CSL weighs on ASX as Domino’s, JB Hi-Fi set new records

Consumer stocks surged to records despite a 0.8pc slip in the ASX, while results from Qantas and Wesfarmers prompted little share reaction.

David Rogers and Melissa Yeo

43 min read

8:38PMAugust 20, 2020

Wesfarmers’ Kmart and Target stores posted an 24pc earnings drop. Picture: NCA NewsWire/Bianca De Marchi.

Afterpay soars to $82
Wesfarmers net profit sinks 69pc
Qantas posts $2.7bn loss
CC Amatil slashes divided amid writedowns

That’s all from the Trading Day blog for Thursday, August 20. The ASX fell 0.8pc from yesterday’s six-month high as CSL reversed and the major banks weighed. It came after Wall Street swung between gains and losses but ended lower.

Locally, it was another big day for earnings. Qantas posted a $2.7bn loss and pushed for the opening of state borders while Wesfarmers said its Kmart and Target stores had weighed on its bottom line. Santos, Origin, South32, Coca-Cola Amatil, Mirvac, Medibank and Perpetual, were among a host of others reporting.

Ben Wilmot 8.36pm: Scentre Group boards up stores

The powerful property industry has warned that an extension of the Morrison government’s leasing code for small tenants until March next year could see the overall cost of the scheme blow out to about $15bn.

The caution comes as Scentre Group, owner of the local Westfield empire, this week boarded up about 129 stores run by Mosaic Brands, owner of the Noni B, Millers, Rivers, Katies, Crossroads and EziBuy brands, that sit outside the code.

The parties declined to comment but the dispute escalated from Tuesday when Scentre demanded payment of outstanding rent and the chain was locked out of 24 stores, with the remainder also temporarily closed on Wednesday night.

John Durie 7.14pm: Praise from the top end of town

The national unity evident back in May has broken but corporate Australia has gone out of its way to praise the work of state and federal governments in their handling of the pandemic.

Corporate earnings season is not normally the time to sing the praises of politicians but the steady stream of bouquets to Canberra continued on Thursday.

Qantas boss Alan Joyce and Wesfarmers’ Rob Scott both made special mention of the way Canberra has handled the crisis.

privately frustrated at the states’ short-term focus it helps to have big business backing.

This is especially as October beckons and business is looking for some more help.

A better investment allowance tops the wish list and Scott earlier this week called for more tax cuts.

Cliona O’Dowd 6.43pm: Perpetual eyes a ‘stockpickers world’

A weight of money will shift to active managers in the coming years as COVID-19 stunts economic growth around the globe, paving the way for “a stockpickers world”, according to Perpetual chief executive Rob Adams.

Once a vaccine to protect against the virus is found, the economic recovery “will be sharp and swift”, but until then the investing environment will be difficult, Mr Adams told The Australian.

The valuations afforded to certain ‘Covid winners’, meanwhile, will come under question at some point in the near future, he predicted.

“It feels like we’re likely to be in an environment that’s going to be better suited to value investing. And rather than just buying the whole market in a passive way through an index fund, where you’re buying the good, the bad, and the ugly, I think we’re entering into an environment when stock picking is going to come to the fore.

“And so your active management, I suspect over the next few years, will come back into vogue and we’ll see a weight of money shift towards active managers, if they outperform. A tougher economic environment where growth is less certain is better suited to active management,” he said.

Mr Adams was speaking after the wealth manager posted a 29 per cent slide in net profit for the year, as revenue dropped on lower funds under management, an investment hit from COVID-19 and its investment in growth initiatives.

Damon Kitney 6.12pm: Crown China arrests ‘a governance failure’

Former Crown Resorts chief executive Rowen Craigie has admitted a failure of corporate governance left him and the Crown board gravely misinformed about the predicament of the company’s staff in China, which led to their arrests in October 2016.

In testimony to an inquiry into the affair on Thursday, Mr Craigie said if he and the board’s risk committee had been made aware of the staff’s concerns for their safety and a range of other risk and compliance issues, they could have potentially been moved to in Singapore for a period.

He said he relied solely on advice about the China situation relayed by Crown’s VIP team comprising its Australian Resorts boss Barry Felstead, group executive manager VIP Jason O’Connor and international marketing president Michael Chen.

4.48pm: Qantas, Wesfarmers little changed on results

Qantas and Wesfarmers were key earnings releases in Thursday’s session, but both finished little changed.

Despite posted a blowout $2.7bn annual loss, Qantas shares finished the day flat at $3.76 after swings in either direction.

Similarly lacklustre, Wesfarmers closed the day down 0.2 per cent to $48.78 after hitting all-time highs of $49.24 earlier in the session.

In other results, Coca-Cola Amatil slashed its interim dividend and slumped to a half-year loss of $8.7m, but still shares finished higher by 4.6 per cent to $9.28.

Market operator ASX reported a lift in profit amid record trading activity during the pandemic, as the wave of secondary capital raisings lifted revenues. Its shares rose to record highs, up 2.7 per cent to $89.91.

Property developer Mirvac rose 2.4 per cent to $2.10 as it said it was focused on build-to-rent while its shopping centres came under pressure from store closures and lower foot traffic.

Here’s the biggest movers at the close:

4.13pm: Consumer stocks surge to records

Consumer-exposed stocks surged to new highs on Thursday, despite broader weakness in the market while a new deluge of earnings results swayed markets only slightly.

By the close of trade, 89 of the top 200 had reported their full year results, and a further 18 posting their results for the half-year.

Qantas and Wesfarmers were key releases but both did little to dictate the market as heavyweights CSL and the major banks reversed sharply from the previous day’s strength.

The benchmark ASX200 fell as much as 1.1 per cent intraday, but finished the session a more moderate 48 points or 0.77 per cent lower to 6120.

On the All Ords, shares lost 42 points or 0.67 per cent to 6271.7.

Afterpay jumped to highs of $82 and settled the day up 6.8 per cent to $79.98 while JB Hi-Fi lifted 1.5pc to a new high of $51, Domino’s rose 2.3pc to $85.58 and Nick Scali rose 1.4pc to $9.28.

3.54pm: ASX200 combined profit down by 38pc

The deluge of earnings releases on Thursday takes the total full year reports to 89 of the top 200, and a further 18 handing down their interim results.

According to CommSec, profit for those reported to date has tumbled by more than a third, at 38pc, while earnings per share is down by 41 per cent.

Accordingly, dividends are down by 35pc as companies prefer to savour capital to ride out the downturn.

Despite that, aggregate revenue is up 1.4pc, while expenses are up 1.2pc and cash levels are higher by 26pc

Bridget Carter 3.11pm: Private equity circling Aryzta break-up

DataRoom | Private equity funds are believed to be circling the Australian operations of global bakery company Aryzta, with suggestions that the international player is heading for a break-up.

It is understood that private equity groups have started to closely scrutinise the Australian arm of the business in the expectation that it will come up for sale, as the parent company comes under pressure from activist investors due to its declining share price over the past five years.

Firms such as Pacific Equity Partners and Adamantem Capital, which is headed by former PEP executives, are seen as logical acquirers, although PEP is not currently looking at the asset.

Both firms have strong expertise in the food manufacturing space, with PEP previously owning Griffins Foods in New Zealand and bakery company Allied Pinnacle and currently owning Patties Foods.

