ASX dives 5pc amid jitters on earnings, economic outlook

A late dive sent the ASX to its biggest daily drop in five weeks, finishing down 5pc as economic jitters sparked a no-holds-barred sell-off.

David Rogers and Melissa Yeo

42 min read

9:05PMMay 01, 2020

Markets are set for more falls.

Stocks take $83bn hit in broad sell-off
PM mulls social distancing ‘early mark’
Reliance scales back manufacturing
ResMed boost revenue on ventilator pivot

That’s all from the Trading Day blog for Friday, May 1. A late dive sent the ASX to its biggest daily drop in five weeks, finishing down 5pc as economic jitters sparked a no-holds-barred sell-off.

It comes after a hit on Wall Street overnight where the S&P 500 shed 0.9 per cent, the Dow lost 1.2 per and the Nasdaq dipped 0.3 per cent. Weak results from Apple and Amazon compounded weakness after soft economic data.

US futures are pointing to further losses to come tonight.

Perry Williams 8.44pm: Woodside set to pounce

Woodside Petroleum has signalled its desire to hunt down distressed oil and gas assets around the globe amid a prolonged energy crash, with the Perth producer open to tapping $7bn in liquidity for the right target.

US and European supermajors are being hit by lower earnings and slumping share prices, with oil plunging and the US shale industry forced to cut production to survive the market rout.

Woodside chief executive Peter Coleman said he expected opportunities to initially arise at an asset rather than company level.

John Durie 8.27pm: Origin goes for Octopus Energy

Origin’s Frank Calabria is from the big end of town, one of the big three energy giants, but he has joined forces with a UK-based disrupter, Octopus Energy, in a bold attempt to shake up the retail market in Australia.

Octopus has created a revolutionary new service platform that has the scope to dramatically change the way energy is managed at the retail level.

Calabria will take a 20 per cent stake in Octopus for $507m, becoming the first outside investor since Greg Jackson started the company four years ago.

The big end of town may be jumping into bed with a disrupter, but it’s one that has established its credentials as a fast-growing UK retailer, and Origin is buying a stake as it potentially expands globally.

7.52pm: Tencent takes stake in Afterpay

Afterpay said Hong Kong-listed Tencent Holdings is now a “substantial shareholder”, making the announcement late on Friday to the ASX.

Tencent businesses include digital entertainment, online advertising, and FinTech and its communications platforms include Weixin, WeChat and QQ.

Afterpay said the Weixin Pay service is the leading mobile payments platform in China, with about a billion commercial transactions a day.

Anthony Eisen and Nick Molnar, co-founders of Afterpay said in the ASX statement: “We feel very privileged to welcome Tencent as a substantial shareholder in our business. Being able to attract a strategic investor of this calibre is extremely rewarding and is a testament to our team and the strength of our differentiated business model.

Ben Wilmot 7.50pm: Shopping centre owners hammered

Shopping centre owners were hammered on Friday as investors worry about their longer-term prospects, with the recovery from the coronavirus crisis expected to be sluggish as consumers are reluctant to spend.

Retail property values are also being marked down heavily as retailers push for more permanent rental cuts as they re-establish their businesses, while big chains are still baulking at paying rent during periods they are closed.

Large regional malls are at most risk as customers are staying away from crowds and instead focused on supermarket shopping or purchases of other necessities.

Lisa Allen 7.39pm: Helloworld pins hopes on September

Travel agency Helloworld expects domestic travel to resume by September, closely followed by the reopening of trans-Tasman markets in October or November. But mid to long-haul outbound travel will not resume until next year — and will be largely dependent on wide distribution of a vaccine or cure for COVID-19.

In a market update released to the ASX on Friday, Melbourne-based Helloworld revealed collapsed airline Virgin owed it $3.7m in commission overrides and marketing income and it was awaiting details on recoverability from the airline’s administrators.

Helloworld said it was taking advantage of the federal government’s JobKeeper scheme as well as New Zealand’s Wage Subsidy to keep more than half of its staff employed, but at reduced hours.

7.02pm: UK PMI slumps; FTSE lower

British manufacturers suffered the biggest fall in output and orders for at least three decades in April, as measures to slow the spread of the coronavirus sent the economy into a steep downturn, a survey showed on Friday.

April’s final IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) headline activity index fell to a record-low 32.6 from March’s 47.8.

The FTSE 100 opened 2.4pc lower ahead of UK data and was down 2pc after the data showing the full extent of the impact of coronavirus lockdown measures on the manufacturing industry in April was released.

with wires

6.46pm: Heathrow loss; expects 97pc passenger drop

London’s Heathrow airport said on Friday that it swung to a pretax loss for the first quarter of 2020 and that it has reduced costs by around 30pc due to the coronavirus pandemic.

The airport - jointly owned by the Qatar Investment Authority, China Investment Corporation, Spain’s Ferrovial SA, and other investment companies - said it has cut management pay, renegotiated all contracts and consolidated operations.

Heathrow said its pretax loss was 278m pounds sterling ($541m) compared with a pretax profit of GBP132m for the first quarter of 2019.

Revenue for the first quarter was GBP593m compared with GBP679m in the same period of the previous year. The airport said capital expenditure has been cut by GBP650m.

Heathrow said passenger numbers fell 18.3pc in the quarter to 14.6 million and that it expects a fall of around 97pc for April.

Dow Jones Newswires

Perry Williams 6.02pm: Energy collapse hits LNG Ltd

The biggest energy crash in a generation has claimed its first Australian gas scalp after LNG Limited slipped into administration just two weeks after saying it was running out of cash.

The ASX-listed junior said it had appointed PwC as voluntary administrators with the company’s directors and management quitting the company over the last few days.

The gas developer had been toiling to kickstart a hugely ambitious $US5bn ($7.8bn) Magnolia LNG project in Louisiana but ran into a series of difficulties including a slump in the LNG price and fallout from the US-China trade war, complicating moves to sign up customers in Asia for its project.

The market has no interest in backing prospective LNG projects in the current market downturn, Credit Suisse analyst Saul Kavonic said.

“There is no appetite to progress LNG projects to a final investment decision amidst the oil price rout,” Mr Kavonic said. “Appetite for US LNG is waning in particular as current spot prices aren’t covering cash costs.”

US gas prices have sunk to their lowest level since 1995 with domestic stockpiles due to hit a record in 2020 as demand falls due to the coronavirus which roils demand. The outlook is also downbeat for high cost US LNG exporters with a surplus of supply in international markets and prices in Asia also hovering near record lows.

5.09pm: Risk reversal sends $A down 0.8pc

The shift in risk sentiment is hammering the Aussie dollar, even after comments from the PM that Australian’s deserved an “early mark” on social distancing restrictions.

At the local close, AUDUSD is trading down 0.83pc to US64.57c.

Westpac currency strategist Sean Callow points out that while the local currency has avoided revisiting its March lows of US55.69c, weak data will restrain its short-term prospects.

