Trading Day: ‘Fragile’ ASX drops as bounce fades, after global markets slump on Trump virus warning
The ASX closed down 2pc on Thursday after NZ froze bank dividend payouts and as virus fears weighed on world markets.
- Moody’s downgrades banks
- Banks count cost of NZ move
- NZ halts bank dividends
- Adelaide Brighton drops guidance
That’s all from the Trading Day blog for Thursday, April 2. The S&P/ASX 200 closed 2pc lower at 5154.30, losing 104.3 points. The All Ordinaries was down 1.93pc, or 102 points, at 5188.7 at the close. The drop came after world markets fell on more grim forecasts of coronavirus infections and deaths. New Zealand’s suspension of dividends to Australian banks also hit bank stocks. On Wall Street, the Dow, S&P 500 and Nasdaq all closed 4.4 per cent lower. US futures markets were in positive territory as our local markets closed for the day.
Gerard Cockburn 5.21pm: CML change of plans on offer
The federal government’s Takeovers Panel has consented to a request by CML Group to withdraw an application regarding a takeover bid for the company.
The initial application lodged to the department, related to CML asking major shareholder Consolidated Operations Group to match a non-binding conditional offer made by Scottish Pacific Group to acquire 100 per cent of CML’s issued capital.
Consolidated Operations Group said it had no current intention in matching the offer, which prompted CML to take action through the Takeovers Panel.
The Takeovers Panel said it was “satisfied” that the withdrawal does not go against public interest.
“Given the [Takeovers] Panel had not yet made a decision on whether to conduct proceedings, the Panel does not propose to publish reasons in relation to this matter,” the panel said.
4.45pm: Brent oil higher as China steps in
Brent oil jumped more than 11pc to $US27.48 a barrel after Bloomberg reported that China is moving forward with plans to buy up oil for its emergency reserves after an epic price crash, according to people with knowledge of the matter.
The world’s biggest importer is taking advantage of a 60pc plunge this year to snatch up cheaper barrels for its stockpiles, a source of considerable speculation in the oil market because of the government’s reluctance to release information about their formation, size or use.
The initial target is to hold government stockpiles equivalent to 90 days of net imports, which could eventually be expanded to as much as 180 days when including commercial reserves, the sources said, according to Bloomberg.
4.25pm: ASX, Aussie dollar jitters on grim forecasts
The Australian dollar has been hit by a fresh bout of market jitters as grim forecasts for the length and depth of the coronavirus pandemic tested investor appetite for risk.
The Aussie is managing to stay around US60.68c, having fallen almost 1 per cent overnight to as low as US60.39c, and it’s been struggling to get above US62.15c reached earlier in the week.
By the close of the ASX session today it was up 0.1 per cent against the US dollar buying US60.77c.
The Australian share market closed lower amid increasingly dire warnings about how bad the coronavirus crisis could get in the US. The S&P/ASX200 benchmark index finished Thursday down 104.3 points, or 1.98 per cent, at 5154.3, while the All Ordinaries index dropped 102 points, or 1.93 per cent, to 5188.7.
AAP/Reuters
Gerard Cockburn 3.58pm: Late surge for ASX-listed child care groups
ASX-listed early child care providers have had an afternoon share price surge, following the federal government’s decision to make childcare free for essential workers during the coronavirus pandemic.
Stocks in both Think Childcare (TNK) and Mayfield (MFD) have soared by more then 30 per cent, while the prime minister’s pledge has prompted G8 Education (GEM) to request a trading halt on its shares.
TNK shares were up 33.3 per cent to $1.00 each. While MFD stood at 82 cents per share, a rise in stock value of 31.7 per cent.
In a statement to the ASX shortly after 1pm, GEM said its trading halt request is in relation to a pending response to the federal government’s decision to assist the children of essential workers.
Prior to the halt, GEM had been trading 28.6 per cent to $1.08 per share.
GEM’s trading halt will remain in place until April 6, or until its response has been released to the share market.
Patrick Commins 3.43pm: Franking credits relief
At his press conference today Scott Morrison ruled out any changes to franking credit rules to help pay for the $205bn in fiscal support packages announced over the past month.
“No, we’re not reconsidering franking credits,” the PM said, when asked.
The favourable tax treatment of dividends is a cherished perk of many Australian shareholders, especially those who rely on income in retirement, and it was a major issue in last year’s election.
Fund manager Geoff Wilson, who led the crusade against changes to Labor’s proposed changes, yesterday cautioned against a second attempted raid on franking credits to pay for the blowout in the national debt, as Eli Greenblat wrote.
Of course, the challenge for investors will be getting any dividends at all out of Aussie businesses, many of which are facing a dramatic and sudden collapse in revenue.
In New Zealand, the regulator has even forced banks there to cancel their payouts, and there are worries something similar will happen here.
On this, the PM said: “At this point, the Australian government, through our financial regulators, we have not received that advice to move to that level”.
You could say he failed to rule it out.
Looking more broadly, Don Hamson of Plato Investment Management reckons there will be a 30 per cent cut to dividends across Aussie equities over the coming 12 months, and that “significant dividend cuts are likely from the banking sector”.
“It is our belief that smaller banks will be hurt more than larger banks, due to thinner margins and narrower funding avenues,” he says.
Telcos, consumer staples and miners should be able to avoid cutting their payouts, he reckons.
Lilly Vitorovich 3.35pm: Network Ten temporary shutdown coming
Australia’s third-ranked free-to-air television broadcaster Network 10 will temporarily shutdown after the Easter long-weekend as the ViacomCBS-owned company grapples with the coronavirus crisis.
But the closure from April 14 to 17 won't impact its news and locally-produced programs such as Studio 10 and The Project or its digital news website 10 daily. A skeleton staff will be on deck to run the broadcaster.
ViacomCBS’s newly promoted local content boss Beverley McGarvey has told staff that "COVID-19 has caused extensive and fast-moving change in the broadcast industry", and it is working to ensure it comes through the crisis "as a stronger, more innovative and more agile organisation".
"Despite more viewers turning to television for the latest news, information and entertainment that we provide, our business has been directly impacted by the COVID-19 crisis. It has clearly affected our day-to-day operations, at least temporarily," she told staff in an email on Thursday, seen by The Australian.
Gerard Cockburn 3.30pm: Speedcast enters forbearance agreement
Communications company Speedcast has entered into a forbearance agreement after breaching its loan covenant obligations with a lender.
In a statement to the ASX, Speedcast says it entered the agreement in order to maintain a decent liquidity position throughout the economic downturn induced by coronavirus.
It first became aware that it would not meet the net leverage covenant under its syndicated facility agreement (SFA) as at December 31, when finalising its 2019 financial year results.
The negotiated agreement will provide temporary forbearance of actions under the SFA for the initial breach and also the additional breach of non-payment of interest and amortisation on March 31.
The forbearance agreement will expire on April 17.
3.12pm: Moody’s revises Asia Pacific banking outlooks
Moody’s Investors Service has changed its outlook on 12 Asia Pacific banking systems to negative in light of the coronavirus outbreak and broad economic deterioration.
