ASX drops 2pc to 3-week low as AMP dives 12pc
The ASX was seeing red at the close, as banks and miners drove a drop in all sectors.
- AMP leads share decline on profit warning
- Super Retail to deliver steady profit
- US economy collapsed 32.9pc
- $A to reach US80c by 2022: NAB
That’s all from the Trading Day blog for Friday, July 31. Australian stocks fell 2pc to a three-week low following a Wall Street decline on news the US economy contracted by one-third in the second quarter – the worst decline on record.
Locally, AMP warned its first half profit was set to halve, while Super Retail is optimistic of a steady full year profit.
8.25pm: France’s economy slumps a record 13.8pc
France’s economy slumped a record 13.8pc in the second quarter as businesses bore the brunt of a strict coronavirus lockdown that slammed consumer spending, the INSEE statistics agency said Friday.
The seasonally-adjusted drop in gross domestic product (GDP) from the first quarter was not as steep as many analysts had expected, but worse than the performance of most of France’s eurozone peers.
“GDP’s negative developments in first half of 2020 is linked to the shutdown of ‘non-essential’ activities in the context of the implementation of the lockdown between mid-March and the beginning of May,” the INSEE said in a statement.
The agency also revised the figure for the first quarter - when lockdowns just started to be implemented - to a 5.9pc contraction from the 5.3pc it had previously estimated.
The French economy has now shrunk for three consecutive quarters, a recession that analysts say is likely to persist even as spending begins to revive.
Household consumption, a main driver of the economy, tumbled 11 pc during the quarter.
France’s second-quarter contraction was much sharper than the record 10.1 pc fall in Germany, while Austria suffered a 10.7pc decline and Belgium 12.2pc.
Spain, however, recorded an 18.5pc plunge in second-quarter GDP, reflecting one of the most stringent COVID-19 lockdowns in Europe which battered its key tourism industry.
AFP
Ewin Hannan 8.13pm: Woolies locks out 500 workers
Woolworths has locked out 500 distribution centre employees indefinitely after they rejected a revised wages offer the supermarket giant said equated to annual pay rises of 3.6 per cent over three years.
The supermarket giant expressed confidence on Friday that contingency plans enacted last week would keep shelves stocked despite the increasingly bitter dispute with United Workers Union members at the Central Coast distribution operations.
The Wyong workers are seeking pay rises totalling 16 per cent to bring their wages into line with the company’s Sydney employees that the union says are performing the same work.
The UWU said the lockout, which started last week in response to industrial action, was causing shortages in stores across the NSW central coast.
“This latest intimidation move is likely to worsen a deepening crisis for the locals who rely on the supermarket giant,” the union said.
“Workers were ready to make a deal on Thursday, but Woolworths wasn’t interested in going even halfway towards wage equality.
“The company barely improved its offer, with only a 0.6 per cent increase on wages, well below a meaningful move towards the 16 per cent needed to be on par with those doing the same job in Sydney.”
Eli Greenblat 7.49pm: Pratt’s Visy goes full bottle
Super Retail Group, whose chains include Rebel, Macpac, Supercheap Auto and BCF, has confirmed that consumers, fresh out of lockdown and home isolation, have turned their attention to getting fit, working on their cars and updating their fishing equipment as the retailer’s sales quickly rebounded after the economy was opened up.
A number of retailers spanning fashion, apparel, jewellery, food delivery and consumer electronics recently updated the market to reveal that pent-up demand for discretionary goods during the peak of COVID-19 restrictions had been unleashed since June as shoppers began spending again.
Shares in Super Retail rallied more than 10 per cent on Friday to be the best-performing company in the S&P/ASX 200 after the company reported stronger-than-expected sales in the last few months of the financial year as consumers spent on gym equipment, sports gear and car projects.
John Stensholt 6.39pm: Pratt’s Visy goes full bottle
Fresh from clinching the biggest deal of his career, billionaire Anthony Pratt will spend another $500m making Australia’s beer bottles lighter and more recycling-friendly in a big bet on a local manufacturing future.
Mr Pratt’s giant cardboard box manufacturing and recycling business, Visy, in mid-July won the race to buy the Australasian assets of glassmaker Owens-Illinois (O-I). The $1bn deal, finalised on Friday afternoon, adds $800m revenue to the Pratt family empire and brings with it a 90 per cent share of the beer bottle manufacturing market.
Is his first interview since the deal, Mr Pratt revealed Visy would outlay another $500m over the next 10 years to increase the recycled components of the bottles and make them considerably lighter to save on transportation costs. He would also quickly upgrade the management processes and technology used at O-I’s seven factories around Australia.
He said the COVID-19 pandemic had highlighted the need for Australia to be self-sufficient, a major driver in his pursuit of the O-I deal, which is being funded by cash and borrowings from Westpac and other banks, and is the biggest in Visy’s 72-year history.
“Manufacturing has never been more important in Australia in light of the coronavirus as the world deglobalises, particularly food manufacturing. And Australia ranks last in the OECD for self-sufficiency in manufacturing.
“So this O-I deal is an important milestone for us. I was very pleased that we were able to continue to invest in Australia — it’s a great country to invest in. We are committed and this very much shows that. Glass has a history of thousands of years and we are dealing in the real economy here, as opposed to the casino that is the sharemarket. These are real assets with real products and real customers.”
Ticky Fullerton 6.39pm: Who knows manufacturing better?
There is a report with recommendations for the recovery burning quite a hole in the government’s in tray. It is the work of the National COVID-19 Commission manufacturing taskforce and there is much at stake for manufacturing, for energy and hopefully, jobs.
In June, the leaked interim report proffered a gas-led recovery with the government underwriting gas volumes and pipelines, the lifting of moratoriums, and a gas price of just $4 a gigajoule.
Since then there have been squeals from many sides: the gas sector hates $4 and fears intervention; the greens are crying foul over gas leading anything and at vested interests in energy and industrial involved in the commission. Even commission chairman Nev Power cautioned that the report was a “very early draft”
Andrew Liveris expects change. Apart from anything else, the government is demanding cheaper energy. The former chairman and CEO at Dow is now leading the Northern Territory’s Economic Reconstruction Commission and remains an adviser to the COVID-19 commission. And he has done manufacturing recoveries before, for US presidents Barack Obama and Donald Trump, where the issues went far beyond energy.
Liveris insists that his path to a viable long-term manufacturing sector in Australia is not about subsidies. “Not tariffs, not subsidies, not protectionism. We are a high-quality nation. Our labour is expensive and should be,” he says with emphasis.
“We want a high quality of life for everybody. So what type of jobs can we create in the country? And what is our competitive advantage? These are the questions I was asked to help answer.”
5.00pm: AMP leads share decline on profit warning
AMP led the march lower in Friday’s session, shedding 12.8 per cent after warning half year profit would drop by 50 per cent at its upcoming results.