The situation is one being compared to Kraft Heinz, which was understood to be weighing a potential exit from the Australian market last year.

2.48pm: Westpac accepts ASIC fees suit

Westpac says it will not defend the fee-for-no-services proceedings brought by ASIC against its BT and Asgard divisions and will make submissions on the appropriate penalty in due course.

In a statement to the market, Westpac acknowledged the proceedings commenced by ASIC, alleging the inadvertent charging of financial adviser fees to 404 customers totalling $130,006.

Westpac said it had self-reported the incident to ASIC in July 2017 and customers had been contacted and remediated.

“BTFM and ACML accept the allegations made and do not intend to defend the proceedings,” the bank said.

“BTFM and ACML will make submissions on the appropriate penalty in due course.

“BTFM and ACML apologise that these errors occurred and will work with ASIC to resolve the proceedings as soon as possible.”

2.01pm: Regulation could mar Woolies PFD buy

Woolworths’ aspirations for B2B growth and acquisition of a stake in PFD could be delayed with regulatory concerns, so warns Macquarie.

After the supermarket giant yesterday announced a $302m investment for a 65pc stake in food service provider PFD, the broker notes potential scope for growth, but that the peak body for food and grocery has previously raised competition concerns.

“We see the strategic rationale behind the investment and the B2B segment is a significant opportunity,” analysts write.

“However we note WOW’s aspirations to reach $1bn of B2B sales has been met with opposition from suppliers via the Australian Food and Grocery Council this year, who wrote to the ACCC on the matter, therefore we believe there could be a risk of delay in the transaction.”

WOW last traded down 1.4pc to $40.01.

Read more: Woolies pays $302m for PFD stake

Samantha Bailey 1.47pm: BT, Asgard in new fee for no service suit

The financial watchdog has commenced civil penalty proceedings against Westpac-owned super funds BT and Asgard, as well as StatePlus Super, for charging customers fees where no service was provided.

The Australian Securities and Investments Commission alleges that between 2014 and 2017, 404 Asgard customers were charged a total of around $130,006 in advisor fees for financial advice that was not provided.

ASIC also alleges that BT made misleading representations in half-yearly or annual account statements regarding the charging of the advisor fees, that appeared to show that fees were no longer being charged while the “advisor fee” line was removed from the account statement.

An amount equal to that fee was added to the administration fee amount, the corporate watchdog said.

In separate proceedings, ASIC alleges that State Super charged at least 36,592 members advice fees that it didn’t provide and that it contravened its overarching obligations as an Australasian financial services license holder to act efficiently, honestly and fairly.

1.35pm: BNPL buck ASX weakness

As the broader market hovers near a 1pc loss, the buy now, pay later sector is providing some uplift, led by heavyweight Afterpay.

The pioneer of the sector doubled its full-year earnings guidance overnight, saying it had recorded higher-than-expected collections in recent weeks.

Shares in the company surged to heights of $82 and last traded up 8.1pc to $80.96.

The news has also lifted the rest of the sector – Zip up by 4.58 per cent to $6.52, Splitit up by 4.7pc to $1.45 and Sezzle up by 3.2pc to $7.79.

Lisa Allen 1.22pm: STA Travel poised to appoint administrators

The COVID-19 pandemic has claimed another tourism business with iconic retail travel agency chain, STA Travel, poised to appoint administrators.

Founded in the Melbourne suburb of Carlton, STA Travel once sported 70 retail shops in Australia alone, but had contracted into 30 Australian stores more recently, and was subsequently acquired by the Swiss-based STA Travel Holding AG group.

Chief executive Casper Urhammer of the Diethelm Keller Travel Group parent, said in a letter to the tourism industry this morning that he was poised to appoint an external administrator in coming days.

“The global magnitude of the pandemic crisis has brought the travel industry to a standstill, including STA Travel,” said Mr Urhammer in the letter obtained by The Australian.

“In the wake of COVID-19, we have left no stone unturned and took decisive measures, cut costs, restructured, and renegotiated terms with suppliers, trying to secure the business beyond the pandemic crisis.

“However, sales have not picked up as anticipated, due to consumer uncertainties, further restrictions and renewed lockdown measures, which are expected to largely continue into 2021.”

1.01pm: Shares fade to two-day low

Shares are trading at the lowest levels of the day, down 71 points or 1.2 per cent as heavyweight banks and CSL reverse.

At 1pm, the ASX200 is down to a two-day low of 6096.7 in early afternoon trading.

Monday’s low at 6059.3 is initial chart support ahead of the 50-day moving average at 6000 and the August 3rd low at 5860.7.

CSL is heaviest drag, down 4.1pc and taking 20 points off the index, offset only somewhat by Afterpay’s 8.3pc surge to $81.08, which is adding 5 points.

But much of the intraday fall is coming weaker from offshore markets, with S&P 500 futures down 0.7pc after the Fed said the pandemic will “weigh heavily” on the economy.

Here’s the biggest movers at 1pm:

12.44pm: Qantas well capitalised for recovery: Macq

Macquarie notes that while there is only limited visibility on the shape of the travel recovery, Qantas is well capitalised and management remain focused.

The broker keeps the stock at Outperform after this morning’s results, even with its mammoth $2.7bn before tax loss, noting the airline’s expectations around recovery.

Qantas said it expected domestic demand to have fully recovered by FY22, with average capacity of 70pc in FY21 – a far way off August’s 20pc of pre-COVID-19 capacity.

As for international demand, Qantas says it will get back to 50pc by FY22, with any capacity, bar repatriation flights, unlikely to restart before July next year.

“While there continues to be limited visibility on the shape of the recovery across both domestic and international, importantly, Qantas are well capitalised, management remain focused on profitable flying and the $1bn benefits of restructuring the business from FY23+ have been reaffirmed,” the broker says.

“We continue to back management that Qantas will emerge from COVID-19 more profitable and that the domestic market will remain rational considering Bain Capital has recently taken control of Virgin.”

QAN last traded down 1.1pc to $3.72.

12.19pm: Wesfarmers upside already factored in: Citi

Citi analyst Bryan Raymond expects modest upgrades to consensus earnings on Wesfarmers given its better than expected second half results across most of its divisions, but cautions that much of this earnings upgrade risk is already factored into the earnings multiple.

He notes that Wesfarmers’ underlying FY20 net profit of $2.09bn beat the consensus estimate by about 3 per cent Wesfarmers, while a fully-franked final dividend of 152 cents met his expectation, albeit there was also a fully franked special dividend of 18 cents from after tax profits realised from the sales of its 10.1pc stake in Coles.

Despite a lack of quantitative guidance, Wesfarmers indicated that the solid trading conditions of the second half have continued.

But while Bunnings and Officeworks remain strong, foot traffic for Kmart and Target continue to be impacted by the Stage 4 lockdowns in Victoria.

WES last down 0.4pc at $48.71 after rising to $49.24.

Perry Williams 12.14pm: Cairns to retire as Origin chair

One of Australia’s highest profile directors, Gordon Cairns, will retire as Origin Energy chairman in October after a seven-year stint with Origin director and former banker Scott Perkins to succeed him in the role.

Both sit on the Woolworths board where Mr Cairns is chairman and Mr Perkins serves as a director.

