ASX adds 2.6pc, dollar nears 12-month high as wage support extended

Shares closed at the best levels since March 9, as all sectors cheered an extension of government wage support and offshore stimulus.

David Rogers and Melissa Yeo

38 min read

8:19PMJuly 21, 2020

Vaccine tests at French pharmaceutical company Sanofi. Picture: AFP

Lowe ‘pleased’ by refinancing boom
ASX lift best in a week
JobSeeker reduced, rules tightened
Ardent faces Dreamworld criminal charges

That’s all from the Trading Day blog for Tuesday, July 21. Australian stocks soared to four-month highs, up 2.6pc and supported by the extension of the government’s wage support package, which also pushed the Australian dollar near 12-month highs. Tech shares led the rally after the Nasdaq set new records overnight – Afterpay breaking past $75 per share.

Locally, RBA governor Philip Lowe said MMT would be a big mistake, as the minutes of the RBA’s July meeting showed the board weighed up the local policy response against global central banks.

8.18pm: Perry Williams Call to retire coal-fired power stations early

Australia’s success in meeting long-term emission reduction targets will depend on closing its fleet of coal-fired power stations earlier than its retirement date or using technology to decarbonise fossil fuel pollution, the International Energy Agency has warned.

Coal still accounts for nearly 70 per cent of power in Australia’s national electricity market although a steady stream of plants will start to exit the grid over the next 15 years, starting with AGL Energy’s Liddell facility in the 2022-23 summer.

“If they don’t retire early or if we don’t use technology which decarbonises existing plants is the issue. If things stand now, if they continue to operate as they run then it is impossible. We can forget reaching these hard climate targets,” IEA executive director Fatih Birol told a Clean Energy Council seminar on Tuesday.

“Even if you assume as of tomorrow no single coal power plant will be built in the world in the next 30 years, existing coal plants if they operate throughout their normal economic lifetime of 40 years then it is impossible to reach our climate targets.”

The IEA has predicted investment in coal supply is tipped to fall by a quarter in the 12 months to December although it noted in May that COVID-19 does not pose an “existential threat” to the fossil fuel. Decisions to proceed with new coal plants have fallen by 80 per cent since 2015, but the global coal fleet continues to grow according to the IEA.

Approvals of new facilities in the first quarter of 2020, mostly in China, were running at twice the rate seen in 2020.

“The issue is what to do with the existing coal plants and for me it is the number one issue,” Mr Birol said.

8.01pm: Eli Greenblat Show investors the money: Wilson

Veteran fund manager Geoff Wilson has one message for corporate Australia this year: show investors the cash.

The Wilson Asset Management chairman and champion of the nation’s fully franked dividend regime will reward shareholders in his international fund with a more than tripling of its final dividend.

The move comes ahead of what is expected to be a disastrous earnings season for yield-hungry investors, with the prospect of more capital raisings further eroding confidence and the ability to pay out higher dividends to shareholders.

Mr Wilson expects most company boards to adopt a cautious approach to paying final dividends, with one eye on the continued economic blows caused by the coronavirus and a desire to bolster their own balance sheets.

Mr Wilson’s $500m WAM Global, one of his stable of listed investment funds that includes the flagship WAM Capital, on Tuesday moved to spread some cheer with investors and announce early its own intentions to sharply lift its final dividend payment after the fund easily beat its benchmarks over the past year.

WAM Global announced its intention to pay a fully franked final dividend of 4c a share, bringing the total 2020 fiscal year dividend to 7c a share.

This represents a 250 per cent improvement on the 2019 full year and a 100 per cent rise on last year’s final dividend. The international fund will dip into its profit reserves of 24c a share to support the fatter dividend.

7.46pm: Joyce Moullakis Call for fair trial in cartel case

Deutsche Bank has questioned the prospect of having a fair trial for it, Citigroup, ANZ and six senior bankers in a landmark criminal cartel case, given the competition regulator did not retain initial statements by witnesses that were later changed.

Deutsche’s senior counsel Murugan Thangaraj cast a shadow in the Penrith District Court on Tuesday on an Australian Competition and Consumer Commission process of typing over initial statements, meaning the original version could be overridden and not saved.

He said the banks had only discovered “prior inconsistent statements” by some ACCC witnesses at JPMorgan — which was granted conditional immunity in the case — because they were sent via email, rather than being retained by the regulator.

“Witnesses in court cases are challenged on credit … aren’t we as the defence entitled to know when your witnesses have given a previous inconsistent version?

“Your (ACCC) process is no retaining of drafts, no note taking, the effect of your process is it is impossible for you to disclose prior inconsistent statements,” Mr Thangaraj said. “Who makes the note for disclosure purposes to give defence and the community of a fair trial?”

The comments came in pre-trial hearings as the ACCC and Director of Public Prosecutions pursue criminal charges against the three banks and key staff over how they managed a 2015 sale of surplus shares not taken up in a $2.5bn ANZ raising. The regulator alleges the banks acted as a cartel and is drawing on evidence supplied from JPMorgan, a fellow bank on the deal.

7.23pm: John Durie Get serious about cyber crime

Last year the Australian Cyber Security Centre received reports of 26,500 cyber breaches at a direct cost of $29bn which highlights the need for the overhaul recommended by Telstra’s Andy Penn’s taskforce.

Fighting cyber crime is a little like motherhood. Everyone knows it’s good but in this case the villains range from nation states down and defence needs change by the day.

Ninety-nine per cent of cyber crime requires human error to succeed, so no matter how many high-powered committees you have the defence effort depends on the worker down the end of the chain.

Telstra alone had some 1.4 million scam calls and 23 million dodgy emails in the first quarter of this year.

This is why education and constant co-ordination between government, universities and industry is necessary.