At the same time, it has maintained its negative outlook on two banking systems - Hong Kong and Japan - meaning its outlook on 14 systems is now negative.
The negative outlook reflects Moody’s expectation that the broad and growing scope of economic and market disruption from the coronavirus outbreak will increasingly strain banks’ operating environment and loan performance.
Widespread business defaults and restrictions on social interactions will hit economic activity this year, and Moody’s projects a contraction in global economic growth in 2020.
Outlooks for the Australian, Chinese, Indian, Indonesian, Korean, Malaysian, New Zealand, Philippines, Singapore, Taiwan, Thailand and Vietnam banking systems are changed to negative. The outlook on the Hong Kong and Japan banking systems remains negative.
David Rogers 2.57pm: ASX bounces with US futures
A big rise in S&P 500 futures has done wonders for Australian shares today.
After opening down 3.7pc at 5065.2, the S&P/ASX 200 bounced to an intraday high of 5190.
The rebound came as S&P 500 futures rose 1.6pc after the Fed allowed US banks to take on more leverage.
“To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations’ ability to provide credit to households and businesses, the Federal Reserve Board on Wednesday announced a temporary change to its supplementary leverage ratio rule,” the Fed said just before the US close.
The change will exclude US Treasuries and deposits at Federal Reserve Banks from the calculation of the rule for holding companies, until March 31, 2021.
The Financials sector remains weakest, with the major banks down 3.3-5.2pc. The Energy sector is up 1.2pc after WTI crude bounced 5.7pc to $US21.47 a barrel.
S&P/ASX 200 last down 1.8pc at 5166.3.
Patrick Commins 2.45pm: High anxiety in NAB survey to coronavirus
Australians’ level of anxiety has increased sharply alongside the spread of the coronavirus, triggering changes in consumption patterns which could linger long after the epidemic is over, NAB’s head of behavioural economics said.
The bank’s quarterly survey on consumer anxiety, released Thursday, showed a steep lift in March to push above average levels for the first time since late 2018 – the last time there were broad, if ultimately unfounded, fears of a global recession.
NAB’s Dean Pearson said the survey showed “just how quickly consumer anxiety is climbing and how our behaviours are changing, really quite rapidly, due to the fear surrounding the coronavirus and the isolation being imposed on many Australians”.
NAB’s consumer anxiety index for March lifted 2.4 points from December to 60.1 points. The steepest increase was around job security, which climbed 5.8 points to 52.3, the highest since the survey began in early 2013. A reading of 100 points indicates “extreme anxiety”, and the index peaked at above 64 in 2014 with an average reading of 59.4.
“When we ask consumers about major household purchases, that has really fallen sharply,” he said.
Anxiety rose noticeably between the first wave of 1000 respondents March 12th-16th, who yielded an anxiety score of 59.1, and the second, who were surveyed March 17th-20th and who rated their level of anxiety at 61.1.
The surveys predated the string of lay-offs triggered by the enforced shutdown of non-essential services and tough new rules designed to keep Australians at home as much as possible.
“It’s really difficult to see how consumer anxiety won’t continue to rise from here,” Mr Pearson said.
Gerard Cockburn 2.30pm: Westpac weighs in on RBNZ dividends decision
Westpac is the latest Australian big bank to weigh in on the Reserve Bank of New Zealand’s decision to ban dividend payouts by the banking sector.
Australia’s second-largest bank said the RBNZ’s term lending facility will only affect the level one capital ratio of its New Zealand subsidiary.
The bank said it is “well capitalised” with a level two common equity tier capital ratio of 10.8 per cent and level one capital ratio of 11.1 per cent, as at December 31, 2019.
Both ANZ and NAB responded to the central bank’s decision earlier this morning.
ANZ said it will prevent it from redeeming $NZ500m in capital notes on May 25, but will still be able to make interest payments on those notes.
The bank said it would also likely lead to an increase in its common equity tier one position.
NAB said it expects minimal impact on its capital ratios.
David Rogers 2.20pm: RBA ‘may yet need’ negative interest rates
The RBA may yet need to launch negative interest rates to meet its employment and inflation targets, according to Capital Economics.
Capital Economics senior economist, Marcel Thieliant says Australia is “particularly well suited to negative rates” since the average interest rate on owner occupied interest-only loans - while likely to fall toward 3pc as a result of the RBA’s recent interest rate cuts -”will still be miles above the 0.1pc interest rate on reserve balances”, which is “now the defacto policy rate as reserve balances have surged.”
RBA Governor Lowe said in November that negative rates were “extraordinarily unlikely”, RBA minutes this week said the RBA “had no appetite for negative interest rates” and the recent easing of financial market conditions suggests the RBA won’t move next week. But with Australia’s June-quarter economic growth set to fall an unprecedented 15pc Q/Q and unemployment set to hit 12pc in the second half of 2020, “the RBA won’t meet its employment and inflation targets for years to come,” Mr Thieliant says.
And in his view, the arguments against negative rates are flawed in the current environment. He notes that pension funds only hold a fraction of their assets in domestic bonds, bonds only account or a small share of insurance company assets, and at a time when consumer confidence is already tanking, it’s hard to make the case that negative interest rates will undermine it any further. “If underlying inflation falls below 1 per cent for a sustained basis, we think the RBA will reassess the merits of negative interest rates,” Mr Thieliant says.
Michael Roddan 2.14pm: Banking credit outlook cut
Global ratings agency Moody’s has downgraded the credit outlook for the Australian banking system despite dramatic intervention by the Morrison government and the Reserve Bank to shore up companies and borrowers amid the coronavirus pandemic.
In a note sent to clients on Thursday, Moody’s senior credit officer Francesco Mirenzi said the agency had lowered the outlook for the banking system to “negative”, revised downward from its previous “stable” outlook, due to the “broad and growing scope” of the stress the economic shutdown will have on profits and loan repayments.
A move by the Reserve Bank of New Zealand on Thursday to block Kiwi-based banks from paying dividends would also hit the big four Australian banks, Moody’s said.
The big four banks — Commonwealth Bank, Westpac, National Australia Bank and ANZ — also operate the largest four lenders in New Zealand, and dividends paid by their Kiwi subsidiaries contributed to the capital buffers of the Australian parent banks.
While Mr Mirenzi said the lenders were currently well capitalised, the lenders’ capital buffers were likely to deteriorate “in the event of a deep and prolonged economic slowdown”.
Richard Ferguson 2.08pm: Morrison: No changes to franking credits
Scott Morrison has ruled out making changes to franking credits to pay for the government’s $200bn coronavirus rescue packages.
“No, we’re not reconsidering franking credits and these sort of things,” he said in Canberra.
“We will have to address the many challenges that we have taken on.
“One of the important principles, though, Shane, that we have put in place is to ensure that the measures are temporary and they do not provide long tails of expenditure.”
The Prime Minister won the last election partly due to his support to keeping current franking credits arrangement. Senior ministers have also promised that income tax cuts will still be delivered in 2022 and 2024.