Mr Cairns, also a Macquarie director, will step down after Origin’s annual general meeting in October.

Mr Perkins, a Brambles board member, joined Origin’s board in September 2015 and before that held senior positions at Deutsche Bank until 2013.

Origin indicated at its 2019 AGM Mr Cairns would step down from his position as chairman.

The company’s shares slumped 7 per cent on Thursday after it warned of lower earnings in 2021 and a smaller than expected dividend.

Origin chairman Gordon Cairns will retire in October. Picture: AAP Image/Wayne Taylor.

11.50am: Iress acquisitions weigh on profit

Iress says acquisitions pulled its profit lower for the first half, while demand for its digital offerings grew during the COVID-19 pandemic.

Handing down its interim results, the tech developer to the financial services industry reported a 14pc slip in net profit to $26.3m, due to the impact of losses in its acquired businesses BC Gateways and QuantHouse and an increase in annual leave expense.

It declared a 16c per share dividend, in line with last year, and said group revenue was up 12pc on the same time last year to $270.7m.

“Our software and services have proven to be reliable and resilient during COVID-19. Demand has remained strong with increased interest in our digital offering,” chief Andrew Walsh said.

He added that the group was supporting changes in the super industry, with a number of tenders currently out that could positively impact revenue in the year ahead.

Still, the group ruled out providing guidance due to COVID-19 uncertainty, noting that some adjustments of its institutional arrangements would occur in the second half and as a result, second half revenue would not be in line with the first.

Iress also warned its net debt position would increase if its OneVue acquisition was completed in the second half.

IRE last traded down 5.2pc to $10.65.

Robyn Ironside 11.37am: Joyce pushes for clarity on domestic travel

Qantas Group chief executive Alan Joyce has made an impassioned plea for a fact-based approach to domestic border closures, following the airline’s second biggest loss in its 100-year history.

Aircraft write downs and redundancies contributed to the $2.7bn statutory before tax loss, down 333 per cent on the previous year.

Mr Joyce said the current state border closures made little sense with states with zero cases of COVID-19 closed to other states with zero cases.

He said the decisions needed to be based on medical science.

“Otherwise it feels like … it’s there just to inform the politics and we think that will eventually cost jobs,” Mr Joyce said.

“In some areas of Queensland and Tasmania, 30 per cent of jobs are dependent on tourism. If it’s safe to do it, those borders should be open. Let’s have the rules to say what would you have to see for those borders to be open.”

He said he had written to state premiers outlining his concerns and was hopeful that would be considered at Friday’s national cabinet meeting.

“We would be very happy and a lot of the public would be very happy if there were a clear set of rules set by the national cabinet,” Mr Joyce said.

Qantas had expected to be back at about 45 per cent of pre-COVID-19 domestic capacity by now but instead it was operating at 20 per cent of capacity.

QAN last traded down 1.6pc to $3.70.

11.12am: IDP tops results leaderboard

Earnings momentum is more skewed to the downside on Thursday, though they seem to not be driving the broader market as much as yesterday.

While roughly the same number of companies are reporting today as yesterday, the market capitalisation of reporting companies is much lower, especially without heavyweight CSL.

After the first hour of trade, here’s the score, including those that reported after the close yesterday:

COMPANY	% CHANGE	LAST TRADED
IDP Education	28.15	$19.12
Star Entertainment	3.18	$2.92
Charter Hall	3.11	$11.60
Coca-Cola Amatil	2.03	$9.05
Sonic Healthcare	1.94	$32.25
ASX	1.72	$89.03
Mirvac	1.46	$2.08
Growthpoint	1.44	$3.18
Southern Cross	1.21	$0.17
Waypoint	1.13	$2.68
Brambles	0.62	$11.33
SmartGroup	0	$6.28
Qantas	-0.27	$3.75
Wesfarmers	-0.35	$48.71
Perpetual	-0.45	$30.83
South32	-0.70	$2.14
Domain	-1.65	$3.57
Santos	-3.32	$5.69
Medibank	-3.50	$2.76
Orora	-4.60	$2.28
IPH	-5.79	$7.97
Iress	-6.77	$10.47
Origin	-6.78	$5.50
Pro Medicus	-7.90	$23.31
Webjet	-9.24	$3.34

Ben Wilmot 10.58am: Charter Hall defies pandemic, grows earnings

The Charter Hall Group has delivered a hefty lift in earnings as its property funds empire surged past $40bn and it became one of few property players to release strong guidance.

The David Harrison-led company is defying the pandemic by keeping up its relentless deal-making, realising its ambition of becoming the country’s largest logistics property group and remaining bullish on office towers.

Charter Hall has an exposure to retail but the bulk of it is in convenience style assets including petrol stations and neighbourhood centres and it is positioning to grow further as cash strapped corporate Australia looks to offload more assets via sale and leaseback.

Charter Hall generated operating earnings of $322.8m and on a per share basis this was a 46.3 per cent lift to 69.3 cents on 2019.

The company’s profit jumped to $345.9m, a 47 per cent rise on 2019, as it dramatically grew the size of its funds platform, buying portfolios from Telstra and other major companies. It has also struck deals with Ampol, Owens-Illinois and Qube.

Charter Hall boosted distributions by 6 per cent to 35.7c per share and says it has more firepower to expand as it raised $5.1bn of equity last year.

The company managed $40.5bn of funds at year end, with $1.3bn of growth in July and August and more deals brewing.

CHC last up 3pc to $11.59.

10.43am: Afterpay soars to $82

Shares in Afterpay have soared to new record highs of $82, after the group updated the market after the close yesterday.

The buy now, pay later group reported expected earnings for fiscal year of $44m, with net transaction loss of 0.38pc, both an improvement on its update last month.

While the group is still a week off reporting its final results for the year, it said a better than anticipated level of June collections had helped it to lower losses and provisions for the full year.

The stock also had its price target lifted by bullish broker Bell Potter, who now sees it reaching $92.50, from $83 previously.

APT last up 7.1pc to $80.24 after hitting $82.

Damon Kitney 10.27am: Orora plots Aussie beverage expansion

Packaging group Orora will focus on leveraging its Australasian beverage expertise via organic growth and acquisitions and enhance the digital capabilities of its North American operations following a strategic review, as its annual net profit fell 23 per cent.

“The focus is on leveraging the Australasian Beverage capabilities via exploring footprint expansion and complementary products and services. Separately, the medium term priorities for the North American businesses will be to drive organic improvement initiatives including enhancing digital capabilities and productivity,’’ chief executive Brian Lowe said of the strategic review findings.

Orora’s Underlying Earnings Before Interest and Tax was $224.3m, down 14.3pc, while Underlying Net Profit After Tax (NPAT) from continuing operations was $127.7m, down 22.8pc on pcp.

During the second half, Orora completed the sale of its Australasian Fibre business, finalised the review of its strategy, reduced debt and returned $600m to shareholders.

Orora on Thursday announced a further return to shareholders via an on-market buyback of up to 10 per cent of issued share capital and paid a final unfranked dividend of 5.5 cents per share.

Orora shares last traded down 3.8pc to $2.30.

Lilly Vitorovich 10.21am: Southern Cross cuts dividends ’til 2022

Southern Cross Media has joined a growing list of media companies to report a double digit drop in earnings and revenue as advertisers slash spending during the coronavirus crisis.

