Trading Day: ASX sinks as markets rate Trump-Biden clash

Australia’s share market had its worst day in almost 4 weeks as US futures pointed to a dive on Wall Street.

Markets were focused on the first presidential debate between Joe Biden and Donald Trump.

• Santos’ Narrabri project approved
• CBA gets $450m more from life sale
• JPMorgan Chase fined $US920m

That’s all from the Trading Day blog for Wednesday, Sept 30.

Australia’s share market had its worst day in almost 4 weeks as US futures pointed to a dive on Wall Street after opinion polls suggested the first of three US Presidential debates went badly for Donald Trump.

The S&P/ASX 200 share index fell 136.2 points or 2.3pc to a 5-day low close of 5815.9, its biggest one-day fall since 4th September.

The Dow and S&P 500 both fell 0.5 per cent, while the Nasdaq lost 0.3 per cent.

Eli Greenblat 7.48pm: Summer of risk for food retailers

The nation’s biggest supermarket chains Woolworths, Coles, Aldi and wholesaler Metcash have been warned by the federal government’s Supermarkets Taskforce to prepare for a tough summer dominated by the lasting impacts of COVID-19, moderate bushfires and wetter than normal conditions that could spark floods and disrupt supply chains.

In a conference call held on Wednesday to discuss issues ­affecting the $100bn grocery sector, the attention of the key industry players focused beyond the expected Christmas rush and the summer that could see harsh weather conditions constrict the ability to shift supermarket products around the country.

This national supply chain could be hampered by floods in Queensland and adverse weather conditions in Western Australia that in the past have severed rail lines and transport routes, making it harder to get grocery supplies to these regions. This will be made all the harder by COVID-19 this summer, the taskforce warned.

The Supermarkets Taskforce, under the umbrella of the Department of Home Affairs, was established in March to respond to challenges facing supermarkets arising from the COVID-19 ­pandemic, and to co-ordinate supermarket responses across the nation. It has several working groups and dozens of members spanning government, regulatory authorities, industry associations and companies including the ­supermarkets and national ­retailers.

Between March and May the taskforce met almost 50 times and was crucial in co-ordinating industry reactions and acting collaboratively to meet the demands of panic buying experienced in the early weeks of the pandemic.

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Eli Greenblat 7.09pm: COVID pushing Harvey Norman sales

Harvey Norman is continuing to see strong sales throughout its stores in Australia and overseas as the COVID-19 pandemic funnels consumer spending into home ­appliances and white goods as they spend more time at home.

In its annual report, the retailer said the continued impact globally due to the fast evolving COVID-19 remains unknown. But there were effects on consumer spending habits that had now become a major trend across its stores in Australia, New Zealand, Southeast Asia and Europe.

“To date, the biggest consumer change we have seen in our eight countries is the elevated importance of family, home, work and study from home, cooking and entertainment from home. Our brands are well placed to take advantage of this trend,” Harvey Norman executive chairman Gerry Harvey and chief executive Katie Page said in their report to shareholders.

Sales had continued to climb in the start of the 2021 fiscal year.

“The sales uptick we saw in the last quarter in Australia accelerated in July and has continued in August and September — notwithstanding the metropolitan Melbourne government mandated stage-four lockdown.

“Within our company-operated stores overseas, sales improved quickly as they reopened to the public following government-mandated closures. This improvement continued into the Sep­tember quarter, notwithstanding the New Zealand government lockdown of metropolitan Auckland from August 11 to August 30.”

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6.45pm: Andrew Forrest’s $97m FMG top up

Fortescue Mining chairman Andrew Forrest has topped up his holdings in the iron ore miner he co-founded – by nearly $100m.

Forrest who was recently paid a $1.16bn dividend from Fortescue shelled out $97m to pick up another 6m shares in the miner. That takes his total holding to 1.116bn shares a little over 36 per cent – worth $18.19bn on paper.

5.59pm: Shell to cut up to 9000 jobs by 2022

Energy major Shell unleashed on Wednesday a major restructuring to combat plunging oil prices driven by the coronavirus pandemic, warning it will also spark more asset writedowns in the third quarter.

Royal Dutch Shell said in a statement that it would axe between 7000 and 9000 positions by the end of 2022, of which 1500 staff have already agreed to take voluntary redundancy this year.

The job cuts would amount to roughly 10 percent of Shell’s total global workforce of 80,000 staff across more than 70 countries.

The Anglo-Dutch giant aims to generate annual savings of between $US2.0 billion and $US2.5 billion (1.7-2.1 billion euros) under the plan, which also includes other measures to streamline the business in response to the fallout from the Covid-19 crisis.

Those savings will partially contribute to the $US3.0-$US4.0 billion efficiency drive that was announced in March and runs to 2021, it added.

Shell had already flagged in July that job cuts were in the pipeline after posting a colossal $US18.1-billion second-quarter net loss as coronavirus savaged the world oil market.

It warned on Wednesday that it would suffer more post-tax impairment charges of between $US1.0-$US1.5 billion in third quarter earnings, which will be published at the end of October.

“This is an extremely tough process. It is very painful to know that you will end up saying goodbye to quite a few good people,” said chief executive Ben van Beurden in an interview on the company website.

“But we are doing this because we have to, because it is the right thing to do for the future of the company.

“We have to be a simpler, more streamlined, more competitive organisation that is more nimble and able to respond to customers.” Shell’s main British rival BP is axing around 10,000 jobs or 15 percent of its total workforce in response to the virus turmoil

AFP

Lachlan Moffet Gray 4.47pm: Reject Iress’ OneVue takeover offer, Waislitz urges

Thorney Investment Group Australia has voted against a takeover bid of OneVue by Iress and is urging other shareholders to do the same.

Thorney head Alex Waislitz, who owns 18.35 per cent of OneVue told other investors on Wednesday that Iress’s offer of 43c s a share for the company does not adequately reward shareholders.