Gerard Cockburn 1.34pm: IDP Education shares soar
IDP Education shares surged more than 25 per cent in early morning trade following the expansion of its capital raising scheme, originally announced on Wednesday.
In a statement to the ASX, the company said due to high demand it had expanded its initial share placement of $175m to $225m, which represents approximately 21.1 million new fully paid ordinary shares.
As at 12.40pm, IDP shares were trading up 27.9 per cent at $14.80 each. However, earlier in the trading day they rose more than 30 per cent, reaching a peak price of $15.42 per share.
The company had initiated the equity raising program to bolster its liquidity position, in an attempt to ride out the volatile economic storm caused by the coronavirus.
The $240m capital raise also includes a $15m share purchase plan.
Analysts at Ord Minnett noted the fund raising does not address the underlying uncertainty facing the company’s university English language tests business, known as IELTS.
The brokerage said mobility of international students could be further impacted as countries continue to close borders and restrict movement, with no indication if the next semester’s student intake will be physically able to attend university.
“With travel restrictions enforced globally and campuses experiencing disruption, university intakes have become highly uncertain for the next 12 months,” its analysts said.
David Rogers 1.09pm: APRA ‘monitors’ NZ bank move
Decisions on dividends are up to boards “for the time being”, APRA says in an emailed statement.
It comes after the RBNZ froze the payment of dividends by banks in NZ earlier today, following a similar move by the UK regulator.
APRA says it’s “engaging with banks to understand their approach to dividends, as well as other distributions to shareholders or employees, given current uncertainties.”
“Banks are well-capitalised, however APRA has advised banks that it expects them to be prudently managing their capital, and ensure their actions in the foreseeable future are consistent with their ability to provide ongoing credit support to the broader economy.
“APRA continues to monitor these issues and may review its guidance on these issues as circumstances evolve.”
This advice from APRA appeared to trigger an intraday bounce in bank share prices, but they remain down 3.6-5pc.
But in reality APRA seems to have left the door wide open for Australia to follow NZ and UK.
Ben Wilmot 12.53pm: Property loan breaches unlikely
The dramatic plunge in property stocks in March as investors lost confidence in the sector’s ability to handle the impact of the coronavirus crisis is unlikely to be followed by breaches of loan covenants, according to Credit Suisse.
The bank’s property team said earnings would have to fall by 50‐70 per cent for interest coverage ratio covenants to be breached, which would imply five to seven months of zero income.
In the alternative, cap rates, a measure of value, would have to soften by 300 to 700 basis points for loan to value ratio covenants to be breached, which is beyond most extreme scenarios.
After dramatically underperforming in the month of March, with the A-REIT sector falling below the broader ASX 200 by about 14.5 per cent, rattled investors have sought reassurance about the liquidity of key stocks.
Credit Suisse noted the fact that many management teams withdrew fiscal 2020 guidance did nothing to help confidence in the sector, with REITs apparently losing their mantle as being defensive with fairly predictable earnings.
Credit Suisse said short‐term refinance risk was generally low, with only an estimated 10 per cent of sector debt due to expire over fiscal 2020 and 2021. About half of sector debt is from banks, with the balance from debt capital markets.
2.48pm: China stocks down
Hong Kong stocks sank at the start of trade Thursday following a steep drop on Wall Street as worries over the rapid spread of the coronavirus played on investors’ minds, overshadowing the huge stimulus measures put in place around the world.
The Hang Seng Index fell 1.07 per cent, or 247.12 points, to 22,838.67. The benchmark Shanghai Composite Index eased 0.52 per cent, or 14.29 points, to 2,720.23, while the Shenzhen Composite Index on China’s second exchange dipped 0.44 per cent, or 7.35 points, to 1,652.73.
AFP
12.45pm: ASX down nearly 3pc at midday
The Australian share market was lower at noon after the major US indices suffered four per cent falls overnight on warnings of a mounting coronavirus death toll.
At midday (AEDT) she S&P/ASX200 benchmark index was down 146.4 points, or 2.78 per cent, at 5,112.2, having earlier fallen by more than 3.5 per cent amid COVID-19 volatility.
The All Ordinaries index was also down, plunging 142.1 points, or 2.69 per cent, to 5,148.6 at noon.
The banks, property and industrial stocks were among the biggest losers as the market followed up Wednesday’s 3.58 per cent rise with a steep decline. Commonwealth Bank shed 4.41 per cent to $60.86 as it announced it will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus.
Westpac shares fell 5.03 per cent to $15.86 after revealing it would make Peter King’s interim chief executive appointment a permanent one.
NAB dropped 5.72 per cent to $15.98 and ANZ fell 5.87 per cent to $16.05.
Also in banking news this morning, the Reserve Bank of New Zealand announced Australia’s big four banks won’t be able to receive dividends from their Kiwi subsidiaries during the coronavirus pandemic.
Macquarie Group dropped 3.63 per cent to $86.05, while insurers QBE and Suncorp both fell around eight per cent.
Property managers Scentre Group, Stockland, Vicinity Centres, Goodman and GPT Group pared earlier losses, but they were still down between 0.3 per cent and 3.8 per cent at midday.
Toll road manager Transurban shed another four per cent to $11.76. Health giant CSL fell 1.75 per cent to $301.66, while Telstra dropped 2.5 per cent to $3.12.
For the big miners, Rio Tinto lost 2.69 per cent to $86.02 and BHP fell 2.65 per cent to $29.43 as metals prices come under more pressure amid falling demand. Gold miners Newcrest, Northern Star, and Evolution bucked the trend with rises of between 2.5 per cent and five per cent as investors turn to the safe haven precious metal.
Supermarket Woolworths dipped 1.72 per cent to $35.39, but rival Coles provided a rare splash of green on the market with a 1.7 per cent rise to $16.10. For energy stocks, Santos, Origin, and Oil Search rose by between 1.12 per cent and 2.4 per cent by noon.
One of the few bright spot on the market was IDP Education, with its shares up almost 26 per cent to $14.52 after it announces the successful completion of a $225 million Institutional Placement.
Wall Street suffered more losses overnight after US health officials warned the death toll from the COVID-19 pandemic will surge.
The Dow Jones and S&P 500 indexes slumped after suffering their worst first quarter as President Donald Trump warned of a “painful” two weeks ahead for Americans.
Weak US payroll data also stoked concerns of a economic downturn as lockdown measures intensify in a bid to combat the spread of the virus. The Australian dollar is buying 60.84 US cents, up from 60.80 US cents as the market closed on Wednesday.
AAP
Michael Roddan 12.35pm: Moody’s downgrades banks
Global ratings agency Moody’s has downgraded the credit outlook for the Australian banking system despite dramatic intervention by the Morrison government and the Reserve Bank to shore up companies and borrowers amid the coronavirus pandemic.
In a note sent to clients on Thursday, Moody’s senior credit officer Francesco Mirenzi said the agency had lowered the outlook for the banking system to “negative”, revised downward from its previous “stable” outlook, due to the “broad and growing scope” of the stress the economic shutdown will have on profits and loan repayments.