The group, which operates 98 radio stations across its Triple M and Hit Networks, also announced it won’t resume paying dividends until the 2022 financial year.

Its annual underlying earnings dropped 37 per cent to $93m, hurt by an 18 per cent drop in revenue to $540.1m.

However, it swung to a net profit to $25.5m, helped by a near 13 per cent drop in expenses. It received $16m from the federal government’s JobKeeper wage subsidy. That compares to a net loss of $95.7m last year, hurt by impairment charges against its television operations.

Southern Cross also announced that its chairman Peter Bush had resigned and will retire as a director at the group’s annual shareholder meeting on October 30.

Mr Bush has been replaced by Metcash chairman Rob Murray, who has been an independent non-executive director with the radio group for nearly six years. The group has also appointed Carole Campbell to the board, with Leon Pasternak to retire at the AGM as previously announced.

Mr Bush’s departure comes four months after Southern Cross raised $169m capital to cut its net debt to $131.6m.

At the time of the capital raising, Southern Cross said it wouldn’t pay any dividends for the 2020 and 2021 financial year.

SXL last traded up 4.2pc to 17.2c.

Read more: Big bets on Southern Cross

10.11am: Shares reverse from six-month high

Shares have staged a swift reversal from yesterday’s six-month high, reversing all of the previous day’s gains as energy and financials weigh.

At the open, the benchmark ASX200 is lower by 57 points or 0.92 per cent to 6110.6.

Reactions to earnings reports and analyst rating changes added to downward pressure from modest falls on Wall Street after the FOMC minutes.

A 2.5pc fall in CSL shaved 13 points off the index after Citi cut its rating to Neutral after its shares surged 6.4pc on Wednesday.

Meanwhile the major banks are down by between 0.5pc and 1.1pc.

IDP Education is a standout after its results, up by 33.6pc, while Qantas is flat at $3.76.

Samantha Bailey 10.01am: Dramatic patient drop dents Sonic Health

Pathology giant Sonic Healthcare has unveiled 4 per cent drop in full-year profit on lower patient volumes through the COVID-19 restrictions.

Net profit attributable to members fell 4 per cent to $527.7m for the full-year through June.

“After reporting a strong first half, Sonic’s financial results for the 2020 financial year were impacted by dramatic falls in base business patient volumes from mid-March through May 2020, caused by social restrictions and fear of infection,” said chief executive Colin Goldschmidt.

“Fortunately, our base business volumes had largely recovered by 30 June 2020, and COVID-19 testing volumes ramped up through the period providing a partial offset.

“This enabled us to report modest earnings growth for the year, and to maintain our final dividend at the prior year level.”

The company declared a final dividend of 51c per share, in line with last year.

Sonic said that while it would not provide a guidance, revenue growth rates had been substantially higher than historical rates through July and August.

SHL last traded at $34.58.

Eli Greenblat 9.58am: ACCC passes Metcash, Total Tools tie-up

The Australian Competition and Consumer Commission announced on Thursday it will not oppose Metcash’s acquisition of a 70 per cent majority interest in Total Tools Holdings, the franchisor of the Total Tools network.

Metcash is a wholesaler and retailer of hardware and home improvement products through its Independent Hardware Group division. IHG’s retail stores include Mitre 10, Home Timber & Hardware, Thrifty-Link Hardware, True Value Hardware and Hardings. Total Tools is a specialist retail supplier of tools and equipment.

The ACCC said it considered that IHG stores compete more closely with multicategory hardware stores, such as Bunnings, while Total Tools competes more closely with other tool specialists such as Sydney Tools, as well as Bunnings.

“We saw that generally Mitre 10 focuses on the DIY customer and those looking for convenience, while Total Tools mainly attracts trade customers because of their extensive range of trade quality products and specialised staff,” ACCC Chair Rod Sims said.

Ben Wilmot 9.51am: Growthpoint beats pre-virus guidance

Office and industrial landlord Growthpoint Properties Australia is on course and has delivered earnings ahead of the guidance it had pulled as the pandemic struck.

But the trust’s profit after tax fell to $272.1m, down on fiscal 2019’s $375.3m, mainly due to a lower net gain in the fair value of investments.

Growthpoint delivered a 2 per cent lift in funds from operation per security of 25.6 cents and a distribution of 21.8 cents per security, a 5.2 per cent drop on fiscal 2019.

In a good sign for offices and warehouses, the trust’s net property income was up 5.1 per cent to $242.1m and like-for-like property income up 2.2 per cent.

It also had a strong property valuation gain on its $4.2bn portfolio in first half of the year and no material change in the second half as the virus struck.

Growthpoint completed an office development in Richmond, Victoria and the expansion of a distribution centre, leased by Woolworths, in Gepps Cross, SA.

The trust gave limited assistance to severely impacted tenants, granting $800,000 of rental abatements and deferring $2m of rental payments. Rent collection remained strong with 97 per cent of April to June billings collected.

9.48am: What’s on the broker radar?

A2 Milk raised to Outperform – Credit Suisse
Bapcor rated new Buy – Jefferies
Corporate travel cut to Sell – Morningstar
CSL cut to Neutral – Citi
EML Payments cut to Sector Perform – RBC
InvoCare cut to Neutral – Citi
McMillan Shakespeare raised to Outperform – Credit Suisse
Northern Star raised to Outperform – Credit Suisse
OZ Minerals cut to Hold – Bell Potter
Saracen Minerals raised to Buy – Canaccord
Silver Lake raised to Outperform – RBC
SmartGroup cut to Hold – Morgans
Tabcorp raised to Outperform – Credit Suisse
Treasury raised to Market Perform – Bernstein
Vicinity Centre cut to Underperform – Jefferies
Webjet cut to Neutral – JP Morgan
Webjet cut to Sector Perform – RBC
WiseTech cut to Neutral – Credit Suisse

Samantha Bailey 9.45am: Renovation boom lifts Beacon Lighting

Beacon Lighting has unveiled a full-year net profit up 38.5 per cent to $22.2m on the back of record sales, as stuck at home Aussies spruced up their fixtures and fittings.

“During April, May and June 2020, Beacon Lighting stores experienced significant growth in sales as its customers were spending more time working, educating and completing projects at home,” the company said.

Beacon directors declared a final dividend of 2.4 cents a share, up from 2c a share the prior year.

Beacon said that given uncertainties the future of COVID-19 cases, changes in customer shopping behaviours and changes to future government policies, it was not possible to predict whether the current high level of sales would continue.

BLX last traded at $1.35.

Lilly Vitorovich 9.44am: HT&E payout suspended

HT&E, which operates radio stations KIIS, Pure Gold and The Edge, has suspended its interim dividend to preserve cash during the coronavirus crisis, as it swung to a $59m loss.

The company says advertising spending in both Australia and Hong Kong has been “significantly affected by the economic impacts of COVID-19”.

Its underlying earnings from continuing operations dropped 49 per cent to $19.5m for the six months to June, with revenue down 29 per cent to $93m.

But there are some signs of improving conditions at its vast radio division, ARN. Trading in July has improved, down 27 per cent for the month, compared with a 46 per cent drop in the second quarter as some advertisers return with the easing of lockdown restrictions in parts of the country.