“The all cash nature of Iress’s bid means that there is no reward for OneVue shareholders for the potential revenue and cost saving synergies of the proposed scheme,” he said.

“In addition, OneVue shareholders will not receive any benefit for OneVue’s retained franking credits worth approximately $2.5m.”

Mr Waislitz also said that the bid was launched at a time when OneVue “had been under duress” due to the COVID-19 pandemic and they payment of a debt by the company.

“By the time Iress announced its bid on 1 June 2020, OneVue’s share price had begun to recover, as had its peer group,” he said.

“Many of these peers are now trading well above pre-COVID-19 levels.

“There is every reason to believe that OneVue’s share price appreciation would also have continued, given that for the 12-month period prior to the start of the COVID-19 pandemic, OneVue traded at a VWAP of 44 cents per share.”

Noting that an independent expert’s valuation methodology allowed for a price up to 46 cents a share, Mr Waislitz said that many factors of the expert’s report were deficient in accounting for recent transaction volumes and earnings potential.

“With so much of the hard work already undertaken, OneVue is on the cusp of further success and value accretion for its committed and loyal shareholders,” he said.

“Now is not the time for OneVue shareholders to pass on these future benefits to an opportunistic acquirer.”

A vote on the scheme of arrangement will be held on October 9.

OneVue closed at 36 cents a share on Wednesday, down 3.95 per cent.

Joyce Moullakis 4.47pm: AMP cuts jobs by up to 20%

Embattled wealth group AMP has kicked off a far-reaching staff redundancy program, which will see it curb costs and centralise some functions across is Australia and capital business units.

The plan was outlined in a memo to staff sent by AMP chief executive Francesco De Ferrari, and sources believe it may lead to sharp headcount cuts of up to 20 per cent in parts of the two impacted divisions.

“AMP has made changes to its teams that will centralise some business services. Our focus is on continuing to reshape the organisation to drive efficiency and support the delivery of AMP’s strategy to become a simpler, client-led organisation,” an AMP spokesman said on Wednesday.

The plan is said to include combining functions such as human resources and legal across AMP’s Australia unit - which includes advice, wealth and the bank - and the AMP Capital division which houses functions including infrastructure, real estate, equities.

It comes as AMP continues to reel from the departure in August of head of its Australia unit Alex Wade for inappropriate conduct and the demotion of Boe Pahari as AMP Capital boss. Mr De Ferrari is seeking permanent executives to run both divisions, following a stinging investor backlash against Mr Pahari’s promotion mid year, despite a 2017 sexual harassment complaint against him.

4.40pm: ASX -2.3% after US debate

Australia’s share market had its worst day in almost 4 weeks as US futures pointed to a dive on Wall Street after opinion polls suggested the first of three US Presidential debates went badly for Donald Trump.

The S&P/ASX 200 share index fell 136.2 points or 2.3pc to a 5-day low close of 5815.9, its biggest one-day fall since 4th September.

After initially reacting positively to the debate, S&P 500 futures turned down sharply to be down more than 1pc at the Australian market close.

Stronger-than-expected official China PMI data wasn’t much help although Fortescue Metals rose 0.9pc.

The S&P/ASX 200 fall seemed magnified by volume that was light until a heavy burst of volume into the close left composite turnover at $8.33bn versus a 20-day average of $6.98bn.

The Energy sector led broad-based falls, with Woodsie down 4.9pc as WTI crude oil fell 3.2pc t o$39.29 overnight before falling more than 1pc locally on renewed concern that coronavirus will hit global oil demand.

Elsewhere among top 20 stocks, CSL fell 2.9pc, BHP fell 3.5pc, the major banks fell 1.8-2.2pc, Transurban lost 3.3pc, Macquarie fell 2.3pc and ASX Limited lost 3.6pc.

The Australian dollar was 0.24pc weaker against the US dollar trading around US71.13c.

Bridget Carter 4.20pm: HT&E taps UBS for Soprano Design sale

Radio broadcaster Here There and Everywhere is understood to have hired investment bank UBS for a sale of its stake in the technology company Soprano Design.

More to come.

3.20pm: Lifeline for China’s biggest property developer

Shares in China’s biggest property developer surged Wednesday after it reached an agreement with key investors that helps it avoid a cash crunch that some observers fear could hit the global financial system.

The future of China Evergrande Group has been thrown into doubt as it struggles to cover repayments on debts totalling more than $120 billion, with a letter last week circulating on Chinese social media appearing to show it asking the government in Guangdong for help.

The company, the world’s most indebted developer, refuted the claims on Thursday, saying they were “fabricated” and “pure defamation”, adding it would take legal action.

Its shares plunged by a fifth in Hong Kong, while its Shanghai-listed stock was suspended and ratings group S&P downgraded its credit outlook to “negative”.

Analysts have warned that a default on huge debts owed by the company, founded by billionaire Xu Jiayin and a key player in China’s building boom, could send bad loans cascading through the country’s opaque banking system.

But the firm moved to stabilise its affairs on Tuesday after key investors agreed not to sell 86.3 billion yuan ($12.6 billion) in Hengda Real Estate, an Evergrande unit.

The company had raised billions of dollars by selling stakes in the unit and pledged to repay the cash if it did not float by January.

There had been fears they would push to get their money but the developer said in a statement the investors “will continue to hold their interests in Hengda Real Estate, with their percentage of equity interests remaining unchanged”.

Tuesday’s deal, which also starts the process of shoring up a further 28 billion yuan of shareholdings, buys some time for the developer to sort out its debt repayments.

Evergrande shares jumped almost 15 percent in Hong Kong on Wednesday. That followed a more than 20 percent jump Monday after the firm sought to reassure investors about its future.

AFP

Jared Lynch 3pm: Antisense drug nears FDA approval

Shares in junior biotech Antisense have rocketed more than 21 per cent after the company edged closer to winning US approval for its drug to prolong the life of boys suffering a rare fatal disease.