A move by the Reserve Bank of New Zealand on Thursday to block Kiwi-based banks from paying dividends would also hit the big four Australian banks, Moody’s said.
The big four banks — Commonwealth Bank, Westpac, National Australia Bank and ANZ — also operate the largest four lenders in New Zealand, and dividends paid by their Kiwi subsidiaries contributed to the capital buffers of the Australian parent banks.
While Mr Mirenzi said the lenders were currently well capitalised, the lenders’ capital buffers were likely to deteriorate “in the event of a deep and prolonged economic slowdown”.
12:18pm: GDP to contract by 5pc: Evans
Westpac chief economist Bill Evans has reaffirmed his belief that the federal government’s JobKeeper package will cushion the expected blowout of the unemployment rate caused by the coronavirus pandemic, sketching out some key predictions of the virus’ effect on the economy
Read more: JobKeeper will ‘mitigate’ worst case effects
12.15pm: ASX bounces but fades again
The ASX200 was rolling over again at noon after an intraday bounce and it’s hard to see this ending well.
After falling 3.6pc initially, the index recovered to be down “just” 1.8pc, but near midday was down 3.3pc at 5082.
“Sentiment remains exceptionally fragile as investors are a flat-out bundle of nerves fretting over the potential impact the coronavirus will have in the US markets and the economy,” says Axicorp’s Stephen Innes.
Perry Williams 11.57am: Transurban raises $1bn
Toll road giant Transurban has raised €600m ($1.08bn) in the European bond market, boosting its balance sheet as it rides out a big fall in traffic across its road Australian and North American road network.
The 10-year notes were priced at a 3 per cent coupon overnight with settlement due April 8.
Funds will be used to repay maturing debt and fund its development pipeline in Sydney and the US, adding to $3.5bn of liquidity.
The company abandoned its second-half dividend guidance on Wednesday and UBS expects the 31c payout will be slashed to just 11c with only underlying cashflow being paid out.
While average daily traffic fell by 14 per cent across its network in March, a three-month shock from the coronavirus may lead to declines of 50 per cent for cars and 20 per cent for trucks, UBS forecasts.
Still, at those levels Transurban would fare better than peers in Europe which have dived between 60 and 80 per cent.
A more severe and prolonged six-month disruption could test its debt covenants although UBS sees a worst case scenario of cashflow before interest falling 36 per cent compared with the 50 per cent fall needed to trigger covenant ratios.
UBS upgraded Transurban to buy from neutral with target price cut to $13.85 from $16.05.
Transurban last down 2.6 per cent to $11.93.
Gerard Cockburn 11.55am: Business survey slump
NAB’s quarterly business survey has shows sharp declines in business conditions and confidence in the Australian economy in the first quarter of 2020.
In a survey of 950 firms between February 18 and March 13, business conditions fell by nine points to an index of minus three, with confidence also falling by nine points to an index position of negative 11 points.
NAB chief economist Alan Oster said the bulk of the survey was conducted before significant containment measures were put in place, but highlights the initial concerns Australian businesses had regarding COVID-19.
“The decline in confidence was broad-based across industries but we saw the largest hits occurring in personal and recreational services and retail,” Mr Oster said.
“This is unsurprising given the labour-intensive nature of these industries.”
Mr Oster noted conditions were softer across all industries, except for retail and wholesale.
“It appears the impacts of hoarding and other pre-emptive purchases supported these sectors,” he said.
11.50am: Bond yields rise on smaller QE
Australian bond yields kicked up as bonds were sold after the RBA announced its smallest daily bond buying yet.
Tens rose to 0.755pc from 0.663pc, while 3’s rose to 0.243pc from 0.227pc after the RBA said it will buy up to $2bn of April 2024-Nov 2027 ACGS.
Clearly there’s a lot of trading around the RBA’s announcements. However, the RBA’s smaller operation today shouldn’t have been a great surprise since 3’s were trading below the RBA’s 0.25pc yield target.
Ben Wilmot 11.35am: Short-seller to pay damages
Hedge funds have made rich pickings out of falling share prices but US-based Bonitas has come off second best against listed agricultural trust the Rural Funds Group.
The US company has been ordered to pay almost $900,000 by the New South Wales Supreme Court after losing a case against the listed Australian firm, which took it on after it was targeted by the short-seller last year.
The judgment found that the US group made statements in a report last August that breached Australian laws. The publication of the Bonitas report contravened both the Corporations Act and the ASIC Act and the court awarded damages of $530,201 and costs of $368,974.
The court ordered that damages were payable by Bonitas and the company’s principal Matthew Wiechert.
Rural Funds made a claim for loss and damages totalling $625,985, comprised of $385,000 paid to EY to produce a report refuting claims made by Bonitas, $134,784 paid to its lawyers, as well as $106,201 for internal costs. The latter was refused.
The corporate regulator in February ruled out a licensing system for analysts, in the wake of the original scathing court judgment that called out deceptive tactics from the US-based short-seller.
Rural Funds Group took action against Bonitas after a short report published by the firm in October prompted a 42 per cent slide in its stock.
Judge David Hammerschlag criticised the authors for the “materially misleading” and “deceptive” reports, as he found them to be in breach of several sections of the Corporations Act and the ASIC Act.
11.33am: Tokyo lower after Wall St rout
Tokyo stocks opened lower following a rout on Wall Street, with investor sentiment weighed down by ongoing virus concerns in Japan, which is seeing a steady rise in cases.
The benchmark Nikkei 225 index fell 0.24 per cent or 43.62 points to 18,021.79 in early trade while the broader Topix index was down 0.46 per cent or 6.27 points at 1,344.81.
AFP
Gerard Cockburn 11.30am: Alert on refunds, cancellations
The competition regulator says small businesses need to get up to date with Australian consumer law when managing refunds and cancellations due to coronavirus.
The Australian Competition and Consumer Commission has issued guidance to help small businesses understanded rights and obligations when handling refunds, saying despite harder times, businesses must honour the terms and conditions of a contract.
ACCC deputy chair Mick Keogh said the updated guidelines outline rights and obligations in the scenarios of a cancelled event, pricing of goods and services and subscription or membership fees.
“We know a lot of small businesses are facing a very challenging time, but they still want to do the right thing by their customers,” Mr Keogh said.
“In the past couple of weeks, we have received over 100 contacts from small businesses about the impact of COVID-19 and their rights and obligations. We have developed this guide to help reduce any confusion.”
11.03am: ASX pares losses in volatile trade
Thankfully US futures caught a bid today despite a lack of good news.
With S&P 500 futures up close to 1pc all morning, the Australian sharemarket is bouncing off its lows.
The S&P/ASX 200 is down 2.2pc at 5146 after opening down 3.7pc at a two-day low of 5065.2.
Obviously the market remains super volatile. What’s more surprising is the lack of volume - 37pc below average for this time of day.
11.00am: Banks count cost of NZ move
Australia’s big four banks are counting the cost of a New Zealand order for banks across the Tasman to suspend the payments of dividends.