“Supportive factors include open-ended QE programs by major central banks, FX swaps lines to avoid further scrambles for US$ and plans by many OECD governments to loosen coronavirus restrictions,” he writes.

“While these factors may be enough for A$ to avoid revisiting its March lows, we expect that the extended period of brutal economic data and waves of earnings downgrades globally will weigh on risk appetite including equities in coming weeks. Moreover, doubts over the scale of the expected recovery may grow.”

5.02pm: Austal’s 20pc hit drags most on ASX

Materials were worst hit in Friday’s sell-off amid a twin blow from weak commodity prices and Newcrest’s $1bn placement.

Heavyweight BHP took a hit of 7.8 per cent to $29.84 as Rio Tinto shed 5.6 per cent to $82.59 and Fortescue dropped by 8.2 per cent to $10.98.

In the gold names – Newcrest lost 8.7 per cent to close at $25.15 after raising funds at $25.60 apiece. Peer Northern Star was sold off by 8.1 per cent to $11.75 while Evolution lost 7.6 per cent to $4.72 and Saracen Minerals slipped by 8.5 per cent to $3.97.

Despite those moves, it was shipbuilder Austal that provided the biggest drag for the market, shedding 20 per cent to $2.69 after losing a key US Navy tender, and despite a record local contract.

On the upside, Janus Henderson results spurred a 8.2 per cent jump in its shares to $26.60.

Here’s the biggest movers at the close:

4.39pm: Downside risk remains for ASX: AMP

With losses across all sectors, AMP Capital chief economist Shane Oliver points out that some of the downfall could be attributable to profit taking after very strong gains last month.

He warned that weak earnings were likely to persist, just as Amazon and Apple results came in softer-than-expected overnight.

“The March quarter earnings reporting season in the US which is now more than half way through is seeing only 49 per cent of companies reporting profit growth on a year ago and profits are running down around 10 per cent from a year ago and consensus expectations for second quarter earnings are down 36 per cent from the 2019 high,” he wrote, pointing to weakness in the major banks this week.

“The bottom line remains that after the strong run up in global and Australian shares since the low around March 23 they are vulnerable to a pullback on the back of the very poor economic and profit data we will see over the next few months.”

Perry Williams 4.20pm: Woodside backs China virus investigation

Woodside Petroleum boss Peter Coleman has backed Australia’s push for an investigation into the origins of coronavirus and cautioned China against seeing it as a “witch hunt”.

The gas producer, a major seller of LNG to big Chinese customers, said the Australian government was right to call for an inquiry so the world could avoid a repeat of the health pandemic in the future.

“With respect to COVID-19, I think it would be in everybody’s interest to understand exactly what the source of that virus is. And the reason for that is if you understand what the source is and how the virus started in the first place, you hope you can then put in measures to prevent that happening again somewhere else in the world,” Mr Coleman said on Friday.

“This shouldn’t be about a witch hunt. This should be around trying to understand so that knowledge can then be shared. As we know, wet markets are not just in China, they’re all through Asia and Africa.

Still, he said the diplomatic stoush was unfortunate and the two nations should hold talks behind closed doors rather than engage in a public spat.

“The diplomatic relations is just unfortunate to be quite frank. I don’t think this type of diplomacy is best played out in public. I think everybody is extremely sensitive at the moment about the pandemic,” Mr Coleman said.

4.11pm: Stocks take $83bn hit in broad sell-off

Australian shares plunged by 5pc on Friday, wiping $83bn off the market in a stark reversal of sentiment after its biggest monthly rise on record.

Weak US earnings, soft economic data and likely profit taking spurred a steady decline over the session, sending the ASX200 to close at its daily lows, down 5 per cent or 276 points to 5245.9 – its worst drop in five weeks.

The pullback effectively halves the market’s previous monthly jump – winding back strength in the index over the past week.

3.31pm: Materials hardest hit as ASX drops

A dual hit from weaker commodity prices and Newcrest’s mammoth $1.1bn placement are combining to send the materials sector down by 5.8 per cent in afternoon trade.

Heavyweight BHP is lower by 6.5 per cent to $30.25 on jitters about the outlook for commodities, while Newcrest is taking a 7.5 per cent to $25.48 on its return to trade. Its shares in the placement were offered at $25.60 apiece.

Fellow gold miners Evolution and Northern Star are also under pressure – down by 6.8pc and 7.4pc respectively.

Newcrest Mining Cadia Hill gold mine treatment plant in Orange, NSW. Picture: Supplied.

3.25pm: Family Insights surges on grocery interest

Family Insights Group has pointed to increased media attention on the grocery sector as the catalyst for share surge of as much as 176pc.

The group, which owns grocery comparison tool Frugl, answered a speeding ticket from the ASX this afternoon after its shares jumped from 2.1c to as much as 5.8c.

It said it could not explain the recent trading activity, and noted “increased media attention and interest in consumer behavioural patterns following the release of third quarter sales

results of major retailers Coles Group Limited and Woolworths Group Limited this week

amid widely reported panic buying and supply chain constraints during the COVID-19

pandemic.”

After a brief pause in trade, the stock resumed up 67pc to 3.5c.

Nick Evans 3.15pm: Virus to squeeze Monadelphous margins

Engineering company Monadelphous has warned its business faces significant challenges due to the coronavirus crisis, saying major construction projects had been delayed and its maintenance business has experienced a “material reduction” in activity levels.

Monadelphous said on Friday its engineering and construction arm had experienced “supply chain issues causing delays on large resources construction projects currently in progress, as well as a number of temporary deferrals to potential new construction contract award dates”.

Its maintenance division, which delivered 68 per cent of its $852m in revenue in the first half of the year, had been badly hit by the deferral of discretionary maintenance work by resources majors, and by movement restrictions making it more difficult to get workers to remote sites, the company said.

Monadelphous did not name the projects facing delays due to its supply chain problems, but the company has won major work items on BHP’s South Flank mine, Rio Tinto’s Oyu Tolgoi expansion in Mongolia, as well as new construction at Rio’s West Angelas mines in the Pilbara, and Albemarle’s lithium hydroxide plant in WA’s south.

The company said it could not predict the total impact of the virus crisis on its full year financial results, but “should the activity levels that the company is currently experiencing continue to the end of the financial year, revenue would be similar to that of the previous corresponding period”.

MND last traded down 8.2pc at $10.37.

Olivia Caisley 2.17pm: PM mulls social distancing ‘early mark’

Scott Morrison has announced Australians will be given an “early mark” and national cabinet will meet next Friday to discuss social easing distancing restrictions.

This is a week earlier than anticipated.

Speaking after a meeting of the National cabinet on Friday, the Prime Minister said that while there are about 1000 active coronavirus cases across the nation, the coronavirus is not the only curve that needs to be flattened.

“We need to restart our economy. We need to restart our society. We can’t keep Australia under the doona. We need to be able to move ahead,” Mr Morrison said on Friday.

