ASX wipes week-to-date gains as Telstra drags

Shares bounced from daily lows but finished down 0.7pc under the drag of banks and ex-dividend trade in Telstra.

Adbri said today its operations were “largely uninterrupted” by the coronavirus pandemic. Picture: Matt Way.

• Buy now, pay later stocks rise to records
• Holden exit rocks Eagers Automotive
• Zip rockets to new high on eBay deal
• APA warns of weakness ahead

That’s all from the Trading Day blog for Wednesday, August 26. The ASX finished lower under the weight of the major banks and ex-dividend trade in Telstra, Suncorp and AGL, after a mixed night on Wall Street, where the S&P 500 (up 0.4pc) and Nasdaq (up 0.8pc) hit new records, but the Dow dipped 0.2pc.

Locally, profits season continued, Adbri said its operations were “largely uninterrupted” by the pandemic, while Eagers Automotive took a hit from the Australian exit of Holden. Whitehaven was hammered as profit fell 95pc while Cleanaway lifted as it reported growth across most segments.

Eli Greenblat 8.18pm: Champagne off the shelves in pricing dispute

Shoppers heading into their local Dan Murphy’s for a bottle of Moet champagne or vintage Dom Perignon are likely to be walking out empty-handed after a feud between Woolworths and the world’s leading owner of luxury brands, French conglomerate Louis Vuitton Moet Hennessy, spilt into the aisles.

Woolworths is embroiled in a protracted price battle with LVMH over the French luxury goods giant’s stable of best-selling liquor brands that has resulted in Australia’s biggest supermarket and liquor retailer running almost dry of supplies of Moet, Chandon, Krug, Dom Perignon, Glenmorangie whisky and Cape Mentelle wine.

It is believed the stand-off began in February, when LVMH demanded a price rise for some of its key products from Woolworths, which the supermarket group refused to agree to.

Hopes of a negotiated deal soon evaporated, leaving the supermarket retailer’s big-box liquor chain Dan Murphy’s dangerously low on crucial supplies.

It leaves most of its stores almost empty of brands such as Moet, which commands about 40 per cent market share of the Australian champagne market, and Veuve Clicquot, which has a share of more than 15 per cent. It is estimated these top champagne brands alone generate more than $300m a year in sales, of which Dan Murphy’s would account for a significant portion.

The inability of Woolworths to fully supply these popular liquor brands to its customers comes at a time when alcoholic beverage sales are booming in Australia as restaurants, bars and nightclubs are closed and people are drinking at home.

These boom conditions have helped champagne sales in Australia return to growth after large falls last year, with liquor outlets doing a brisk trade. But now Dan Murphy’s will be competing with one arm tied behind its back because of the supplier dispute.

Read more

6.11pm: Virgin fees a windfall for Deloitte

The Virgin Australia collapse has proven to be a windfall for administrators Deloitte, as the firm pockets more than $1m a week in fees.

Deloitte’s 192-page report to creditors on Tuesday revealed the administrators charged $13.4m for the first 10-weeks and will collect another $13.4m upon the completion of the sale to Bain Capital.

Cliona O’Dowd 5.59pm: ‘Investment mania’ in markets: Platinum

Platinum co-founder and chief executive Andrew Clifford has warned of a “fully fledged investment mania” running through markets in the wake of the COVID-19 correction, as he handed down a slight dip in net profit for the fund manager after billions of dollars flowed out from its flagship fund.

Read more

4.35pm: Buy now, pay later stocks set records

Buy now pay later stocks were in focus ahead of key earnings to be released tomorrow.

Heavyweight Afterpay pumped the breaks after its record rally, ahead of its earnings release tomorrow morning. Shares in the group pulled back by 1.9 per cent to $90.72.

Meanwhile, rival Zip soared 27.5 per cent to $9.65 as it inked a partnership with eBay and launched its Zip Business product, with results to come tomorrow also.

It was pipped at the post in the race to $10, with peer Sezzle soaring to records of $10.30 before settling to a gain of 14.7 per cent at $10.21.

Still, with almost double the number of shares on issue, Zip has a much more lofty market valuation of $3.7bn, compared to Sezzle’s $1.98bn.

Not to be left behind,Openpay Groupadded 10 per cent to $4.52 while Splitit added 9 per cent to $1.64.

Flexigroup was halted at $1.31 for a $140m capital raise.

Read more: Zip rockets to new high on eBay deal

4.14pm: Shares wipe out week-to-date gains

The Australian market fought back from a drop as much as 1.3 per cent on Wednesday but finished firmly lower as disappointment in company results added to reversal in the major banks.

Reaction to the latest releases was overwhelmingly negative, with just two of the 13 top 200 companies posting results finishing in the red.

By the close, the benchmark ASX200 was lower by 45 points or 0.73 per cent to 6116.4 giving back the gains of the previous to sessions. The All Ords finished lower by 38 points or 0.59 per cent to 6294.5.