The Penn committee highlighted five strings — deterrence, prevention, detection, resilience and investment.

6.53pm: Richard Gluyas Trader sues ANZ for defamation

A high-performing ANZ trader is seeking a $20m defamation payout after the bank condemned one of his LinkedIn posts that blamed China for the coronavirus pandemic.

Bogac Ozdemir, the Singapore-based global head of credit, local markets and G4 rates trading, posted on the professional website in March that “we are all in this mess because of China and I don’t believe anything from there”, adding that “Americans do not have a government anymore”.

Later that month, after Mr Ozdemir was targeted on social media, ANZ issued a statement saying that the post did not reflect its views and showed “a distinct lack of judgment”.

The trader issued proceedings on July 8 in the New York State Supreme Court, alleging ANZ had “published statements on the internet ... including that he lacked judgment and was a racist”.

Mr Ozdemir claimed the statements were made “in response to pressure applied by Chinese financial regulators after Ozdemir published a blog linking China to COVID-19”.

He is seeking special damages of “not less than $20m, plus punitive damages, interest and costs”.

Mr Ozdemir, who remains an ANZ employee, told Bloomberg he wasn’t given notice of the bank’s statement before it was issued, and had since been offered a separation agreement.

6.30pm: Jared Lynch Spike in face mask sales

Australian Pharmaceutical Industries has experienced a 30-fold increase in face masks as the deadline approaches for everyone in Melbourne to wear facial protection outside their homes.

Victorian Premier Daniel Andrews triggered a surge in personal protective equipment sales on Sunday when said face masks would become mandatory for people in metropolitan Melbourne, and in Mitchell Shire to the city’s north, from 11:59pm on Wednesday.

For those who fail to comply, they’ll cop a $200 fine.

Australian Pharmaceutical Industries (API), which operates the Priceline Pharmacy network, said demand had surged not only in Victoria, which reported 374 new COVID-19 cases on Tuesday, but also NSW.

“As of yesterday, sales had increased 30-fold compared to the previous week with the bulk of this increase being in Melbourne and, to a much lesser extent, NSW,” an API spokesman said on Tuesday.

“API has sufficient masks in stock to meet current demand well into the future.”

6.11pm: James Kirby What saved our super?

For millions of Australians shocked by the torrent of grim financial news this year, the relatively strong performance of local super funds, which mostly finished unchanged in the 12 months to June 30, has been a mystery.

If the sharemarket fell more than 7 per cent across the year, how did funds finish with an average dip of just 0.5 per cent? The answer is revealed in new research that looks at the strategic retreat of Australian super funds from the local share market in the decade since the GFC.

Following the losses of the GFC era when share prices fell 50 per cent from top to bottom from November 2007 to March 2009, the majority of Australia’s biggest super funds moved steadily out of the ASX and into international share markets.

But the most dramatic move was an industry wide step away from traditional fixed income such as bonds into “alternatives” coupled with a shift from listed property and infrastructure to unlisted versions of the same assets.

“It’s been a useful shift away from volatile listed markets and a corresponding increase in unlisted and alternative assets - it certainly made a difference in recent times,” says Mano Mohankumar, senior research manager at superannuation research specialist Chant West.

The research also reveals that big funds also held tightly to cash with the levels changing very little.

Large funds actually had more in cash at the start of the this year’s crash in March than they had before the GFC crash even though cash interest rates were many times higher back in 2006.

4.51pm: Nearmap leads, TPG lags

Tech shares led the broad rally on the ASX, led by an 11pc jump in Nearmap and 8pc surge in Afterpay.

Following new records on the Nasdaq overnight, the tech sector rose 5.7 per cent, well surpassing a 3.1pc gain in consumer discretionary stocks or 3.7pc leap in health.

Afterpay settled just shy of record highs, while Xero’s 5.6pc rise put it within reach of records too.

On the flip side, TPG lost 2.5 per cent while Alumina lost 2pc.

Here’s the biggest movers at the close:

4.11pm: ASX rallies to four-month high

The extension of local wage support, along with new EU support measures fuelled a risk-on rally on the ASX on Tuesday to the best levels in more than four months.

By the close, the benchmark ASX200 was up 155 points or 2.58 per cent to 6156.3 - the highest since March 9 while the Aussie dollar was on track for its best close in a year, last up 0.4pc to US70.39c.

3.23pm: Recovery depends on health solution: NAB

NAB director of economics Tapas Strickland notes that any economic recovery is dependant on a health solution, regardless of the level of fiscal or monetary support.

In comments after the government’s extension of JobKeeper and JobSeeker earlier today, Mr Strickland notes that the dialling back of support measures still means households could be facing a $2.1bn per fortnight income reduction come September.

He echoed comments from RBA governor Lowe that the first priority in repairing the economy involves a health solution.

“Today’s announcement from the Government provides further support for businesses that continue to be significantly impacted by COVID-19, but at the same time tightens eligibility to make sure that businesses that do not require significant support, do not continue to receive that support,” he says.

“The Government has also noted that it will review whether further support is necessary closer to the end of the year, which seems sensible.

“The bottom line remains, the government is doing its part - we remain quite dependant on finding a health solution and/or adapting our businesses and ways of life to live with the virus.”

Read more: Somebody always pays, says Lowe

2.55pm: Shares soar to 6-week high

Australia’s S&P/ASX 200 share index has surged 2.3pc to a 6-week high of 6137.4, outperforming regional markets as a positive response to extended fiscal stimulus adds to positive leads from offshore markets.

The index is having its best day since a 3.9 per cent rise five weeks ago and is just over 1pc away from breaking its June peak at 6198.6. A break above that point would set a 4-month high.

While the Information Technology, Health Care and Consumer Discretionary sectors continue lead gains, the banks are the big swing factor this afternoon, with CBA up 2.6pc.