Follow the latest updates at our coronavirus live blog

Eli Greenblat 2.06pm: Treasury to defend another class action

Treasury Wine Estates, the maker of Penfolds, Wolf Blass and Lindemans, has been hit with a second shareholder class action resulting from its recent profit downgrades and tumbling share price.

The case launched by law firm Maurice Blackburn follows a separate case lodged by Slater & Gordon in April.

Both class actions allege Treasury Wine did not fully disclose its financial position to shareholders, especially as it related to issues plaguing its crucial Americas division.

Maurice Blackburn said on Friday it had filed a class action in the Supreme Court of Victoria, on behalf of its client Steven Napier, accusing Treasury of engaging in misleading and deceptive conduct and breaching its continuous disclosure obligations in the period from June 30, 2018 to January 28, 2020.

“TWE strongly denies any and all allegations of wrongdoing and intends to vigorously defend the further proceeding,” the company said.

TWE last traded down 5.1pc to $9.66.

1.54pm: ResMed record high within reach

A shift from sleeping apparatuses to ventilators put a rocket under ResMed revenues in the first quarter and has pushed the company within reach of its March record highs.

The dual listed stock traded higher by 6.9pc in US after-hours trade, and is holding more moderate gains of 5pc in the local session.

Just before 2pm, the stock is higher by 4.3pc to $24.41 after hitting highs of $24.99 – just over 6pc from its March record of $26.66.

An analyst upgrade from US investment bank Oppenheimer could also be helping sentiment – the broker put a price target of $US200 on its NYSE-listed stock – which last traded at $155.32.

1.46pm: Oil prices rally as cuts kick in

Oil prices rallied Friday as massive output cuts began to kick in and top producers said they would turn the taps lower, while there were also hopes for a pick-up in demand as economies slowly reopen.

After a diabolical month for the commodity in which the May WTI contract fell to a mind-boggling minus $40, investors were a little more upbeat about the outlook, though analysts warned the market was not yet out of the woods.

In early trade, US benchmark WTI for June was up almost five per cent at $US19.75, having piled on 25 per cent in each of the previous two days.

Brent for July delivery gained 2.4 per cent to $US27.12 on its first day of trading, with the June contract closing without any of the flurry of selling suffered by US oil two weeks ago.

The gains this week are in line with strong advances across equity markets, which have been fuelled by signs of a slowing of coronavirus infections and deaths in some of the worst-hit nations.

AFP

1.19pm: S&P cuts Virgin rating to D

S&P Global Ratings has slashed Virgin Australia’s rating to D, reflecting the moratorium on all creditor payments while the company is under administration.

In a note this afternoon, the ratings agency said it considered the payment moratorium as a default.

“We expect that unsecured lenders will be forced to accept less value for amounts owing under the terms of the existing unsecured debt facilities as part of the anticipated debt restructuring and recapitalisation process,” S&P says, adding the D grade also reflected the airline’s filing of a bankruptcy petition in the US.

It said the rating would remain at that level until the recapitalisation process is complete and the outstanding senior unsecured notes have been restructured.

1.01pm: ASX sees red in 3.8pc drop

Shares are holding just shy of daily lows at lunch, taking a hit from weak US economic data and earnings misses from heavyweights Amazon and Apple.

At 1pm, the ASX200 is off by 212 points or 3.8 per cent at 5310.8 – from five-day lows of 5293.3.

Materials and real estate stocks are falling fastest – down by 5.6pc and 5.7pc respectively while key gold miner Newcrest sheds 7 per cent after raising $1.1bn in an institutional placement.

Health stocks are the only glimmer of hope – with ResMed up by 5.3pc and Blackmores by 1.3pc.

Here’s the biggest movers at 1pm:

12.35pm: 31pc of Aussies financially worse-off

One third of Australians are in a worse financial position now than they were a month ago, according to the results of the latest ABS survey of households.

The new data set shows nearly half of Australians aged over 18 had their household finances impacted by COVID-19, while one in ten had to draw on accumulated savings to support basic living expenses.

Here’s a summary of their findings:

Our latest Household Impacts of COVID-19 Survey results are out now at https://t.co/kfuLURUQ8h pic.twitter.com/ZPGT5PY9dA
— Australian Bureau of Statistics (@ABSStats) May 1, 2020

12.22pm: Janus Henderson soars on Q1 update

Despite the broader market gloom, fund manager Janus Henderson is surging on Friday – leading the most improved in the top 200 with gains as much as 18 per cent.

Overnight, the group released its first quarter results, including a 21pc drop in assets under management as a result of volatility, but $US165m in adjusted operating income.

The board declared a first quarter dividend of US36c a share.

“Despite significant market declines around the world, Janus Henderson is generating positive cash flow and has a strong balance sheet. Management and the Board continue to take an active, disciplined approach to capital management, and we will continue to balance the capital needs and investment opportunities of the business with shareholder interests,” chairman Richard Gillingwater said in an address to the fund’s AGM in Denver.

The stock was also upgraded by UK investment bank Keefe, Bruyette and Woods.

JHG last up 10pc to $27.05.

John Stensholt 11.44am: Pacific Star takes on more debt

Craig Hutchison’s sports radio and media business Pacific Star Network is taking on an additional $13.5m in debut funding to navigate the COVID-19 pandemic during which almost all live sport has ceased.

Shares in Pacific Star, the owner of the SEN sports radio network which employs media identities such as Gerard Whately and ex-AFL footballers including Gary Lyon, resumed trading on Friday morning after a six-week hiatus.

The company told the market it had extended its existing $15m debt facility to $28.5m, with an expiry date of August 31 next year.

“The debt facility extension provides pro-forma cash liquidity of $18.5m, inclusive of $5m cash at hand as of 30 April,” Pacific Star said in a statement. “Available liquidity will predominantly support working capital requirements associated with COVID-19 pandemic disruptions to sporting seasons and events.”

Mr Hutchison said the company’s strategy is primarily focused on generating revenue from live sporting events, particularly the suspended AFL and NRL competitions.

In response, Pacific Star has increased its working capital, reduced its workforce, ceased capital expenditure plans and had discussions with stakeholders regarding contracts for services which may need to be cancelled or renegotiated.

Pacific Star also announced the acquisition of the Spirit 621AM radio licence in Bunbury, Western Australia, the launch of the SEN Track national racing radio network across 14 stations around Australia and the appointment of former Seven West Media network director of sports sales Patrick Moloughney as commercial director.

PNW last traded flat at 25c.

11.34am: Macquarie dividend cuts coming

Analysts expect Macquarie Group to cut its final dividend by 31pc, according to Bloomberg.

The consensus has Macquarie cutting the dividend from $3.60 to $2.50 a share when it reports next Friday.

Adjusted EPS is expected to fall 5pc from $4.30 to $4.09 a share, in line with the latest company guidance.

Morgan Staney’s Andrei Stadnik expects a 10pc fall in EPS because of asset realisations and COVID impairments, but concedes that impairments could be recognised in FY21.