There was little to celebrate across all of the blue chips, with miners, banks and energy plays all notching significant losses for the session.
Still, the Aussie dollar continued to hold higher - last up 0.4 per cent to US72.22c.
Here’s the biggest movers at the close:
4.11pm: Shares dive 2pc
The local share sell-off accelerated to as much as 2.5pc in afternoon trade, but settled to 2pc at the close, after the US warned of a 33 per cent drop in GDP, and Victoria’s rising coronavirus tally spooked shares.
At the close, the ASX200 was down by 123 points or 2.04 per cent to 5927.8, after touching its lowest levels in a month at 5893.2.
Major banks were a key driver of the momentum, Westpac shedding 3.3pc as CBA lost 2.8pc while ANZ lost 2.2pc and NAB fell 2.5pc.
AMP dived by 12.8pc to $1.46 after warning of a halving of its profit for the six months to June, while Super Retail offered some relief, adding 9.5pc after upgrading its profit forecasts.
3.38pm: France posts record 13.8pc GDP plunge
France has joined the US in posting a record collapse in the economy for the second quarter, today posting a 13.8pc drop.
It comes after the US economy posted a 32.9pc drop overnight.
3.30pm: Sell-off accelerates to 2.2pc drop
The local market sell-off is gathering pace into the close, down 2.2pc as banks, miners and CSL pull lower for the day.
With just half an hour left of trade, the benchmark ASX200 is lower by 132.6 points or 2.2pc to 5918.5.
3.04pm: Asian markets struggle
Asian markets struggled and the US dollar extended losses Friday on data showing the US economy suffered its worst quarter on record, while a tweet from Donald Trump suggesting delaying November’s elections also jolted investors.
The figures from Washington added to fears about the long-running economic impact of COVID-19 and overshadowed a better-than-forecast read on Chinese factory activity that suggested the country is slowly emerging from the pandemic crisis.
Wall Street’s S&P 500 and Dow dropped following the dour US readings, while Frankfurt led steep losses in Europe after Germany announced the region’s biggest economy suffered a historic 10 per cent contraction.
Tokyo lost 1.9 per cent and Seoul and Taipei were also in the red. Hong Kong dipped but Shanghai edged up after China said its closely watched purchasing managers index on manufacturing improved for a second straight month, with officials pointing to an easing of lockdowns and the resumption of economic activity in major economies.
ASX200 last down 1.79pc to 5942.9.
AFP
Eli Greenblat 1.45pm: Amazon staff receive $2000 bonus
Global online marketplace Amazon is the latest to reward its frontline staff in the face of the coronavirus pandemic with a one-off cash bonus.
Amazon announced that for those who have been preparing orders in one of Amazon Australia’s fulfilment centres, delivering order to customers’ homes, or one of the many roles in between will receive a bonus of up to $2,000.
Amazon Australia director of operations Craig Fuller thanked the local staff and delivery partners for serving customers so they could stay home during the pandemic.
Frontline associates for the company will receive a $1000 bonus, while frontline leaders will get $2000 and delivery partners who worked more than 10 hours in the month will receive $300.
Other companies have rewarded their staff recently including Bunnings paying to its essential workers up to a $1000 bonus for full-time staff and up to $500 for part time and casual staff.
It comes after the global parent Amazon this morning reported a 40pc jump in revenue to $US88.9bn, and a doubling of profits to a record $US5.2bn.
Read more: Amazon stronger in the pandemic
David Ross 1.42pm: More than 155k faulty airbags still in use
Less than six months remain for the more than 155,000 vehicles that still contain deadly faulty Takata airbags to be recalled and replaced.
More than 6000 of those vehicles are so dangerous, according to regulators, that they should not be driven at all.
The Australian Competition and Consumer Commission is urging consumers to check if their vehicles have had all their deadly airbags replaced.
ACCC Deputy Chair Delia Rickard said faulty Takata airbags had the potential to misdeploy and injure or seriously maim a vehicle’s occupants.
“It is essential that you do not ignore or delay responding to notices about the recalls from your manufacturer. If your vehicle is under active recall, please act now to arrange for a free replacement,” she said.
In the past three months, more than 40,000 vehicles have had their airbags replaced.
1.02pm: ASX sell-off accelerates
The local share slide is gaining pace at lunch, with shares down 1.9pc to two-week lows.
At 1pm, the benchmark ASX200 is lower by 108 points or 1.79 per cent to 5942.5.
The index is heading for its worst day in the past five weeks, exacerbated by regional weakness as Japan’s Nikkei 225 falls 1.9pc after Tokyo’s governor threatened to declare a state of emergency if the COVID-19 outbreak doesn’t improve.
The S&P/ASX 200 appears to be finding support from its 50-day moving average at 5942 but a close below that point could call for a test of the June low at 5720 on a technical basis.
Heavyweight banks and miners are leading the local reversal, giving back gains from Thursday, with BHP and Rio Tinto extending losses to 2.6pc while Commonwealth Bank slides by 2.3pc.
Afterpay is one of only a few stocks bucking the negativity – adding 0.7pc to $69.29.
Elsewhere, AMP is still under pressure after warning of a more than halving of its half year profit – its shares are down by 12.4pc to $1.47.
Here’s the biggest movers at 1pm:
12.34pm: Credit demand slows further
Demand for credit pulled lower again in June, down 0.2 per cent according to the latest RBA figures as companies and consumers sought instead to preserve cash.
Financial aggregates data for June showed a 0.6 per cent slip in personal credit demand for the month, taking credit for the year to June down 10.5pc.
Demand for business credit declined by 0.8 per cent, curbing the year-ended growth to 4.8pc.
The total credit drop follows a 0.1pc slip in the previous month, with growth for the year to June now just 2.9pc.
Aust private credit fell again in June: -0.2%mom/+2.9%yoy.
— Shane Oliver (@ShaneOliverAMP) July 31, 2020
Owner occ credit slowed to +0.3%mom, inv credit was flat
Biz credit continued to fall after emergency lending of Mar
M3 & broad money remained strong likely reflecting wages & support payments piling up in bank accounts pic.twitter.com/REvVgpbYsy
11.55am: China factory activity edges up
Factory activity in China edged upwards in July as the country’s manufacturing sector gathered pace after a sharp coronavirus hit and demand gradually rebounded, according to official data published Friday.
China’s closely watched Purchasing Managers’ Index (PMI), a key gauge of manufacturing activity, has bounced back after measures to curb the coronavirus caused a dramatic plunge in February, and performed better than expected over the last month.
The PMI of the world’s second-largest economy came in at 51.1 points in July, up from 50.9 the month before.
This is better than the analyst expectations reflected in a Bloomberg poll, which forecast 50.9.