The Reserve Bank of New Zealand made the order on Thursday morning to support the stability of the NZ banking system during the coronavirus pandemic. Each of Australia’s big four banks own substantial operations in New Zealand.
“This initiative further supports the stability of the financial system by maintaining higher levels of capital during the period of falling economic activity resulting from the COVID-19 pandemic,” deputy governor and general manager for financial stability Geoff Bascand said.
“(The restrictions) will remain in place until further notice, with the aim of relaxing them when the economic outlook has sufficiently recovered.”
10.35am: ASX plunges 3.5pc amid wild swings
The Australian share market has lurched back into the red after US stocks were hammered overnight on warnings of a mounting coronavirus death toll.
At 10.15am (AEDT) the S&P/ASX200 benchmark index was down 178.3 points, or 3.39 per cent, at 5,080.3, having earlier fallen by more than 3.5 per cent amid more COVID-19 volatility.
The All Ordinaries index was also down, plunging 178.4 points, or 3.37 per cent, to 5,112.3 after the first 15 minutes of trading.
Banks, property and consumer discretionary stocks were the hardest hit.
Thursday’s opening fall comes after 3.58 per cent rise for the S&P/ASX200 benchmark index on Wednesday, when the market surged even as the Reserve Bank released minutes from a meeting a fortnight ago showing members were worried about the likelihood of a recession.
Wall Street, however, suffered more losses overnight after US health officials warned the death toll from the COVID-19 pandemic will surge. The Dow Jones and S&P 500 indexes slumped after suffering their worst first quarter as President Donald Trump warned of a “painful” two weeks ahead for Americans.
Weak US payroll data also stoked concerns of a economic downturn as lockdown measures intensify in a bid to combat the spread of the virus.
The Australian dollar is buying US60.83 cents, down from US61.80 cents as the market closed on Wednesday.
AAP
10.36am: Whitehaven exec appointment
Whitehaven Coal has appointed Ian Humphris as its new executive general manager for the company’s operations division.
Mr Humphris had previously worked at Peabody Energy Australia, where he held the position of vice president of health, safety and environment.
He begins the new role on April 6, taking over from Quentin Granger who has been acting as interim general manager since December 2019.
Whitehaven chief executive Paul Flynn said Mr Humphris will bring more than 20 years of resource sector experience to the executive team.
“Ian is a proven leader, whose operational credentials are complemented by a successful track record of leading a large workforce with strategic oversight of multiple mining operations,” Mr Flynn said.
Gerard Cockburn 10.33am: ANZ, NAB react to NZ move
Two of Australia’s major banks have responded to the Reserve Bank of New Zealand’s (RBNZ) decision to stop allowing financial institutions to make dividend payments.
Both ANZ and NAB have noted what impacts the RBNZ’s longer term funding scheme will have on its trans-Tasman operations.
The RBNZ’s introduction of a term lending facility has been put in place to ensure ample liquidity within the country’s financial sector, with one aspect of the package being that all bank’s operating in New Zealand cannot provide dividend payments on capital instruments.
ANZ said the decision will prevent it from redeeming NZ$500m in capital notes on May 25. But it will still be able to make interest payments on those notes.
The terms of the capital notes also provide conversion into a variable number of ANZ ordinary shares in May 2020 and May 2022.
The bank noted the conversion into ordinary shares following the central bank’s decision is expected to lead to an increase in its common equity tier one position.
It is also anticipating its level two capital ratio will increase by approximately 12 basis points.
NAB said it does not anticipate that the restriction will have a material impact on its level one capital position, nor affect its level two capital ratio.
10.30am: Broker rating changes
AGL Energy cut to Hold - Morgans Financial Limited
AGL Energy raised to Neutral - UBS
APA Group cut to Sell - Morningstar
Bingo Industries cut to Neutral - Goldman Sachs
Brambles cut to Hold - Morningstar
Brambles raised to Outperform - Macquarie
Caltex Australia raised to Overweight - JPMorgan
Dexus raised to Positive - Evans & Partners
IDP Education raised to Add - Morgans Financial
JB Hi-Fi cut to Sell - Morningstar
Magellan raised to Neutral - Macquarie
Mayne Pharma cut to Hold - Morningstar
Monadelphous cut to Hold - Morningstar
Pendal Group raised to Neutral - Credit Suisse
Pendal Group raised to Outperform - Macquarie
Perpetual raised to Neutral - Macquarie
Redbubble cut to Reduce - Morgans Financial
Rio Tinto raised to Outperform - BMO
Sonic Healthcare cut to Neutral - JPMorgan
Technology One cut to Hold - Bell Potter
Viva Energy Group cut to Neutral at JPMorgan
10.10am: ASX sinks, banks smashed
Australia’s S&P/ASX 200 share index has opened down 190 points, or 3.7pc, at a two-day low of 5067.
This was significantly worse than a 3.2pc fall indicated by overnight futures.
It then bounced slightly off the low to be down 3.1pc as S&P 500 futures rose 0.7pc.
The financials sector is weakest with the major banks smashed by 5pc-6pc in early trading.
RBNZ’s freeze on dividend payments on banks in operating in NZ appears to have magnified the selloff in banks.
The real estate and consumer discretionary sectors are also underperforming amid fear of extended lockdowns.
The materials sector is strongest with BHP down 1.4pc.
S&P/ASX 200 was last down 3.1pc at 5097.
The ASX’s opening plunge came after Wall Street continued to suffer as US health officials warn the death toll from the COVID-19 pandemic will surge.
Major US indexes closed 4.4 per cent lower.
The Australian share market had rallied on Wednesday with a 3.58 per cent rise for the S&P/ASX200 benchmark index, even as the Reserve Bank released minutes from a meeting a fortnight ago showing members were worried about the likelihood of a recession.
Eli Greenblat 9.53am: Radio Rentals stores close
Thorn Group has announced it will close all of its 62 Radio Rentals stores, effective April 3 until further notice.
“Our primary focus is the health, safety and welfare of our customers, our team members and the greater community and the decision to close the stores is a result of governments’ moves to limit the spread of the COVID-19 virus across Australia,’’ the company said in an ASX statement.
Radio Rentals’ online store will continue to operate throughout this period, and back office customer service functions will continue to operate as normal.
The company said it will continue to monitor the impact of COVID-19 on its business and will seek solutions that minimise the effects on customers and the financial impact to the company.
Perry Williams 9.30am: AdelBri drops guidance
Australia’s biggest cement company, Adelaide Brighton, has dumped its full-year earnings guidance over coronavirus volatility.
Adelaide Brighton said it was unable to predict the future impact of COVID-19 on its operations and earnings and considered it prudent to withdraw its February guidance of a 10 per cent fall in 2020 profit.
The company has $450m of cash and committed and undrawn bank facilities with no debt maturing until November 2024.
A cost cutting program targeting in excess of $30m in gross 2020 savings will continue with the company also reviewing its capital spending plans.
“To date, all of our sites have been fully operational and, since our full year results release in late February, our business has continued to trade largely in line with our expectations,” chief executive Nick Miller said.