He says global peer experience suggests MQG’s FY21 performance fees and asset realisations will be down 35-40pc on year and skewed to 2H and anecdotal evidence from renewables peers suggests development projects are being delayed as partners and contractors have been affected.

Still, he has an Overweight rating and $115 target price given MQG is the leading alternative asset manager, its renewables growth, strong capital, earnings resilience and opportunities to deploy dry powder in dislocated markets.

MQG shares are down 3.8pc at $98.83 with the S&P/ASX 200 index down 3.6pc at 5328 points, its worst fall in 5 weeks.

11.14am: Stalling super to dent ASX, $A: UBS

UBS equity strategist Jim Xu says super funds capacity to invest in Aussie equities could be halved as dividends plunge, unemployment rises and funds are withdrawn through the government’s special access scheme.

Early super fund withdrawals, based on the government estimate of $29.5bn, would be just 1.1 per cent of total super balances, and if funds maintain similar asset allocations as they had pre-COVID, with 27 per cent invested in Australian shares, Mr Xu estimates $8bn in Australian equities may need to be sold.

But if dividends per share fall 30-40pc as expected and net contributions to super slow due to lower employment and early withdrawals, the money available for super funds to invest in assets including equities could halve from $89bn in FY19 to $44bn over the coming year.

“Over the past 20 years, the share of Australian equities held in super has increased from 21 per cent to 37 per cent,” Mr Xu says.

“Super funds are the only sector to have increased their ownership of Australian shares over the past 20 years. Hence, any decline in the ability of super funds to purchase Australian shares could be negative for demand for Australian equities.” Still, $45bn is only about 2.6pc of the total market capitalisation of the S&P/ASX 300.

Mr Xu also says the potential decrease in cash available to invest would also reduce purchases of international assets, which were at least 36 per cent of super funds as of Q4-19.

“This could reduce what has been a consistent source of Australian dollar selling pressure and could, at the margin, support a stronger dollar in the medium term.”

UBS forecasts the dollar will be at 0.69 by end-20 and 0.71 by end-21 versus 0.6480 now.

Lilly Vitorovich 11.00am: Seven West completes magazine sale

Kerry Stokes-controlled Seven West Media has completed the long-awaited sale of its Pacific Magazines business to Bauer Media for $40m, bringing much needed cash to the debt-laden television broadcaster and publisher.

Under the deal, which was struck last October before the COVID-19 crisis, Seven will also receive $6.6m in advertising over three years from Bauer’s publication.

The merger of the Australia’s two major magazine publishers will bring Bauer’s 36 titles, including Women’s Weekly and Woman’s Day, together with Pacific’s roughly 20 mastheads such as New Idea and That’s Life!

Seven chief executive James Warburton, who was brought in by Mr Stokes last August to rebuild the television broadcaster and publisher and pay down its $541m debt pile, would be breathing a sigh of relief on Friday after the original completion date of April 9 was pushed back.

SWM last traded down 4.7pc to 8.2c.

10.43am: Shares drop 3.3pc

The local shares sell-off extended to as much as 3.3 per cent in early trading, as all sectors pull lower.

Shares touched a low of 5338 and last traded down 3.2pc to 5346.3 – that’s as US futures extend losses to 1pc.

Heavyweight BHP is down by 5.4pc while the major banks trade lower by between 3pc and 4.8pc.

Energy stocks are worst hit, down by 4.6pc even as WTI crude futures gain 7pc.

Meanwhile, the Aussie dollar is off by 0.54 per cent to US64.75c.

10.34am: ResMed ventilator pivot boost revenues

Pivoting from sleep disorder machines to ventilator production for COVID-19 victims has boosted quarterly revenue at ASX-listed health firm ResMed.

The US-based respiratory health company increased revenue 16 per cent to $US769.5m ($1.19bn) for the three months to March 31 as it ramped up production of life support ventilators, non-invasive ventilators, and ventilation mask systems to treat coronavirus.

The virus – which has infected more than three million people across 185 countries and claimed more than 200,000 lives – can lead to respiratory failure and viral inflammation of lung tissue, which can be fatal.

Ventilators help push oxygen into patients whose lungs are failing. ResMed’s focus is usually on making devices for people suffering from sleep apnoea, chronic obstructive pulmonary disease, asthma, and for people in out-of- hospital care settings.

“Our primary goals are the safety and wellbeing of our team members, and the preservation of life – helping people breathe while their immune system fights this coronavirus,” ResMed chief executive Mick Farrell said in a note on Friday.

RMD last up 4.96pc to $24.56.

AAP

Ben Wilmot 10.25am: Ardent warns of ongoing US closures

The struggling Ardent Leisure Group has warned that the bulk of its US Main Event centres will remain closed for now but hopes that some may progressively re-open as US states controversially look to kickstart the economy.

The Dreamworld owner has been slugged as its local theme parks have also closed and any recovery is expected to be slow as international tourism is off the agenda while borders are closed.

Ardent said that due to ongoing government-mandated shelter-in-place orders in the US, most centres were expected to remain closed. But some states have announced plans that ease shelter-in-place restrictions and allow businesses to re-open if they satisfy certain rules.

US states include that have flagged plans to re-open include Georgia, Oklahoma, Texas, Missouri, Ohio and Florida and Ardent said it may be able to re-open 23 or more centres, or about half its holdings, in May.

10.12am: Shares reverse on weak data

A stark shift in sentiment is wiping all of the previous days gains, with shares off by 2.6pc at the open.

Yesterday’s 2.4pc jump helped the market to notch its best monthly rise on record – but that optimism has been wiped today, with shares down 142 points or 2.57pc at 5380.2.

All sectors bar health care are in the red, led by a 3.9pc drop in energy and materials stocks.

Austal is taking a 23pc after losing out on a key US Navy contract, while Newcrest is losing 6.3pc after raising $1.1bn.

Gerard Cockburn 10.01am: Austal wins $324m Aussie contract

West Australian shipbuilder Austal has been awarded a multimillion-dollar contract by the federal government to construct a new fleet of patrol boats, to bolster the country’s border security.

The largest contract ever received by the company in its 30 year history, Austal will construct six new Cape-class Patrol Boats for the Royal Australian Navy, at a total price tag of $324m.

Austal’s chief executive David Singleton said the contract highlighted the government’s commitment in maintaining a shipbuilding industry in Australia.

“Since its introduction by the Australian Border Force (ABF) in 2013, the Cape-class has proven to be a high-performing, reliable and effective maritime asset, used for a wide variety of constabulary and naval missions, playing a critical role in Australia’s national security,” Mr Singleton said.

The news came as consolation after the group’s US operations missed out on a US Navy contract for a Guided-Missile Frigates FFG (X), described by Mr Singleton as disappointing.

Austal shares will resume trade on Friday after a halt in trade yesterday. Its shares last traded at $3.36 each.