The US Food and Drug Administration has granted Antisense drug to treat Duchene Muscular Dystrophy rare pediatric disease designation, which gives the treatment priority review, slashing the FDA approval process by as much as six months.

The designation includes a voucher to expedite the process and can be onsold for hundreds of millions of dollars, creating a further windfall for the initial recipient company.

Antisense shares soared more than 21 per cent to 14c in afternoon trade on Wednesday - a six year high.

It comes after the company submitted the results of its phase two trials to the FDA, which gave the regulator confidence is drug could be an effective treatment for lessen the symptoms and prolonging the life of boys with Duchene Muscular Dystrophy (DMD), the most common fatal genetic disorder.

“We are very encouraged by the granting of the rare pediatric disease designation to ATL1102 (Antisense’s drug) by the FDA, which recognizes a great need for new and improved therapies for boys with DMD. We look forward to future interactions with FDA as we refine our strategy for development of ATL1102 in DMD in the US,” chief executive Mark Diamond said.

In May this year, Antisense successfully completed a phase two trial, which involved nine boys with DMD, at the Murdoch Children’s Research Institute.

2.46pm: ASX falls 2 per cent

Australian shares are still suffering from a lack of buying as US futures tumble.

The S&P/ASX 200 fell as much as 2pc to a 4-day low of 5834.2 in volatile trading as S&P 500 futures dived 0.7pc.

After initially calling it for Trump, the US futures market is embracing opinion polls showing the spread widened in favour of Joe Biden.

With the first US presidential debate out of the way and the US share market set for a tumble, traders are wondering how far it needs to fall before President Trump agrees to increase fiscal stimulus.

But ASX 200 share trading volume is barely in line with the 20-day average despite all the volatility.

Thus, as has been the case all week, the share market is falling because of a lack of buying, rather than heavy selling.

2.44pm: AGL completes Click acquisition

AGL has completed the $115m acquisition of electricity and gas retailer, Click Energy from amaysim.

“We have continued to grow and transform our business by digitising our customer experience and offering more choice and flexibility on our products,” AGL chief executive Brett Redman said.

“This acquisition aligns with our growth strategy and builds on our recent acquisitions of Perth Energy and Southern Phone Company.

“We’re excited to welcome Click Energy customers to AGL and we’re working closely with the team to ensure a smooth transition for their people and customers.”

2.40pm: Business NSW applauds Narribi gas project approval

Industry association Business NSW says 300,000 jobs will be created as a result of Santos’ Narrabri gas project and welcomed its approval today, saying it would help meet the state’s looming gas shortfall.

“The common-sense decision to green light to the Narrabri Gas Project will be welcomed by every business in NSW that depends on gas to power their business and will keep thousands of people in their jobs,” said Business NSW chief executive Nola Watson.

“Gas is a complementary energy source to renewables.

“Securing our gas supply will help support reliable and affordable power as the energy market continues to evolve and develop emerging technologies like hydrogen.

“It’s now vital that work begin immediately to build this project and provide a reliable and affordable supply of gas in NSW by 2025 – that’s when the Australian Energy Market Operator has projected, we will face a shortfall if no action is taken.”

2.30pm: Rex shares jump on leasing agreement

Regional Express shares have jumped on their return to trade after the regional airline said it had signed letters of intent with two lessors for the lease of six Boeing 737-800 NG aircraft, ahead of the launch of its domestic jet operations.

Shares in the company were halted this morning pending the leasing announcement.

“Today I am pleased to announce that we have selected the Boeing 737-800 NG as the aircraft for our domestic jet operations,” said deputy chairman John Sharp AM.

“These aircraft are well received by passengers and have proven to be very suitable for operations in Australia.

“Three of these aircraft will be deployed in the first phase of our launch on March 1 2021 on the Sydney, Melbourne route, with another two aircraft beginning service before Easter.

“From there, Rex will continue to grow the domestic fleet in line with the return of passenger demand and hopes to see its fleet of 737-800 NGs reach ten by year end.”

Rex shares last up 5.5 per cent at $1.34 each.

Jared Lynch 1.40pm: Sigma rewards exec with CFO role

Sigma Healthcare has promoted an executive who stared Chemist Warehouse down, resulting in the company losing a third of its revenue before it won back the pharmacy chain’s business.

Jackie Pearson, who joined Sigma in 2005, will become the group’s chief financial officer, effective immediately.

Her latest role at the company was executive general manager business transformation, a role which included Sigma walking away from its then unprofitable contract with Chemist Warehouse. Ms Pearson then helped regain around half of the pharmacy chain’s business on better terms in a deal worth around $800m.

Chairman Ray Gunston said Ms Pearson had also managed the company’s “project pivot” program, which aims to deliver more than $100m in cost savings.

Mr Gunston said Ms Pearson brings “extensive commercial, people and management experience, as well as deep business and financial acumen gained from various roles since joining Sigma”

“It is pleasing to announce such a highly capable internal appointment. Over the last four years Jackie was entrusted with managing three significant and business-critical projects to transform Sigma and has continued to deliver on every one of them,” Mr Gunston said.

“Jackie’s various roles have been built on a thorough understanding of all parts of the Sigma Group, giving her a comprehensive view of what drives value across the business.”

Mrs Pearson holds a Bachelor of Applied Science – Psychology (Honours) and a Master of

Business Administration.

Jeff Sells, who assumed the interim CFO role over the past nine months, will remain at the company as executive general manager retail pharmacy.

1.25pm: Bookies not impressed with Trump

Betting odds say the first US presidential debate went badly for POTUS.

While share market investors initially seemed to think Donald Trump went OK, electionbettingodds.com has Donald Trump down 3.2 basis points to 39.6pc and Joe Biden up 4.1 basis points to 58.8pc.

S&P 500 futures are down 0.4pc after rising as much as 0.7pc in the first half hour of the debate.

At around 1.30pm, Australia’s S&P/ASX 200 was down 1.6pc at a four-day low of 5860.8,

after initially halving its early fall of 1.5pc after the debate.

