ASX clinches daily gain as Commonwealth Bank lifts
After spending all day in the red, a rally in the final match has sent the ASX to a gain of 0.4pc – thanks in most part to CBA and BHP.
- CBA update ‘encouraging’: AMP
- Sigma served first strike over exec pay
- Rex could fly domestic by March 2021
- KKR buys stake in Colonial First State
That’s all from the Trading Day blog for Wednesday, May 13. Australian stocks came back from a loss as much as 1.9pc to trade higher by 0.4pc at the close – with defensive stocks the key contributors.
Fear of a second wave of infection jolted Wall Street overnight and added to fear of a trade war locally. In company news, CBA took a $1.5bn provision for coronavirus and sold a $1.7bn stake in its wealth arm to KKR, while Westpac’s read of confidence shot higher and wages data printed flat.
US futures are higher, pointing to a rebound in the session to come.
Richard Gluyas 8.50pm: Westpac and Austrac ‘closer to trial’
It’s now looking very unlikely that Westpac and Austrac will walk hand-in-hand to the Federal Court on Friday and present a proposed penalty and agreed statement of facts to Judge James Allsop.
The bank will instead lodge a defence, including a range of admissions it has previously made.
In theory, it’s a step closer to a trial.
However, discussions are expected to continue, with optimists believing the odds still favour a commercial settlement, even if the process follows the same circuitous route as Commonwealth Bank’s clash with the combative financial intelligence agency in 2017.
CBA appeared to be willing to go head-to-head against Austrac by initially lodging a defence, only to think better of it in June 2018 and pay a record $700m fine to make the whole thing disappear.
Two years later, the main obstacle to a settlement in these capital-constrained times is the size of the cheque that Westpac is prepared to hand over to the commonwealth Treasury.
The bank set aside $900m for a penalty last month as part of an overall charge of $1.03bn, including $130m in costs linked to its Austrac response plan.
Eli Greenblat 8.12pm: Coke boss expects Aussies to emerge early
Coca-Cola Amatil chief executive Alison Watkins says the Australian consumer is better placed to emerge from the coronavirus crisis with confidence to spend because of the government’s success in stemming the pandemic, compared to consumers elsewhere in the world.
Australian and New Zealand consumers had a better prospect of rapidly returning to their life before the coronavirus swamped the globe, whether it was enjoying the outdoors or eating out, although they would be seeking value offers when shopping, she said.
And, in a candid moment during her virtual address to the trans-Tasman Business Circle on Wednesday, Ms Watkins spoke of her disempowerment as a leader in the pandemic, and said she felt that for many workers the novelty of working from home was starting to wane.
“The novelty of it has well and truly worn off for most of us. It is tremendously difficult for people who have to juggle kids not being at school and the restrictions on just being able to take the kids to the park.
“So living in a small apartment, the stresses, the untold stories are many and I’m sure we will see the outworkings of that in coming months,’’ Ms Watkins said.
“Working from home, we probably need to approach this as it is just the first 50m of an 800m race and so we need to make sure this is sustainable for everyone.”
Addressing the Business Circle’s Emerging Leaders Series, Ms Watkins also conceded some aspect of disempowerment as her long-promised restructure of CC Amatil was just starting to come to fruition when the country was hit by bushfires and then the coronavirus pandemic.
“All of sudden the weather changed and we can’t complete the climb like we wanted to, and so (it all depends on) how quickly you can accept that and get yourself into a positive mindset.’’
CC Amatil was forced in March to withdraw its guidance of single-digit earnings per share growth in 2020 as the economic uncertainty driven by the pandemic rattled consumer confidence and squeezed beverage sales.
7.45pm: Banks go well; bankers, not so much
Investment banks had an excellent first quarter. Investment bankers weren’t so lucky.
Revenues at the largest US and European investment banks were $US44bn ($67.9bn), up 12pc compared with the same period last year, according to a new report from data provider Coalition.
Jobs in the front office, however, fell by 6pc to 49,000 over the year.
The figures cover Bank of America, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Société Générale and UBS.
Traders capitalised on plunging stocks, wild swings in commodity prices and the dramatic actions of the US Federal Reserve and other central banks to ease liquidity at the onset of the coronavirus crisis.
Capital markets were buoyed by the corporate dash for cash as companies built war chests to weather the economic turmoil. Bankers also helped investors adjust their holdings to the dramatic shift in the economic outlook after the lockdown restrictions spread beyond China.
But the extra profits couldn’t stop the number of jobs for front-office investment bankers from shrinking. These roles have been disappearing for the past six years, and the trend is expected to continue. European lenders have long been culling their investment banking operations, and many, including HSBC, Deutsche Bank and Royal Bank of Scotland, plan to cut thousands more jobs either now or when lockdowns lift.
There seems to be little sympathy for bankers in Europe, where they have failed to rehabilitate their reputation after being blamed for the 2008 crisis. Bankers’ pay and bonuses are once again under pressure in the region as governments look to them for support in helping businesses through the lockdowns.
Investment banks have invested billions in technology to replace old systems and automate processes, making bankers redundant. Neither that spending, nor the layoffs, show signs of slacking. Many staff are working from home and that also has senior managers considering new ways to trim costs.
With so many unknowns about the path to economic recovery, more volatility and more opportunities for investment bankers to profit are likely. But they shouldn’t count on a jobs bonanza.
Dow Jones Newswires
Craig Johnstone 6.43pm: Qld goverment to bid for Virgin Australia
The Queensland government plans to bid for troubled airline Virgin Australia as a way of keeping its headquarters in Brisbane.
New state Treasurer Cameron Dick has told the Queensland Investment Corporation to look at investing in Virgin, which went into voluntary administration with $7bn in debts.
Mr Dick said the investment “could take the form of a direct equity stake, a loan, guarantee or other financial incentives”.
James Kirby 6.34pm: Housing: What’s the worst scenario?
Could house prices drop more than 30 per cent?
The nation’s biggest bank, CBA, has published just such a scenario putting forth a suggestion that house prices will keep falling over the next three years.
Under a so-called “prolonged downturn”, CBA says prices would fall this year, next year and the year after, combining to create a 32 per cent plunge from top to bottom.
The estimate is a prediction that we should not overplay since it is set beside an alternative scenario where a base case “downturn” scenario would see home prices drop 11 per cent.
But then again, the monster of the home lending market would not produce its considerably scarier forecasts if they were not being considered at the highest levels.
Adam Creighton 5.27pm: China ‘punishing’ Australia
Lowy Institute fellow Richard McGregor told The Australian China’s sudden black-listing of Australian meat exports could be followed by wine and dairy bans as Beijing seeks to penalise the Morrison government for speaking out in favour of an inquiry into the origins of the coronavirus.