Adelaide Brighton’s underlying net profit after tax for the December year fell to $123m from $191m a year earlier with construction materials markets softening in NSW and Queensland due to an oversupply of apartments and falling consumer confidence.
The company - which supplies products to construction, infrastructure and mining projects throughout Australia - plans to keep high stockpiles of raw materials over concern the coronavirus may cut access to imported supplies.
Its shares have fallen 38 per cent so far this year.
Eli Greenblat 9.15am: CC Amatil update to come
Bottler Coca-Cola Amatil will hold a market update on April 17 led by chief executive Alison Watkins and chief financial officer Martyn Roberts, at which they will detail the beverage group’s first quarter trading.
CC Amatil said in an ASX statement it would be the first in an ongoing series of briefings this year as it updates investors on its performance through the coronavirus pandemic.
Last month CC Amatil said it could no longer provide earnings guidance for 2020 due to the uncertainty around the coronavirus pandemic.
At the time it said it had seen a spike in the supermarkets channel as shoppers stocked up on products, but there was a drop in sales through other channels such as convenience stores, restaurants and cafes.
Bridget Carter 9.03am: Next DC taps market
Data centre operator Next DC is tapping the market for $672m through investment banks Citi and RBC as the rush by companies to embark on equity raisings continues.
Shares are being sold at $7.80 each, a 15 per cent discount to their last close of $9.18.
The company is issuing 86.1m securities which represents 25 per cent of securities on issue.
The raise is by way of a placement, but the company will also launch a share purchase plan to secure funds.
Next DC says the funds are to support the construction of a new data centre in Sydney and to offer flexibility to ensures its growth agenda will continue.
The company’s market value is $3.17bn and has surged since government restrictions have been put in place on the back of the COVID-19 crisis that sees the large portions of the Australian workforce now working on computers at home to curb the virus spread.
More companies have started raising equity in recent days after laws temporarily changed to allow placements of 25 per cent in a listed business compared to 15 per cent normally.
Richard Gluyas 8.58am: CBA ‘well placed’ on NZ payout freeze
Commonwealth Bank has said it is well-placed to absorb the suspension of dividends from its New Zealand subsidiary ASB, which is part of a sector-wide move announced on Thursday by the Reserve Bank of New Zealand.
The RBNZ’s order to subsidiaries of Australia’s big four banks was made to support the stability of the NZ banking system during the coronavirus pandemic.
“This initiative further supports the stability of the financial system by maintaining higher levels of capital during the period of falling economic activity resulting from the COVID-19 pandemic,” deputy governor and general manager for financial stability Geoff Bascand said.
“(The restrictions) will remain in place until further notice, with the aim of relaxing them when the economic outlook has sufficiently recovered.”
CBA told the Australian Securities Exchange that dividends from ASB only affected its level one common equity tier one ratio, which stood at 12.1 per cent at the end of last year.
The group’s “strong” level one CET1 capital position meant it was “well-placed” to absorb the suspension of ASB dividends.
The RBNZ’s announcement follows similar restrictions on dividend payments to bank shareholders by the Bank of England and the European Central Bank.
Bridget Carter 8.50am: Webjet upsizes raising
Webjet has upsized its equity raising to $346m from up to $332m earlier on the back of demand for the stock from investors.
It comes as private equity firm and potential suitor Bain Capital takes up shares in the company as part of its institutional offer partially sub underwrites the retail component.
On Wednesday, Webjet launched a book build for an equity raising on Wednesday at $1.70 per share.
In a book message sent to investors, it said that the Webjet institutional component of the offer was covered with demand from both existing Webjet shareholders and new investors.
“In response to this demand, the institutional placement will be upsized from $101m to $115m with total proceeds raised being $346m,” investors were told.
The term sheet said that the retail entitlement offer had been fully sub-underwritten, including in part by Bain Capital, which was also allocated stock in the institutional component of the institutional offer.
The online travel agency has been eager to secure funds after the government suspended travel to curb the spread of COVID-19.
Eli Greenblat 8.35am: Freedom, Kresta shut down
Freedom Furniture and blinds retailer Kresta are the latest retailers to close their doors amid the coronavirus pandemic, sending more staff home to wait out the health crisis.
Freedom Furniture, which has 65 stores across Australia and New Zealand, with 49 of those in Australia, has decided to shut down until further notice, although its Toowoomba store will remain open. The shutdown is expected to impact more than 700 jobs.
Freedom Furniture is owned by Greenlit Brands.
Kresta, which is listed on the ASX, has about 30 stores across Australia and New Zealand and will also close. It will stand down around 130 staff.
“The health and wellbeing of customers, team members, their families and the broader communities remain the Company’s priority,” it said in an ASX statement.
“The online business operates as usual. Unfortunately, the company has also made the difficult decision to stand down approximately 130 team members from 30 March 2020.”
Bridget Carter 8.00am: Bauer shuts NZ mags
German media company Bauer Media is permanently shutting down its New Zealand magazine business and is understood to have hired EY to launch a strategic review of its operations in Australia.
The company announced the closure of operations across the Tasman on Thursday, with 237 staff to be made redundant.
Bauer Media blames the closure on the severe economic impact of COVID-19.
“The closure brings to an end many decades of publishing in New Zealand and means the company’s 237 staff will be made redundant,” the company said in a statement.
Bauer Media NZ publishes entertainment, lifestyle and current affairs titles including the NZ Listener, Woman’s Day, New Zealand Woman’s Weekly, North and South and Next, along with a digital network.
7.52am: Peter King appointed Westpac CEO
Westpac has appointed Peter King as its new chief executive, after he last year stepped in as acting CEO following the departure of Brian Hartzer in the wake of the AUSTRAC scandal
Announcing the appointment, chairman John McFarlane said in moments of global stress and uncertainty, management stability and strength were vital.
“I believe we need a chief executive in place now, not later, and with full, rather than acting
authority. On my recommendation, the board has appointed Peter King as CEO. Peter has
agreed to do this for two years.
“I have built a strong relationship with Peter since we first met. He understands the bank,
its business and its finances, and has the confidence of the management team, as well as
my own and that of the board.
“He and I are also completely aligned on what needs to be done. He is the right person to
take the company forward at the present time, and now has the full authority to make
change and to see it through,” Mr McFarlane said.
Peter King has worked at Westpac for 25 years.
“We are focused on responding to the COVID-19 outbreak and supporting our customers
and protecting our people,” Mr King said.
“We have a critical role to play alongside government and regulators in supporting Australians and New Zealanders and our countries’ financial systems,” Mr King said.
7.46am: Aluminium prices sink
Industrial metals prices fell sharply on Wednesday after data showed global factory output shrinking fast, with expectations of a vast supply surplus pushing aluminium below $US1500 a tonne for the first time since 2016.
Benchmark aluminium on the London Metal Exchange was down 1.8 per cent at $US1,498 at after falling as low as $US1,483.50.
The falls come on the heels of the worst quarter for base metals since 2011. Aluminium, a lightweight metal used in transport and packaging, has tumbled 17 per cent this year as the coronavirus pandemic has reduced demand.