1 .05pm: State govts to be tested by surging debt: S&P

Surging debt will test the states, which are expected to record unusually large cash deficits this year, except Western Australia which may outperform, according S&P Global Ratings credit analyst Martin Foo.

“Outstanding state government bonds on issue have surged past one-third of a trillion Australian dollars, which will reduce buffers at the states’ ‘AAA’ and ‘AA+’ rating levels,” Mr Foo said.

Public borrowing is set to lift in Australia but costs should remain manageable, Mr Foo said.

“The COVID-19 recession is driving budget deficits wider, as tax revenues plummet and emergency fiscal support flows,” Mr Foo said.

“But borrowing costs should remain manageable with yields at historic lows.”

With conventional monetary policy ammunition almost exhausted, fiscal policy is playing a much greater role compared to in other crisis’s, Mr Foo said.

12.05pm: ASX remains negative as buyers step back

Australian shares remained sharply weaker at midday despite an intraday bounce as US futures crept up during the US presidential debate.

The S&P/ASX 200 index was down 1pc at 5890 after falling as much as 1.5pc to a four-day low of 5861.6 in early trading.

But the sharp fall in Australian shares so far on Wednesday has evidently been due to a lack of buyers rather than heavy selling.

S&P/ASX 200 traded value of $1.8bn was 19 per cent below the 20-day moving average for this time of day.

The energy sector led broad-based falls, with Woodside down 2.8pc after fell 3.2pc to $US39.29 overnight and lost a further 0.7pc in early Asian trading.

Financials, Industrials, Real Estate and Tech stocks also underperformed with major banks down 1.2-1.5pc, Scentre down 2.4pc and Afterpay down 1.9pc.

Resources bounced significantly intraday with BHP down 1.3pc after falling 2.6pc, Rio Tinto down 0.5pc after falling 2pc and Fortescue up 0.3pc after falling 1.3pc.

China’s official September PMI data beat expectations, albeit more so for the Services sector PMI.

Perry Williams 11.45am: Santos welcomes Narrabri gas project approval

Santos has accepted 134 conditions imposed on its $3.6bn Narrabri gas project by the NSW Independent Planning Commission and will now seek final environmental approvals from the federal government while APA Group will push ahead with a new $500m pipeline to transport gas to customers.

Its Narrabri gas project was sanctioned by the IPC on Wednesday, marking the last regulatory hurdle for the energy producer some four years after it first kicked off the planning process.

Receiving expedited federal approvals could take as little as one month, according to Citi, with Santos still requiring the green light under the Environment Protection and Biodiversity Conservation Act.

“Santos accepts the conditions proposed by the IPC and will now work with the Federal Department of Agriculture, Water and Environment as it considers its recommendation to the Minister on EPBC Act approval. Key to this recommendation will be that the New South Wales’ assessment process has adequately addressed all relevant matters of national environmental significance.”

APA said it will continue to progress its 460km Western Slopes pipeline which connects to the existing Moomba-Sydney pipeline.

“Critically, the Western Slopes Pipeline does not require any form of government subsidy or investment,” APA managing director Rob Wheals said. “The WSP will be a key addition to APA’s existing East Coast Gas Grid, which we continue to expand to deliver the most cost effective, flexible and timely solution to meet the forecast gas shortfalls in the south-eastern states from 2023.”

Santos said it will immediately start planning for workover activities on existing wells under its exploration rights followed by a 12-18 month appraisal drilling program.

Santos may be in a position to take a final investment decision on Narrabri by late 2021 or 2022, RBC said.

“While Narrabri is not expected to have an immediate earnings impact on Santos, it has important strategic value because it should allow Santos to gain efficiencies in its Australian gas distribution,” RBC analyst Gordon Ramsay said.

“For example, Cooper Basin gas previously destined for New South Wales now has potential to be displaced by Narrabri production, thereby allowing Santos to send more Cooper Basin gas across to its underutilised GLNG Project in Queensland.”

11.42am: Credit, building approvals subdued

Australia’s private sector credit and building approvals data were overall subdued in September.

Private sector credit was flat month-on-month versus an expected 0.1pc fall and up 2.1pc year-on-year versus a 2.1pc rise expected.

Building approvals fell 1.6pc versus expectations of no change after a 12.2pc jump the previous month, with private sector housing approvals up 4.8pc from 8.6pc the previous month.

11.36am: ASX recovers ground from sharp fall

Australia’s share market is trimming a sharp intraday fall as US index futures rise on what looks like a strong showing by Donald Trump in the first of three US presidential debates.

The S&P/ASX 200 was down 0.9pc at 5898 after falling 1.5pc to a 4-day low of 5861.6.

S&P 500 futures rose 0.3pc to an intraday high of 3344.88.

11.15am: Tokyo opens lower with eyes on US debate

Tokyo stocks opened lower on Wednesday, tracking falls on Wall Street as investors awaited the first US presidential debate for fresh trading cues.

The benchmark Nikkei 225 index was down 0.34 per cent or 79.06 points at 23,460.04 in early trade, while the broader Topix index slipped 0.51 per cent or 8.49 points at 1,649.61.

“Japanese shares today are seen moving, with investors’ eyes on the US presidential debate,” Okasan Online Securities said in a note.

The overall mood in the Japanese market is positive, partly due to expectations for reforms under new Prime Minister Yoshihide Suga, a day after telecom operator NTT announced a takeover of its mobile phone unit, it added.

AFP

11.05am: China data beats expectations

China’s official purchasing managers indexes for September have beaten market expectations.

Manufacturing PMI printed 51.5pc which was a marginal beat of the 51.3pc estimate according to Bloomberg.

But the Services PMI printed 55.9 which was a solid beat of the 54.7 estimate

However it’s not really helping Australian risk assets at this point.

AUD/USD is near flat at 0.7138 while the S&P/ASX 200 index is down 1.3pc at 5873 after a 4-day low of 5861.6.