2.39pm: Biotech surges on COVID mention

Biotech Immuron is the latest listed drug developer to get a boost from coronavirus-related developments, more than trebling its market value today as it reported neutralising activity against the virus in lab tests.

The group’s lead drug candidate, used in its gastro product Travelan, was shown to have antiviral properties against the severe acute respiratory syndrome coronavirus-2, which causes COVID-19, according to the company.

Immuron chief Jerry Kanellos noted that respiratory symptoms had dominated focus for coronavirus, but a growing subset of patients had been exhibiting gastrointestinal symptoms … albeit inconclusive research at present.

“If fecal – oral transmission is a significant factor in the pandemic then the consequences for an oral therapeutic would be significant, however the research is still inconclusive,” he said.

“The preliminary data set we have generated potentially offers a new oral therapeutic approach to target and directly inhibit the virus in the Gastrointestinal tract and warrants further evaluation to identify the inhibitory substances in our products.”

IMC shares last up 236pc to 82.5c, after hitting 95c.

Lachlan Moffet Gray 2.02pm: Lowe ‘pleased’ by refinancing boom

In his final response to questions, Mr Lowe says he was “very pleased” with the rush on home loan refinancing.

“For many years … I’ve been encouraging people to look at the rate they are getting from their banks,” he said.

“One positive out of the pandemic is that people have been sitting at home and looking for better deals on their mortgages.”

It comes as data from the ABS showed a record value of mortgages refinanced in May.

When asked about his level of concern over the housing market, and whether the pandemic will limit the ability of young people to enter that market, Mr Lowe said his main concern is that young people “won’t have a job”.

He added that if they get a job, the housing market situation will resolve itself.

Read more: Home loan refinancing surges

2.00pm: EU agrees on recovery fund

EU leaders have reached a deal on the planned EUR750bn ($1.22tn) Recovery Fund, including EUR390bn in grants to pandemic hit countries, to be funded by debt mutualisation.

This is consistent with a draft proposal reported earlier by Bloomberg and while positive for market sentiment it may be mostly priced in already.

EUR/USD spiked from 1.1461 to a 4-month high of 1.1470 before retreating to 1.1443.

AUD/USD saw a similar reaction but remained within its intraday range.

Shares remain buoyant with the S&P/ASX 200 up 1.69pc at 6103 – a three-week high.

Lachlan Moffet Gray 1.49pm: MMT would be a big mistake: RBA

Mr Lowe has ruled out experimenting with modern monetary theory-inspired or more novel forms of monetary policy, saying the RBA preferred to stick to “solid, sound, predictable” frameworks.

“I don’t think we need to experiment with monetary financing, I think it would be a big mistake,” Mr Lowe said.

“The Australian government can borrow at the lowest interest rates since federation, there’s demand out there for Australian debt,” Mr Lowe said, adding that if the RBA was to start experimenting, it would be “bad for confidence, investments and jobs over time”.

When asked for a figure the three-year yield would have to reach before the RBA began buying bonds again, Mr Lowe said: “I don’t want to put a number on that for obvious reasons – we’ve seen a couple of episodes since late last week where yields have moved … from 25 basis points, then they have settled down again.”

“So for us to come back into the market, we would need to see these rates be sustainably higher and not just driven by some market indigestion as new bond buyers come on.”

When asked if the pandemic presented a chance for economic reform, Mr Lowe said: “I don’t know, this is in the world of politics, so it’s not in my area of expertise … other than to recite to you the long list of recommendations that have come out of many long and worthy reports.”

Mr Lowe then proceeded to list a number of areas such as land taxes, the way infrastructure is priced, the labour market and business regulations as areas that should be examined.

Some speculation lately the RBA might have to restart its bond purchases in the near future. These comments from Governor Lowe do not suggest that is imminent... pic.twitter.com/O7TBwk95p5
— James Foster (@JFosterFM) July 21, 2020

Lachlan Moffet Gray 1.45pm: No reason to intervene on $A: RBA

RBA’s Lowe says he is not yet concerned about the appreciation in the Aussie dollar, saying there is no specific level at which the bank will intervene.

“We don’t think in terms of specific numbers for levels. It really comes down to how the exchange rate is moving in comparison to economic fundamentals,” he says.

Mr Lowe adds that in the context of the global economy, the Australian dollar’s value is not off base.

“Commodity prices have recovered some of the falls and interest differentials are pretty narrow at the moment. So you can’t, at the moment, make the argument that the Australian dollar is misaligned,” he said.

Mr Lowe said that he wanted to see a lower Australian dollar as it would fuel exports, competitiveness and see inflation rise, but still saw no need to intervene.

“As I have been saying for a long time, I would like to see a lower Australian dollar … but the value of the Australian dollar is set in the market and we are not going to intervene to send it lower in the current circumstances,” he said.

Asked about the likely impact on the shutdown of Victoria, Mr Lowe said that it was “very concerning and we’re watching it very carefully”.

“It has served as a reminder to us all just how infectious this virus is … it’s also a reminder that if we don’t address people’s health concerns, it’s also hard to get back to a functioning economy,” he said, adding that forecasts that encompass the impact of Victoria’s shutdown will filter through in August.

AUDUSD last up 0.21pc to US70.27c.

Lachlan Moffet Gray 1.38pm: Support programs crucial to recovery: RBA

RBA Governor Phillip Lowe says the extension of support measures was key in the economy’s recovery.

Taking questions after his speech to the Anika Foundation, Mr Lowe says he welcomes the extension and tailoring of both the JobKeeper and JobSeeker support, saying “they’re both providing important support to households and businesses” and adding that the IMF told a meeting of G20 finance leaders that such programs are crucial.

“One of the main messages from the IMF on that meeting was that it is very important that we keep support messages going.”