Local weakness was at odds with continued strength on Wall Street, where the S&P500 and Nasdaq set new records again overnight.

3.53pm: China to buy record US soybeans: BBG

Can there be any more good news on US-China trade? Apparently so.

After the joint reaffirmation of commitment to the ‘Phase One’ trade deal by the US and Chinese officials during Asia/Pacific trading yesterday, Bloomberg now reports that China is set to buy a record amount of US soybeans this year.

Citing unnamed people familiar with the matter, Bloomber says lower prices will help the Asian nation boost purchases pledged under the phase-one trade deal.

More US agricultural purchases might also help President Trump’s re-election chances.

Perry Williams 3.25pm: Aldi inks renewable power deal

Supermarket giant Aldi will power its Australian operations with renewable energy by the end of 2021 after signing new 10-year offtake deals with major wind farms in Victoria and NSW.

The power purchase agreements are with Tilt Renewables’ Dundonnell wind farm near Mortlake in Victoria and Ratch’s Collector wind farm in NSW’s Southern Tablelands.

Up to 200 stores and four distribution centres will also have rooftop solar installations in place by the end of 2020 in a partnership with developer Epho.

The Tilt deal adds to existing contracts in place with Snowy Hydro and the Victorian government for the Dundonnell facility, which has been hit by a set of technical issues as the market operator works to integrate renewables into the grid.

Tilt said the 10-year deal showed there was still affordable pricing for corporates despite the fall-off in offtake deals in recent times.

“Our approach is build it and see who is interested in the output and so by having some merchant capacity available in these projects we can respond to interest from the likes of Aldi,” Tilt chief executive Deion Campbell told The Australian.

Still, the renewables provider said Dundonnell was a learning experience with the wind farm its fourth major wind project in Australia but the first that had run into grid issues.

3.10pm: Australia sells monster $21bn bond

Australia’s record-breaking $21bn November 2031 bond was easily soaked up by the market with over $66bn of bids at the final clearing price equivalent to a 1.055pc yield to maturity. Citigroup Global Markets Australia Pty Limited, Commonwealth Bank of Australia, UBS AG, Australia Branch and Westpac Institutional Bank were Joint-Lead Managers for the issue.

2.15pm: Flexigroup to rebrand as Humm

Flexigroup has set out plans to rebrand as Humm, the name of its most popular buy-now-pay-later product, as it taps the market for $140m.

The ASX-listed company, which on Wednesday reported a 65pc fall in annual profit, said the $140m entitlement offer would provide balance sheet flexibility as it simplifies its product portfolio.

Flexigroup, which provides credit cards as well as interest-free instalment platform Humm, said its commercial and leasing businesses will be subject to a strategic review.

The group announced a 1-for-3.2 entitlement offer capped at $140m, of which $115m is underwritten.

Chief Executive Rebecca James said the coronavirus had accelerated the group’s restructuring plans, saying buy-now-pay-later products had become ubiquitous amid consumers’ switch to e-commerce. Flexigroup said Wednesday it was Australia’s third largest buy-now-pay-later provider, with an 18pc market share.

Shareholders will vote on the company name change at Flexigroup’s annual general meeting.

FXL shares halted at $1.31.

Read more: Flexigroup commercial and leasing under review

1.48pm: NZX flat after double outage

New Zealand’s stockmarket is trading flat in afternoon, after a prolonged outage to deal with a connectivity issue, just a day after it closed to deal with a cyber attack.

NZX, the market operator, halted trade just before midday local time, and resumed trade before 3pm (1pm AEST).

It came after the NZX said yesterday it had been hit with a volumetric distributed denial of service (DDoS) attack from offshore, which had impacted network connectivity.

“A DDoS attack aims to disrupt service by saturating a network with significant volumes of internet traffic. The attack was able to be mitigated and connectivity has now been restored for NZX,” it said.

NZX 50 last traded flat at 11,998.

Samantha Bailey 1.38pm: Resimac investors cheer portfolio growth

Shares in Resimac have lifted as much 7 per cent after the non-bank lender delivered a 19 per cent lift in annual net profit on the back of growth in its home loan portfolio.

Net profit after tax grew to $56m as normalised net profit after tax, which excludes one off items, shot up 79 per cent to $55.7m.

“Our portfolio growth is testament to our focus on consistent and timely credit decisioning, with our overall service offering resonating well with both brokers and consumers alike,” chief executive Scott McWilliam said.

“Our investment in process improvement and digital automation of the home loan process continues to reap rewards.”

RMC shares last traded up 2.9pc to $1.34.

Ben Wilmot 1.28pm: National Storage plots growth solo

Self-storage company National Storage has shrugged off both merger approaches and the coronavirus pandemic and will keep expanding its holdings.

Managing director Andrew Catsoulis said that despite the combined challenges of fielding takeover bids – including from US giant Public Storage – and COVID-19 the company was growing.