Defence Pacific 2019 Guardian Class Patrol Boat manufactured by Austal. Picture: Supplied.

9.54am: Helloworld revenue slashed, still not raising cash

Travel agency Helloworld is tipping the coronavirus squeeze to continue until at least September, with revenues from travel sales and operations projected to remain at just 5pc of previous levels until that time but says its not raising capital.

Handing down its latest quarterly update, Helloworld said January and February trade had been progressing well, before falling off a cliff in March – with total transaction value dropping by 58 per cent.

The company said net salary costs had been reduced from $12m per month to just $1m, including cuts from its two executive directors to zero since late March.

“Based on current expectations, HLO will incur cash losses of $1.5m – $2.0m per month for the next six months, moving to a break-even position in Q2 FY21 and towards a small profit in the second half of FY21,” the company said.

“HLO has sufficient liquidity to maintain operations for a period of 12 months or longer and is not intending to undertake a capital raising at this point in time.”

9.43am: Newcrest completes $1bn raise

Newcrest will return to trade this morning, after completing its $1bn institutional placement to purchase the Fruta del Norte financing facilities.

The gold miner said this morning the placement had been successful with strong interest at a price of $25.60 per share.

“We are pleased with the continued support from our institutional shareholders, their confidence in Newcrest’s long-term growth strategy and their support of the Fruta del Norte transaction,” chairman Peter Hay said.

The company will launch a share purchase plan with a target of $100m open to eligible retail investors at the lower of the placement or a 2pc discount to the stock’s five-day volume weighted moving average up to the closing date.

9.33am: Apple, Amazon weakness to weigh on ASX

Australia’s sharemarket could fall more than 2 per cent today as sharp falls in Apple and Amazon add to downward pressure on the US sharemarket.

Overnight futures relative to fair value were pointing to a 1.7pc fall in the S&P/ASX 200, with BHP ADR’s equivalent close at $31.24 suggesting the local heavyweight will fall 3.4pc.

Adding to the weakness, S&P 500 and Nasdaq 100 futures are down 1.2pc and 1.7pc respectively after Apple and Amazon reported after-hours.

Apple fell 2.5pc and Amazon fell 4pc, after rising 2.1pc and 4.3pc respectively in regular trading. While beating estimates for 2Q EPS, sales and iPhone revenue, Apple didn’t give a forecast for the first time in a decade while Amazon missed 1Q EPS estimates by 20pc and said it may incur a loss in the current quarter as it boosts spending for logistics in the pandemic.

Amazon CEO Jeff Bezos said he expects to spend all or “a bit more” of the $4bn it would have made, on COVID-related expenses.

The S&P/ASX 200 rose 2.4pc to a 6-week high daily close of 5522.35 yesterday, to be up 8.8pc for the month, its best since 1988.

9.26am: Broker ratings changes

AP Eagers raised to Add – Morgans
Adelaide Brighton cut to Hold – Morgans
Challenger target price cut 44pc to $4.80 – Macquarie
GPT Group cut to Hold – Jefferies
GPT Group raised to Outperform – Credit Suisse
Orica raised to Outperform – Macquarie
Orora cut to Neutral – Credit Suisse
Pacific Smiles cut to Hold – Bell Potter
People Infrastructure raised to Buy – Ord Minnett
Qube raised to Outperform – Credit Suisse
Qube raised to Buy – Citi
Quickstep rated new Buy – Canaccord
REA Group cut to Hold – Jefferies
Westgold raised to Buy – Bell Potter

9.12am: Reliance scales back manufacturing

Behind the wall plumbing parts manufacturer Reliance Worldwide Corp has warned it is planning to scale back manufacturing in Australia.

“We have decided to scale back manufacturing operations from 5 days a week to 4 days a week from May 11,” it said in a filing to the market this morning.

The move comes as the manufacturer tips a sharp downturn in housing construction which is a key driver of sales.

“We estimate that approximately 50 per cent of RWC sales in Australia are to the residential new construction end-market. In view of the forecast reduction in demand levels, we believe that it is prudent to reduce manufacturing operations by one full day per week,” the company says.

In an update RWC says chief executive Heath Sharp and top executives will take a 20 per cent salary cut from May 1, while also warning that US and Canadian sales have been hit by COVID-19 lockdown restrictions.

RWC last traded at $2.73.

9.01am: ANZ weakest among peers: Jefferies

Coronavirus adds to further weight to the view that ANZ should trade at a discount to its major bank peers, according to Jefferies.

After the bank yesterday handed down a 60pc profit slump, bank analyst Brian Johnson writes that ANZ’s business mix is “fundamentally less profitable than peers” amid low margins – with a shareholder base less skewed to domestic retail investors, a proportionally smaller home loan book and a proportionally bigger institutional business.

“COVID-19 heightens the justifiable discount at which ANZ should trade,” Mr Johnson says, tipping peak bank loan stress to hit after September, once loan and rent moratoriums are lifted and wage subsidies expire.

His base case is for credit risk weightings to rise in the next two years, set to consume about 110 bps of its tier one capital.

Jefferies keeps an Underperform rating on the stock and cuts its price target to $11.45.

ANZ last traded at $16.90.

8.54am: Qube completes $264m placement

Logistics group Qube has completed its institutional entitlement offer to raise $264m, said to be “extremely well supported”.

The company this morning said institutional shareholders had a take up of 99.3pc.

“We see the success of the offer as a clear endorsement of Qube’s long term strategy. This Entitlement Offer provides support to continue the investment in our core businesses, as well as pursue growth opportunities that we expect to arise from the current environment,” boss Maurice James said.

Following that, the company will launch a further $236m in a retail entitlement offer.

8.20am: Atlassian outlook disappoints

Atlassian shares declined after the enterprise cloud-software company’s results topped Wall Street estimates but its quarterly outlook did not.

Atlassian shares declined 3.8pc after hours, following a 1.8pc gain in the regular session to close at $US155.49.

Atlassian expects fiscal fourth-quarter adjusted earnings of 17 cents to 22 cents a share on revenue of $US400 million to $US415 million, while analysts surveyed by FactSet had forecast 23 cents a share on revenue of $US417.7 million.

The company reported a fiscal third-quarter loss of $US158.8 million, or 65 cents a share, compared with $US202.8 million, or 85 cents a share, in the year-ago period.

Adjusted earnings were 25 cents a share. Revenue rose to $US411.6 million from $US309.3 million in the year-ago quarter. Analysts had forecast earnings of 21 cents a share on revenue of $US395.2 million.

Atlassian co-CEOs Mike Cannon-Brookes and Scott Farquhar. Source: Atlassian

Dow Jones

8.15am: Origin deal heralds ‘retail transformation’

Origin Energy says it has established a strategic partnership with UK retailer and emerging technology business Octopus Energy.

It says the move will “transform its retail operations, delivering a radical improvement in customer experience, a material reduction in costs, and opening up future growth opportunities”.