Moving on to a question on the bank’s 2pc to 3pc inflation target, Mr Lowe said inflation is set by two factors: the first is expectations of future inflation, and the second is the balance of supply and demand in the economy.

“There’s been a significant shock to global supply in recent years, which have been deflationary,” Mr Lowe said, saying that as a result the expectation that there will be inflation remains subdued.

On the demand side, Mr Lowe said that businesses and households around the world are “not using low interest rates to spend and invest”.

“Businesses and others don’t want to use that liquidity to invest and spend … until we can create more aggregate demand in the economy … we are going to see inflation stay low.”

1.29pm: Retailers need rent relief too: ARA

The peak body for Australia’s retailers is pushing for further rent relief, noting the wage support alone is not enough to support retailers.

The Australian Retailers Association cheered the government’s decision to extend JobKeeper and JobSeeker stimulus for a further six months, noting the fourth quarter was “the make or break period” for retailers.

Still, he said rent was a key “pain point” for the sector.

“When retailers win, landlords win – it’s important we all work together to ensure the survival of retail tenants and the Code has been working well to protect the interests of small to medium size retailers,” chief Paul Zahra said.

“Though we had hoped to be further on the road to recovery at this time, the spike of infections in Victoria and NSW clearly shows us we aren’t out of the woods.

“Pockets of retail will take longer to recover, particularly discretionary retailers or for stores in the CBD and popular tourist locations. These retailers depend on higher foot traffic which we are unlikely to see for quite some time.”

1.18pm: Growth needed to address debt: RBA

RBA Governor Philip Lowe said Tuesday that when the COVID-19 pandemic eventually eases and the time comes to address ballooning government debt, stronger economic growth will be needed to bring it under control.

“When the time does come to address the build-up of debt, the best way to do this will be through economic growth. Given that we are borrowing against future income, we will be better placed if that future income is strong,” Mr Lowe told a conference of economists.

Treasurer Josh Frydenberg is set to reveal the extent of the deterioration in the government’s budget position on Thursday as a result of the pandemic and a massive wave of stimulus deployed to combat it.

The Australian economy has entered its first recession in 29 years as a result of the virus, pushing unemployment sharply higher.

Economists are anticipating the government to announce Thursday a budget deficit forecast for fiscal 2020-21 of more than $200bn, the biggest shortfall since the second world war.

The government announced earlier today the extension of government support for firms and the unemployed from September into next year.

Mr Lowe concluded his speech on a positive note, saying the Australian economy is strong.

“At some point the pandemic will pass. We have handled the health crisis better than many other countries and our economy is also faring better than many others,” he said.

Dow Jones Newswires

1.01pm: ASX lift best in a week

Australia’s share market is having its best day in almost a week, as the extension of government stimulus sends the ASX up 1.5pc.

At 1pm, the ASX200 is up 92 points or 1.52 per cent to a three-day high of 6093.1.

Added strength in the Financial sector and a rebound in Energy and Materials stocks helped, albeit gains continue to be led by the IT, Health Care and Consumer Discretionary sectors.

Afterpay is up 7.7pc and CSL is up 2.9pc, while CBA is up 1.6pc and Macquarie is up 1.9pc. BHP went from down 0.6pc to up 0.2pc, Woodside rose 1.3pc and Oil Search rose 2.3pc.

Here’s the biggest movers at 1pm:

12.35pm: RBA weighs policy against global peers

Reserve Bank board members last month reviewed the monetary policy measures of other advanced economies and their applicability to Australia but decided there was no need to adjust the package of measures adopted by Australia in the “current environment”, according to RBA minutes.

“Members agreed, however, to continue to assess the evolving situation in Australia and did not rule out adjusting the current package if circumstances warranted,” the RBA said.

In the minutes of the RBA’s July board meeting, members also reviewed again the international experience with other monetary policies and their relevance in the Australian context, as they had done the previous year, and saw merit in these policy matters being addressed in a speech by Governor Philip Lowe, which has since been postponed until 1pm Tuesday.

“These policies included negative interest rates, foreign exchange intervention, the purchase of private sector assets and also direct government financing,” the minutes said.

“All such options entail significant costs and involve very difficult trade-offs and, for some policies, there are legitimate questions about their effectiveness.”

Board members agreed that “negative interest rates in Australia remain extraordinarily unlikely.”

RBA July minutes show the Board discussed policy alternatives to their current package, including lower rates and more bond-buying. Overall sees its current stance as well-calibrated in a local context, but will be flexible if circumstances change. pic.twitter.com/jq4QksYIeL
— James Foster (@JFosterFM) July 21, 2020

12.05pm: Wage support lifts ASX higher

Shares are trading at their best levels of the day, up 1.1pc at midday, as the government unveils is plans to extend wage support.

At 12pm, the ASX200 is higher by 69 points or 1.1pc to 6070.3.

Tech stocks remain firmly in the lead, up 5.2pc as Afterpay soars by 7.3pc to $74.55 and Xero jump 5.2pc to $95.78 – both just shy of record highs.

Commonwealth Bank is outperforming the rest of its major bank peers with a 1.4pc jump as Westpac ekes a 0.2pc gain, ANZ by 0.5pc and NAB by 0.3pc.

Richard Ferguson 12.01pm: JobSeeker reduced, rules tightened

JobSeeker welfare benefits will be reduced to $815 a fortnight from September, and any dole recipients will have to be looking for work if they want to keep getting COVID support.

Scott Morrison announced on Tuesday that the coronavirus supplement of $550 – added to the current welfare rate of $550 — will be slashed to $250 from September, and the reduced supplement will run till the end of the year.

The new JobSeeker will still be substantially higher than the pre-pandemic Newstart payment.

From August, JobSeeker recipients will have to apply for four jobs a month and will be penalised if they do not accept job offers.