Any figure above the 50-point mark represents growth rather than contraction. Non-manufacturing PMI came in at 54.2 points, down from 54.4 in June and slightly worse than expected.
AFP
Perry Williams 11.50am: Origin slipping on revenue dip
Better than expected LNG pricing and production saw Origin Energy avoid any fallout from tepid gas markets in the June quarter while electricity sales fell as COVID-19 saw big industrial users curb their volumes.
Revenue from its Australia Pacific LNG business dipped 3 per cent to $610m compared with the March quarter, ahead of analyst expectations, while income for the 2020 financial year fell 5 per cent to $2.64bn on the prior 12 month period. Production for integrated gas fell 3 per cent due to lower demand from the pandemic.
Still, its LNG price rose 3 per cent to $US8.80 per million British thermal units on the previous three months, bucking a trend among some competitors for lower prices. The average realised price was $10.21 a gigajoule with its LNG pricing equating to $12.72GJ and domestic pricing of $4.90GJ.
ORG last traded down 3.6pc to $5.43.
11.44am: Tech defies ASX weakness
Tech is the only sector to defy the broader market’s 1.5pc drop, largely thanks to strength in buy now, pay later heavyweight Afterpay.
The sector is higher by 0.5pc, likely buoyed by strong earnings from Apple, Amazon and Facebook after the US close.
Afterpay is higher by 1.6pc to $69.93 as Appen adds 0.2pc to $36.58, WiseTech rises by 1.2pc to $21.28 and Altium edges up by 0.1pc to $33.26.
Lilly Vitorovich 11.36am: ACM to close three print facilities
Australian Community Media will close three of its eight print facilities as part of the embattled regional newspaper publisher’s cost cutting during the coronavirus crisis.
As a result of the decision to close its print sites in Canberra, Murray Bridge and Ballarat, ACM has struck a deal with News Corp Australia, which will print some of ACM and Nine Entertainment’s newspapers.
ACM, which is owned by businessman investor Alex Waislitz and media boss Antony Catalano, said the closure of the three printing facilities will make its newspapers “stronger and more sustainable into the future”.
“We are not stepping away from publishing printed copies of our newspapers – to the contrary, the printed newspaper will still play a significant role in the future of ACM.”
As well as printing its own newspapers, ACM prints some of Nine’s mastheads.
The decision comes a month after ACM resumed publishing “a big chunk” of its 170 rural and regional newspapers, which were suspended in April as advertising revenue dropped during the coronavirus crisis. The first few mastheads to return to production were the Goulburn Post, Southern Highland News, The Area News and Wimmera Mail Times.
Read more: Government to provide assistance to media as ACM halts titles
Jared Lynch 11.21am: Trump backs CSL COVID-19 therapy
US President Donald Trump has thrown his support behind a therapy, which Australia’s biggest health company CSL is developing with other plasma manufactures, to fight COVID-19.
At a White House roundtable with Mr Trump, CSL chief executive Paul Perreault says the company is weeks away from beginning a clinical trial of plasma-based hyperimmune therapy to combat COVID-19.
Mr Trump endorsed the trial, which CSL – the biggest company on the ASX – will complete as part of a global alliance it forged with Takeda and other plasma therapy manufacturers earlier this year.
The therapy focuses on using antibodies found in plasma donated from people who have recovered from COVID-19 to help others fight off the high infectious disease that has killed 670,000 thousand across the globe, infected millions of others and exiled Victoria from the rest of Australia.
CSL last traded down 0.9pc to $271.94.
Read more: CSL joins COVID-19 coronavirus vaccine bid
Eli Greenblat 11.16am: Woolies CEO worried about affordability
Woolworths chief executive Brad Banducci has expressed his concern about the economic impact of the COVID-19 health crisis, with the retailer focused on helping consumers whose household budgets are being stretched.
Speaking to ABC Radio, Mr Banducci said Woolworths had experienced first hand the economic hit from the coronavirus pandemic with its hotels arm closed in Victoria.
“I can’t comment on everyone else’s business … our ALH venues in Victoria are shut right now so we can understand the ramifications that have impacted other businesses,” he told the ABC.
“But we are very worried, as I’m sure everyone is, for our customers and how they make ends meet and how we provide affordable value to them is our real focus.’’
On Thursday Woolworths said it was going to start encouraging its team members, customers and suppliers to wear masks when visiting its stores and distribution centres across NSW, ACT and hot spot areas of QLD in the coming days.
WOW last down 0.4pc to $39.17.
Read more at our coronavirus live blog
Eli Greenblat 11.11am: Super Retail jumps 10pc
Shares in retailer Super Retail Group, whose chains include Rebel Sport and Supercheap Auto, rallied 10 per cent Friday morning after the company reported stronger than expected sales in the last few months as consumers stuck at home in lockdowns spent up on gym equipment and car projects.
Super Retail shares jumped as much as 13.4pc and were last up 8.6pc to $8.81.
The company said restrictions around the country had led to a significant uplift in domestic tourism and travel, personal fitness and outdoor leisure activities which had fed through to its stores.
Super Retail is now expecting total revenue for 2020 to be $2.82bn, up from $2.71bn in 2019, EBITDA of between $327m and $328m, up from $315m in 2019, and normalised net profit of $153m to $154m, against $153m in 2019.
Its Supercheap Auto chain reported the strongest uplift for 2020, with total sales up 7.6 pre cent and like for like sales up 6.3 per cent. At Rebel sales were up 3.3 per cent and like for like sales better by 2.7 per cent, BCF had sales up 4 per cent and like for like sales up 3 per cent.
Macpac sales were down 5 per cent and like for like sales down 9.1 per cent, hurt by the limit to movements and flow on effect to camping.
11.10am: Share drop worst in 3 weeks
Australia’s share market is having its worst day in 3 weeks.
The S&P/ASX 200 is falling 1.6pc to a 2-week low of 5954.9 with banks and resources doing most of the damage.
The index is sharply underperforming the US share market, particularly given S&P 500 futures are up 0.3pc after strong results from tech giants.
Commonwealth Bank leads falls in major banks with a 2.1pc drop, while BHP and Rio Tinto is dropping by 2.5pc.
The fall in resources stocks and the Australian dollar’s 0.3pc to an almost 15-month high of US72.15c means the share market sell-off can’t be completely pinned on Victoria’s record COVID case count.
Apart from the major banks, Qantas is an obvious casualty falling 4pc to a 4-month low of $3.22, leaving participants in its recent capital raising underwater.
Melbourne-exposed Vicinity Centres is down 1.9pc, Crown is down 1.7pc, Scentre is down 1.2pc and GPT and Dexus are down 1.3pc on the prospect of an extended Melbourne lockdown.