Reuters
7.45am: Oil ends lower
Oil prices have fallen after US crude inventories rose last week by the most since 2016, while gasoline demand suffered its biggest weekly drop ever due to the coronavirus pandemic.
Crude inventories rose by 13.8 million barrels last week, the US Energy Information Administration said. That was the biggest one-week rise since 2016, and analysts expect similar data in coming weeks, as refineries curb output further and gasoline demand continues to decline.
West Texas Intermediate crude fell 17 US cents to settle at $US20.31 a barrel, after hitting a low at $US19.90.
June Brent crude fell $US1.61, or 6.1 per cent, to $US24.74 a barrel. The global benchmark fell to $US21.65 on Monday, its lowest since 2002, when the now-expired May contract was the front month.
Reuters
7.30am: NZ stops bank dividend payouts
The Reserve Bank of New Zealand has announced a new longer-term funding scheme for the nation’s banking system, in support of government guarantees to help promote lending to businesses during the virus crisis.
It says the term lending facility 9TLF) is similar to the recently announced term auction facility, and both provide liquidity to the banking system.
The TLF aims to ensure access to funding for banks at low interest rates for up to 3 years duration, which is longer than the RBNZ’s other liquidity facilities.
The RBNZ has already cut rates and deferred the start of increased capital requirements for banks.
In another move, banks will not pay dividends on ordinary shares.
“To further support the stability of the financial system during this period of economic uncertainty, we have agreed with the banks that during this period there will be no payment of dividends on ordinary shares, and that they should not redeem non-CET1 capital instruments,” Deputy Governor and general manager for financial stability Geoff Bascand says.
7.20am: ASX poised to dive into red
The Australian share market is poised to lurch back into the red after US stocks were hammered overnight on warnings of a mounting coronavirus death toll.
At 7am (AEDT) the SPI200 futures contract was down 169 points, or 3.24 per cent, at 5,055.0 points, suggesting heavy early losses for local stocks.
Wall Street continues to suffer as US health officials warn the death toll from the COVID-19 pandemic will surge.
The Australian share market had rallied on Wednesday with a 3.58 per cent rise for the S&P/ASX200 benchmark index, even as the Reserve Bank released minutes from a meeting a fortnight ago showing members were worried about the likelihood of a recession.
The Australian dollar is buying US61.78 cents, slightly down from US61.80 cents as the market closed on Wednesday.
AAP
7.15am: CBA to pay some customers
The Commonwealth Bank says it will make payments to support customers granted a six- month loan deferral to offset interest.
It comes after the CBA and other banks announced repayment deferrals for home loan customers as jobs disappear during the COVID-19 crisis.
Group executive retail banking services, Angus Sullivan, said: “When a home loan repayment is deferred for six months, interest is calculated and added to the loan balance each month which can result in customers paying interest on interest each month.
“To support more Australians, we will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus.
“This means for an average loan of $350,000, CBA will be refunding approximately $45 to offset the effect of interest on interest over the six month period. Customer payments will vary based on their loan amount and interest rate.”
7.08am: US stocks tumble 4pc
Wall Street fell after President Trump issued a stark new warning on the spread of the novel coronavirus, putting investors on edge about the damage that the pandemic could inflict on the world’s largest economy.
The Dow Jones Industrial Average dropped 974 points, or 4.4pc, a day after the index closed out its worst quarter since 1987. The S&P 500 fell 4.4pc, while the Nasdaq Composite was also down 4.4pc.
Australian stocks are set to open sharply lower, with the SPI futures index down 169 points, or 3.3 per cent, at 7am (AEDT).
The White House had warned that the U.S. could face as many as 240,000 deaths, with Mr Trump asking Americans to brace for an unprecedented crisis in the days ahead. The US has more confirmed cases than any other country, with more than 200,000 infections. Projections from the University of Washington show the illness could result in 2,214 deaths a day at the peak in two weeks.
“We’re slowly peering through the fog and trying to see how bad things will become, but essentially we are flying blind,” said Peter Dixon, a senior economist at Commerzbank. “It’s very clear this is going to be the biggest sudden stop in measured history: The economy is just going to hit the buffers.”
Overseas markets also fell. The pan-continental Stoxx Europe 600 index retreated 2.9pc. In Asia, Japan’s Nikkei 225 lost 4.5pc and Hong Kong’s Hang Seng dropped 2.2pc.
As investors turned to assets that are perceived to be the safest, the yield on the 10-year U.S. Treasury note slipped to 0.627pc, from 0.691pc on Tuesday. Yields drop as bond prices climb.
Philip Blancato, CEO of Ladenburg Thalmann Asset Management, said the market had entered a new phase after the initial shock of the pandemic triggered a precipitous drop in major stock indexes. Stocks are cheap enough now that investors are eyeing opportunities and hoping the market will bottom out once measures to battle the virus show signs of effectiveness, he said.
“Stocks are now inexpensive,” Mr. Blancato said. “If they’re cheap, that creates a floor in the market for companies with good fundamentals.”
Still, major US indexes have posted two consecutive days of declines, a reversal from last week when the S&P 500 rallied more than 10pc in its best week in years. Fears that the pandemic could worsen are driving fund managers to hold cash instead of buying stocks, said Randy Frederick, vice president of trading and derivatives at Schwab Center for Financial Research.
Futures on Brent crude, the global oil benchmark, dropped $US1.61 a barrel, or 6.1pc, to $US24.74 after an agreement between major oil-producing nations limiting the output lapsed overnight. Saudi Arabia is preparing to flood oil markets as the kingdom forges ahead in a price war with Russia. Oil prices have tumbled more than 60pc so far this year.
Dow Jones Newswires
6.30am: Wall St sinks 4pc
Stocks fell after President Trump issued a stark new warning on the spread of the novel coronavirus, putting investors on edge about the damage that the pandemic could inflict on the world’s largest economy.
The Dow Jones Industrial Average dropped 930 points, or 4.2pc, in afternoon trading, a day after the index closed out its worst quarter since 1987. The S&P 500 fell 4.4pc, while the Nasdaq Composite was down 4.2pc.
The White House warned on Tuesday that the US could face as many as 240,000 deaths, with Mr Trump asking Americans to brace for an unprecedented crisis in the days ahead. The US has more confirmed cases than any other country, with more than 200,000 infections. Projections from the University of Washington show the illness could result in 2,214 deaths a day at the peak in two weeks.
“We’re slowly peering through the fog and trying to see how bad things will become, but essentially we are flying blind,” said Peter Dixon, a senior economist at Commerzbank. “It’s very clear this is going to be the biggest sudden stop in measured history: The economy is just going to hit the buffers.”
Overseas markets also fell. The pan-continental Stoxx Europe 600 index retreated 2.9pc. In Asia, Japan’s Nikkei 225 lost 4.5pc and Hong Kong’s Hang Seng dropped 2.2pc.
Dow Jones
5.45am: Stocks skid as infections keep soaring
US stocks joined a worldwide downdraft as more signs piled up of the economic and physical pain being caused by the coronavirus outbreak.