“The penalties regime will kick in if people refuse a job that has been provided and offered through that process,” Mr Morrison said in Canberra.

Read more: PM cuts JobSeeker, tightens rules

11.48am: RBA support ‘as long as necessary’

The RBA pledged to maintain its accommodative approach for “as long as necessary”, noting it was committed to supporting jobs and making sure Australia was well placed for recovery.

In the minutes of its July meeting, the board considered its policy package and the broader global economy, noting that risk to the outlook for the world economy had increased recently despite data previously being on the right track.

“Members agreed that negative interest rates in Australia remain extraordinarily unlikely. They also agreed there is no case for intervention in the foreign exchange market, given its limited effectiveness when the exchange rate is broadly aligned with its fundamental determinants, as at present,” minutes of the meeting read.

“Members reaffirmed the importance of the longstanding principle of separating monetary policy from the financing of government, a principle that has served Australia well in practice.”

AUDUSD last up 0.21pc to US70.27c.

The #RBA minutes foreshadow a push back on MMT in Lowe's speech today as well as "other policy matters" such as negative interest rates and exchange rate intervention#ausbiz https://t.co/Yx9KZBDRau
— Alex Joiner (@IFM_Economist) July 21, 2020

11.35am: Signs of COVID disruption for BHP

RBC’s Tyler Broda says BHP’s June quarter production was better than expected in all main divisions except petroleum, with cash costs in line or exceeding most divisions.

But he cautions that BHP’s FY21 guidance appears to be the first sign of the medium-term impacts of COVID-19 with about 5-10 per cent lower production than previous forecasts, except in iron ore, which continues to creep above nameplate.

“There are multiple one-offs that we will need to fully assess, but the net impact is likely to see negative moves in consensus earnings and cashflow offset the stronger Q4 production, at least before the market further prices in the tight supply situations in both iron ore and copper, as well as potentially strengthening supply dynamics in met coal,” Mr Broda says.

BHP is down 0.1pc at $38.86 while the S&P/ASX 200 is up 1.1pc at 6064.4.

Read more: BHP iron ore output defies virus

Richard Ferguson 11.23am: Qantas welcomes JobKeeper extension

Qantas chief executive Alan Joyce has welcomed the six-month extension to JobKeeper wage subsidies, saying thousands of his workers will be dependent on them for months.

The national airline has been largely grounded by the closure of international and some internal state borders, and have been one of the biggest recipients of JobKeeper.

“The extension to JobKeeper until at least March is fantastic for our people and provides them with certainty. Importantly, it will help ensure most of them stay employed with us and come back to work when flights resume,” Mr Joyce said in a statement.

“For many of our people who are stood down, JobKeeper has been the difference between continuing their careers with Qantas and Jetstar or leaving the industry altogether. That’s how important it has been.

“We have been speaking to the Government about this for months and when I spoke to the Prime Minister and Treasurer in June they understood the devastating impact COVID-19 has had on airlines and said they would provide further support for affected companies like ours post-September.”

QAN last traded up 1.1pc to $3.67.

John Stensholt 10.52am: Broncos profits dented by poor performance

The usually healthy profits for ASX-listed Brisbane Broncos rugby league team will take a big hit this year due to COVID-19 and the team’s below par performances on the field.

The Broncos, considered one of the strongest sports clubs in Australia in financial terms but currently running 14th in the 16-team National Rugby League competition, made a $2.9m profit from $51.9m revenue in 2019.

But its financial result this year will take a “significant” hit, the company’s chairman Karl Morris told its annual general meeting in Brisbane on Tuesday morning.

Mr Morris said the coronavirus, which caused the suspension of the NRL for several months and has most clubs only being able to let small crowds into their stadiums since its resumption, will “result in a significant reduction in the group’s revenue and profits for the 2020 financial year”.

“Given the constantly evolving nature and uncertainty of the situation, it is not possible to accurately forecast the quantum of the financial effect on the group or the time frame for recovery at this stage.”

Mr Morris said management had identified and implemented cost saving initiatives to mitigate the financial impact of COVID-19 and a review of fixed costs of the business including remuneration levels and staff requirements had been undertaken.

The Broncos, majority owned by News Corporation, had declared a fully franked dividend of 1c per share for the 2019 financial year, but have suspended payment until October 15. Mr Morris said the Broncos board would reassess the company’s financial position closer to the date to determine whether the payment would still go ahead.

Despite the team’s parlous position on the ladder and doubts over the future of coach Anthony Seibold, the Broncos said in its AGM presentation that the team “are not in a rebuilding phase”.

Broncos shares rose 1c or 2.56pc on Tuesday morning.

Broncos chairman Karl Morris says COVID and the team’s performance would hit results ‘significantly’. Picture: Grant Trouville / NRL Photos.

10.47am: RBA speech delayed

A scheduled speech by RBA’s governor Philip Lowe has been pushed back to accommodate other speeches by the Prime Minister and Victorian Premier.

Mr Lowe had been scheduled to address the Anika Foundation at 12.30pm AEST, but has been delayed until 1pm.

His speech is titled COVID-19, the labour market and public-sector balance sheets.

Minutes of the RBA’s July meeting will still be released as previously flagged at 11.30am.

10.38am: Bauer to shutter 8 magazine titles

Magazine publisher Bauer will shutter eight of its magazine titles, including Harper’s BAZAAR, InStyle and Men’s Health, citing crippling conditions due to coronavirus.

The eight titles had been temporarily paused in May given the impact of travel restrictions on transit reliant titles and declining advertising revenue, but would now be closed permanently.

Affected titles include BAZAAR, ELLE, InStyle, Men’s Health, Women’s Health, Good Health, NW and OK!.