Cliona O’Dowd 10.50am: Bendigo hit over debt collection breaches

Bendigo Bank has been sanctioned for serious and systemic breaches of the 2013 Code of Banking Practice over its debt collection practices and the treatment of customers experiencing financial difficulty.

The banking industry’s self-appointed watchdog, the Banking Code Compliance Committee, on Wednesday said the breaches related to outstanding loans in the collapsed Great Southern scheme and took place over a four-year period between February 2015 and 2019.

It is the first time the BCCC has named a bank for non-compliance with the code and only the second time since 2008 that a bank has received such a sanction.

The bank has taken a $1m provision for a remediation program related to the breaches following a review that found more than 400 accounts may require refunds or goodwill payments.

To date, 15 per cent of the accounts independently reviewed have been assessed as eligible to receive remediation or a goodwill payment, with the majority comprising goodwill payments which recognises any non-financial adverse impact on the customer, the bank said.

Lachlan Moffet Gray 10.48am: Analysts back Corporate Travel buy

Analysts at Macquarie are bullish about Corporate Travel Management‘s latest acquisition, adding that the company’s equity raising will provide balance sheet flexibility and opens up the possibility of future acquisitions.

On Tuesday the corporate travel agency announced that it would purchase US-based Travel & Transport group for US$200m ($282m), funded by a $375m equity raising.

In a note, Macquarie analysts said the acquisition was “strategically sound” as Travel & Transport‘s presence is concentrated on the US’s east coast, while Corporate Travel Management’s current US present is concentrated on the west coast and in the mid-west.

Additionally, Travel & Transport‘s customer base is focused on professional services and healthcare clients, which the analysts say is under-represented in Corporate Travel Management’s US presence.

The analysts also said with the remaining $127m from the raising that was not used to fund the acquisition and an uncommitted $182m debt facility, Corporate Travel Management could make future acquisitions as the industry is “ripe for consolidation.”

“Covid19 continues to have a material impact on corporate travel, with Corporate Travel Management (CTD) currently tracking at about 20 per cent of pre-Covid levels despite domestic travel comprising about 60 per cent of the group,” they wrote.

10.30am: Rex shares halted

Shares in airline Regional Express are halted ahead of an announcement in relation to aircraft leasing arrangements.

It comes after the company announced it had entered into a $150m deal with Asian-based investment firm PAG that would ultimately give the firm a 48 per cent stake in the airline, making it the largest shareholder. The deal is subject to shareholder and Foreign Investment Review Board approval.

10.23am: ASX opens sharply down

Australia’s share market opened sharply weaker after a two-day bounce in the US share market faltered.

The S&P/ASX 200 fell 1.3pc to a four-day low of 5873.8 in early trading, exceeding a 1pc fall implied by overnight futures.

The selloff was magnified by sharp falls in large Financials, Materials, Industrials, Health Care and Energy stocks.

In those groups the four major banks fell 1.3-1.9pc, BHP fell 2.2pc, Tranurban lost 1.9pc, CSL fell 1.6pc and Woodside lost 2pc after oil prices tumbled.

The index has no clear support on the charts until last week’s low at 5763.2.

10.07am: Bank customer credit quality ‘concerning’

The credit quality of customers intending to ask their bank to extend their deferral is “concerning”, says UBS analyst Jon Mott.

Based a UBS “Evidence Lab” survey of 904 from July to September of Australians who took a mortgage in the last 12 months, he found that as the bulk of deferred mortgagors approach the end of their six month deferral period, 47pc intend to revert to normal payments, 32pc intend to switch to interest only, and 21pc intend to ask to extend deferral. “However, the credit quality of customers intending to ask their bank to extend their deferral is concerning,” Mr Mott said.

Of these customers he found: 40pc overstated their income in their mortgage application by 21pc on average, 15pc understated other debts, 67pc are on JobKeeper, 25pc are on JobSeeker, they have seen their income fall 19pc since COVID on average in addition to the amount they overstated.

“Unfortunately, we found the financial position of those asking to move to IO is only marginally better,” he said.

“The 2020 survey illustrates factually inaccurate mortgages are materially higher credit risk.”

Mr Mott says banks need to undertake significant due diligence beforeextending deferrals or moving deferred customers to interest only, as a large number of these borrowers are likely to be under more stress than the banks perceive.

“Many of these customers should be considered delinquent, in our view,” he says.

“Given this stress, a recovery in employment and house prices is critical to the banks’ performance.”

9.55am: OceanaGold halts for raise

Shares in gold miner OceanaGold are halted ahead of an announcement regarding a capital raising.

The company withdrew its production guidance earlier this month after it was told by the ASX that based on the percentage of inferred resources used in its preliminary economic assessment of its Waihi operation, it may not have had a reasonable basis for the production and economic forecasts disclosed in July.

Mike Cherney 9.55am: CSL’s plasma collection slows: Macquarie

Foot traffic at CSL’s plasma-collection centers in the US has slowed, coinciding with an uptick in coronavirus cases, Macquarie says, using data from Google. Recent foot traffic sits at 17pc below average, compared with 15pc below average for the full month of September. Given the lag time between collecting plasma and manufacturing finished product, Macquarie

notes that collections from October will begin to inform revenue and earnings for FY 2022. “We will be looking for more meaningful improvement over coming weeks/months; a continuation of recent trends would present downside risk to our forecasts,” Macquarie says, keeping a neutral rating on CSL shares for now.

Dow Jones

9.50am: What’s impressing analysts?

Rio Tinto cut to Hold: SocGen

Downer raised to Buy: UBS

Atlas Arteria raised to Outperform: Macquarie

Corporate Travel Management raised to Outperform: Macquarie

Eli Greenblat 9.35am: Harvey Norman sees spending shift

Harvey Norman is continuing to witness strong sales throughout its stores both in Australia and overseas as the COVID-19 pandemic funnels consumer spending into home appliances and whitegoods.