David Ross 10.41am: Pandemic sends Prospa to $22m loss
Small business lender Prospa has announced an $18m-$22m loss for its full-year unaudited FY20 results as the COVID-19 pandemic hits home.
The lender said prior to its additional provisionings and loan write-offs it would have made a $4-8m profit but, its full-year earnings had been materially impacted by the COVID-19 pandemic, including early impacts on loan originations and increased provisioning for credit losses.
The company has set aside a further provision of approximately $20m, lifting the allowance for expected credit losses as a percentage of receivables to 11.7 per cent from 5.9 per cent in the first half of last financial year.
This provisioning is on top of an addition $5.5m in write-offs following a review of Prospa’s loan book receivables
“The steps we’ve taken to ensure we are maintaining price and risk discipline during this time ensure we are in the strongest possible position to support the small business economy as it recovers,” chief Greg Moshal said.
Prospa expects to announce final full-year results on August 27, 2020.
PGl last traded down 12pc to 80.5c.
10.30am: Aussie dollar breaks US72c
The Aussie dollar is breaking the US72c level for the first time in 15 months this morning.
In morning trade AUDUSD spiked to US72.15c, the highest since April 2019, largely thanks to weakness in the US dollar.
The US dollar index is lower by 0.28pc.
The 2-year #AUDUSD chart below shows the Aussie dollar has breached 72 US cents for the first time since April 2019 this morning, mostly firming on a weaker USD #ausbiz Iress pic.twitter.com/X0M727rmmM
— CommSec (@CommSec) July 31, 2020
10.11am: Shares at two-week low
Shares are swiftly erasing yesterday’s lift, falling 1.1pc in early trade to a two-week low as financials and energy stocks dive.
At the open, the benchmark ASX200 is lower by 64 points or 1.1pc to 5987.5 – falling below the key 6000 resistance as Victoria recorded a further 627 coronavirus cases in the past 24 hours.
AMP is diving 10pc and is the worst performer early – after flagging a major profit hit.
Elsewhere, The major banks are down around 1.3pc, as Rio gives back 2.3pc and BHP sheds 2.4pc.
Qantas is falling further, down 2.1pc, on concern of further restrictions to curb the second wave of cases.
9.47am: Flexigroup tips $29m profit
Buy now, pay later service Flexigroup says it expects to post profit of $29m for the full year, as it takes a $31m provision related to the impact of COVID-19.
The group, which offers credit cards and SME lending alongside its buy now, pay later product Humm, said transaction volumes were up 16pc for the year to $2.5bn.
Flexigroup said it expected to post cash net profit of $29m for the year, including a “macro overlay provision” of $31m.
It said it had committed wholesale funding facility headroom of $603m, with $145m of undrawn debt.
“The increased macro overlay provision is a necessary and prudent step as we continue to manage the continued economic uncertainty as a result of COVID-19,” chief Rebecca James said.
“What’s particularly reassuring is that despite the significant economic headwinds experienced this year for both the business and our customers, we’ve continued to manage the portfolio in a prudent way.”
FXL last traded at $1.33.
9.23am: Woolies redeems Marley Spoon bond
Woolworths has today redeemed a $2.95m convertible bond in Marley Spoon, just as shares in the meal kit service hit record highs yesterday.
The conversion is the first by the supermarket giant as, part of a tie up by the two groups last year. It gives Woolies 5.9 million CDIs in Marley Spoon.
Woolworths said its investments arm W23 continues to hold a further $27m secured convertible bonds in the group and “looks forward to continuing to work with Marley Spoon under the five-year partnership”.
Woolworths inked a convertible note and share deal with Marley Spoon in June last year, which will ultimately give Woolies a 9pc stake.
It comes after Marley Spoon CDIs listed on the ASX hit $3.47 yesterday, a record high, after posting strong growth during the pandemic.
Read more: Woolworths tips more money into Marley Spoon
9.16am: Flat start for ASX after US contraction
Australia’s S&P/ASX 200 share index is expected to open flat based on overnight futures relative to fair value.
After-hours gains in US tech giants Apple, Alphabet, Amazon and Facebook may help overall market sentiment but haven’t had much impact on US share index futures.
Still, while the S&P 500 fell 0.4pc to 3245.22 on Thursday, it mostly recovered from a 1.7pc intraday fall tied to US President Trump’s tweet suggesting the US election should be delayed due to a risk of fraudulent voting, a suggestion that drew bipartisan derision and was later walked back by the President.
With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history. It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???
— Donald J. Trump (@realDonaldTrump) July 30, 2020
The S&P 500 has now closed above its June peak for seven of the past nine days, suggesting this resistance level has broken and the uptrend may resume.
Similarly, while the VIX volatility index rose 0.66bp to 24.76 per cent, it failed to sustain a spike above its 200-day moving average at 26.95 per cent.
The VIX has closed below this former major support level for 10 days straight, suggesting it may continue its downtrend since March, allowing passive and risk parity investors to buy more shares.
While there was no real progress on the next round of US fiscal stimulus overnight, the market has been surprised too many times by last minute US budget agreements to doubt it will happen.
But daily coronavirus numbers for Victoria and NSW could affect the Australian share market today. China’s July PMI data are due for release at 1100am.
9.10am: $A to reach US80c: NAB
NAB has raised its forecasts for all G10 currencies including the Australian dollar.
Head of FX strategy Ray Attril says the move “reflects our increased conviction that the recent weakening in the USD is ’for real’ and has a fair way to play out over the coming couple of years at least”.
He now sees the Aussie at US74c in December 2020 versus US72c previously, US78c in December 2021 versus US75c previously, and US80c at June 2022 versus US75c before.
Mr Attrill says short-term “fair value” for the Aussie has been boosted by a combination of improved risk sentiment and commodity price gains, while NAB’s longer-term AUD valuation model, driven more by real interest rate and commodity price variables, also sees the rise since March as fully justified.
9.02am: What’s on the broker radar?
- Bapcor cut to Hold – Morningstar
- Carsales.com cut to Sell – Morningstar
- GWA Group raised to Buy – Goldman
- GWA Group raised to Outperform – Credit Suisse
- Fortescue Metals price target raised 29pc to $17.50 – UBS
- IGO cut to Accumulate – Hartleys
- Orocobre cut to Underweight – JP Morgan
- Pilbara Minerals raised to Neutral – Hartleys
- Rio Tinto cut to Hold – Investec
- Sandfire cut to Neutral – Macquarie
- Seven West Media target price raised 43pc to 10c – Credit Suisse
- WiseTech reinstated Outperform – Credit Suisse
8.54am: Super Retail to deliver steady profit
Super Retail Group says the rebound in demand after the initial COVID-19 lockdown has put it in good stead to deliver a flat net profit for the full year.