“At this stage, August and September are tracking similar to July. Early pacing suggests this trend could improve further into Q4 if current COVID-19 restrictions in Melbourne moderate and are not tightened elsewhere,” HT&E says.

However, its outdoor ad business in Hong Kong continues to struggle during the pandemic.

HT&E said it remains on track to deliver total temporary operating cost savings of between $11m-$14m this year, before the current JobKeeper subsidy benefit of about $9m.

HT1 last traded at $1.21.

Samantha Bailey 9.41am: ASX boosts dividend in ‘challenging’ year

Sharemarket operator ASX Limited has delivered a 1.4 per cent lift in full-year net profit after tax to $498.6m and boosted its final dividend by 7pc, against what it described as a challenging backdrop.

ASX said operating functions remained resilient and reliably managed through the last six months as market conditions deteriorated.

“The 2020 financial year presented extraordinary health and economic challenges for the global community,” chief executive Dominic Stevens said.

“While ASX was not immune, we did deliver a robust result for our stakeholders.

“The strong performance of our core businesses generated solid underlying profit growth, while investment in the resilience of our systems helped ensure the availability of ASX’s markets throughout the COVID-19 pandemic.”

The company declared a final dividend of nearly $1.23 per share fully-franked, up 7.2 per cent on a year ago.

Ben Wilmot 9.39am: Mirvac firms focus on built-to-rent

Property developer Mirvac is coming through the coronavirus pandemic by shifting more into build to rent apartments even as its shopping centres take a hit as it unveiled a 5 per cent drop in full-year operating profit to $602m.

But the company’s profit after tax fell heavily from $1.02bn to $558m as it wrote down the value of its investments and gave assistance to hard pressed retail tenants.

Mirvac’s closely watched residential unit is on track and its earnings increased by 12 per cent to $225m and it is pressing ahead with major developments, including the former Channel 9 site Sydney.

The company settled 2,563 residential lots, with $971m in residential pre-sales secured. Mirvac also kicked off pre-leasing on its first build-to-rent project, LIV Indigo at Sydney Olympic Park and acquired two more Melbourne projects, extending its pipeline to about 1,700 apartments across four projects.

Citing the evolving nature of the COVID-19 pandemic, Mirvac did not give fiscal 2021 earnings guidance but will target a distribution payout ratio of 65-75 per cent of operating earnings, in line with its distribution policy to pay up to a maximum of 80 per cent of operating earnings.

MGR last traded at $2.05.

Members of the presentation and hygiene team at Mirvac’s Broadway Shopping Centre. Picture: Lisa Maree Williams/Getty Images.

Cliona O’Dowd 9.36am: Market volatility dents Perpetual

Perpetual chief executive Rob Adams says the medium to long-term outlook for the business remains positive despite the short-term COVID-19 headwinds which helped push its net profit down 29 per cent for the full year.

Strategic initiatives delivered during the year would provide further strength and diversification for Perpetual as well as opportunities for growth, Mr Adams said as he flagged a coming change in dividends.

For the 12 months through June, net profit slumped to $82m from $116m the year prior, as revenue dropped due to lower funds under management, an investment hit from COVID-19 and investment in growth initiatives.

For fiscal 2020, revenue was down 5 per cent on the year prior to $489.2m.

“The S&P/ASX All Ordinaries Price Index closed the year 10 per cent lower than fiscal 2019, which had a direct impact on the group’s market-related revenues generated by funds under management in Perpetual Investments and funds under advice in Perpetual Private in the second half,” Mr Adams said.

“In addition, net outflows from Perpetual Investments, while slowing through the year, led to lower revenue for the full year.”

For the full year, Perpetual Investments generated a profit before tax of $55.4m, down 31 per cent on the prior corresponding period.

9.35am: Qantas ‘wings are clipped’: Joyce

Qantas chief executive Alan Joyce speaking to media now says “the Flying Kangaroo’s wings are clipped for now, but it’s still got plenty of ambition”.

However he says airlines in a post-Covid world will involve “an industry and competitors that are structurally different”. He also says it will involve an economy recovering from deep recession, a customer base with new expectations and “continued uncertainty on borders”.

“We’ll have to operate differently in response. And that will mean more hard decisions,” Mr Joyce warns.

“Hard decisions in the current climate are largely about survival – and also about eventually being able to grow again,” he adds.

His comments follow Qantas this morning posting a $2.7bn statutory loss before tax for the 2020 financial year, after a horror second half.

The result was tempered slightly by a $124m underlying profit before tax, down 91 per cent on the previous year.

QAN last traded at $3.76.

9.32am: Corporate earnings in focus after US slip

Corporate earnings are the main focus again today despite a slight dip on Wall Street.

Overnight futures relative to estimated fair value suggest the S&P/ASX 200 will open down 0.3pc at 6149 points.

The index rose 0.7pc to a 6-month high close of 6167.6 on Wednesday, closing above its falling 200-day moving average near 6160 for the first time since late February.

Monday’s low at 6059 now offers potential support on the chart, while the June peak at 6198.6 is resistance and the 200-DMA is yet to be decisively broken.

While the S&P 500 fell 0.4pc and the Nasdaq 100 lost 0.6pc overnight, there bearish reversal patterns from record highs are of only minor concern given recent price action.

The slight pullback was attributed to July FOMC minutes being more sceptical about yield curve control and more vague about the timing of when Fed officials think it will be appropriate to give “greater clarity” about the likely path of the Fed Funds rate.

One consequence may be that asset prices react positively in the event that the Fed does roll out these options following its September 15-16 meeting, thereby further improving US financial conditions while the economy struggles to recover from virus lockdowns.

QBE trades ex-dividend.

Perry Williams 9.28am: Santos slumps to $402m loss

Santos slumped to a first half loss of $US289m ($402m) due to writedowns flagged in July as the oil crash roiled the producer and will pay an interim dividend at the lower end of a target range due to economic volatility.

The South Australian producer sank to the $US289m loss from a $US388m profit last year after it was forced to slash the value of its GLNG gas export project in Queensland due to lower oil price assumptions as crude demand cratered from the COVID-19 pandemic.

Underlying profit fell 48 per cent to $US212m for the six months to June 30 with sales dipping 16 per cent to $1.668bn.

The company will pay a US2.1c per share dividend, at the lower end of a 10-30 per cent payout of free cash flow, with the board stating economic uncertainty and the lower oil price environment made it a prudent decision. The payout level will be reviewed again for the final dividend in February.

Nick Evans 9.22am: South32 slashes dividend

South32 has slashed its full-year dividend after slumping to a $US65m ($90.5m) net loss for the year on the back of tumbling commodity prices and a writedown of the value of its Tasmanian manganese smelters, sold this month to Sanjeev Gupta.

The WA headquartered mining major will pay a US1c a share final dividend, down from US2.8c at the same time in 2019, saying the payout represented 77 per cent of its underlying earnings in the second half of the financial year.

South32’s final result was hit by $US115m in restructuring and impairment charges, largely focused on its manganese smelters.

It booked a net loss of $US65m for the financial year, against an after-tax profit of $US454m the previous period, as revenue across its global mining operations fell 16 per cent to $US6.08bn.