Origin will acquire a 20 per cent interest in Octopus and a licence in Australia to its market-leading customer platform, Kraken.

“Over the next 24 to 30 months, Origin will transfer its 3.8 million retail electricity and gas

customer accounts to the Kraken platform, delivering a step-change reduction in operating

and capital costs, with expected pre-tax cash savings of $70-80 million in FY2022 increasing

to $100-150 million annually from FY2024.”

Origin says the deal is being funded with a “staged consideration” of $134m paid upfront and

$373m spread over four financial years, comprising equity instalments and progress

payments.

Origin Energy CEO Frank Calabria. Picture: AAP

Origin CEO Frank Calabria said: “The future of energy retailing lies in delivering superior

customer experience at lowest cost and seamlessly integrating products and services,

enabled by new technologies.

“While we have made good progress towards improving our customers’ experiences and the

efficiencies within our retail business, this partnership Octopus will help us transform energy

retailing by automating our end-to-end processes and embedding an operating model

designed around, and for, the customer experience. This will make every transaction simpler

for our customers.”

7.40am: US airlines post huge losses

American Airlines and United Airlines lost a combined $US4 billion in the first quarter as the coronavirus pandemic triggered a sharp drop in air travel, and the airlines are busy borrowing enough money to survive until passengers return in large numbers.

The reports from two of the nation’s four biggest airlines captured only the first weeks of the pandemic’s impact in the US. The situation facing the airline industry has grown more dire since the first quarter ended: Air travel in the U.S. during April remained down 95pc from a year ago, judging by the number of people screened at the nation’s airports.

“Never before has our airline, or our industry, faced such a significant challenge,” American Airlines Chairman and CEO Doug Parker said.

With little money coming in from ticket sales, and unsure when the public will feel like flying again, airlines are hunkering down. They are raising money on private credit markets and borrowing from the federal government. They are slashing flight schedules, parking planes, and urging employees to retire early or take leaves of absence.

American reported a loss of $US2.24 billion, the biggest loss since it came out of bankruptcy and merged with US Airways in 2013. The Fort Worth, Texas-based airline has cut its flight schedule by 80pc in April and May and 70pc in June. Fewer passengers will mean fewer employees.

Chicago-based United posted a $US1.7 billion loss, its biggest since 2008. The loss was expected, since United said last week that it suffered a pretax loss of $US2.1 billion.

The airline is shrinking its flight schedule by 90pc in May and probably a similar amount in June.

7.25am: ASX set for sharp early fall

Share prices are set to decline when trading begins on Friday after the Australian stock market recorded its best month since 1988.

At 7am (AEST) the SPI 200 futures contract was down 123 points, or 2.22 per cent, at 5,417.0 points.

Overnight, US stocks lost ground after grim economic data and mixed earnings reports.

Unemployment claims topped 30 million and consumer spending has plummeted, while Amazon and American Airlines’ earnings disappointed traders. The S&P 500 fell 0.9 per cent, after its biggest monthly gain of 12.7 per cent since 1987.

In Australia on Friday, property price data for April is due to be published. The figures may show whether home values were impacted by the social distancing restrictions imposed to slow the coronavirus.

The benchmark S&P/ASX200 index rallied Thursday for its best day in three weeks, closing up 129 points, or 2.39 per cent to close at 5,522.4 points and its best level since March 13.

The broader All Ordinaries index gained 133.9 points, or 2.45 per cent, at 5,597.7 points, finishing April up 9.5 per cent for its best month since a 13.2 per cent gain in March 1988.

At 7am the Australian dollar was at US65.12 cents, down from US65.43 cents at Thursday’s close.

The gold price is $US1684.8, down from $US1716.01 at the close.

AAP

6.45am: Apple resilient in pandemic

Apple reported a slight uptick in revenue for the second quarter despite the coronavirus shutting down factories and denting sales in China, as the tech giant’s growing services business offset declining iPhone sales.

The company said revenue rose 1pc in its fiscal second quarter to $US58.3 billion, with iPhone sales momentum stalling after Apple closed stores, first in China and later worldwide. Profit fell about 3pc to $US11.25 billion, or $2.55 a share.

The results exceeded analysts’ revised expectations for nearly $US55 billion in revenue but fell short of the company’s pre-pandemic projections for more than $US63 billion for the three months ended March 28.

The quarter’s results highlight the strengths of big technology companies even during an economic crisis that has rocked markets around the world and consistently tested corporations. Some have seen increased business as the virus keeps people at home. Facebook Inc. and Microsoft Corp. on Wednesday reported higher revenue and signalled more gains in the current period as home-bound social-media usage swells and cloud-computing rises. Google parent Alphabet Inc. last week posted revenue gains but provided a sober outlook, saying it experienced a sudden slowdown in ad sales in late March.

Apple’s performance also underscored the value of its strategic shift from selling more devices to selling more software and services across those devices.

Dow Jones

6.30am: Amazon’s sales jump

Amazon.com reported soaring quarterly sales as the company experienced a surge in online orders from homebound customers contending with the coronavirus pandemic.

The tech giant said revenue rose 26pc from a year earlier to $US75.5 billion in the three months through March. The boom in sales came at a cost, though, as profit fell 29pc from a year earlier to $US2.5 billion, well short of analysts’ average estimate of $US3.26 billion, according to a survey by FactSet. Operating profit for the quarter also missed the estimate Amazon gave in January.

The results, which follow relatively robust earnings reports by several other big tech companies in recent days, reflect the central role Amazon has played during the coronavirus crisis, delivering goods to people stranded at home by government shelter-in-place orders. The surge in online buying taxed Amazon’s fulfilment centres, which saw unprecedented volumes for this part of the year. In response, Amazon temporarily stopped taking inventory for products deemed non-essential and announced plans to hire 175,000 more staffers for its warehouses and delivery network.

Amazon’s booming sales stand in stark contrast to many companies across the US economy, which shrank in the first quarter at its fastest pace since the last recession. Investors had sent the Seattle company’s stock price up nearly 34pc this year through Thursday’s close, while the Dow Jones Industrial Average fell nearly 15pc and the Nasdaq Composite Index was down about 1pc.

Dow Jones

6.20am: US stocks drop but hold April gains

US stocks finished their best month in decades on a downbeat note after data on spending and unemployment further revealed the extent of the coronavirus pandemic’s damage.

The S&P 500 fell 0.9 per cent, reversing Wednesday’s gains when the Federal Reserve reassured investors that it is in no hurry to end its stimulus programs. Despite a choppy month, the index wrapped up April with a gain of about 12.7 per cent.

The Dow Jones Industrial Average, which fell about 288 points, or 1.2 per cent, Thursday, is up 11.1 per cent in April.

Both indexes turned in their best monthly performance since 1987 – but are still down about 10 per cent or more for the year.

After closing up 2.4 per cent on Thursday to post an 8.8pc gain for April, Australian stocks are set for steep early losses. At 6am (AEST) the SPI futures index was down 110 points, or 2 per cent.