Ahead of the release of its results next month, the owner of Rebel Sport, BCF and Macpac chains said it was expecting to announce revenue of $2.8bn for the full year, up from $2.71bn last year, while net profit was forecast between $153m and $154m, in line with last year’s $153m.
The group had previously said sales dropped 26.2pc at the peak of the COVID-19 lockdown in April, but said May sales were up 26.5pc compared to the previous period, and June sales were up 27.7pc.
For the 52 weeks to June 27, the group posted total sales growth of 4.2pc and like-for-like sales growth of 3.6pc.
“Given the volatile trading environment, we are very pleased with these results. The Group’s omni-retail channel business strategy has enabled our businesses to adapt quickly to changing consumer behaviour during COVID-19 and delivered a resilient trading performance,” chief Anthony Heraghty said.
8.25am: Atlassian outlook falls short
Atlassian shares dropped in US trading after the Australian enterprise cloud-software company’s earnings outlook fell short of Wall Street expectations, while quarterly results topped estimates.
Atlassian shares fell 8pc after hours, following a 0.3pc rise in the regular session to close at $US187.66.
Atlassian said it expects adjusted earnings of 26 cents to 27 cents a share on revenue of $US430 million to $US445 million.
Analysts surveyed by FactSet expect earnings of 29 cents a share on revenue of $US438.9 million. The company reported a fiscal fourth-quarter loss of $US385.2 million, or $US1.56 a share, compared with $US237.5 million, or 99 cents a share, in the year-ago period.
Adjusted earnings, which exclude items such as share-based compensation, were 25 cents a share, compared with 20 cents a share in the year-ago period. Revenue rose to $US430.5 million from $US334.6 million in the year-ago quarter. Analysts had forecast earnings of 21 cents a share on revenue of $US410.7 million.
Atlassian also announced its acquisition of Swedish asset and configuration management company Mindville for an undisclosed amount.
Dow Jones
8.11am: Bank lending crucial: RBNZ
The Reserve Bank of New Zealand says bank lending will be key to economic recovery from the pandemic and urged the country’s banks not to “hunker down” until good times roll around again.
“Now is the time for banks to drawdown prudently on their buffers to support their customers,” Deputy Governor Geoff Bascand said in a speech. “Shareholders will have to be patient for longer-term pay-off.”
The initial response of banks to the economic shock has been strong and they had supported customers with liquidity facilities, covenant relief and principal and interest deferrals on about $NZ39 billion of residential mortgages, Mr Bascand said.
“But a key determinant of the success of New Zealand’s economic recovery to come will be the willingness of banks to lend to productive, job-rich sectors of the economy,” he said.
A tightening of lending might seem the right response to increased risk, but a contraction across the banking industry could cause a credit crunch that worsens the economic downturn, which is already predicted to be the severest in New Zealand history, Mr. Bascand said.
“Ultimately it is in banks’ own interest to maintain the flow of credit and contribute to the long-term stability of the banking system by preventing large scale borrower defaults and disorderly corrections in asset markets,” he said.
The assets of New Zealand banks – most of which are Australian-owned- are equal to nearly 160pc of gross domestic product, which is high relative to other developed economies.
Increased capital requirements for banks, which were delayed because of the pandemic, will be fully implemented no earlier than July 2021, Mr Bascand said.
Dow Jones
7.55am: Apple confirms iPhone delay
Apple has confirmed that its next iPhone will be delayed by “a few weeks.”
The company declined to give a financial forecast for the fiscal fourth quarter but Chief Financial Officer Luca Maestri said that investors should anticipate a slight delay in this year’s iPhone launch timing relative to the prior cycle, in which there was some availability of the new models in late September.
7.45am: AMP expecting pandemic hit
AMP says it expects to report underlying half year profit for its businesses of between $140m-$150m, amid market volatility and economic disruption caused by the pandemic.
In an update, AMP said its first half results were still being finalised and subject to audit review.
“The results have been impacted by a range of factors including market volatility and a credit loss provision in AMP Bank,” it told the ASX.
AMP said costs had risen and the pandemic had had an impact on the pace of investment spending, “including the cost reduction program”, although it remained committed to delivering $300m of annual cost savings.
In a breakdown, AMP said it expects to report first half retained business unit operating earnings of approximately $195m and operating earnings of about $60m in Australian wealth management.
Expected average assets under management were expected to be $126 billion – 6 per cent lower than the previous corresponding period.
Net cash outflows were estimated to be $4.4 billion, following the early release of
superannuation scheme and the loss of corporate super mandates.
AMP says it will provide an update on its capital management strategy, including the expected use of net cash proceeds from the sale of AMP Life, when it reports its first half results on August 13.
7.25am: AMP: two class actions this week
AMP says it will defend a class action filed against AMP Financial Planning over the sale of life and insurance products.
AMP said on Thursday proceedings in the Federal Court against AMP and Hillross Financial Services “relate to advice provided by some aligned financial advisers in respect of certain life and other insurance products”.
Earlier this week, AMP says it would defend a class-action lawsuit brought against it by its own financial advisers over its controversial decision to slash the amount it would pay them for their businesses.
7.10am: Woolies encouraging masks
Woolworths is “strongly encouraging” customers and staff in the NSW and ACT to wear face masks from August 3.
In Queensland, customers and staff in hot spot areas will also be strongly encouraged to wear face coverings from tomorrow.
The guidance is for Woolworths Supermarkets, Woolworths Metro Food Stores, BIG W, Dan Murphy’s, BWS and ALH Hotels.
This is in addition to the mandatory requirements for face coverings in all of Victoria.
Woolworths Group CEO Brad Banducci said: “Even though wearing a face covering is not mandatory in NSW, ACT or Queensland, as the largest private sector employer with stores in almost every community, we feel it’s important we lead the way in helping reduce community transmission of COVID-19. We’re asking our teams to lead by example, and this includes our Group Executive Team.”
6.59am: MGM revenue plunges
MGM Resorts International posted a 91pc decline in quarterly revenue, the latest casino operator to reveal the continuing financial blow of pandemic shutdowns and curtailed global travel on the gambling industry.
The Las Vegas-based company reported revenue of $US290 million for the three months ended June 30, compared with $US3.2 billion a year earlier. MGM Resorts had an operating loss of $US1 billion compared with operating income of $US371 million a year earlier.
“The near term operating environment will remain challenging and unpredictable as COVID-19 case trends, health and safety protocols, and travel restrictions continue to heavily impact our business,” said Chief Executive Bill Hornbuckle in a press release.
MGM posted a net loss attributable to the company of $US857 million for the quarter, compared to net income of $US43 million the prior year.
On the Las Vegas Strip, MGM Resorts’ Bellagio, MGM Grand, New York-New York, Excalibur and Luxor casinos reopened in June, while other company properties remained closed as of June 30. Nevada regulators have limited casino floors to 50pc capacity as part of social-distancing mandates. Fewer visitors are flying into Las Vegas, leaving the Strip to rely on locals and drive-in tourists from California and other nearby states.