Earnings before interest and tax plunged 71 per cent to $US261m, with the company saying underlying EBIT was also down sharply, to $US446m, from $US1.44bn the year before.

S32 last traded at $2.15.

Lachlan Moffet Gray 9.16am: Listing decline sends Domain to $227m loss

Real estate classifieds site Domain will not pay a final dividend after recording a net loss after tax of $227.7m.

Contributing to the loss was a 10.5 per cent decline in underlying revenue to $261.6m and a goodwill impairment charge of $256.1m.

Following cost-cutting measures implemented earlier in the year and the added benefit of JobKeeper, the company managed to combat revenue decline by reducing expenses by 10.4 per cent.

EBITDA fell 10.4 per cent to $84.4m while earnings per share fell from 6.19c to 3.70c.

The company paid an interim dividend of two cents a share earlier in the year.

Domain managing director Jason Pellegrino said despite the impact of the COVID-19-pandemic and the $5m revenue cost of support packages to customers, the company experienced organic growth of 23 per cent and the implementation of a new pricing model.

Net debt was also reduced to $105.8m from $147.9m in December of last year, with existing debt covenants waived.

“To strengthen our balance sheet, we reached agreement with our banking group to extend Domain’s banking facilities and waive covenants for June and December 2020,” Mr Pellegrino said.

The company did not provide formal guidance, citing the uncertainty in the property market as a result of the COVID-19 pandemic.

DHG last traded at $3.63.

John Stensholt 9.10am: Closures weigh on Star Entertainment

The Star Entertainment Group has revealed a statutory net loss of $95m from $1.487bn revenue in a year hit by COVID-19, but said trading in July had shown positive signs as restrictions in NSW and Queensland ease.

The owner of The Star casinos and resorts in Sydney, Gold Coast and Brisbane had been forced to close its doors and stand down 8500 staff but said domestic gaming revenue in July had been within 80pc of the previous corresponding period, even though it was still not allowed full capacity at its venues.

Trading during the first 17 days of August had also been good in Queensland, though spatial distancing restrictions for its patrons in NSW had been tightened. The group said it was cash flow positive in July.

Profit for the full-year fell 147pc and revenue was down 30.4pc.

Management said The Star had been trading at record levels to the end of February, after which COVID-19 hit. EBITDA at its Sydney casino had been up 21.4pc to February but eventually fell 7.6pc to $284m for the full year.

The Star said it had received $64.8m between April and June from the federal government’s JobKeeper scheme, and estimated that figure would reach about $130m for about 7000 employees by September 27.

The Star confirmed it would not pay a final dividend for the year.

SGR last traded at $2.83.

Star Entertainment says trading in July showed signs of recovery from the pandemic. Picture: NCA Newswire/ Gaye Gerard.

Eli Greenblat 9.05am: CC Amatil slashes dividend amid writedowns

Coca-Cola Amatil has slumped to a half-year loss of $8.7m, a reversal of the $168m profit made in the previous corresponding period, as it was stung by hundreds of millions of dollars in impairments to its Indonesian operations flowing from the impact of the COVID-19 pandemic.

The beverage company has also slashed its interim dividend by more than half, declaring a half year dividend of 9 cents per share, down from a dividend of 21 cents for the half year results in 2019 which also came with another 4 cents per share special dividend.

The bottler said that it had booked impairments of $162.2m for the June half, at the bottom end of its earlier guidance of impairments for the period of $160m to $190m.

Coca-Cola Amatil, which sells a range of carbonated drinks, bottled water, alcohol and coffee, said its ongoing net profit of $112.1m was down 35.3 per cent while group trading revenue for the half was down 9.2 per cent.

Pre-tax earnings of 370.5m was down 19.4 per cent and reflected the impacts of volume and changing consumer patterns during the early months of the COVID-19 pandemic and restrictions on movements and social gatherings.

David Ross 8.58am: IDP Education posts flat profit

IDP Education has reported a $70.4m profit after tax, up three per cent on 2019, driven by continued growth in student placements despite travel restrictions due to the pandemic.

The group reported an 11 per cent growth in earnings to $107.8m, but still, a full year dividend will not be paid.

The broader performance of IDP Education was mixed, with its core English language testing business hit by 9 per cent, while student placements grew by 12 per cent for the year.

Multi-destination placements were the key driver, up 52 per cent, but placements to Australia were down 9 per cent as the country as our borders were closed in March to stop the spread of coronavirus.

Jared Lynch 8.48am: Medibank unveils Wilkins as chair

Australia’s biggest private health insurer Medibank has unveiled a new chairman after its net full-year profit dived 31.3 per cent to $315m.

Elizabeth Alexander, who has led Medibank since 2013 and guided it through its float a year later, will step down on September 30, making way for current non-executive director Mike Wilkins.

The move adds another chairmanship to Mr Wilkins’ workload, with him also leading QBE Insurance Group. He was formerly Insurance Group Australia’s chief executive, and is a Scentre Group director.

“This is a great company which plays an important role in the health and wellbeing of many Australians and I look forward to continuing to work with my fellow directors and management to ensure the ongoing success of Medibank for the benefit of all of our stakeholders,” Mr Wilkins said.

His appointment comes as chief executive Craig Drummond said savings, which were forecast by some commentators, as a result of the cancellation of elective surgeries to combat COVID-19 had not eventuated.

Health insurance premium revenue firmed 1.3 per cent to $6.56bn in the year to June 30, while benefits payable increased 2.5 per cent to $5.5bn. Net profit fell 31.3 per cent to $315m.

Mike Wilkins has been announced as Medibank’s new chairman. Picture: AAP Image/Wayne Taylor.

Samantha Bailey 8.30am: Wesfarmers net profit sinks 69pc

Wesfarmers has delivered a 10 per cent lift in full-year revenue of $30.8bn, as demand for home improvements and working from home products lifted during the COVID-19 restrictions.

Bunnings, Kmart and Officeworks all booked a lift in revenue while the company’s fertilisers business was in line with the prior year.

Net profit for the period plunged 69.2 per cent to $1.7 billion, compared to $5.5bn a year ago, which included $3.6bn relating to gains on the Coles demerger, as well as earnings from discontinued businesses.

The company declared a final dividend of 77c a share, bringing the total dividends for the period to 170c a share, compared to 278c last year.

Wesfarmers said the outlook for the year ahead was uncertain, and while consumers spending more time at home would support higher demand for some businesses, retail sales will be impacted by any further trading restrictions.

Robyn Ironside 8.20am: Qantas posts $2.7bn loss

Aircraft write downs and redundancies have seen Qantas post a $2.7bn statutory loss before tax for the 2020 financial year after a horror second half.

On a more positive note for the airline, the result was tempered by a $124m underlying profit before tax, down 91 per cent on the previous year.

The airline explained the $2.7bn loss as being due mostly to a $1.4bn write down of assets including the A380 fleet, currently mothballed in the California desert, and $642m in one-off redundancy and other restructuring costs.

7.53am: US writedowns surge

US companies are writing down more of their assets during the coronavirus pandemic than they have in years.

Finance chiefs are reducing the value of company assets such as aeroplanes, cruise ships and movie theatres in response to changes in consumer behaviour that threaten the viability of their business models.

“You have assets at least for a period of time generating zero — or close to zero — revenue,” said Steve Hills, who heads up the technical accounting consulting unit at Stout Risius Ross LLC, an advisory firm.