“The reinstatement of these titles and teams was always dependent on the advertising market bouncing back and the return of domestic and international travel. Despite promising signs from advertisers in recent weeks, this has not outweighed the medium-term outlook for these titles,” Bauer’s local chief Brendon Hill said.

“Additionally, with a second lockdown in Victoria and minimal travel, it is not feasible to sufficiently distribute NW and OK! without transit channels.

“The financial impact of these factors and the ongoing economic uncertainty makes the return and sustainability of these titles no longer viable. We have been forced to reset and future-proof the business like all of the media industry has.”

It comes as ownership of the group was transferred to Mercury Capital in a less than $50m deal completed just last week.

10.13am: Shares follow Wall St rally

Shares are rising strongly at the open, making back yesterday’s losses as tech shares lead the rush.

At the open, the benchmark ASX200 is higher by 46 points or 0.77 per cent to 6047.7 – still less than the 1.2pc projected by overnight futures.

After more records on the Nasdaq overnight, the tech sector is higher by 3.2pc – led by a 4.5pc jump in Afterpay while Zip added 3.1pc and Xero jumped 3.2pc.

Energy and utilities are the only sectors in the red, with Santos bucking the negativity with a 0.8pc lift, even as it flagged $1.1bn in writedowns.

10.02am: Ardent faces Dreamworld criminal charges

Dreamworld owner Ardent is facing three criminal charges over the 2016 Thunder River Ride tragedy.

Four people died in the incident and a coroner later revealed a litany of failures at the Gold Coast theme park.

Ardent Leisure Group told the ASX that the Queensland Work Health and Safety prosecutor has filed three charges in the Brisbane Magistrates Court against the subsidiary which operates Dreamworld.

Each of the charges under work health and safety legislation carries a maximum penalty of $1.5m.

Handing down findings in February, coroner James McDougall said he suspected Ardent Leisure “may have committed an offence under workplace law” and referred the company to the Office of Industrial Relations to weigh up the case.

Ardent could face millions of dollars in fines if found liable over the tragedy, which cost the lives of Cindy Low, Kate Goodchild, her brother Luke Dorsett and his partner Roozi Araghi.

In a statement on Tuesday, Ardent said there had been “considerable change” at Dreamworld over the last few years.

“Dreamworld has taken substantive and proactive steps to improve safety across the entire park and continues to enhance existing systems and practices, as well as adopt new ones, as we develop and implement our safety case in accordance with the Queensland Government’s new major amusement park safety regulations,” the company said.

“The new leadership team is committed to continuing to improve and enhance safety systems and practices with the aim of becoming a global industry leader in theme park safety and operations.”

Dreamworld owner Ardent is facing three criminal charges over the 2016 Thunder River Rapids ride tragedy. Picture: Adam Head

Ben Wilmot 9.51am: Weiss pushes for Cromwell board

The battle for Cromwell Property Group is again heating up with Singapore’s ARA Asset Management lodging its $518m proportional takeover offer for Cromwell and saying it will call a meeting to appoint corporate raider Gary Weiss and Melbourne fund manager Joe Gersh to the target’s board.

The fight for control of the $2.8bn company, that has property across Australia and Europe, has rolled on for more than a year since relations between Cromwell and major shareholder ARA soured.

ARA said last month it would make an all cash proportional off market takeover bid that could see it end up with about 49 per cent of the company. But the offer price is just 88.125c and has been rejected by Cromwell which told investors to take no action.

ARA has twice lost votes to appoint Dr Weiss to the board but has bumped up its stake to 24.07 per cent and also has had the backing of the Tang family, another large investor, for board change.

Chief executive John Lim said “there is a groundswell of rising support among a broad range of Cromwell securityholders for desperately needed change to deliver improved governance and performance”.

ARA again attacked Cromwell’s $1bn investment in a portfolio of shopping centres in Poland, calling on it to release the key assumptions which underpinned its draft property revaluations, including changes in market rental assumptions as well as capitalisation rates.

Rent collections were sitting at a run rate of just 57 per cent of total billings according to Cromwell’s June business update.

Mr Lim said evaluations put forward by Cromwell bore little resemblance to its rivals, especially those with exposure to the European and Polish retail sectors.

Read more: ARA takes a $518m tilt at Cromwell

9.44am: Consumer confidence falls for 4th week

A rising case tally in Melbourne and spread to Sydney pulled consumer confidence lower last week, the fourth consecutive weekly slip.

The ANZ survey of confidence showed a 1pc weekly change to 92.1, with all subindices on the decline bar perceptions of current finances.

Head of Australian Economics David Plank took some solace in the data, noting the decline was “nowhere near as severe as the fall seen in mid-March”.

“The resilience shown by the ‘current finances’ subindex, which has actually risen a touch since the end of May as overall sentiment has fallen by almost 8pc, is also encouraging.

“Australia’s success in combating the first surge in the pandemic, as well as the expectation that the Government stands ready to extend support if required, is underpinning this resilience.”

ANZ-Roy Morgan consumer confidence fell for the 4th week in a row. The good news is that the decline is modest compared to the March plunge and sentiment toward own finances is holding up. The extension of jobkeeper and jobseeker will support this. https://t.co/QQF4lFtDlk
— David Plank (@DavidPlank12) July 20, 2020

9.37am: ASX poised for strong jump

Australia’s share market is set to jump after strong offshore gains amid optimism about coronavirus vaccines and EU and US fiscal stimulus.

Overnight futures relative to fair value suggest the S&P/ASX 200 will rise 1.2pc to a 2-day high of 6078 after falling 0.5pc on Monday.

Positive results from the Pfizer/BioNTech and Oxford-AstraZeneca vaccine trials helped market sentiment, as did reports that EU leaders are moving toward agreement on the proposed EU Recovery Fund.