Dow Jones
6.56am: Apple sales surge
Apple showed the technology industry’s resilience amid the pandemic, reporting a better-than-expected 11pc increase in quarterly sales from a year earlier as it benefited from strong demand for apps and work-from-home devices and avoided a downturn in its iPhone business.
The tech giant posted revenue in its fiscal third quarter of $US59.69 billion, even as a new wave of coronavirus outbreaks across the US forced the company to again close stores. Profit rose about 12pc to $US11.25 billion, or $US2.58 a share.
The results exceeded analysts’ expectations of $US52.24 billion in revenue for the three months ended June 27. Apple and its tech peers have outperformed other industries up-ended by the pandemic because of their roles providing the goods and services people have turned to as they work remotely and spent less time venturing outside the home.
Apple on Thursday said its board also approved a four-for-one stock split, aiming to make the stock more accessible to a wider investor base.
Shares rose 5pc in after-hours trading. The company’s stock price has risen more than 31pc since the start of the year, adding more than $US350 billion in market value.
Dow Jones Newswires
6.52am: Car giants swing to losses
Ford Motor Co. posted a second-quarter operating loss of $US1.9 billion from pandemic-related factory shutdowns, a better result than it had previously warned of and reflecting a successful restart of its North American plants since mid-May.
Revenue fell 50pc, to $US19.4 billion in the second quarter.
Ford lost 35 cents per share on a pretax basis adjusted for one-time items, easily beating the average analyst forecast of a $1.17 loss. The pretax loss of $US1.9 billion was a reversal from a $US1.7 billion profit a year earlier.
Net income totalled $US1 billion in the April-to-June period, reflecting a $US3.5 billion gain related to Volkswagen AG’s recent investment in the company’s driverless-car start-up, Argo AI.
Earlier, Volkswagen AG cut its proposed dividend after swinging to a net loss in the second quarter, but the world’s biggest car maker by sales also said there were signs a recovery was under way in markets from Western Europe to the US.
Volkswagen, which also makes the Audi and Porsche brands, posted a net loss of EUR1.61 billion ($US1.9 billion) in the second quarter ended June 30, compared with a net profit of EUR3.96 billion during the same period a year earlier. Revenue fell 37pc to EUR41.08 billion from EUR65.19 billion as sales slipped across the world because of economic shutdowns aimed at containing the pandemic.
“The first half of 2020 was one of the most challenging in the history of our company due to the COVID-19 pandemic,” said Chief Finance Officer Frank Witter.
Dow Jones
6.37am: Amazon stronger in the pandemic
Amazon.com said sales and profits soared in the second quarter as shoppers inundated the company’s site with orders and employees working from home around the world powered growth in its cloud-computing unit.
Revenue grew 40pc to $US88.9 billion for the quarter ending June 30, propelled by a flood of customers who have relied on online shopping more than ever during the pandemic. Analysts polled by FactSet had expected sales of $US81.4 billion.
Profits doubled to a record $US5.2 billion even as Amazon spent more than $US4 billion on coronavirus-related costs, hiring hundreds of thousands of workers, increasing pay and taking dozens of steps to ensure warehouse safety after facing early criticism from some employees. Amazon’s workforce now exceeds one million people and it is the second-largest employer in the US.
Amazon has emerged as one of a handful of companies that have seen sales increase during the pandemic, which has ravaged US markets. Like retail giants such as Walmart Inc. and Home Depot Inc., customers have flocked to Amazon for essential goods even as the company struggled to keep up with demand in the early days of the viral outbreak.
The Seattle e-commerce pioneer has seen its shares surge by more than 60pc this year, more than double the increase for other tech giants such as Apple Inc. and triple that of retailers that have largely kept stores open such as Home Depot, according to FactSet.
Dow Jones Newswires
6.35am: Google ad haul comes up short
The global pandemic dealt a rare losing hand to Google’s venerable digital advertising operation, pushing revenue down compared with a year earlier for the first time in company history.
Google’s parent, Alphabet, reported advertising revenue of $US29.9 billion for the second quarter. That metric, which includes ads on Google’s own properties as well as those placed on other websites, fell short of the $US32.5 billion haul a year earlier.
Though it was the first such drop in Google’s 22-year history, analysts polled by FactSet had expected it, and investors were mostly undisturbed. Alphabet shares rose roughly 2pc in after-hours trading. In a statement, Chief Financial Officer Ruth Porat said: “We continue to navigate through a difficult global economic environment.”
Alphabet reported total profit across the conglomerate of $US6.4 billion, a steep drop from a year earlier.
Dow Jones Newswires
6.34am: Facebook posts growth despite virus
Facebook posted diminished growth in the second quarter but revenue was still higher than expected, as the social-media giant benefited from higher engagement from users amid the pandemic.
Facebook brought in $US18.7 billion in revenue in the quarter, up from $US16.9 billion a year earlier and beating analyst expectations of $US17.34 billion, according to data from FactSet. The 11pc growth is a sharp deceleration from the average gains of nearly 25pc annual growth that the company had posted over the last four quarters.
Earnings rose to $US5.18 billion, or $US1.80 a share, compared with the $US3.96 billion, or $US1.39 a share, expected by analysts. Facebook shares gained more than 5pc in after-hours trading.
The quarter was the first to reflect the full weight of the coronavirus pandemic in the U.S. that up-ended normal economic activity but contributed to rising usage of Facebook’s products. Average monthly users of the Facebook platform rose to 2.7 billion, from 2.6 billion in the first quarter. More than three billion people now use at least one of Facebook’s products on a monthly basis.
The company’s gross margin, 32pc, rose 1pc from the first quarter and was up from 27pc a year ago. Chief Executive Mark Zuckerberg had predicted that the margin would drop throughout 2020 as the company used its financial strength to invest in as many as 10,000 new products and contribute to pandemic relief efforts.
Dow Jones Newswires
6.25am: Vale shrugs off virus to post profit
Brazilian mining giant Vale posted a net profit in the second quarter, shrugging off the effects of the coronavirus pandemic to pay shareholders a dividend for the first time in more than a year.
Vale said renewed demand in China, whose industrial sector is bouncing back from coronavirus lockdowns, fuelled strong exports, along with a weak Brazilian currency.
The company reported a net profit of $US995 million for the quarter, more than quadrupling its first-quarter profit of $US239 million and reversing a loss of $US133 million in the second quarter of 2019.
Vale, one of the world’s biggest iron ore miners, had not cut dividend checks for shareholders since the Brumadinho disaster in January 2019, when a dam collapsed at one of its mines in the Brazilian state of Minas Gerais.