The S&P 500 was down 4pc in afternoon trading as investors remain uncertain about the duration of the virus outbreak and its ultimate impact on the global and domestic economies.
The Dow Jones Industrial Average was down 868 points, or 4pc, to 21,053, and the Nasdaq dropped 3.8pc.
After a bumper 3.6pc lift on Wednesday, Australian stocks are set to open lower. At 5.40am (AEDT) the SPI futures index was down 78 points.
The Australian dollar was lower at US60.77c.
In the US, President Donald Trump warned Americans to brace for “one of the roughest two or three weeks we’ve ever had in our country.”
The White House is projecting that 100,000 to 240,000 people in the US could die from COVID-19.
Japanese stocks took some of the world’s heaviest losses, down 4.5pc, after a survey of business sentiment there fell to its worst result in seven years.
Britain’s FTSE 100 fell 3.8pc after big banks there scrapped dividend payments, part of a worldwide effort by companies and households alike to conserve cash.
Stocks have tumbled this year as the coronavirus pandemic forces economies into what is expected to be a steep, sudden recession. Businesses are shutting down, people are staying at home in hopes of slowing the spread of the virus and the S&P 500 just closed out its worst quarter since 2008 with a 20pc loss.
“The challenge for investors is you don’t know how deep and how wide this downturn may be,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. “It ends up being a true leap of faith that the forecast and the duration of the pandemic will be accurate.”
AP
5.40am: Saudi oil supply hits record
Saudi Arabia has boosted crude oil supply to record levels, with state giant Aramco offering 18.8 million barrels on a single day despite a global supply glut as a price war rages with Russia.
Aramco’s announcement comes after a deal to limit crude output between the Organisation of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, expired on Tuesday.
The move comes despite pressure from Washington, with US President Donald Trump offering on Tuesday to help resolve the price war between Moscow and Riyadh that has sent crude prices plummeting to 18-year lows.
“As the world demands economic stability, Aramco remains committed to supplying the world with energy,” the oil giant said in a statement.
AFP
5.35am: Sprint and T-Mobile merge
Mobile carrier T-Mobile has completed the takeover of smaller rival Sprint, creating a new wireless giant that rivals AT&T and Verizon in size.
The companies announced the deal, valued at $US31.6 billion based on T-Mobile’s closing stock price on Tuesday, two years ago. It has taken a long time to close because of pushback from state and federal regulators.
The Federal Communications Commission and the Department of Justice approved the deal last year, with DOJ telling the companies that they must set up satellite TV company Dish as a new wireless carrier - an unusual arrangement - in order to win approval. Public-interest groups said this was insufficient to correct the harms from the merger.
AP
5.30am: Stocks slump on Trump warning
Stock markets slumped after President Donald Trump warned of “a very, very painful two weeks” to come for the United States, whose coronavirus death toll has overtaken that of China.
European equities fell hard, with London, Frankfurt and Paris all down around 4 per cent. Tokyo earlier closed down 4.5 per cent.
Wall Street opened sharply lower, but clawed back some of the losses as the morning wore on. The Dow was down 2.5 per cent in midday trading.
Adding to the gloom, UK banks axed billions of pounds in shareholder dividends and stock buybacks after the Bank of England requested the move to boost liquidity as a way to stimulate the virus-hit economy.
Investor sentiment in Europe was also knocked by poor manufacturing survey data, jangling market nerves before Friday’s key US non-farm payrolls figures.
The euro dropped against the dollar and pound.
“Trump’s warning is the primary driver of today’s downturn,” Oanda analyst Craig Erlam said.
“It’s such a shift from his previous views on the impact of the coronavirus and finally an acceptance of how severe the situation is.”
Asian bourses fell after a dire first quarter for markets, with traders contemplating the prospect of lengthy lockdowns as the coronavirus continues its deadly sweep across the planet.
“Donald Trump reflected the mood as he warned of weeks of pain still ahead -- a stark change from his rather casual approach thus far,” noted Markets.com analyst Neil Wilson.
Oil slid, as Saudi Arabia began ramping up output amid its price war with Russia.
World oil prices are close to 18-year lows at around $US20-25 per barrel, having plunged by around 65 per cent in the first quarter as lockdowns dampened demand.
AFP
5.25am: World ‘could face food crisis’
The heads of three global agencies warned of a potential worldwide food shortage if authorities fail to manage the ongoing coronavirus crisis properly.
Many governments around the world have put their populations on lockdown to slow the spread of the virus but that has resulted in severe slowdowns in international trade and food supply chains.
Meanwhile panic buying by people going into isolation has already demonstrated the fragility of supply chains as supermarket shelves emptied in many countries.
“Uncertainty about food availability can spark a wave of export restrictions, creating a shortage on the global market,” said the joint text signed by Qu Dongyu, head of the UN’s Food and Agriculture Organization (FAO), Tedros Adhanom Ghebreyesus, director-general of the World Health Organization (WHO) and Roberto Azevedo, director of the World Trade Organization (WTO).
That is not an idle threat. After the 2007 global financial crisis, rice producing countries India and Vietnam restricted exports to ward off expected price increases. The result: food riots in several developing countries as the price of rice soared.
AFP
5.20am: Adidas ‘sorry’ over rent stand
German sportsgear maker Adidas said it had made “a mistake” when it decided not to pay rent on its shuttered shops in April, after the move sparked a widespread outcry.
Adidas was one of a string of retailers in Germany that said they wouldn’t be paying their landlords while their stores are closed as part of efforts to stem the coronavirus spread.
“We made a mistake and we lost a lot of trust,” the firm said in a letter on its German website.
“We would like to wholeheartedly apologise. We have paid our landlords the rent for April.” Adidas, which made a net profit of nearly two billion euros ($US2.2 billion) in 2019, has been hard hit by a slump in Chinese sales and store closures around the world.
But it faced massive criticism when it emerged last week that the group was planning to suspend rent payments as it grapples with the fallout from the coronavirus crisis.
AFP
5.15am: US private hiring falls
US private hiring fell in March amid the coronavirus pandemic, with small businesses suffering the biggest losses, however the report likely underestimated the damage, data released Wednesday from payrolls firm ADP said.
Total employment fell by 27,000 in the month -- the biggest and only drop since September 2017 -- while small business jobs plunged by 90,000, according to ADP’s monthly report.
However, like the government employment report, the private data looks at employment in the week including the 12th day of the month -- which was before the worst of the lockdowns due to COVID-19 took effect.
AFP
5.10am: BP cuts spend by quarter
British energy giant BP has slashed its planned spending for 2020 by one quarter and announced a $US1.0-billion hit from collapsing oil prices as the coronavirus outbreak destroys demand.
The energy sector has been ravaged by the collapse in the global oil market where the problems have been made worse by a vicious price war between key producers Saudi Arabia and Russia.
BP spending this year will stand at $US12 billion, 25 per cent below prior guidance, it said in a statement.
The London-listed company added that it would deliver $US2.5 billion in cost savings by the end of 2021, compared with last year.
BP said its first-quarter results, due April 28, would include a $US1.0-billion charge linked to the market slump.
AFP
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