“The meat decision is a straight-out shot across the bow to remind us of the damage they can do to us,” he said.
“They want to make sure governments which cross them politically understand there is a cost, and that the underlying populations also understand it.”
S&P chief economist Shaun Roache said it was in Australia’s interest for the World Trade Organisation to be reformed, as large nations were increasingly using trade as a political weapon.
5.02pm: Defensives lead ASX push higher
Defensive names were a standout in Wednesday’s trade led by Telstra’s 1.3 per cent jump to $3.13. Transurban put on 1.2 per cent to $13.82 as gold miner Newcrest put on 1.4 per cent to $28 and Northern Star gained 1.6 per cent to $13.37.
Real estate stocks clocked the largest fall, slipping by 2.2 per cent as Stockland lost 1.1 per cent to $2.69, Scentre lost 3.6 per cent to $2.12 and Vicinity Centres put on 2.8 per cent to $1.41.
Regional airline Rex soared by 32 per cent to $1.19 as it re-emerged from a halt, saying it was looking for backers for an extension of its services to capital cities. Qantas shares added 0.3 per cent to $3.55.
Here’s the biggest movers at the close:
4.54pm: Economic recovery priced in
The warning of a second wave of infection from the top US disease expert wasn’t a surprise, but pertinent given global market’s recent recovery rally, says OANDA’s Jeffrey Halley.
“Markets had unceremoniously been ignoring similar warnings for the past two weeks. It suggests that for now, most of the peak-virus global recovery trade, maybe baked into financial markets and that we are entering a period of sideways consolidation,” he said. “Investors should be wary of being whipsawed by the daily flip-flops in global sentiment over the remainder of the week.”
The jolt to sentiment also hit the Aussie dollar, sending it down to US64.51c but by the close AUDUSD was trading higher by 0.2pc from the NY close to US64.81c.
Gerard Cockburn 4.28pm: Banks on standby for negative NZ rates
The New Zealand divisions of Australia’s major banks are on standby for potential negative interest rates, following the country’s central bank flagging further monetary easing measures.
The Reserve Bank of New Zealand has indicated it is in discussions with financial institutions about being prepared for the country’s central bank to potentially impose a negative cash rate, if the coronavirus pandemic continues to drag down economic recovery.
In a note issued on Wednesday, the RBNZ reaffirmed the official cash rate will hold until at least early 2021, noting the current banking environment is not “operationally ready” for another cash rate cut.
“The current goal of monetary policy tools is to reduce borrowing rates for New Zealanders, and further official cash rate reductions at this stage would not be effective in achieving that,” the RBNZ said.
Australia’s big four banks all have trans-Tasman operations, with a potential negative interest rate likely to place further pressure upon capital positions.
4.11pm: Late boost sends ASX up 0.4pc
Local shares fought back from a 1.9 per cent intraday loss, jumping in the final match to notch a 0.4 per cent gain for the day.
At the close, the benchmark ASX200 was up by 19 points or 0.35 per cent to 5421.9.
A reversal in Commonwealth Bank was the key driver of the shift in momentum, slipping as much as 1.5pc but finishing the session higher by 1.9 per cent.
Perry Williams 3.54pm: Eni’s gas sales unlikely this year: WoodMac
Italian energy major Eni faces a challenging time to sell its Australian gas assets with a deal unlikely to be completed this year, consultancy Wood Mackenzie said.
Investment bank Citi has been hired to sell Eni’s exploration and production business. The Italian producer has held talks with its Australian joint venture partners including Santos in the last few weeks to inform them of its decision.
Eni was named last year by WoodMac as a company likely to divest its Australian upstream division, but faces a difficult deal climate amid the current oil slump.
“The sale announcement does come at an interesting time, where operators globally have taken an axe to discretionary expenditure budgets. It’s also a challenging time to sell assets, as valuations will have fallen due to the oil price crisis,” WoodMac analyst David Low said.
“The Australian buyer pool is already small, and will have shrunk further as many companies are focused on cutting spend and retaining capital – or just survival – rather than growth. Also, fluctuating oil prices means it’s hard for buyers and sellers to close the bid-ask price for assets – a deal is unlikely to be completed this year.”
Eni holds stakes in Darwin LNG and the Bayu-Undan gas fields which supply the facility. However, the Bayu fields are due to cease production in 2022 meaning Eni will only be left with a LNG tolling fee while regional production is also in decline.
Eni’s Australian renewables business will be kept with WoodMac expecting it to grow its investment as part of a bid to reach 10 gigawatts of renewables globally by 2030.
3.46pm: ASX claws back to flat
Local stocks have clawed back ground in the afternoon session, the benchmark ASX200 trading flat just ahead of the close.
With 15 minutes to go, the index is lower by just -0.8pc to 5402.2 – helped in some part as US futures turn higher by 0.2pc.
Commonwealth Bank has jumped by 1.3pc while heavyweight miners are all up more than 1pc.
Still, if recent trade is anything to go by, don’t be surprised if we see a reversal in the final match.
3.31pm: Australia prices record $19bn in bonds
Australia has raised a record $19bn in its latest syndicated bond sale.
The Australian Office of Financial Management today said that the issue by syndication of the new 1.00pc December 21, 2030 Treasury Bond had been priced at a yield to maturity of 1.025pc.
It said there had been a total of $53.5bn of bids and that settlement would occur on May 21.
ANZ, Citi CBA and UBS were joint-lead managers for the issue.
“The AOFM will be mindful of the performance of the bond when considering the timing of future issuance,” it said.
3.22pm: Mesoblast trial a game changer: Waislitz
Mesoblast backer billionaire Alex Waislitz has heralded the biotech’s US trial as a “game changer” for COVID-19 patients and the global economy, after supporting the stock in its latest raise.
The group raised $US90m ($138m) to scale up its manufacturing as it trials its treatment on 300 patients in US hospitals.
Mr Waislitz said his fund had been a supporter of the stock since the beginning and “have participated in every one of their capital raises”.
“If their current 300 patient trial in the USA produces similar results (to the early trial) it will be a game changer not only for dramatically lowering death rates in the worst affected COVID-19 patients but for the world economy as well,” he said.
Mr Waislitz also encouraged the local government to recognise the company’s potential to develop their capabilities domestically, “rather than lose them to another country such as the USA or elsewhere”.
MSB last traded down 2.3pc to $3.36.
Read more: Mesoblast claims coronavirus treatment breakthrough
3.05pm: Consumption to slump further: UBS
UBS says today’s consumer sentiment rebound is a positive, but the slump in business conditions implies a collapse in capital expenditure, as it tips more pain to come in the second quarter.