The accident killed 270 people and sent millions of tons of toxic mining waste gushing into the surrounding area. The disaster was devastating for the company, which lost nearly $US1.7 billion on the year in 2019.
AFP
6.15am: ASX poised to open lower
The ASX is set for a weaker start after global markets were hit by GDP figures showing the extent of the damage on the US economy wrought by the coronavirus pandemic.
At about 6am (AEST) the SPI futures index was down 38 points, or 0.6 per cent.
Yesterday, Australian stocks gained 0.74pc.
The Australian dollar was higher at US71.84c.
6.10am: Wall St lower on dour GDP data
US stocks fell on one of the busiest days of the corporate earnings season, while new data laid bare the extent of the economic damage wrought by the coronavirus pandemic.
Major indexes opened sharply lower, and the Dow Jones Industrial Average fell nearly 550 points before paring its losses to trade down about 223 points, or 0.8 per cent, to 26319. Shares of technology giants, many of which are set to report quarterly results after markets close, led the turnaround and helped lift the Nasdaq Composite Index back into positive territory on the day.
Still, the broader stock market continued to struggle after data showed the US economy saw its biggest-ever quarterly plunge in activity and an uptick in weekly unemployment claims suggesting the recovery in the labour market may be faltering.
Investors largely expected poor economic figures, and the extent of the second quarter’s decline in gross domestic product – nearly 33 per cent on an annualised basis – was slightly smaller than economists’ projections. Still, the Commerce Department data confirmed the extent of the pandemic’s damage, showing few corners of the US economy were spared.
“When you see that number in print, it becomes a reality,” said Bill Northey, a senior investment director at U.S. Bank Wealth Management. “It solidifies the amount of economic damage we have already sustained.”
Meanwhile, a tweet from President Donald Trump didn’t help matters ahead of Thursday’s opening bell. The president suggested delaying the November election until people can safely vote in person, further pressuring stock futures.
Although some investors wrote off the comment, Mr Northey said it highlighted how the election remains a major factor that can sway markets.
The S&P 500 declined 0.4 per cent, and the Nasdaq Composite gained 0.4 per cent.
Some stocks bucked the broader market’s decline following upbeat earnings reports, highlighting the handful of “winners” during the crisis.
Stocks didn’t fare much better overseas, with most indexes falling. The pan-continental Stoxx Europe 600 slipped 2.2pc after companies like Volkswagen and Lloyds Banking Group reported weak earnings. Germany also reported that its economy contracted the most on record, shrinking 10.1pc in the second quarter.
Beer sales, however, picked up amid the pandemic, sending shares of Anheuser-Busch InBev up 1.4pc.
Dow Jones Newswires
5.45am: Big loss for Air France-KLM
Air France-KLM announced a second-quarter loss of 2.6 billion euros ($US3.1 billion), thanks to grounded flights during the virus pandemic, adding that the twin airlines must “significantly reduce” the workforce.
“Activity levels were close to zero in April and May 2020,” compared to last year, rising to just eight per cent in June as government progressively eased their COVID-19 lockdown rules, the Franco-Dutch airline group said in its report.
“Nevertheless, there is limited visibility on the demand recovery curve as customer booking behaviour is much more short-term oriented than before the COVID-19 crisis, especially on the Long Haul network,” the report cautioned.
Group CEO Benjamin Smith said: “The second quarter results demonstrate the unprecedented impact of the COVID-19 crisis on the activity of the Air France-KLM Group and of all airlines worldwide”.
Air France-KLM had already posted an operating loss of 1.5 billion euros for the quarter.
AFP
5.40am: United planning more lay-offs
United Airlines is now planning for even deeper furloughs of pilots following the latest weakening of air travel demand due to the coronavirus, a company official said.
The big US carrier currently is planning for 3,900 pilots to be furloughed, up from 2,250 expected in early July before the latest spike in US coronavirus cases that has led to another deterioration in customer interest.
“Because COVID-19 cases continue, and demand improvement remains very slow, we may need to furlough more pilots in 2020, and in 2021, than originally planned,” Bryan Quigley, senior vice president for flight operations, said in a memo to staff.
Quigley said total revenues for the airline are down about 85 per cent. The company expects to end the third quarter with a daily cash burn of $US25 million per day.
AFP
5.37am: Trump suggests election delay
US President Donald Trump suggested an unprecedented delay to the 2020 election – which polls show him losing – claiming that attempts to provide safe voting during the pandemic will promote mass fraud.
“Delay the Election until people can properly, securely and safely vote???” Trump, who faces Democrat Joe Biden on November 3, asked in a tweet.
Trump claimed that increased mail-in voting, a way to allow people to vote without risking their health in polling stations, would lead to “the most INACCURATE & FRAUDULENT Election in history. It will be a great embarrassment to the USA.”
Trump has no constitutional authority to hold back the election. However, his mere airing of the idea broke with presidential custom, adding to tension mounting in a country ravaged by the coronavirus and set on edge by bitterly partisan politics.
The tweet came minutes after second quarter data showed a 32.9 per cent annualised collapse in the economy compared to the first quarter, and down 9.5 per cent compared to the same April-June period last year.
Economic pain and mass unemployment is a big reason why Trump finds himself staring down the barrel of defeat in less than 100 days.
Polls show him losing to Biden heavily, including in several must-win swing states, and being relegated to a rare one-term presidency.
“Trump’s threat is nothing more than a desperate attempt to distract from today’s devastating economic numbers that make it clear his failed response to the coronavirus has tanked the US economy,” the Democratic National Committee said in a statement.
“Trump can tweet all he wants, but the reality is that he can’t delay the election, and come November, voters will hold him accountable.”
Presidential election dates are mandated by law to take place on the first Tuesday after November 1, which this year is the 3rd.
The United States has never allowed a delay, holding elections even during the Civil War, and only Congress could change the timing. With Democrats ruling the House of Representatives, Trump’s idea will not get far.
AFP
With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history. It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???
— Donald J. Trump (@realDonaldTrump) July 30, 2020
5.36am: Markets hit by US data, mounting virus woes
US and European equities sank on mounting corporate and economic evidence of the coronavirus-induced downturn, crystallised by the worst quarterly drop in US growth since records began after World War II.
The slide came on the heels of a gloomy Federal Reserve warning over a US spike in COVID-19 infections, adding to fears of more job losses amid a pandemic that continues to pound the global economy.
Major Asian trading hubs had managed to limit losses before the US Commerce Department revealed that the world’s biggest economy contracted by one-third in the second quarter – the worst decline on record.
The Dow Jones Industrial Average had lost 1.1 per cent in morning exchanges, while European indices nosedived.
In Frankfurt, the benchmark DAX index closed 3.4 per cent lower on data showing that Germany’s powerful economy shrank by a record 10.1 per cent in the second quarter.