In its annual report released on Wednesday the retailer said the continued impact globally of the health crisis remained unknown. But impacts on consumer spending habits had become a major trend.

“To date, the biggest consumer change we have seen in our eight countries, is the elevated importance of family, home, work and study from home, cooking and entertainment from home. Our brands are well placed to take advantage of this trend,” Harvey Norman executive chairman Gerry Harvey and chief executive Katie Page said in their report to shareholders.

Sales had continued to climb in the start of fiscal 2021.

“The sales uptick we saw in the last quarter in Australia accelerated in July and has continued in August and September - notwithstanding the metropolitan Melbourne government-mandated Stage 4 lockdown.

“Within our company-operated stores overseas, sales improved quickly as they re-opened to the public following government mandated closures. “This improvement continued into the September quarter, notwithstanding the New Zealand government lockdown of metropolitan Auckland from 11 August 2020 to 30 August 2020.”

Gerry Harvey.

Last week Harvey Norman said sales surged 30 per cent for the eleven weeks to mid-September, as Australian consumers splashed out on whitegoods, TVs and even bedding — while many had little chance of spending their spare cash at restaurants or on quick interstate getaways.

According to the annual report Mr Harvey holds 392.38 million shares in Harvey Norman and Ms Page holds 19.77m shares. Combined the husband and wife hold shares with $1.89 billion.

The annual report discloses that Mr Harvey’s total remuneration in 2020 was $858,953, flat with 2019, while Ms Page’s total remuneration increased to $3.32m from $3.03m. For 2020 Mr Harvey did not recieve any short term performance cash incentives, while Ms Page had a short term cash incentive of $998,073.

9.30am: ASX expected to fall 1%; speech, data due

The Australian share market’s surprising underperformance this week may continue today but it looks a buy on dips.

Key events today include the first of three US presidential debates from 11:00am, when China’s official PMI data for September are also due.

At 11:30am, private sector credit and building approvals data for August are due, and Caixin’s China manufacturing PMI data are due at 11:45am.

Ahead of those events, the S&P/ASX 200 index is expected to open down 1pc at a 3-day low of 5893 based on overnight futures relative to fair value.

That’s twice as much as a 0.5pc fall in the S&P 500 to 3335.5 amid worsening coronavirus trends, sharp drops in energy and bank stocks and a stalemate on US fiscal stimulus.

It comes after the local bourse fell on Monday and Tuesday despite strong US gains on Friday and Monday.

This underperformance of the local bourse can be partly attributed to Friday’s positive overreaction by bank shares to the easing of Responsible Lending rules.

But coronavirus trends are clearly improving in Australia and China relative to Europe and the US, with bullish implications for the relative growth outlooks. And whereas the US faces heightened political uncertainty and there’s a remote chance of more US fiscal stimulus before the election, a stimulatory budget is likely in Australia next week.

There’s also a strong chance of added RBA rate cuts and potentially much greater bond buying after its board meeting next week, whereas the Fed is on hold before the US election.

BHP ADR’s suggest the resources heavyweight will open down 1.9pc at $US36.17 after WTI crude oil fell 3.2pc to $US39.29.

But the iron ore price rose 1.6pc to $US118.95 a tonne and spot gold rose 0.9pc to $US1898.08 an ounce while base metals were mixed.

If the ASX200 ends below its 100-day moving average at 5931 there will be minimal chart support until last week’s low at 5763.2.

But relative fundamentals strongly argue for the local bourse to outperform the US market in the week ahead.

Perry Williams 9.18am: Narrabri gas project approved

Santos has received the green light for its controversial $3.6bn Narrabri gas project in NSW after a near four-year wait for planning approval.

The Independent Planning Commission has sanctioned the development which has been touted as providing half the state’s gas needs, providing stringent conditions were met.

“The Commission finds that the project has the potential to improve gas security for Australia’s east coast domestic market. It will also deliver economic and social benefits to the people of NSW, including through a diversification of industry for Narrabri,” the IPC said in a statement.

Santos’s board faces a big risk proceeding with its $3.6bn Narrabri gas project should it win approval from planning authorities given the danger of the project becoming a stranded asset, NSW Energy Minister Matt Kean warned.

Among the chief concerns raised by critics of the proposed gas facility was the potential for the Gunnedah Basin and surrounding aquifers to be poisoned due to underground drilling, putting in danger both local farms and the region’s agricultural products produced from the land.

Activist group Lock The Gate Alliance said farmers and Gomeroi Traditional Owners fighting the Santos Narrabri coal seam gasfield will ramp up the battle to protect their lands and precious water resources following the decision.

9.15am: Challenger seeks new CFO

Annuities provider Challenger says is on the hunt for a new chief financial officer after long-serving CFO Andrew Tobin resigned from the position.

Mr Tobin joined Challenger in 2007 has been in the job since 2012. He will officially step down from the role in March 2021.

“Andrew has been a key member of our executive team for almost nine years. His deep financial capability and steadfast leadership presence have helped Challenger navigate significant change in our business and operating environment,” chief executive Richard Howes said.

“On behalf of the board and the Challenger team I thank Andrew for his commitment and diligence over many years and we wish him all the best for the future.”

9.07am: Oil price slumps 3.6pc

Oil prices fell overnight on concerns that COVID-19 restrictions may be tightened again in the US and Europe, as the number of coronavirus cases increases.

The price of Brent dropped 3.6 per cent to $US40.28 a barrel overnight, while TAPIS crude fell 1 per cent and WTI retreated 3.2 per cent.

“Oil is sensitive to any lockdown measures because transportation accounts for two-thirds of oil consumption,” said Commonwealth Bank mining and commodities research director Vivek Dhar.

“Prices also fell after number of the world’s largest oil traders said that a meaningful recovery in oil demand is at least 18 months away.”

Official US inventory data is scheduled to be released tomorrow.