In a note led by chief economist George Tharenou, the broker notes the range of economic data released today – that wages data will likely hold flat in the near time, while April migration is set to turn negative and yesterdays business conditions are set to slump further.
But in reaction to the rebound in sentiment from the Westpac survey this morning, Mr Tharenou writes that sentiment levels are historically consistent with flat real consumption.
“However, due to mobility restrictions, we still expect a far larger slump to 9pc q/q and y/y in Q2; albeit nowhere near as bad as the 15pc collapse expected by both the Australian Treasury and the RBA.” he says.
Read more: Confidence in record comeback
Bridget Carter 2.49pm: Palisade hires RBC for renewable deal
DataRoom | Palisade Investment Partners is understood to have hired the Royal Bank of Canada and Grant Samuel for a potential acquisition of John Laing’s Australian renewable energy business.
Other parties that could also be in the mix include ICG and Macquarie Investment and Real Assets.
Palisade is interested in the John Laing business after it purchased the Snow Town 2 Wind Farm from Tilt Renewables late last year with First State Super for about $1bn.
At that time, Macquarie Capital, along with law firm Allen and Overy and accounting firm KPMG, advised on the transaction, which involved $472m of equity and $611m of debt.
Palisade is a specialist, independent infrastructure manager and developer and owner and manager of renewable energy assets in Australia.
Richard Ferguson 2.22pm: Australia stands behind producers: PM
The Prime Minister says the government is reaching out to Chinese authorities over both met and barley trade disputes, and that he has confidence that he will continue to support the China-Australia strategic partnership.
“We hold concerns for the way this issue is being progressed at this point in time to this is a matter that the government has been raising now for a considerable period of time. In fact I have done so on several occasions in my direct meetings with the Premier (Li Kewaing).
“Let me be clear about one thing. Australia stands firmly behind our agricultural producers and we stand firmly about where we see the role of the Australian economy in the broader world.
“We have great confidence in our outlook as a trading nation and we engage with all partners in good faith with the purpose of ensuring the increasing global trade.
“That is the basis for our relationship with the Chinese government when it comes to a comprehensive strategic partnership it works across many different areas and has been a highly successful agreement. From time to time there will be differences in views and we will progress them constructively in the national interest, always in the national interest.”
Follow the latest at our live blog: China ‘won’t throw away trade with Australia’
2.12pm: CBA revenue looks resilient: Ords
Commonwealth Bank’s update showed more “resilient” revenue trends than expected, according to Ord Minnett, but the broker warns its capital was significantly weaker.
In a note following the update this morning, Ords analysts write that at just 10.7pc, the bank’s tier one capital ratio was softer than anticipated, but that the sale of a stake in Colonial First State should bolster those levels by 30bps to 40bps.
Ords adds that under the bank’s “downturn” scenario a 90bps impact on its top tier capital ratio is expected, and 170bps under its “prolonged downturn” scenario – though both “at the low end of the range presented by peers over the past 2 weeks”.
CBA last up 0.4pc to $59.98.
Read more: CBA books $1.5bn hit, sells wealth stake
1.54pm: China car sales get COVID jump-start
The lifting of coronavirus lockdowns in China has given the stuttering auto industry a jump-start, with sales rising for the first time in two years as buyers return as the health crisis eases.
Sales in the world’s biggest car market began to slide in 2018 and plunged further when the pandemic paralysed the economy, but they have rebounded as the country tames the virus and lifts restrictions on travel and businesses.
Sales rose 4.4 per cent year-on-year in April, the latest figures from the China Association of Automobile Manufacturers show, driven by strong demand for commercial vehicles, which soared more than 30 per cent.
The recent uptick came as China emerged from months of lockdown and restrictions on movement imposed around the country earlier this year to curb the spread of the virus.
Passenger car sales suffered at the time, plunging close to 80 per cent from a year ago in February, according to China Passenger Car Association data.\
AFP
David Swan 1.26pm: Atlassian picks up Halp
Australian tech darling Atlassian has made its latest acquisition, picking up Slack specialist Halp for an undisclosed sum.
Atlassian, which has continued to climb in valuation over the last few months despite the ongoing COVID-19 pandemic, said overnight that it was buying Halp, which lets Slack users easily create help desk tickets from inside Slack.
“Halp Answers enables your teams to leverage the knowledge that already exists within your company to automatically answer tickets right in Slack,” the company said in a blog post announcing the deal.
“That knowledge can be pulled in from Slack messages, Confluence articles or any piece of knowledge in your organisation.”
Read more: Atlassian makes fresh acquisition
We’re thrilled to announce that @halp is joining the Atlassian family. â¤ï¸ Read about how Halp’s conversational ticketing solution can help you solve problems directly in @SlackHQ. https://t.co/QF1B0bpZiT
— Atlassian (@Atlassian) May 12, 2020
1.20pm: Domestic hopes lifts Rex 45pc
Investors have cheered the prospect of Rex extending its services to domestic capacity – sending shares up by as much as 45 per cent on its return to trade.
The regional airline said this morning it would cost $200m to build out its services to the capital cities and that it was in talks with a number of potential equity partners.
Shares were halted yesterday pending an announcement, and jumped to heights of $1.31 on its release, before settling up 32pc to $1.19.
Read more: Rex $200m plan to spread wings
Lilly Vitorovich 1.13pm: Seven West sells WA HQ
Cash-strapped Seven West Media has sold the headquarters of its newspapers, The West Australian and The Sunday Times, for $75m, less than two weeks after banking $40m from the sale of its Pacific Magazines business.
In a brief statement to the stock exchange on Wednesday, Seven said it has sold its Osborne Park facility for $75m to a special purpose trust called Primewest Media Trust, which is managed by Primewest Management, as tipped by The Australian’s Data Room.
Its newspapers and television station TVW7 will continue to occupy the site, with Seven striking a 15 year lease as part of the sale deal.
The property sale is expected to be completed in about four weeks, according to Seven’s statement, which was authorised by chief executive James Warburton.
The second asset sale in less than a fortnight is good news for Seven, which had debt of $541.5m before the Pacific sale to Bauer Media was completed on May 1.
Read more: Seven West banking on restructure deal
1.01pm: Shares trim losses as CBA lifts
Recovery in Commonwealth Bank trade and a lift in the major miners is helping the local market to trim its losses in lunch trade.
Shares had been down as much as 1.9pc in the morning session, but are now holding lower by 46 points or 0.8 per cent at 5357.2.
CBA shares are higher by 0.3pc after an initial slip and are helping the market gain ground while BHP and Rio Tinto both add around 0.4pc.
Gold names are outperforming in defensive trade- Newcrest is up by 1.6pc as Northern Star puts on 0.6pc while fellow defensive stock Telstra jumps by 0.8pc.