US stocks have rebounded since the market bottomed March 23, the day the Fed signalled it would do practically anything to save an economy ravaged by the pandemic.

Thursday’s weak reports on consumer spending and unemployment were the latest examples of the pandemic’s reach.

“Markets tend to run in these short-burst cycles now,” said Tom Stringfellow, president and chief investment officer at Frost Investment Advisors. “Then, you have a few reality checks. That’s what reminds investors that things have run up a bit, so let’s take some money off the table.”

Consumer spending fell 7.5pc in March, the Commerce Department said Thursday, the steepest monthly decline in records tracing back to 1959. Spending by Americans accounts for more than two-thirds of total output and therefore weighs on the economy heavily. Earlier this week, data showed U.S. gross domestic product shrank 4.8pc in the first quarter.

Meanwhile, the Labor Department said weekly jobless claims in the US hit 3.8 million in the week ended April 25, bringing the total number of claims to roughly 30 million since mid-March. Thursday’s data signalled that claims may be trending downward – in the previous two weeks, 4.4 million and 5.2 million Americans applied for benefits – though some market observers fear that a second wave of coronavirus lay-offs could continue.

Big technology companies were among the gainers, helping limit the Nasdaq Composite’s losses. The technology-heavy index was down 0.4pc, bringing its losses for 2020 to 1pc.

Tech companies have largely buoyed the stock market this year, in part, because they have seen increased use as the pandemic has kept millions of people stuck at home. Shares of Facebook jumped 5.1pc after the social-media company said ad revenue has stabilised in recent weeks.

And Netflix, which gained 1.3pc, has been one of the key beneficiaries of the pandemic, propelling its year-to-date gains to 29pc. Tesla dipped 1.9pc after gaining for most of the morning, following its unexpected third consecutive profitable quarter. Still, the car maker’s stock is up 50% this month, on pace for its fourth best month on record.

Oil prices rose Thursday as investors were hopeful that fuel consumption will rise as stay-at-home orders are lifted. Brent crude futures for delivery in June rallied 12pc to $US25.27 a barrel.

Meanwhile, the yield on the 10-year U.S. Treasury note ticked up to 0.631pc, from 0.625pc. Yields fall as bond prices rise.

Globally, stocks were mixed. In Europe, the pan-continental Stoxx Europe 600 fell 2pc after the European Central Bank kept interest rates and its bond-buying program unchanged. Still, it said it was prepared to ramp up its asset purchases if necessary.

Dow Jones Newswires

6.00am: Fed expands lending program

The Federal Reserve announced that it was expanding a major lending program to provide support for businesses struggling to cope with the economic disruptions caused by the coronavirus pandemic.

The Fed said that it was expanding the scope and eligibility of its Main Street Lending Program which is designed to provide up to $US600 billion in loans to small and mid-size businesses that have been harmed by the pandemic and the efforts to contain it.

The Fed said it was allowing businesses with up to 15,000 employees and $US5 billion in annual revenues to qualify for loans. That is up from earlier limit of 10,000 employees and $US2.5 billion in revenue.

The minimum loan size is being reduced to $500,000, down from an original minimum loan size of $US1 million.

5.55am: UK ‘past the peak’

Britain is past the peak of its coronavirus outbreak, Prime Minister Boris Johnson said, as he promised to reveal a “road map” out of national lockdown – but not yet.

Appearing at a news conference for the first time since he fell seriously ill with the virus a month ago, Johnson said “we’re past the peak and we are on the downward slope.”

The number of hospital admissions and people in intensive care with COVID-19 are now falling, and deaths are increasing less sharply than in early April.

And, crucially, the disease’s reproduction rate – the number of people each person with the virus infects – is now below 1.

5.52am: Markets drop on growth data

Stock markets plunged after economic growth data confirmed fears of COVID-19’s bruising impact on the world economy.

Key eurozone markets were more than two per cent down at the close, while London dropped even more sharply, falling 3.5 per cent. Frankfurt lost 2.2pc and Paris 2.1pc.

The EU economy shrank 3.5 per cent in the first quarter, the first major indication of the devastation facing the bloc as a result of coronavirus.

Separate figures revealed that the jobless total in Europe’s biggest economy Germany soared 13.2 per cent in April.

The European Central Bank, also on Thursday, promised that it was ready to reload its weapons to help offset the economic impact of the coronavirus, notably by buying more bonds.

But the fact it hadn’t already done so left some analysts disappointed.

“The Bank’s failure to expand its asset purchase programs leaves some doubt about policymakers’ commitment to ensure that the huge economic shock which the region is experiencing does not morph into a new sovereign debt crisis,” said Capital Economics.

The euro rose against the dollar after ECB chief Christine Lagarde said the monetary policy council had not discussed widening its asset buying program to include junk bonds.

Earlier Thursday, however, Asian stocks advanced, with top US epidemiologist Anthony Fauci saying that Gilead Science’s remdesivir drug “has a clear-cut, significant, positive effect in diminishing the time to recovery” from the coronavirus.

His comments fanned hopes that lockdowns – already being loosened in some nations – could be lifted more quickly, allowing people back to work to kickstart the battered economy.

On crude markets, both main contracts soared for a second day – with WTI’s gain adding to a 25 per cent advance Wednesday.

AFP

5.49am: Germany wary of lifting lockdown

Politicians and scientists in Germany pushed back against calls for a rapid relaxation of pandemic restrictions as new figures showed that businesses have applied for state aid to avoid slashing 10 million jobs because of the economic downturn.

Like in other countries, lockdown measures designed to curb the spread of the new coronavirus have paralysed much of public life in Germany.

Authorities recently allowed stores to reopen and some students to return to school, but officials dampened expectations about an imminent return to normality. German media reported that the federal government is considering reopening playgrounds and allowing church services soon.

“Especially because Germany has so far come through this crisis better than others it would be reckless to endanger this hard-won joint achievement,” Health Minister Jens Spahn said.

5.47am: US jobless claims pass 30m

The number of Americans filing for unemployment benefits because of the coronavirus has soared past 30 million, worsening a crisis unmatched since the 1930s and turning up the pressure on political leaders to lift restrictions that are choking the economy.

Government figures showed that 3.8 million laid-off workers applied for jobless benefits last week, raising the total to about 30.3 million in the six weeks since the outbreak took hold and forced the shutdown of factories and other businesses from coast to coast.

The lay-offs amount to 1 in 6 American workers and encompass more people than the entire population of Texas, or more people than live in the New York and Chicago metropolitan areas combined.

5.45am: US spending plunges

US consumer spending plunged 7.5pc in March, reflecting the growing impact of the coronavirus pandemic as Americans complied with stay-at- home orders.

The Commerce Department said that the spending decline was the sharpest monthly drop on records that go back to 1959, exceeding the previous record, a decline of 2.1pc in January 1987.