The 2000 largest U.S. businesses by market capitalisation — from oil companies to airlines and restaurant chains — have been recording higher pre-tax impairments as existing assets and investments produce poor returns amid the widespread economic downturn.

“If businesses can’t sell their products or services, the assets they’re holding are most likely worthless,” said Philip Keejae Hong, an accounting professor at Central Michigan University.

Impairment charges totalled $US261.7 billion for the first six months of the year, up 187.6pc from the $US91 billion booked during the same period in 2019. The first-half figure is also 29pc larger than the $US203.1 billion recorded in all of 2019, according to financial-technology firm New Constructs LLC.

The total figure for writedowns in the first half of the year is among the highest for the past 20 years, but lower than such charges in all of 2008, when impairments hit $US486.77 billion, and 2015, when they totalled $US383.3 billion.

Dow Jones

7.15am: OPEC sticks to oil agreement

OPEC ministers stuck to an agreement to lower oil production at a monthly meeting Wednesday, underlining that only strict compliance could restore stability to prices undermined by the coronavirus pandemic.

Ahead of a virtual meeting of OPEC and non-OPEC producers, Russian Energy Minister Alexander Novak had welcomed data showing producers had by July implemented 95 per cent of the cuts agreed.

Following the meeting, the oil cartel said in a statement that figure was as high as 97 per cent if Mexico was included, welcoming “significant performance in overall conformity”.

Nevertheless, “100pc conformity from all participating countries … and compensating for the shortfalls in May, June and July 2020 is not only fair, but vital for the ongoing rebalancing efforts and to help deliver long-term oil market stability,” it added.

The coronavirus pandemic slammed the global economy earlier this year, plunging oil prices into unprecedented negative territory before top exporters Saudi Arabia and Russia agreed to put aside their differences and make common cause to halt the slide.

Now, “there are some signs of gradually improving market conditions,” OPEC said. “Nevertheless, the pace of recovery appeared to be slower than anticipated with growing risks of a prolonged wave of COVID-19,” it added, highlighting oil market “fragility … and significant uncertainties”.

AFP

7.10am: Trump urges Goodyear boycott

President Trump called for a boycott of Goodyear Tire & Rubber Co. in response to reports that the company showed a slide to workers prohibiting the wearing of politically affiliated slogans, such as “Make America Great Again” apparel.

In a tweet, Mr Trump wrote: “Don’t buy GOODYEAR TIRES – they announced a BAN ON MAGA HATS. Get better tires for far less!”

Throughout his presidency, Mr. Trump has taken to Twitter frequently to criticise companies, including some industrial giants such as Boeing Co. and General Motors Co. His remarks have sometimes surprised executives, leaving them scrambling to respond to potentially brand-damaging comments intended to influence customers.

The flare-up involving Goodyear began Tuesday after a local news station in Kansas published a photograph of a slide presented to company employees with a list of acceptable and unacceptable slogans to be worn at work.

On the acceptable list was the phrase “Black Lives Matter” and slogans supporting LGBT pride, while the police-supporting phrase “Blue Lives Matter” and politically affiliated slogans — including Mr. Trump’s “Make America Great Again” campaign message — were designated unacceptable.

Trump wants a boycott of Goodyear after its banned slogans including "Make America Great Again" Picture: AFP

After the president’s tweet, Goodyear responded on Twitter that the photograph had “created some misconceptions about our policies.” The company said in a statement that it asks workers to refrain from displaying support for any campaign or political party in the workplace and to limit advocacy, except for expressions related to racial justice and equity issues. The company also said it supports both equality and law enforcement.

Dow Jones

6.20am: ASX set to slip at the open

Australian stocks are poised for early falls after yesterday hitting a six-month high.

At around 6am, the SPI futures index was down 10 points, or 0.2 per cent.

Yesterday, the ASX jumped 0.7pc to a six-month high as earnings from 29 of the top 200 companies dictated market moves.

The Australian dollar is lower at US71.85c.

Gold and oil prices both fell but iron ore continued its rise, adding 0.9 per cent to $US128.80.

6.10am: Wall Street wavers

US stocks swung between small gains and losses, a day after the S&P 500 set its first record close since February, as investors held out cautious hopes for a continued economic recovery.

The broad stockmarket index was down 0.4 per cent as of the 4pm close of trading in New York, while the Dow Jones Industrial Average was off 0.3 per cent. The technology-heavy Nasdaq Composite fell 0.6 per cent.

The S&P 500 has surged more than 50 per cent from its lows in March and is up more than 5 per cent for the year. After a remarkable rally in April and May, the index has gradually crept higher in recent weeks.

“We’ve had the sharpest sell-off in history from a record high to a bear market,” said Phil Orlando, chief equity market strategist at Federated Hermes. “We followed that up with the sharpest rebound in history from a bear market to a new record high.”

A string of recent economic data has pointed to signs of a rebound in the American labour market, the manufacturing sector and consumer spending. But some investors remain nervous about the sustainability of a market rebound, largely spurred by the Federal Reserve’s interventions.

The Fed has taken aggressive action to prop up bond markets, pushing yields down. Low yields have driven investors to seek out riskier assets like equities.

Stocks lost some of their momentum after the Fed released minutes of a July meeting where they grappled with how to spur growth amid low rates and rising virus cases.

Fed officials said the US needed greater support recovering from the coronavirus pandemic but were hazy about when they should deploy their tools. They expressed limited enthusiasm for yield curve control, a policy that typically involves targeting rates and pledging to buy longer-term bonds.

“It was a mechanism for providing stimulus that the Fed has now ruled out at least for the time being,” said Nathan Sheets, chief economist at PGIM Fixed Income. “They said we’re really good with the hammer and screwdriver, but don’t need the drill.”

The market is counting on additional stimulus spending by the government to bolster consumer confidence after a special jobless benefit for millions of Americans lapsed at the end of July. But talks between Republicans and Democrats remain stalled, Treasury Secretary Steven Mnuchin said Tuesday.

Major stock benchmarks in China and Hong Kong slipped as trade tensions between the US and China continued to ratchet up. The State Department urged US university endowments to divest from China stocks on Tuesday escalating a war of words against China.

The Shanghai Composite Index fell 1.2 per cent, its biggest decline in more than three weeks. Hong Kong’s Hang Seng index retreated 0.7 per cent.

Oil prices edged down. The Organisation of the Petroleum Exporting Countries and its allies were meeting Wednesday and are expected to discuss the supply cuts currently in place. Brent crude, the international benchmark for oil, declined 0.2 per cent to $US45.37 a barrel.

Dow Jones Newswires

5.40am: Fed flagged more support

Federal Reserve officials said at their meeting last month they expected the economy would require greater support recovering from the coronavirus pandemic but were hazy about when they should deploy their tools.

Minutes from the Fed’s July 28-29 meeting released Wednesday showed a number of officials believed “additional accommodation could be required, “ including by providing more specifics about how long the Fed would keep rates near zero after cutting them in March. The minutes didn’t offer strong signals about the timing of such a move, however, saying only that more explicit guidance would be “appropriate at some point.”