12.52pm: CBA update ‘encouraging’: AMP
Strength in Commonwealth Bank’s mortgages and deposits helped to provide an “encouraging update” according to AMP Capital’s Dermot Ryan.
In a note cited by Bloomberg, Mr Ryan writes that the bank is growing its mortgages and deposits ahead of sector averages, while its provision of $1.5bn was in line with peers.
He added that the bank was in good place on dividends but “should be less compelled to pay out at previous high levels as the era of high payout ratios in the sector are over for the time being”.
Jared Lynch 12.42pm: Sigma served first strike over pay
Australia’s biggest pharmaceutical wholesaler Sigma Healthcare has received a first strike from shareholders over its executive remuneration after it paid bonuses to retain key personnel during a failed takeover bid from rival Australian Pharmaceutical Industries.
A total of 30.6 per cent shareholders voted against Sigma’s remuneration report, passing the 25 per cent no vote threshold to record a strike.
The company’s remuneration structure sparked questions from the Australian Shareholders Association, which asked when was the last time Sigma’s board had benchmarked executive pay against company’s of a similar market capitalisation.
Outgoing chairman Brian Jamieson said the board froze executives’ fixed remuneration in 2017, and reviewed pay structures. The board has since approved increases of 3 per cent in 2018 and 2.5 per cent in 2019 with no rises this year.
“In terms of benchmarking based on market capitalisation, Sigma was only removed from the ASX 200 index effective from September 2019,” Mr Jamieson said.
SIG last traded flat at 59c.
12.27pm: Wage growth prospects are slim: RBC
The latest wages data predates the COVID-19 economic downturn, but RBC points out that the weak momentum in the run up to the lockdowns bodes poorly for any wages rebound.
Chief economist Su-Lin Ong writes that today’s data shows those sectors hit hardest by the social distancing restrictions – accommodation and food services and retail – recorded the lowest wage increases in the first quarter already, “suggesting they entered on a weak note”.
“While data across the board in this quarter will be volatile and historic in some instances, it is likely that wages growth will be particularly subdued beyond this period for some time,” Ms Ong cautions.
“Rising labour market slack with unemployment and underemployment set to remain elevated for several years combined with continued low productivity bodes poorly for wages growth beyond COVID-19.
“This will see persistent sub-target inflation and an RBA that retains an historically low cash rate for the foreseeable future.”
AUDUSD little moved on the release, last flat at US64.68c.
Read more: Confidence in record comeback
Ben Wilmot 12.09pm: GPT Group a top pick: JPM
Diversified property company the GPT Group has been nominated as a top pick by analyst JPMorgan due to the high quality of its $14.8bn portfolio of office, industrial and retail property.
JPMorgan has an overweight rating, citing GPT’s majority weighting to NSW and Victoria, and a funds management business, that controls $13.3bn of property and runs at a high margin.
“It trades at a deeply discounted valuation in our view, which more than compensates for the COVID-19 related downside risks to asset values,” JPMorgan said.
Analyst Ben Brayshaw said the company was also buttressed by above average asset quality and its balance sheet is better than most large cap A-REITs.
While acknowledging the risks of COVID-19 like disrupted earnings, asset impairments and risk of double dip, he said social distancing restrictions were starting to ease, and visibility on occupational markets was improving.
JPMorgan lifted its price target from $4.60 to $4.70, well above the price of $4.01 in morning trade.
Investors are worried about retail writedowns but JPMorgan said they were more than priced-in and GPT has the most productive portfolio among A-REITs in specialty sales, although it needs to rebase its rents.
GPT also had the balance sheet strength to continue to pay its dividend, after raising $867m last year which reduced look through gearing to 25 per cent.
JPMorgan said that GPT’s $4bn unlisted retail fund was an ongoing but manageable risk.
“It is geared at the upper end of its 10-30 per cent target, has suspended its dividend and will likely sell assets over the next three years, including a part share of Highpoint,” the analyst said.
11.57am: Rex could fly domestic by March 2021
Regional airline Regional Express says it could be operating its own domestic services by March next year.
In a statement to the market, Rex says its exploring the feasibility of its own domestic services in the wake of Virgin’s collapse, saying it would require equity in the vicinity of $200m.
The stock was halted yesterday pending further detail, and today revealed it had “begun talks with potential equity partners to extend its operations to establish domestic operations, in addition to its regional services”.
“At this juncture the Rex Board believes that with sufficient capital injection, there is a confluence of circumstances which render the start of domestic operations by Rex to be a particularly compelling proposition.”
The company says it will make a decision on whether it will proceed with the move in the next eight weeks – with March 1 the estimate for its commencement of domestic flights.
11.49am: Overseas arrivals drop 99pc
Overseas arrivals to Australia were wiped out by 99 per cent due to coronavirus travel restrictions, according to the latest data from the ABS.
The strict border tightening saw just 22,000 arrivals through April, more than two thirds of which were Australian citizens returning home from overseas.
Just under 7000 arrivals were non-Australian citizens.
Get a load of this chart: there was a 99% drop in overseas arrivals in April versus the same month last year.
— Patrick Commins (@ComminsP) May 13, 2020
Not surprising, but still impressive @australian #ausbiz #COVIDー19 #Covid_19australia pic.twitter.com/UwLtzKhyuL
11.43am: Wage growth slows to 2.1pc
Annual wage growth slowed to 2.1 per cent in the March quarter, before the widescale stand downs and staff cuts associated with coronavirus shutdowns.
In the latest data from the ABS, quarterly wages rose by 0.5pc, and 2.1pc through the year.
Public sector wages grew slightly faster than private sector wages, at 0.5pc compared to 0.4pc while information media and telecommunications was the standout sector with 1.6pc growth for the quarter.
“Quarterly wage growth remained steady at 0.5pc over the past four quarters and on the back of a year of relatively stable but slow economic growth. This contributed to an easing in the annual rate of wage growth,” ABS chief economist Bruce Hockman said.
“Today’s data relates to the period shortly before restrictions were put in place to contain the spread of the coronavirus (COVID-19), capturing wage information for the mid-month (February) of the March quarter.”
Bridget Carter 11.41am: Bain to bring in more backers
DataRoom | Bain Capital is expected to bring in additional backers as part of its pursuit of Virgin Australia.
In what is increasingly becoming a fluid situation in the contest for the collapsed airline, Bain Capital is currently understood to be working with the Future Fund.
However, the US-based private equity firm is expected to add additional fire power to its consortium should it continue in pursuit of the business.
Brookfield, which has former Virgin Australia director David Baxby in its corner, is no longer working with Macquarie Capital, but may have other backers if it remains in the contest.