8.23am: CBA gets $450m more from sale of life business

Commonwealth Bank says it’s received further proceeds of approximately $450 million from AIA Group as part of the divestment of the bank’s Australian life insurance business.

It says the additional proceeds result from an increase to the bank’s common equity tier 1 ratio of 8 basis points at June 30.

“As the earnings impact of the CommInsure Life divestment was largely recognised in FY20 when CommInsure Life was deconsolidated for accounting purposes, the impact of the receipt of the additional proceeds on the group’s FY21 earnings is not material.”

CBA has now received about $2.3 billion of proceeds in aggregate to date, comprising approximately $2.1bn of cash payments from AIA in addition to approximately $240m of dividend payments in excess of the profits of CommInsure Life.

“CBA now expects that the ultimate completion of the divestment of CommInsure Life will

occur via a statutory asset transfer in 2H FY21, at which time the remaining proceeds of approximately $100 million are expected to be received,” it said.

7.36am: Disney lays off 28,000 workers

Walt Disney Co. said it would lay off about 28,000 employees at its domestic theme parks, citing continuing restrictions due to the Covid-19 pandemic, particularly its inability to reopen Disneyland in Southern California.

In announcing the layoffs, Disney said the impact of the pandemic has been “exacerbated in California by the State’s unwillingness to lift restrictions that would allow Disneyland to reopen.”

Disney’s announcement came shortly after California health officials signaled Disneyland Resort would likely have to remain closed for the foreseeable future as the state struggles to contain the spread of the coronavirus well enough to allow such establishments to open again.

The laid-off workers have been on furlough since April, the company said, collecting health benefits but not pay. About two-thirds of them are part-time employees, the company said, adding it would soon enter discussions with unions about “next steps” for their members.

Disneyland closed its gates in March, along with most other such establishments around the world. But it remains the only one of the company’s theme parks yet to reopen at least at reduced capacity -- including Walt Disney World in Orlando, Florida, which in July began allowing visitors to return in limited numbers. Disney has also reopened its parks in Japan, France and China.

Dow Jones

7.05am: Fed’s Williams upbeat on outlook

Federal Reserve Bank of New York President John Williams said he is upbeat about the future of the US economy, adding that he doesn’t see notable risks going forward when it comes to financial stability.

Mr Williams did warn, however, that a failure by the broader government to deliver more aid likely would cause the economy to grow more slowly over time.

“The recovery has actually been stronger, more robust than many were expecting,” Mr Williams said in a virtual appearance. “This ability to somehow keep the economy growing, despite the pandemic, despite the high number of [Covid-19] cases, it makes me optimistic that we’ll be able to continue to see a pretty strong economic recovery for the rest of this year, into next year,” he said.

Mr Williams also said the unemployment rate, which started the year at 3.6pc before rising to 14.7pc in April then falling back to 8.4pc in August, shows the economy is snapping back. A strong economy and full employment are attainable “in about three-years time,” he said.

Dow Jones

6.20am: Australian stocks set to open lower

The ASX is poised to fall in early trade as world markets slipped ahead of the first presidential debate between Donald Trump and Joe Biden.

Around 6am AEST) the SPI futures index was down 46 points, or 0.8 per cent.

Yesterday, the ASX closed flat after fading from a three-week high.

The Australian dollar was higher at US71.28.

Brent oil lost 3.3 per cent to $US41.03 a barrel.

6.10am: US stocks slip ahead of presidential debate

US stocks pulled back after two sessions of solid gains as investors looked ahead to the first debate between President Trump and former Vice President Joe Biden.

The S&P 500 fell 0.5 per cent as of the close of trading in New York, while the Dow Jones Industrial Average edged down 0.5 per cent, or about 132 points. The tech-heavy Nasdaq Composite lost 0.3 per cent.

Heading into the end of a turbulent September, major indexes edged up Thursday and then notched big gains Friday and Monday.

After stocks rocketed higher from their March lows, many investors predicted they could be due for a pullback.

“It’s just the way markets work,” said Vance Howard, chief executive and portfolio manager at Howard Capital Management. “It’s kind of like a marathon runner. A marathon runner can only run so far and so fast without having to sit down and take a break. That doesn’t mean anything is wrong with them.”

Market volatility is on the rise as the November US election gets closer. Mr Trump and Mr Biden will face off at 11am (AEST) in Ohio, to discuss their respective records, the coronavirus pandemic, the economy, race and violence. Other issues are likely to be their views on mail-in voting, interference by overseas interests and potential election fraud.

“People will read into this debate for answers to questions about whether the results of the election will be accepted by either side,” said Tony Dalwood, chief executive of Gresham House Asset Management. “If there’s any uncertainty around this, that will lead to volatility.”

Investors are also continuing to assess the now-dimming prospects for new additional spending to support the economy.

Investors are continuing to monitor the spread of coronavirus. New cases in the US edged down, while the global death toll from the pandemic surpassed one million.

Overseas, the pan-continental Stoxx Europe 600 declined 0.5 per cent as coronavirus cases continued to rise, raising the risk of more stringent measures being introduced by governments in the region.

In Asia, major stock benchmarks were mixed by the close of trading. The Shanghai Composite Index advanced 0.2 per cent and Hong Kong’s Hang Seng index slipped 0.9 per cent.

Dow Jones Newswires

5.50am: British MPs approve Brexit bill

British MPs have adopted a bill to regulate the UK’s internal market after Brexit, defying a looming EU ultimatum as the two sides entered a final week of tense talks.

Despite deep disquiet even from some members of the ruling Conservatives, the House of Commons passed the bill by 340 votes to 256.

Senior minister Michael Gove said the bill was “vitally important” to ensure smooth trade among the UK’s four constituent nations, dismissing vociferous objections from Scottish pro-independence MPs as “stories to scare children at bedtime”.

The government rejected warnings that the bill could imperil peace in Northern Ireland after US President Donald Trump’s special envoy, Mick Mulvaney, conceded that it could leave the province’s Good Friday Agreement “at risk”.

