announces US vaccine trial
British cigarette maker BAT said its US biotech division Kentucky BioProcessing will launch trials of a potential coronavirus vaccine, developed using tobacco plant technology.
The group said the US Food and Drug Administration has approved its application for a vaccine candidate, paving the way for an initial phase one clinical trial in 180 adults.
Study results are expected in mid-2021, when the group hopes to progress to a phase two trial on the project, which is being run on a not-for-profit basis.
“The candidate vaccine has been developed using KBP’s innovative fast-growing plant-based technology,” it said in a statement, adding enrolment for the trial will begin shortly.
“This unique approach has a number of possible advantages, including the rapid production of the vaccine’s active ingredients in around six weeks, compared to several months using conventional methods.
“The candidate vaccine also has the potential to be stable at room temperature, which could be a significant advantage for healthcare systems and public health networks worldwide.” BAT, whose best-selling cigarettes include Dunhill and Lucky Strike, acquired Kentucky BioProcessing with its 2016 purchase of US group Reynolds.
AFP
5.00am: Markets rise on stimulus hopes
Most stock markets advanced and bitcoin soared above $US20,000 for the first time, as prospects increased for more US economic stimulus and a Brexit trade deal.
Potential for an earlier EU rollout of coronavirus vaccines boosted investor’s mood further.
The US dollar faltered however, as a surge in virus cases and further restrictive measures continued to drive a tug of war between long-term optimism and near-term pain.
The Dow Jones index was in negative territory in midday trading, after data showed that US retail sales fell sharply in November, a sign of economic trouble as COVID-19 cases climb.
Bitcoin, the leading virtual currency, traded at a record high of $US20,867 to trace an astounding leap in one year as financial markets maintain their appetite for riskier assets.
Just 12 years old, bitcoin has pursued a meteoric rise since March, when it stood at $US5000, spurred by online payments giant PayPal saying it would enable account holders to use cryptocurrency.
Meanwhile in London, the pound built on recent gains as British and European negotiators press on with talks on a post-Brexit trade deal.
London closed up 0.9 per cent, Frankfurt added 1.5 per cent and Paris closed up 0.3 per cent.
Traders awaited the conclusion Thursday morning (AEDT) of the Federal Reserve’s latest policy meeting, hoping for some guidance on its plans for monetary policy in 2021.
“Sentiment is supported by many factors today, ranging from deal hopes for Brexit and US fiscal stimulus package, to stronger-than-expected economic data and the potential return of normalcy in 2021,” commented Fawad Razaqzada, a market analyst at ThinkMarkets.
After months of stuttering talks between lawmakers in Washington, signs of progress were seen on a new rescue package for the world’s top economy.
AFP
4.58am: Congress inches towards stimulus plan
Congressional leaders said they were nearing a long-awaited agreement on a stimulus package for the US economy, while the Federal Reserve is set to provide updated forecasts that could show renewed optimism for the months ahead.
A federal relief package to aid struggling business and jobless workers is seen as essential in getting the world’s largest economy back on its feet even as vaccines against COVID-19 are rolled out, and would also ease the pressure on the central bank, which has limited tools to help the economy.
“We made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities,” Republican Senate Majority Leader Mitch McConnell said early Wednesday.
“We committed to continuing these urgent discussions until we have an agreement, and we agreed that we will not leave town until we’ve made law.” The progress comes as government data shows retail sales dropping sharply in November, which together with slowing employment gains, a resurgent wave of coronavirus infections and a pandemic death toll north of 300,000 has increased fears of another economic downturn.
Despite months of negotiations, lawmakers in Washington have failed to break an impasse over a new package to follow the $US2.2 trillion CARES act, which provided aid to businesses and expanded benefits to workers hurt by the pandemic that would not normally be eligible for regular jobless payments.
AFP
4.55am: Bitcoin above $US20,000 for first time
Leading virtual currency bitcoin traded above $US20,000 for the first time following a sustained run higher in recent weeks.
Just 12 years old, bitcoin reached a record-high $US20,398.50 before pulling back to $US20,145, which was still an intraday gain of nearly four per cent.
It has seen a meteoric rise since March, when it stood at $US5000, spurred by online payments giant PayPal saying it would enable account holders to use cryptocurrency.
A number of central banks have meanwhile responded to the rise of cryptocurrencies and the dwindling global use of cash by announcing plans for bank-backed digital units.
Several central banks including those of China and Sweden -- but also the US Federal Reserve -- are also testing digital applications in response to Facebook’s recent moves to produce its own digital unit, Libra.
Unregulated by any central bank, bitcoin emerged as an attractive option for investors with an appetite for the exotic -- although criminals have also seen its under-the-radar appeal.
AFP
4.50am: US retail sales fall 1.1pc
US retail sales fell sharply in November, according to government data, a further sign of economic trouble as COVID-19 cases climbed and lawmakers remained deadlocked on approving economic stimulus.
Sales fell 1.1 per cent compared to October, when sales also dipped, the Commerce Department reported, much sharper than expected.
The data were released as the ongoing deadlock in Congress on more fiscal aid as well as the surge in virus cases have raised fears the world’s largest economy is heading for a renewed slowdown.
AFP
4.48am: US accuses Switzerland, Vietnam of manipulating currency
The US Treasury accused Switzerland and Vietnam of manipulating their currencies, partly to gain a trade advantage.
In the semi-annual foreign exchange report, Treasury found the two countries were intervening in currency markets to affect balance of payments, and in the case of Vietnam, also aimed at “gaining unfair competitive advantage in international trade.” China remains on Treasury’s “Monitoring List” of major trading partners that merit close attention to their currency practices, along with Japan, Korea, Germany, India and others.
Switzerland’s central bank flatly rejected the accusations, saying: “In no case does Switzerland manipulate currency.”
AFP
4.45am: Court rules Heathrow can have third runway
Britain’s Supreme Court ruled that Heathrow, one of the world’s busiest airports, can build a third runway, overturning a legal decision to block the plan on environmental grounds as the aviation industry looks to recover from the coronavirus pandemic.
The nation’s highest court struck down a Court of Appeal ruling in February that the UK government had failed to take into account climate change commitments when in 2018 it approved the new runway at the London airport.
Heathrow successfully argued that the Court of Appeal had made errors of law. Following the latest ruling, Friends of the Earth insisted the ruling was not a green light, saying the Judgement still required Heathrow to address climate concerns.
AFP
4.40am: Eurozone economy ‘close to stabilising’
Eurozone business activity was “close to stabilising” in December as more robust manufacturing production helped counterbalance a slump in the service sector caused by coronavirus lockdowns, a key survey showed.
“The eurozone economy is faring better than expected in December,” Chris Williamson, chief business economist at IHS Markit, said.
“The data hint at the economy close to stabilising after having plunged back into a severe decline in November amid renewed COVID-19 lockdown measures.” The firm’s closely watched PMI index rose from 45.3 points in November to 49.8 this month, close to the key 50-point level which indicates growth.
Williamson said the indicator showed the downturn in the fourth quarter “looks far less steep than the hit from the pandemic seen earlier in the year, though the picture is very mixed by sector”.
While growth in manufacturing output in the 19-member single currency quickened in December, service sector output continued to fall for a fourth successive month.
The EU looks set to roll out coronavirus vaccinations in the coming days after its medicines regulator brought forward a key meeting to next Monday.
AFP
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