BGH Capital, meanwhile, has shaken off talk in the market it is working with the Singaporean-based Temasek and Canadian pension funds, including CDPQ, with sources close to the fund denying it is currently involved with such parties.
Still, it is early days in the contest, with first round bids due on Friday.
Read more: Push for Virgin cancellation credits
11.36am: Sigma volumes soar during pandemic
Pharmacy distributor Sigma Health says sales volumes were up as much as 80 per cent at the height of the coronavirus panic, setting the company up for a solid FY21.
In a speech to shareholders at its virtual AGM, chief Mark Hooper said the group’s retail pharmacy brands were up 11.7pc in FY20, and “appear on track to remain above market growth for the current year” while its hospital pharmacy services was up by 26pc.
Still, Sigma neglected to provide guidance, saying only it was “experiencing strong growth and momentum year to date”.
“What I can say is that the combination of the actions we have taken, such as the efficiencies from Project Pivot, our distribution centre investments, our various sales programs, and our expanding 3PL and medical consumables businesses has already produced a strong platform for earnings growth.
The return of some of the Chemist Warehouse contract and the opportunities created as we emerge from the COVID-19 pandemic will further enhance this.”
SIG shares are flat at 59c.
Patrick Commins 11.20am: Confidence in ‘impressive’ recovery: Westpac
Stopping the spread of COVID-19 married with a concrete plan to lift social distancing restrictions has buoyed the nation’s mood and led to an “impressive recovery” in consumer confidence, Westpac’s latest survey shows.
The bank’s widely followed monthly confidence index bounced from April’s all-time lows, albeit to still relatively weak levels by historical standards, recording its biggest gains on record – hard on the heels of the largest drop in history.
“This represents an impressive recovery in confidence,” Westpac chief economist Bill Evans said.
“Consumers are clearly heartened by Australia’s success in containing the coronavirus which has justified the easing of some of the social restrictions that have been so painful for individuals and the economy over the last two months.”
The Westpac-Melbourne Institute Index of Consumer Sentiment rebounded 16 per cent to 88.1 in May, from all-time lows of 75.6 in early April when the eventual scale and economic damage of the outbreak remained frighteningly unclear.
Bridget Carter 11.05am: KKR beat out Blackstone for First State
DataRoom | The contest to buy a stake in CBA’s $3.3bn Colonial First State wealth manager is understood to have been a two-horse race between US-based private equity funds Blackstone and Kohlberg Kravis Roberts.
KKR won the contest in the final hour, say sources, with CBA announcing on Wednesday that the US-based buyout fund had purchased a 55 per cent interest in the business for $1.7bn.
It now begs the question whether Blackstone will aggressively vie for other wealth assets up for sale by Australian banks or whether the latest deal places KKR in a stronger position to consolidate the market further, buying NAB’s wealth manager MLC or wealth management assets expected to be on offer by Westpac.
Some believe that the buyout funds only wanted to acquire part of the business because $3.3bn was an amount too large to allocate to the Australian market alone.
Read more: KKR, CBA have plans for Colonial
10.44am: Mesoblast secures $138m to scale up
Stem cell focused Mesoblast has cashed in on the stock’s recent success, completing a $US90m ($138m) capital raising at $3.20 apiece.
The stock has soared in the past six weeks as it reported a breakthrough in the use of its Remestemcel-L for ventilated COVID-19 patients.
Today, the biotech company said it completed the placement of 43 million shares to existing and new institutional investors, with a “significant portion” of net proceeds to scale up its manufacturing of that lead product candidate.
The $3.20 price represents a 7 per cent discount to both the price at the close of trading May 8, 2020 and the five-day volume weighted average price (VWAP) – but is up 130pc from its trading level at the start of April.
“The Company is now well positioned to pursue this significant new imperative, within the context of the overall product portfolio,” it said.
The company is trialling the treatment for 300 patients in the US and evaluating whether remestemcel-L can reduce the high mortality in COVID-19 patients. Mesoblast says the trial was initiated after “promising results” were seen with remestemcel-L under emergency compassionate use in COVID-19 ARDS, where nine of 12 ventilator-dependent patients were able to come off ventilators within 10 days.
MSB last traded down 1.7pc to $3.38.
Read more: Mesoblast surges on coronavirus trial hopes
10.29am: Commonwealth Bank turns positive
Shares in Commonwealth Bank have sharply snapped opening losses as much a 1.5pc, climbing into positive territory to outperform the rest of the majors.
The bank fell to lows of $58.70 in early trade – but was last trading up 0.7pc to $60.13.
The uptick is helping the broader benchmark to trim losses too – last down 1.4pc.
Across the rest of the big four – NAB is lower by 0.8pc, Westpac down by 0.3pc and ANZ by 0.5pc.
Read more: CBA books $1.5bn hit, sells wealth stake
10.25am: Stockland seeing rebound in home demand
Stockland said its residential and retail businesses had been hurt by the coronavirus pandemic, but offered clues about the possible path to recovery with new enquiry levels for homes already snapping back.
While net residential lots fell materially to 137 lots in April, reflecting lower enquiries in the previous month, new enquiry levels have recently recovered to track levels achieved before the coronavirus reached Australia, Stockland said.
“Settlements are completing within similar timeframes to pre-COVID-19 levels and the default rate in April 2020 is reasonably low, at around 4pc, only slightly above our long term average after having risen in March 2020,” the company said in a filing to the ASX.
Still, management is cautious about the shape and speed of recovery in the residential business, while adopting a similar stance toward the retail sector.
Stockland reported moving annual turnover growth of 5.2pc in the three months through March, partly driven by supermarkets, but the business was then disrupted by many retailers closing their doors temporarily.
Dow Jones Newsires
10.11am: Banks lead ASX down 1.9pc
The local market headed lower for a second day after renewed jitters of a second wave of COVID-19 in the US, and a warning from the country’s top infectious disease expert that states reopening too quickly could “set you back on the road to trying to get economic recovery”.
At the open, the benchmark ASX200 is lower by 101 points or 1.86 per cent to 5302.4.
All sectors are firmly in the red – led by a 3pc drop in energy stocks, while financials are the biggest weight.
Commonwealth Bank is faring the best of the major banks, even after announcing $1.5bn in coronavirus charges and selling a stake in Colonial First State to KKR. The bank is lower by 1.5pc as its rivals lose between 1.7pc and 2.2pc.
10.08am: Breville halted for raise
Kitchen appliance maker Breville has been halted ahead of the open, pending a capital raise.
The group said it was “considering, planning for and expects to announce a proposed capital raising”.
It requested the halt until Friday, or until it makes a market announcement of the outcome.