Personal incomes also fell sharply last month, declining by 2pc with wages and salaries, the largest part of incomes, falling by 3.1pc as millions of Americans started getting lay-off notices.

5.42am: ECB’s stimulus could run ‘beyond 2020’

The ECB’s new pandemic emergency bond-buying scheme could run beyond 2020, chief Christine Lagarde said, describing the asset purchases as “the best tool” in the bank’s battle against the coronavirus fallout.

The 750-billion-euro Pandemic Emergency Purchase Programme (PEPP), launched last month, “might be extended further than the end of 2020” depending on “the length of the crisis”, Lagarde told reporters in Frankfurt.

“The best tool we have in our toolbox is indeed the PEPP,” she added, vowing “full flexibility” to help the battered eurozone economy.

AFP

5.40am: Euro economy could shrink by 5-12pc: ECB

The eurozone economy could shrink by five to 12 per cent this year because of the coronavirus crisis, European Central Bank chief Christine Lagarde said Thursday.

The size of the contraction will depend on the duration of the confinement measures aimed at curbing the outbreak and the policy responses to the pandemic, she said.

“We are facing an economic contraction of a magnitude and speed that is unprecedented in recent history,” Lagarde said in Frankfurt.

“As containment measures are gradually lifted, these scenarios foresee a recovery in economic activity although its speed and scale remain highly uncertain.” The dire warning comes after Eurostat figures showed that the locked-down eurozone economy was estimated to have shrunk by 3.8 per cent in the first quarter.

Further highlighting how much damage the pandemic has already done to the global economy, Germany announced that its jobless total soared to 2.6 million in April from 2.3 million the month before and France confirmed that it had plunged into recession.

An unprecedented economic contraction. ECB president Christine Lagarde. Picture: AFP

AFP

5.35am: American Airlines posts $US2.2bn loss

American Airlines reported a staggering loss of $US2.24 billion for the first quarter, when the coronavirus pandemic triggered a sharp drop in air travel. The airline’s revenue fell 19pc while costs continued to rise even as the virus spread.

The situation has grown more dire since the first quarter ended. Air travel within the US has plunged 95pc from a year ago, judging by the number of people screened at the nation’s airports.

“Never before has our airline, or our industry, faced such a significant challenge,” Chairman and CEO Doug Parker said.

American’s massive loss compared with a profit of $US185 million in the same quarter last year.

American Airlines planes sit idle. Picture: AP

5.33am: Shell cuts dividend

Royal Dutch Shell cut its dividend for the first time since the 1940s after a first-quarter loss – and warned virus-ravaged oil prices will take time to fully recover.

The Anglo-Dutch group sank into a $US24m net loss in the three months to March – when oil went into free fall on tumbling demand and a price war between producers Saudi Arabia and Russia.

That contrasted sharply with profit after tax of $US6.0 billion in the same period a year earlier, the London-listed giant added in a statement.

Earnings on a current cost-of-supplies (CCS) basis – stripping out changes to the value of oil and gas inventories – sank 46 per cent to $US2.9 billion in the reporting period, Shell said.

The energy titan, which axed spending last month in response to the oil crash, said it had slashed its shareholder dividend by 65 per cent to 16 cents per share, from 47 cents in the fourth quarter.

“As a result of COVID-19, there is significant uncertainty in the expected macroeconomic conditions with an expected negative impact on demand for oil, gas and related products,” Shell said.

“Furthermore, recent global developments and uncertainty in oil supply have caused further volatility in commodity markets.” It warned that the pandemic would spark a difficult second quarter – with no price bounceback in prospect.

AFP

5.32am: Twitter swings to loss

Twitter posted a loss in the first quarter as the social media company’s higher expenses outweighed revenue growth.

The San Francisco company reported that average daily users grew 24pc year over year, the highest ever growth rate in the company’s history. Twitter has added 14 million daily users since the previous quarter. The company said growth was driven by seasonal strength, product improvements and interest in coronavirus.

Last year, Twitter started disclosing its daily user base, or the number of users who log in at least once a day and see ads on the platform. The daily metric has replaced its monthly user count, which Twitter said it will no longer disclose. Other companies, such as Facebook, give both daily and monthly counts.

For the three months ended in March, Twitter posted a loss of $US8.4 million, or 1 cent per share, on revenue of $US807.6 million. A year ago, the company earned $US190.8 million, or 25 cents per share, on a big tax benefit. Revenue totalled $US786.9 million.

5.30am: ECB ‘ready’ to ramp up stimulus

The European Central Bank’s governing council held key rates at historic lows Thursday and said it stood ready to ramp up its massive pandemic stimulus package, a spokesman said.

As expected, the Frankfurt institution held the rate on its main refinancing operations at zero, on its marginal lending facility at 0.25 per cent and its deposit facility rate at -0.5 per cent.

The governing council made no tweaks to its newly launched 750-billion-euro pandemic emergency bond-buying scheme set to run until the end of the year, but said it was “fully prepared to increase the size” and adjust its composition if needed.

The ECB also announced fresh incentives to encourage banks to keep lending to households and companies to avoid credit drying up.

AFP

5.25am: McDonald’s sales plunge

McDonald’s reported a drop in first-quarter profits Thursday after sales plunged in the final weeks of the period due to coronavirus restrictions.

The fast-food giant enjoyed comparable sales growth in all three of its operating regions through the month of February, but suffered a 22.2 per cent drop in global comparable sales in March following shelter-in-place orders and other restrictions.

“The sales trends from the second half of March have continued in April, and are expected to continue while these restrictions are in place,” the company said.

Profit fell 17 per cent to $US1.1 billion compared with the year-ago period as revenues declined six per cent to $US4.7 billion.

McDonald’s said 99 per cent of its US restaurants are open, with most operating as drive-through, delivery and takeaway.

Several leading markets, including France, Italy, Spain and the United Kingdom have temporarily closed “substantially all restaurants,” McDonald’s said.

(McDonald’s has been hit by the virus pandemic. Picture: AFP

AFP

5.20am: Glencore to slash investments

Mining giant Glencore said it was planning to slash its capital expenditures by up to $US1.5 billion this year after production was suspended at several mines due to the pandemic.

The Switzerland-based commodities trader said in its quarterly production update that it had been forced to suspend activities at several sites amid the global spread of COVID-19, including in Canada, Peru and South Africa.

Company chief Ivan Glasenberg stressed though that while “the global impact of the COVID-19 pandemic is an unprecedented challenge … disruptions to our business have, to date, been manageable.”

“The majority of our assets are operating relatively normally,” he said, adding though that some industrial assets had been temporarily suspended, mainly linked to national and regional lockdowns imposed to halt the spread of the novel coronavirus.

He said the company was focusing on cost control as it braces for lower prices for a number of key commodities, including copper and zinc.

Given the current context, he said Glencore now expected its capital expenditures to be between $US4.0 and $US4.5 billion – far lower than the $US5.5 billion originally forecast for 2020.

AFP