AFP

5.35am: JPMorgan Chase fined $US920m

JPMorgan Chase will pay $US920 million to settle US civil and criminal charges over fake trades in the precious metals and Treasury markets designed to manipulate the market, US agencies announced.

The US banking giant reached a deferred prosecution agreement with the Justice Department over the long-running schemes, resolving criminal fraud charges against the company.

In one of the schemes, JPMorgan traders in New York, London and Singapore between 2008 and 2016 commissioned tens of thousands of orders in the gold, silver, platinum and palladium futures that were placed in order to be cancelled to deceive other market participants, said a press release from the Department of Justice, one of three agencies involved in the case.

Over the same rough time period, traders in JPMorgan offices in London and New York commissioned orders to buy and sell US Treasury products with an intent of misleading other traders.

“For nearly a decade, a significant number of JP Morgan traders and sales personnel openly disregarded US laws that serve to protect against illegal activity in the marketplace,” said William Sweeney Jr., assistant director of FBI’s New York field office.

“Today’s deferred prosecution agreement, in which JP Morgan Chase and Co. agreed to pay nearly one billion dollars in penalties and victim compensation, is a stark reminder to others that allegations of this nature will be aggressively investigated and pursued.”

Besides the fine, JPMorgan is required to beef up its compliance program and self-report any offences, said the Justice Department, whose criminal case was settled along with civil charges from the Commodities and Futures Trading Commission and the Securities and Exchange Commission.

The JPMorgan Chase & Co. World headquarters in New York City. Picture: AFP

AFP

5.32am: Markets hesitant ahead of election debate

European and US stock markets slid lower as attention turned to the first election debate between US President Donald Trump and challenger Joe Biden.

Constant pressure from the coronavirus and reimposition of containment measures in several countries dampened sentiment overall meanwhile.

“Stocks are in the red due to health concerns,” commented David Madden, an analyst at CMC Markets UK.

Crude oil prices “are in the red as the overall bearish sentiment because of the health crisis has dampened demand prospects,” he added.

In midday New York trades, the Dow Jones index was off by 0.7 per cent, while in London, the FTSE 100 closed 0.5 per cent lower. Frankfurt lost 0.4 per cent and Paris shed 0.2 per cent.

The debate between Trump and Biden comes after a report that claimed the president paid barely any federal income tax for years.

“The New York Times expose on Trump’s tax affairs will certainly add extra spice to the evening, with the president going into the debate on the back foot, meaning he’ll probably come out all guns blazing,” remarked Craig Erlam, an analyst at the online brokerage Oanda.

New measures to stem the spread of the coronavirus also kept traders on their toes, as concern rises that a recovery from the near-global shutdown earlier in the year could be derailed.

However, an International Monetary Fund official said the economic outlook was not as bad as previously feared.

AFP

5.30am: Ex head of Nikola accused of sexual assault

Sexual assault allegations against the founder and former chairman of Nikola prompted additional questions about the electric truck start-up and its pending deal with General Motors.

The allegations by two women concern Trevor Milton, who abruptly resigned September 21 amid accusations of fraud that had led to a big pullback in shares following the September 8 GM announcement.

Milton denied the charges through a spokesman.

Craig Johnson, a Utah lawyer representing the two women, said he was in contact with law enforcement authorities over complaints of unwanted sexual contact when they were minors.

Shares of Nikola plunged 8.6 per cent to $17.64.

The company’s share price had been under pressure for the last three weeks following a report by Hindenburg Research that called the company an “intricate fraud.” The report was released a few days after GM announced a manufacturing partnership with Nikola that would give the auto giant an 11 per cent stake in the start-up.

GM, which had previously reaffirmed plans to complete the deal, hinted it might change course. “Our transaction with Nikola has not closed,” GM said. “We are continuing our discussions with Nikola and will provide further updates when appropriate or required.”

A Nikola truck. Picture: AFP

AFP

5.26am: Airline traffic to fall by two-thirds this year

Global airlines have revised traffic forecasts lower, sector federation IATA said, warning that hundreds of thousands of jobs are at risk without more state aid.

The International Air Transport Association downgraded its 2020 traffic forecast following a “dismal end to the summer travel season” in the northern hemisphere and now expects it to be 66 per cent below the level in 2019, a statement said.

IATA’s previous forecast was for a drop of 63 per cent, but that was before government reimposed travel restrictions in August and the outlook faltered for the rest of the year, it added.

The association, which represents 290 airlines, said that August traffic, which it measures in revenue passenger kilometres or RPKs, plunged by 75.3 per cent from the same period in 2019.

A resurgence in coronavirus cases since then and more government restrictions to deal with them, has prevented a strong rebound.

Air travel has collapsed. Picture: AFP

AFP

5.22am: US consumer confidence jumps

US consumer confidence jumped to 101.8 in September, The Conference Board reported, ending months of decline with a 15 point-plus gain from August despite no new federal stimulus.

Indices measuring consumers’ expectations for present and future conditions also improved, the research firm said, as did outlooks about the labour market and general business conditions.

Confidence among consumers in the United States has wavered in recent months as the country grapples with the world’s worst coronavirus outbreak.

AFP

5.20am: China’s Sogou to be taken private by Tencent

Chinese search engine Sogou confirmed it would be taken private by tech giant Tencent, in a deal that values the US-listed firm at around $US3.5 billion.

The announcement comes a day after Chinese internet giant Sina Corp, parent company of the country’s Twitter-like platform Weibo, said it would be taken private.

A growing number of Chinese companies have delisted from the US or opted for secondary, domestic listings as the world’s two superpowers butt heads over a number of issues including technology, Hong Kong and the virus.

Sohu.com, which is Sogou’s parent company, said in a statement that the purchase price will be at $US9 per share.

This represents a premium of approximately 56.5 per cent to the closing trading price of Sogou on July 24, when the company announced it had received a proposal on going private from Tencent.

AFP