US politicians were due to meet Tuesday to discuss the next round of US stimulus which will be at least $US1tn according to Treasury Secretary Mnuchin.

The Nasdaq surged 2.5pc to a record high close of 10767.1 while the S&P 500 rose 0.8pc to a 5-month high close of 3251.8, decisively breaking above the June peak at 3233.13.

The VIX index fell 1.2bp to a 6-week low of 24.46 per cent and remained below its 200-day moving average for a second day running. IBM beat expectations after the close, sending its share price up 4.5pc, but US stock index futures are little changed.

Tuesday sees an update on JobKeeper and JobSeeker payments by the Prime Minister, with both expected to be extended at lower rates with stricter eligibility tests.

The market will also digest weekly consumer confidence data, BHP and Oil Search production data, RBA minutes at 11.30am, and a speech by RBA Governor Lowe at 12.30pm.

9.27am: What’s on the broker radar?

AMP price target raised 20pc to $1.50 – Citi
Boral cut to Underweight – JP Morgan
CSR raised to Overweight – JP Morgan
Dexus cut to Neutral – Macquarie
Helloworld raised to Buy – Ord Minnett
Netwealth cut to Sell – Ord Minnett
Star Entertainment raised to Equal-weight – Morgan Stanley
Whispir cut to Neutral – Evans and Partners

9.22am: US tech names overtake Japan’s Nikkei

Four of the biggest names in US tech have overtaken the market value of the entire stockmarket in Japan, so points out Bloomberg’s David Ingles.

In a tweet, Mr Ingles notes that Apple, Amazon, Microsoft and Google now surpass the Japanese stockmarket.

“In other words, these four alone would be enough to create the world’s third biggest stock market, behind the US and China,” he said.

Unbelievable.

Apple, Amazon, Microsoft and Google combined are now bigger than JAPAN'S ENTIRE STOCK MARKET. In other words, these 4 alone would be enough to create the world's third biggest stock market (behind the U.S. and China).

GAAAAHHHH pic.twitter.com/Aeq3lCk91X
— David Ingles (@DavidInglesTV) July 20, 2020

Eli Greenblat 9.11am: 100k shoppers flock to Kogan in June

Online retailer Kogan.com has updated the market on its fiscal 2020 performance with the strong growth in sales experienced since the coronavirus pandemic emerged in March accelerating through May and June.

In the month of June alone it put on more than 100,000 new customers as shoppers rushed to online shopping and shunned going to shopping centres and suburban malls.

It also comes as last week the Federal Court upheld a ruling that Kogan breached consumer law in 2018 when it offered a “tax time” promotion to shoppers where actually many product prices had been increased before a discount was offered. Kogan is acing millions of dollars in penalties for the misleading behaviour.

In an update to the market Kogan said gross sales had grown by more than 95 per cent in the fourth quarter, compared to the same time last year, and profit was up by more than 115 per cent.

Kogan, whose shares have almost tripled since the global share market collapse in March, said adjusted EBITDA grew by more than 149 per cent.

During the year active customers grew to 2,183,000 as at 30 June 2020, with an incremental 109,000 customers in the month of June.

KGN last traded at $17.34.

9.07am: BHP hits annual output goals

BHP Group said it achieved annual production guidance for most of its major commodities despite disruption caused by the coronavirus pandemic.

BHP said it produced 67 million tonnes of iron ore in the three months through June, up 11pc on the previous quarter. That brought annual production to 248 million tonnes, which is 4pc higher than in the 2019 fiscal year.

Like rival Rio Tinto PLC, BHP’s iron-ore business has benefited from supply disruptions in Brazil where some mining hubs were forced to shutter temporarily to contain the spread of the novel coronavirus. In addition, miners have recently got a tailwind from a rapid economic recovery in China, where nearly 90pc of steel is used domestically.

On Tuesday, BHP said Chinese domestic industrial activity has been improving, as authorities loosened access to credit and introduced fiscal stimulus. Still, management said the potential for a second wave of virus infections in China is a key risk.

BHP said its production of metallurgical coal, also used to make steel, rose by 26pc in the June quarter to 12 million tonnes. However, annual output of metallurgical coal fell by 3pc to 41 million tonnes.

Dow Jones Newswires

Bridget Carter 8.54am: Downer raising $400m

DataRoom | Downer EDI is raising $400m through an entitlement offer at $3.75 per share.

Downer’s shares last traded at $4.26.

The company will use $135m of the funds to buy the remaining 12 per cent of Spotless it does not own.

The remainder will be invested in initiatives to invest in and reshape the core Urban Services portfolio as well as reduce some net debt.

More to come

8.48am: Santos warns of $1.1bn writedown

Santos has flagged a $US700m to $US800m ($1.14bn) writedown to come at its half year results, due to revised oil price assumptions and waning demand due to coronavirus restrictions.

The group this morning told the ASX it had revised its oil price assumptions lower by over 10pc, while also forecasting a slower recovery in the short to medium term.

“As a result of these revised oil price assumptions, Santos will recognise non-cash impairments of GLNG of $US640-700m before tax and exploration assets (primarily in the Cooper and Amadeus Basins) of $US60-100m before tax in the half-year results. There is no impact on any of Santos’ reserves,” the group said.

Santos has warned of $1.1bn in writedowns to come at its half year results. Picture: Supplied.

8.30am: Downer in trading halt

Downer EDI has requested a trading halt ahead of announcements on an acquisition and a capital raising.

DOW last traded at $4.26.

8.05am: Disney fires top US ABC exec

Walt Disney fired senior ABC News executive Barbara Fedida after an investigation confirmed allegations that she made insensitive and racist remarks about colleagues at the network.

In an email to staff, Peter Rice, the Disney senior executive with oversight of ABC News, said the investigation revealed that Ms. Fedida, the senior vice president of talent relations and business affairs for the unit, made “unacceptable racially insensitive comments” and managed “in a rough manner.”