BRG last traded at $18.70
9.53am: More than half of GPT’s shops open
Property developer GPT said more than half the shops at its shopping centres are trading this week, an increase on 35 per cent at the end of April. Chief executive Bob Johnston gave the figures and said he expected more shops to follow in the coming weeks, according to a transcript ahead of GPT’s annual general meeting on Wednesday.
The reopening of shops comes as state and territory governments relax coronavirus restrictions, following greatly reduced infection numbers. The owner of Westfield shopping centres, Scentre Group, on Monday said 57 per cent of shops at its properties were trading.
GPT will defer rent for shopkeepers as part of government efforts to help small and medium-sized traders through the coronavirus pandemic.
AAP
9.47am: What’s on the broker radar?
- Amcor price target raised 18pc to $16.50 – Morgan Stanley
- AusNet cut to Underweight – JP Morgan
- CSR raised to Equal-weight – Morgan Stanley
- CSR raised to Hold – Jefferies
- CSR raised to Neutral – Credit Suisse
- CSR raised to Overweight – Wilsons
- Elders price target raised 20pc to $7.82 – Wilsons
- Premier Investments price target raised 21pc to $18.50 – Bell Potter
9.40am: AFG halted for raising
Australian Finance Group has requested a trading halt this morning, pending the completion of a capital raising.
The mortgage broker requested the halt until the commencement of trade on Thursday.
At a presentation to the Macquarie conference last week, the group said profit was up 10pc for the half year to $18.3m, and its loan book up 51pc to $2.5bn.
AFG last traded at $1.39.
Nick Evans 9.25am: Rio warns on nationalism
Rio Tinto chief executive Jean Sebastien Jacques has warned the world faces a rising tide of nationalism in the face of the global coronavirus pandemic, saying the lack of co-ordination between nations on the crisis risks an even global recovery.
Mr Jacques told the Bank of America Global Metals, Mining and Steel Conference on Tuesday night there is “absolutely no doubt" that volatility is the new normal on global commodity markets, joining BHP's Mike Henry in flagging a tougher outlook for global miners as the world looks to exit the coronavirus crisis.
And Mr Jacques warned the coronavirus crisis could lead to a fundamental shift in wealth distribution across the globe, warning against a lapse into nationalism as a result of the pandemic.
“The movement of people, and goods, will be restricted. As will the movement of data and it is likely that wealth distribution will fundamentally shift. So, significant uncertainties will exist over the short, medium and potentially, long term,” he said.
“From a response perspective, different countries are in different phases, and right now there is a lack of co-ordination between nations. And we are experiencing what we call, a realpolitik world, one with the potential for rising nationalism, increasing tensions – like the US/China relationship, and trade dislocations.”
Bridget Carter 9.20am: KKR buys Colonial First State stake
Kohlberg Kravis Roberts has tapped Bank of America to advise on its acquisition of a $1.7bn, 55 per cent stake in Colonial First State from Commonwealth Bank.
CBA was advised by UBS.
The transaction values the business at $3.3bn and sees CBA net $1.7bn.
It equates to 15.5 times the business’ net profit of $200m.
CBA said in a statement that with KKR it would undertake an investment program in the business.
The deal is the first major M&A transaction in Australia since the onset of COVID-19 and comes after private equity firms were said to be circling bank-owned wealth assets up for sale.
The US-based KKR owns an interest in Australian financial advisory and accounting firm Findex, which was considered to be an initial public offering candidate when conditions were more buoyant.
Joyce Moullakis 8.45am: CBA to take $1.5bn charge
Commonwealth Bank of Australia has booked COVID-19 related charges of $1.5bn, and accelerated a divestment spree by agreeing to sell a $1.7bn controlling stake in Colonial First State to private equity giant KKR.
In a March quarter trading update CBA said it was taking a charge of $1.5bn to account for the “potential longer-term impacts of COVID-19”, as total credit provisions swelled to $6bn.
In an ASX statement on Wednesday, CBA chief executive Matt Comyn also announced the sale of a 55 per cent stake in Colonial First State to KKR as part of his simplification strategy.
The bank expects proceeds from the sale will amount to $1.5bn.
Mr Comyn said the bank’s provisions for an expected jump in loan losses related to the pandemic further reinforced “already strong provisioning and balance sheet settings”.
On pandemic-related charges, National Australia Bank has booked provisions of $807m, ANZ stands at $1bn and Westpac at $1.6bn.
CBA reported a drop in March quarter unaudited cash earnings from continuing operations to $1.3bn, and statutory profit also fell to $1.3bn. In the same quarter last year, cash net profit from continuing operations printed at $1.7bn and statutory profit at $1.75bn.
Richard Ferguson 8.20am: Cormann downplays trade clash
Finance Minister Mathias Cormann says Australia will have to “just see what happens” to exports which could be targeted by China, as he tries to downplay the notion of a trade war.
Industry leaders across a number of sectors – including seafood, wine and dairy – are now scrambling to prepare for China to impose the same restrictions it has put on beef and barley in recent days, as the Chinese Foreign Ministry ramped up its attacks over Australia’s push for a global inquiry into the origins of coronavirus.
The Finance Minister said each trade issue with China had to be dealt with on its own merits, and would not say if he expected any other export markets to come under pressure.
“This anti-dumping inquiry (into barley) has been going for 18 months, since well before the coronavirus crisis,” he told the Nine Network.
“Let’s just see what happens. We’ll continue to deal with these things one by one.
“We have always committed to the best possible relationship with any and every country – including with China, in particular with China.”
8.00am: Gold gains
Gold rose overnight on expectations of more stimulus from the US Federal Reserve to support an economy battered by coronavirus-induced restrictions, while an easing US dollar lent further support.
Spot gold rose 0.3 per cent to $US1,701.44 per ounce. US gold futures settled up 0.5 per cent at $US1,706.80 per ounce.
“The Fed is going to start buying bond exchange traded funds (ETFs) for the first time ever. This is big … here’s more stimulus coming to the table and everybody knows when there’s more stimulus, you want to own more gold,” said Michael Matousek, head trader at US Global Investors.
The US central bank will start purchasing shares of ETFs that invest in bonds through its Secondary Market Corporate Credit Facility.
The facility is one of several tools recently created by the Fed to improve market functioning in the wake of the pandemic.
Reuters
7.20am: ASX set for downbeat start
Shares on the Australian market are set to fall after concerns world economies could be reopening too soon caused losses on Wall Street overnight.
At 7am (AEST) the SPI 200 futures contract was down 68 points, or 1.26 per cent, to 5,320.0, indicating a loss in early trade.
The S&P 500 dropped 2.1 per cent as investors debate whether the lifting of lockdowns across US states and the world will drive an economic rebound or more coronavirus infections.