Elsewhere, London’s FTSE 100 lost 2.3 per cent and Paris fell by more than two per cent on an avalanche of gloomy corporate earnings tied to the impact of the coronavirus.
“The record fall with (US) second quarter GDP puts an exclamation mark with the coronavirus recession,” said Edward Moya, senior market analyst at OANDA.
“Germany’s record drop in GDP fuels extra concern that the rest of Europe might have a deeper slump,” he added.
Investor alarm spread in Europe on news of disappointing losses from the likes of aircraft manufacturer Airbus, steelmaker ArcelorMittal and energy giant Eni.
Sentiment took another battering as British energy major Royal Dutch Shell posted a $US18.1 billion second-quarter loss, while lender Lloyds also sank deep into the red.
AFP
5.35am: US economy collapsed 32.9pc
The US economy collapsed in the midst of the coronavirus pandemic in the April-to-June period, contracting 32.9 per cent in the second quarter, the government reported.
The decline, though slightly less bad than expected, was the worst on record for the world’s largest economy, dating back to 1947.
However, the Commerce Department figures are an annual rate so not comparable to the quarterly contractions reported in other advanced economies.
Compared to the same quarter of 2019, economic activity fell 9.5 per cent. The plunge in GDP was driven largely by the drop in consumer spending, the largest component, which fell 34.6 per cent annualised, according to the first estimate for the second quarter.
After a 5.0 per cent drop in the first three months of the year, economists had been expecting the damage from COVID-19 to contract activity by 35 per cent or more amid the nationwide halt to travel and much business, which caused tens of millions of jobs to be destroyed.
The data show trade also took a huge hit, with exports falling just over 64 per cent, and imports down 53.4 per cent.
But personal income got a boost of $US1.4 trillion in the quarter from the government emergency spending measures that provided payroll funds for businesses and direct unemployment payments to workers.
The annualised data assumes the damage wrought in a single quarter will play out over the entire year, but economists expect a rebound in coming months.
However, the hopeful signs in May and June have given way amid a resurgence of virus cases in July that has forced authorities in some states to reimpose restrictions.
AFP
5.32am: Nestle to expand NSW factory
Nestle SA said its subsidiary Nestle Australia would invest 60 million Swiss francs ($US65.5 million) to upgrade its Blayney factory that manufactures Purina PetCare products in New South Wales.
The Swiss food-and-beverage giant said the upgrade will consist of extending existing production areas and installing new equipment to increase production capacity and export growth. The upgrade is estimated to take 18 months.
Nestle has invested almost CHF131 million in the site in the last 10 years, it said.
Dow Jones Newswires
5.30am: Cleaning products boost P&G
Strong sales of cleaning products and soaps amid the coronavirus crisis more than compensated for lacklustre demand for shaving products, lifting Procter & Gamble’s quarterly earnings, the company reported.
The US consumer products giant, whose brands include Mr. Clean, Cascade and Gillette, scored an impressive 11 per cent surge in second-quarter sales in fabric and home care, the standout division in the period.
“We remain highly relevant across the board,” said Chief Financial Officer Jon Moeller, who said consumers were keeping larger inventories of products at home to avoid store visits.
“Consumers generally are carrying higher inventory levels. They also are consuming more,” said Moeller, adding that shoppers had also had more money for household items that might have otherwise gone to travel or eating out.
Moeller said consumers were using more detergent because they were washing clothes after just one use. Sales of some items, such as Bounty paper towels, were up “strong” double digits in the quarter, he told reporters on a conference call.
Net income came in at $US2.8 billion, compared to a loss of $US5.2 billion in the year-ago period, which was weighed down by a large write-off.
Revenues rose 3.5 per cent to $US17.7 billion, topping analyst expectations. Organic sales grew in every category except grooming, which has suffered a sales hit as consumers have eased back on shaving while at home.
This effect has been mitigated somewhat among health care workers because of the improved fit of face masks when users shave, said Moeller.
AFP
5.26am: German economy shrinks 10.1pc
The German economy shrank by a record 10.1 per cent in the second quarter as coronavirus lockdowns took their toll, official data showed, but experts say a recovery is already under way.
Federal statistics agency Destatis called the quarter-on-quarter decline in gross domestic product “historic” and far bigger than any slump seen during the 2008-2009 financial crisis.
Economy Minister Peter Altmaier had warned earlier this year that the pandemic would push Europe’s top economy into “the worst recession” in its post-war history, ending a decade of growth.
Analysts had expected a slightly smaller contraction of around nine per cent for the April-June period.
AFP
5.24am: Nestle sees slow growth
Swiss food giant Nestle said that second quarter growth slowed as lockdowns aimed at halting the spread of COVID-19 shuttered eateries, while confined consumers relied on home reserves.
The company’s organic sales, which had swelled 4.3 per cent during the first quarter as people emptied supermarkets in anticipation of confinement measures to come, grew just 1.3 per cent in the second three-month period of the year.
Nestle, which owns KitKat, Nespresso, and Maggi among other brands, explained in a statement that the slowdown reflected “the severe impact of movement restrictions on out-of-home businesses,” as well “consumer destocking after pantry building in March.” For the first six months of the year, organic sales grew 2.8 per cent, the company said.
At the same time, its total reported sales dropped 9.5 per cent during the first half of the year to 41.2 billion Swiss francs ($US45.1 billion, 38.3 billion euros).
AFP
5.20am: Credit Suisse to reorganise
Credit Suisse announced it would reorganise operations to create a global investment bank and announced quarterly profits jumped by nearly a quarter.
The move will see Credit Suisse merge several existing business units “to form a globally integrated Investment Bank to achieve critical scale,” the bank said in a statement.
Nevertheless, Credit Suisse said it would retain its focus on global wealth management.
The bank also announced plans to cut 400 million Swiss francs ($US437 million, 372 million euros) from operating expenses from 2022.
“The changes should allow us to extract significant potential to improve effectiveness and efficiency, navigate the current environment with the necessary far-sightedness, and to unlock additional growth potential in the future to the benefit of our clients,” chief executive Thomas Gottstein said.
During the second quarter net profits rose by 24 per cent to nearly 1.2 billion Swiss francs.
Revenues climbed 11 per cent from the second quarter last year to 6.2 billion thanks to investment banking and trading operations.
AFP
ASX to rise; ACCC power boost in merger reforms
Labor's merger reforms introduce thresholds; ACCC notification for every supermarket deal. US Fed minutes buoy Wall Street. Alphabet drops on forced Google split talks. Boeing's talks with union break down.
ASX 200 trims gains; Rio Tinto acquires Arcadium Lithium
Rio buys lithium player for $US6.7bn. Commodity price falls, China disappointment weigh on Aussie producers. NZ's central bank cuts rate by 50 basis points, as expected. Shares in Cettire, Zip jump.