Ms Fedida, who was one of the most powerful executives in US television news, had been suspended by Disney in June after an article in the Huffington Post detailed some of her remarks, including alleged racial slurs about “Good Morning America” anchor Robin Roberts. The network hired an outside law firm to investigate Ms. Fedida.

Dow Jones

6.20am: ASX set to open higher

Australian stocks are set for a firmly positive start after Wall Street rose on hopes for a coronavirus vaccine, and amid strong gains by tech giants.

At 6am (AEST) the SPI futures was up 47 points, or 0.8 per cent.

On Monday, the ASX 200 ended down 0.53 per cent amid weakness in banks.

The Australian dollar was back above US70c, rising to US70.14c from US 69.87c yesterday.

6.10am: US stocks rise amid vaccine hopes

US stocks rose on continued optimism about the prospects that a vaccine for the novel coronavirus will be ready for production this year.

Oxford University and AstraZeneca showed positive results on a potential coronavirus-vaccine in early trials. Researchers remain on schedule to have the shot ready for mass production as soon as September.

The Nasdaq Composite Index soared 2.5 per cent to a fresh closing record. But broader-market index gains were mostly modest, reflecting attention focused on businesses’ dimming outlook and the hurdles facing fresh stimulus packages as rising coronavirus infection levels threaten to stall the economic recovery.

The Dow Jones Industrial Average rose less than 0.1 per cent as of the close, after initially trading down. The S&P 500 rose 0.8 per cent.

The US equities market is at a crossroads, said Robert Teeter, managing director at Silvercrest Asset Management. The economic recovery appears to be stalling as the coronavirus pandemic expands, at the same time as stock prices sit near the top of their trading range.

“There are a couple of important issues we will be working our way through in the next few weeks,” Mr. Teeter said, “and we’re doing so at a [market] recovery high.” That puts pressure on the bulls, he said.

[CHART] Dow movers in overnight trade #ausbiz Bloomberg pic.twitter.com/iLEOhzeCQf
— CommSec (@CommSec) July 20, 2020

More than 140,300 people in the US have died from the coronavirus, with the number of infected Americans continuing to climb over the weekend. Investors and economists are increasingly taking the view that any robust recovery in the global economy, which suffered a severe contraction in the three months through June, will depend on authorities’ success in containing fresh outbreaks.

There were also developments on the vaccine front. Oxford University and AstraZeneca showed positive results on a potential coronavirus-vaccine in early trials. Researchers remain on schedule to have the shot ready for mass production as soon as September.

More earnings reports are scheduled this week, from Coca-Cola, Lockheed Martin, United Airlines Holdings and others. The 500 largest public companies in the U.S. are projected to report a 44pc drop in earnings for the second quarter, according to analysts polled by FactSet.

Elsewhere, the pan-continental Stoxx Europe 600 climbed 0.8pc. In Asia, Chinese stocks rallied, while other markets posted more tepid moves by the close of trading.

In China, the Shanghai Composite Index rose 3.1pc, led by jumps in shares of the country’s big insurers. Late on Friday, China’s banking and insurance regulator said it would allow domestic insurers to allocate up to 45pc of their total assets to equity investments, from 30pc previously.

Stock benchmarks in South Korea and Hong Kong edged lower by the close of trading, while Japan’s Nikkei 225 gauge ticked higher.

Dow Jones

5.55am: Oil futures settle higher

Oil futures settled with a gain on Monday, finding support as positive results from an earlier COVID-19 vaccine trial helped to offset the pandemic’s risk to economic recovery and energy demand. Also, “crude inventories are still heading lower,” said Robbie Fraser, senior commodity analyst at Schneider Electric told MarketWatch. “From U.S. stocks to floating storage tankers, the data continues to show a market chipping away at excess supply, and that’s providing a buffer from ongoing demand concerns.”

August West Texas Intermediate oil rose 22 cents, or 5pc, to settle at $US40.81 a barrel on the New York Mercantile Exchange.

The Brent crude price rose by US14 cents or 0.3pc to $US43.28 a barrel.

Dow Jones

5.45am: Briggs & Stratton files for bankruptcy

Briggs & Stratton Corp., billed as the world’s largest manufacturer of small petrol engines, has filed for bankruptcy protection citing challenges due to the coronavirus pandemic, the company announced.

As part of the Chapter 11 filing, the Milwaukee-area company said Monday it has secured debtor-in-possession financing of $US677.5 million from KPS Capital Partners LP, the private equity firm purchasing its assets, and its existing lenders to allow it to continue operating ahead of the closing of the deal.

“Over the past several months, we have explored multiple options with our advisers to strengthen our financial position and flexibility,” Chief Executive Todd Teske said in a statement. “The challenges we have faced during the COVID-19 pandemic have made reorganisation the difficult but necessary and appropriate path forward to secure our business.”

The filing allows Briggs & Stratton to fully support its operations through the closing of the transaction, the company said in the statement. It does not include any of Briggs & Stratton’s international subsidiaries.

5.40am: Virus vaccine hopes rise

Two COVID-19 vaccine candidates have proven safe for humans and produced strong immune reactions among patients involved in two separate clinical trials, doctors said.

The first trial among more than a thousand adults in Britain found that the vaccine induced “strong antibody and T cell immune responses” against the novel coronavirus.

A separate trial in China involving more than 500 people showed most had developed widespread antibody immune response.

The studies, published in The Lancet medical journal, constitute a major step on the road towards a COVID-19 vaccine that is effective and safe for widespread use.

The authors of the studies said they encountered few adverse side effects from the vaccine candidates.

They did, however, caution that more research was needed, particularly among older adults, who are disproportionately at risk of dying of COVID-19.