The concerns were summed up in testimony from the top US infectious diseases expert. Dr Anthony Fauci told Congress that if the US reopens too soon, it could not only cause “some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery.”
In Australia on Tuesday, the benchmark S&P/ASX200 index closed down 58.2 points, or 1.07 per cent, at 5,403 points.
The All Ordinaries closed down 61.8 points, or 1.11 per cent, at 5,497.3 points. One Australian dollar was buying US64.72 cents at 7am (AEST), up from US64.70 cents at the close of trade on Tuesday.
AAP
6.40am: Oil prices lift
Oil prices climbed, a sign that production cutbacks and easing pressure on storage facilities are lifting traders’ hopes for battered energy markets.
US crude futures for June delivery closed up 6.8pc at $US25.78 a barrel after Saudi Arabia said Monday it planned to cut June oil production by an additional 1 million barrels a day to 7.5 million – the lowest level since 2002. More heavily traded U.S. oil futures for July delivery rose 5pc to $US26.33 a barrel.
Prices have been staging a tentative comeback as nations across the globe begin lifting lockdown measures during the coronavirus pandemic and other oil-producing countries commit to cut production. The United Arab Emirates and Kuwait said Monday they would cut 180,000 barrels a day collectively in June.
“Prices have recently been boosted not only by hopes that demand will soon return, but also by massive voluntary and involuntary production cuts,” commodities analysts at Commerzbank said in a note.
Brent crude futures for July delivery, the global gauge of oil prices, closed up 1.2pc at $US29.98 a barrel, bringing their month-to-date recovery to 19pc.
Dow Jones
6.05am: Wall Street extends fall
The Nasdaq’s six-day winning streak ended as US stocks pulled back after a top government scientist warned against ending the coronavirus shutdowns and reopening the economy too quickly.
At the closing bell, the Dow Jones Industrial Average stood at 23,764.78, down 1.9 per cent or more than 450 points. The broadbased S&P 500 fell 2.1 per cent to 2,870.12, and, after rising over the last six days, the tech-rich Nasdaq Composite Index shed 2.1 per cent to end at 9,002.55.
After falling on Tuesday amid trade tensions, Australian stocks are set to open lower. At 6am (AEST) the SPI futures index was down 53 points, or 1 per cent.
Major US indexes had started the day higher. But as the day progressed, they slid, with traders saying the selling didn’t appear to be driven by any single clear catalyst. All 11 sectors of the S&P 500 were lower on the day.
Investors have gotten a look at some troubling reports on the economy in recent days. The Labor Department said that its consumer-price index – a measure of prices for goods and services including airfare, clothing and food – fell by 0.8 per cent last month. That marked the largest monthly decline in the index since December 2008.
And at a Senate hearing, top U.S. health officials warned the country should expand testing before reopening the economy.
Despite a darkening economic outlook, many money managers believe markets have been able to stabilise in recent weeks thanks in part to aggressive actions by policy makers. The Federal Reserve Bank of New York began buying corporate-bond exchange-traded funds Tuesday. That’s a historic milestone for the Fed, which hasn’t bought ETFs previously, and expands the central bank’s efforts to support the economy and financial system during the crisis.
Elsewhere, the Stoxx Europe 600 rose 0.3 per cent.
In Asia, Hong Kong’s Hang Seng Index led the region’s decline with a 1.5 per cent drop. Australia’s benchmark S&P/ASX 200 pulled back more than 1 per cent.
The latest economic data from China suggested the world’s second-largest economy won’t see a quick rebound. The producer-price index, a gauge of factory-gate prices, fell deeper into deflation in April as the pandemic crimped demand at home and abroad. The Shanghai Composite Index edged down 0.1pc by the close of trading.
Dow Jones Newswires
6.00am: Fauci warns against reopening too soon
Dr. Anthony Fauci, the nation’s top infectious disease expert, warned Congress that reopening the economy too soon during the coronavirus pandemic will result in “needless suffering and death.”
Dr Fauci was among the health experts testifying to a Senate panel. His testimony comes as President Donald Trump is praising states that are reopening after the prolonged lockdown aimed at controlling the virus’s spread.
“My concern that if some areas – cities, states or what have you – jump over those various checkpoints and prematurely open up, without having the capability of being able to respond effectively and efficiently, my concern is we will start to see little spikes that might turn into outbreaks,” Dr Fauci said in testimony given via video.
“There is a real risk that you will trigger an outbreak that you may not be able to control, which in fact, paradoxically, will set you back, not only leading to some suffering and death that could be avoided but could even set you back on the road to try to get economic recovery,” he said.
AP
5.58am: Boeing’s grim outlook
Boeing reported another round of 737 MAX cancellations as the company’s CEO warned the industry downturn in the wake of the coronavirus pandemic could force a major airline out of business.
Data on the aviation giant’s website showed 108 orders for the 737 MAX were cancelled in April, and Boeing also downgraded contracts for another 101 of the planes, an accounting move that lowered its backlog to below 5,000 planes for the first time since 2013 and indicated weakening demand for its aircraft.
The MAX has been grounded since March 2019 following two deadly crashes, but demand for the plane, like other commercial aircraft, has also been hammered by the massive slump in airline traffic caused by the coronavirus pandemic.
Major carriers have taken thousands of planes out of service as overall US air travel has shrunk to less than one-tenth of its volume before the outbreak.
Boeing Chief Executive David Calhoun said in an interview on NBC that he expects airlines to trim headcount, and it was “most likely” a major US carrier would go out of business.
“Traffic levels will not be back to 100 per cent, they won’t even be back to 25. Maybe by the end of the year, we approach 50,” Calhoun said.
AFP
5.55am: US economy ‘likely bottomed’
Federal Reserve Bank of Richmond President Thomas Barkin believes the US economy is probably at its lowest point in the coronavirus crisis, and reckons a clear plan to manage risks around the COVID-19 pandemic will inspire confidence to begin a recovery.
While the data detailing the economy’s current performance will lag behind the nation’s performance, “I think we are at the bottom and headed up,” Mr. Barkin said in an interview.
“The real issue here is, what’s the rate of recovery,” the official asked. “We’ll obviously have a difficult second quarter, I think we’ll obviously have some bounce in the third in the fourth quarter. And the question is just how high and how fast,” Mr. Barkin said.
As many Fed officials have done, Mr. Barkin deferred to health authorities about the broader decision to reopen the economy. And he also said that regardless of what experts and the government might say, an economic reopening is as much about inspiring confidence to go out, work and shop, as it is for elected officials to say those things are permissible.
Dow Jones
5.45am: Luckin Coffee fires CEO in fraud scandal
The chief executive of Luckin Coffee, a chain rivalling Starbucks in China, and another top executive have been sacked in the wake of a massive fraud scandal that has rocked the company.