Officials didn’t announce new policy steps at the conclusion of their July meeting. The Fed responded aggressively to the pandemic shock in March and April, expanding its asset holdings by nearly $US3 trillion to $US7 trillion after slashing rates to near zero. It has launched an array of emergency lending programs to backstop markets from corporate debt to short-term municipal bonds.

The Fed’s next meeting is scheduled for Sept. 15-16. Officials grappled last month with considerable uncertainty over the economic outlook given the difficulties many states confronted suppressing virus infections. Some central bank officials have indicated it would make more sense for the Fed to provide additional support once virus infections have declined to a point that allows more commercial activity to resume.

Dow Jones

5.32am: Gold turns down

Gold prices settled sharply lower, ending a two-day string of gains, as the US dollar halted its skid and as commodity investors watched for minutes from the Federal Reserve’s July policy meeting, which could provide further insights on the central banker’s outlook for the U.S. and global business.

December gold finished down $US42.80, or 2.1pc, to end at $US1970.30.

The dip for gold comes as the dollar popped off a two-year low. A measure of the buck, the ICE U.S. Dollar Index, which gauges the dollar against six currency pairs, including the euro and the British pound, was up 0.5pc at 92.714. Weakness in the dollar can raise the appeal of commodities priced in the currency to overseas buyers.

Dow Jones

5.30am: Saudis, Russia insist oil cuts be respected

Oil kingpins Saudi Arabia and Russia insisted Wednesday that OPEC members and their allies must respect production cuts agreed to stabilise the market.

Ahead of a virtual meeting of OPEC and non-OPEC producers to review the situation, Saudi Oil Minister Abdulaziz bin Salman and his Russian counterpart Alexander Novak hailed what they said were “encouraging” signs of recovering demand.

At the same time, Novak cautioned about the fragility of the market and uncertainties over the outlook even though, up to July, the 13 OPEC members plus the 10 non-OPEC producers had by July implemented 95 per cent of the cuts agreed.

“But we cannot stop there, we have to ensure the total respect of the OPEC+ accord,” he said.

“Over the past three months, there has been a significant improvement in the fundamentals of the global oil markets,” said the Saudi energy minister, who is half brother to de facto Saudi ruler, Crown Prince Mohammed bin Salman.

“We see encouraging signs that energy demand is recovering, as economies continue to re-open in many parts of the globe,” he said in opening remarks to the meeting.

“But work still needs to be done and I urge you all not to relax the efforts of the past three months.” Analysts said they expect little change at the meeting, with producers wanting to keep the cuts in place to support the market after having gone through a devastating price war in March between Saudi Arabia and Russia as the coronavirus pandemic deepened.

OPEC is meeting. Picture: AFP

AFP

5.28am: Tech titans keep markets on track

Global stock markets marked time against a backdrop of recent massive gains, growing China-US tensions, fresh virus flare-ups and signs of a possible breakthrough in deadlocked US stimulus talks, dealers said.

With the coronavirus having dealt repeated blows to the global economy over the past half year, it was the tech titans who led gainers on an upbeat Wall Street, suggesting they continue to be major beneficiaries from the health crisis that just will not go away.

Wednesday saw Apple became the first US company to reach $US2 trillion in market value — it hit the $US1 trillion mark in early 2018 and the iPhone maker was up 1.1 per cent at $US467.60 three hours into Wall Street trading to boast a 60 per cent rise so far in 2020.

Fellow technology big-hitters also rose, Google parent Alphabet adding 0.5 per cent and Microsoft 0.1 per cent, although fellow $US1 trillion market value traveller Amazon was off 0.4 per cent even as more broadly the S&P 500 and the Nasdaq indices soared to record highs.

Oil was in focus ahead of US stockpiles data and a virtual meeting of OPEC and its allies to discuss their recent output cuts after crude prices were shattered by a coronavirus-driven plunge in energy demand.

The US dollar, which Tuesday hit the lowest level against the euro in more than two years on the prospect of more huge US stimulus, was little changed as the market waited on the Federal Reserve’s minutes from its latest policy meeting.

“As for the oil market, traders are a bit cautious today because of the US crude inventory data” amid a supply glut, noted Naeem Aslam, chief market analyst at Avatrade.

“Traders are also keeping an eye on the OPEC+ gathering.” Craig Erlam, senior market analyst with OANDA Europe, saw European indices producing a “decent return,” albeit “we don’t quite have the momentum that indices on the other side of the Atlantic are enjoying, with the S&P and Nasdaq back in record territory,” he said.

In Europe, London ended up 0.6 per cent, while Frankfurt and Paris both gained 0.8 per cent.

AFP

5.25am: Apple tops $US2tn value mark

Apple became the first US company to reach $US2 trillion in market value in the latest demonstration of how tech giants have benefited from the upheaval of the coronavirus.

The iPhone maker attained the distinction in midmorning trading and was up 1.0 per cent at $US467.02. company had previously become the first giant to hit $US1 trillion in market value in March 2018.

Apple is followed by other technology companies, including Amazon, Microsoft and Google parent Alphabet, all of which now have more than $US1 trillion in market value.

Shares in Apple have roughly doubled from March lows, an astonishing performance which has lifted chief executive Tim Cook’s net worth to $US1 billion for the first time, according to a Bloomberg Billionaires Index calculation.

Even as other large tech firms have shot higher on robust demand during lockdowns, Apple has outpaced its rivals by delivering strong sales of gadgetry including wearables and tablets, along with new apps and services which have gained ground during the global health crisis.

In the past quarter ending in June, Apple reported profits climbed eight per cent to $US11.2 billion and revenues jumped 11 per cent to $US59.7 billion.

Apple has become the first US company to reach $US2 trillion in market value. Picture: AFP

AFP

5.22am: Last big UK coal mine shuts

The closure of England’s last major coal mine this week marked another step towards the end of one of Britain’s historic industries.

The Bradley mine, in County Durham, northeast England, ceased operations on Monday, after owner, the Banks Group, recently shuttered two other mines in the region, leaving 250 jobs in limbo.

Conservationists, including the Extinction Rebellion activist group, led months of pressure and protests to prevent the site being maintained until 2021 and welcomed the closure.

It leaves only Hartington, a small-scale mine in northern England near Sheffield, and several other smaller sites still operating across England.

Some mines remain in Wales and Scotland, according to Banks Group. Bradley’s closure effectively marks the end of an industry which stretches back to Roman times and which had several dozen sites operational as recently as the early 2000s.

Faced with the climate emergency, Britain has opted to halt coal production for electricity entirely by 2025, with just a handful of power stations still using it.

AFP

5.20am: Roche, Regeneron partner on coronavirus cocktail

Swiss pharmaceuticals giant Roche joined forces with Regeneron to scale up supply of the US firm’s REGN-COV2 medicine — potentially both a prevention and treatment for COVID-19 infection.

The two companies are teaming up to develop, manufacture and distribute the investigational combination of two antiviral antibodies.

The product “could provide a much-needed treatment option for people already experiencing symptoms of COVID-19, and also has the potential to prevent infection in people exposed to the virus”, Roche said in a statement.

The medicine is being tested on humans in clinical trials for the treatment of COVID-19, and for the prevention of the new coronavirus in household contacts of infected individuals.

If it proves safe and effective and regulatory approvals are granted, Regeneron will distribute the product in the United States, while Roche will do the same in the rest of the world.

AFP

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