Jenny Zhiya Qian, the CEO, and chief operating officer Liu Jian were terminated from their positions as part of an internal investigation into fabricated transactions, Luckin Coffee said in a statement.
The board of directors made the decision after a special committee conducting the probe brought “evidence that sheds more light on the fabricated transactions,” it said.
Both also resigned from the board.
The group had revealed last month that Liu may have faked 2.2 billion yuan ($US310 million) worth of sales in 2019.
The disclosure caused the company’s shares to sink by more than 70 per cent in the NASDAQ stock exchange in New York. Trading in Luckin shares has been suspended ever since.
Liu and several collaborators had been suspended pending the outcome of the investigation.
AFP
5.40am: EU looks to save summer holiday
The EU will present recommendations to save the summer season in Europe’s reeling tourism sector, which has been pounded by the coronavirus crisis.
The European Commission will urge EU countries to gradually reopen shuttered internal borders and to above all treat each member state on the same criteria.
According to a draft seen by AFP, the Commission insists that reopening of everyday life after the pandemic must be done in a “concerted” and “non-discriminatory” manner and must remain “as harmonious as possible”.
The points are only recommendations on the part of the EU’s executive as it is up to national governments to decide whether to lift the restrictions put in place to deal with the coronavirus pandemic.
Brussels recommends that when countries are in a comparable epidemiological situation and have adopted the same precautionary measures, they should be treated in the same way.
AFP
5.35am: Stocks steady amid lockdown easing
Hopes for economic recovery as lockdowns ease helped to steady European and US stocks, as fears of a second wave of coronavirus infections emerged.
As some of the worst-hit countries – including eurozone members Spain, Italy and France – take heart from slowing COVID-19 death and infection rates, they are gradually allowing businesses to reopen.
European markets ended the day mixed, while Wall Street’s top indices were mostly higher in late morning trading.
London rose 0.9 per cent, Frankfurt slipped less than 0.1 per cent and Paris lost 0.4 per cent.
“Reopening momentum continues but fear of renewed outbreaks remains high,” said analyst Edward Moya at online currency trading firm Oanda.
Concern about a second coronavirus wave dominated sentiment in Asian trading. In Wuhan, the central Chinese city where the coronavirus outbreak first emerged, there have been reports of new infections, while South Korea announced its biggest spike in new cases for more than a month.
Stock markets in Hong Kong, Sydney, Mumbai, Taipei, Singapore and Jakarta all closed down more than one per cent Tuesday. Tokyo and Shanghai only dipped 0.1 per cent however, while there were gains in Wellington and Bangkok.
Elsewhere, oil prices jumped after Saudi Arabia said it would slash an extra one million barrels per day from its June output. Kuwait and the United Arab Emirates also announced cuts after the pandemic caused global crude demand to plunge.
After last month’s historic collapse in oil prices to below zero, the commodity has shot higher in recent weeks after top producers already agreed to slash output by a combined 10 million barrels per day.
AFP
5.30am: Uber eyes Grubhub deal
Uber has made a takeover bid for meal delivery group Grubhub, media reports said, sparking a strong rally in shares of the Chicago-based group.
Grubhub shares rose more than 20 per cent on the reports in The Wall Street Journal and other media. The reports said Uber had made a specific offer for Grubhub but that no agreement had been reached.
A deal would enable Uber to expand the operations of meal delivery through its Uber Eats service, which has seen strong growth during the pandemic even as its ride-hailing operations have slumped.
The two firms did not immediately comment on the reports.
The Journal said Grubhub earlier this year began a strategic review that could lead to the sale of the company.
AFP
5.25am: US consumer prices drop
The economic paralysis caused by the coronavirus led in April to the steepest month-to-month fall in U.S. consumer prices since the 2008 financial crisis – a 0.8pc drop that was driven by a plunge in gasoline prices.
And excluding the normally volatile categories of food and energy, so-called core prices tumbled 0.4pc last month, the Labor Department said Tuesday in its monthly report on consumer prices. That was the sharpest such drop on records dating to 1957.
The widespread business shutdowns, sharply reduced travel and shrunk consumer spending that the virus has caused have likely sent the U.S. economy into a severe recession. The resulting drop in economic activity is exerting powerful downward pressure on prices throughout the economy.
AP
5.22am: Vodafone roaming income slumps
Vodafone, Europe’s biggest mobile phone company, reported slumping roaming revenues as the coronavirus slashes international travel while it warned of increased cyber attacks by criminals profiting from the pandemic.
“In April, we have seen roaming in Europe fall by 65 to 75 per cent,” the British group said in an earnings statement that showed Vodafone at the same time benefiting from customers in lockdown buying more data and adding fixed lines.
“The economic impact of the COVID-19 pandemic in (all) our markets, while uncertain, is likely to be significant,” the group warned after it massively narrowed its annual losses.
“We are experiencing a direct impact on our roaming revenues from lower international travel and we also expect economic pressures to impact our customer revenues over time,” it added.
On the upside however, Vodafone said mobile data had increased 15 per cent and fixed line usage was up as much as 70 per cent in some markets.
AFP
5.20am: Aramco tips difficult 2020
Energy giant Saudi Aramco posted a 25 per cent slump in first-quarter profit and said the coronavirus crisis which triggered a crash in oil prices would weigh heavily on demand in the year ahead.
Aramco was listed on the Saudi stock market in December following a historic $US29.4 billion initial public offering – the world’s largest – but since then has faced a torrid environment.
Oil prices slumped to nearly two-decade lows in March, losing almost two-thirds of their value as the coronavirus pandemic sent the world into recession.
Prices plummeted further in April amid a price war between Russia and Saudi Arabia as the major producers scrambled to secure market share.
“The COVID-19 crisis is unlike anything the world has experienced in recent history and we are adapting to a highly complex and rapidly changing business environment,” CEO Amin Nasser said in a statement.
Aramco said that a steep decline in global demand for energy and prices caused by the pandemic would undermine its full-year results.
AFP
ASX 200 rises 0.5pc to record close; Origin down
A strong day for Aussie shares as the ASX 200 rises 0.5 per cent to a record high close at 8532.3. Origin cuts APLNG guidance. Citi upgrades BlueScope. Rinehart lifts Lynas stake. Broker upgrade for Zip. Lendlease selling Capella. US probing if DeepSeek used Nvidia chips. Trump advisors hunt for deals as Canada, Mexico tariffs loom.
ASX soars to record high on tech, rate cut hopes
The sharemarket has jumped to a record high of 8515.7 points, amid positive leads from Wall Street after big tech reports and Reserve Bank rate cut hopes. DeepSeek will not derail Microsoft’s $US80bn AI investment this year. Zip and MinRes drop.