Public Storage proposed a $2.40 a share bid for National Storage before the pandemic struck, but it is now trading at $1.86 and counts rival Abacus as a shareholder.

The company’s underlying earnings grew by 9 per cent to $67.7m over the year and it settled 22 acquisitions for $218m while building 15 projects. The storage group now controls about $2.28bn worth of assets.

The group is one of few property companies to provide guidance, forecasting underlying earnings of between 7.7c and 8.3c per security, in line with a policy of 90-100 per cent of underlying earnings.

National Storage is the largest self-storage provider in Australia and New Zealand, with 194 centres. It is still expanding and since the start of July has settled seven new acquisitions totalling $134m and is targeting another $100m of purchases.

“The fact that our acquisition and development pipeline remains so strong in the current environment reflects our status as the acquirer of choice in the Australian and New Zealand markets,” Mr Catsoulis said.

“Despite the challenging nature of COVID-19 lockdowns impacting all markets in which NSR operates, NSR again demonstrated the strength and resilience of its business throughout this period,” he said.

Combined Australian and New Zealand occupancy finished the year at 78.9 per cent, down modestly from the previous year, however has improved significantly to 81.5 per cent this week.

NSR last traded down 0.2pc to $1.86.

Richard Ferguson 1.10pm: China warns Aussie reputation at risk

China’s no. 2 diplomat Wang Xixiang says Australia could harm its global financial reputation if it continues to “push away” Chinese investment as a result of “ill-founded” security concerns.

Mr Wang – the Chinese Embassy in Canberra’s deputy head of mission – told the National Press Club that Australia should not interfere in China’s internal affairs, saying Beijing has never attempted to interfere in affairs in this country.

As China targets Australia’s beef, barley and wine exports in recent months, Mr Wang said Australia has been rated highly for investment but risked losing its reputation because of “imported concerns” about security, intellectual property, and technology.

China has protested multiple moves by the Coalition Government in the past few years to tighten foreign investment rules.

“China spares no effort in improving business environment … I wish China would catch up to Australia the quicker the better,” Mr Wang told the Press Club.

“I also hope Australia will remain high on the list, not to be dragged down for pushing foreign business or investment away on account of ill founded – and in many cases imported – assertions of security breach, IPI infringement and forced technology transfer.”

Read more: China warning: Don’t push our investment away

1.02pm: Shares bounce from lows

Shares have bounced from their lows but remain firmly in the red at lunch, as all sectors bar consumer staples trade lower.

At 1pm, the ASX200 is lower by 60 points or 0.97 per cent to 6101.9.

Banks continue to be a key drag – Commonwealth down by 1.7pc, Westpac off by 1.9pc, ANZ losing 1.9pc and NAB the worst hit with a 2.1pc loss.

Zip has continued its surge, climbing to heights of $9.95 and last trading up 24pc to $9.40.

Here’s the biggest movers at 1pm:

Samantha Bailey 12.55pm: PolyNovo slips despite lofty revenue goals

Shares in PolyNovo have slipped more than 8 per cent despite the listed biotech trimming its full-year loss and noting little short-term impact from the coronavirus crisis.

Unveiling an after tax loss of $2.1m, compared to an after tax loss of $3m a year ago, the Melbourne-based company which produces cutting-edge skin graft technology said it expects to double its revenue in fiscal 2021.

“The second half of the year was under a ‘COVID-19 cloud’ however we continued to perform strongly winning new accounts, accelerating sales and ramping our production capacity,” the company said.

“Fiscal year 2021 promises to be another strong year of growth for PolyNovo in existing markets and the opportunity for further revenue contribution from new markets.”

Still, the outlook failed to impress investors and shares were trading down 8.1 per cent at $2.17 each.

PolyNovo said that in the 2021 financial year, it plans enter Taiwan, Korea, Kuwait, UAE, Sweden, Norway, Finland, Belgium, the Netherlands, Luxembourg, France, Italy and Greece.

12.40pm: Engineering boosts Q2 construction

Construction work done over the second quarter was better than expected with a 0.7pc slip, according to Commonwealth Bank.

Senior economist Belinda Allen writes that while engineering works buoyed the index at its latest release, further weakness in residential construction will come in the current quarter.

Residential building work fell by 5.5pc in Q2, as the first quarter works were revised higher to show a flat outcome, but the level now represents a 19.2pc drop from its peak in the second quarter of 2018.

New house construction fell 5.5pc, while multi-unit builds fell 5.6pc and alterations and additions were 5.3pc lower.

“Residential construction is forecast to decline from here. But there will be some unusual variation in the components of dwelling investment,” Ms Allen writes.

“A significant decline in the rate of population growth due to the drop in net overseas migration has reduced underlying demand for new housing.

“That will result in lower new construction. But alterations and additions look set to increase due to record low interest rates and government support.”

Today’s data feeds into the quarterly GDP read, which CBA expects to record a large 6pc contraction.

Eli Greenblat 12.21pm: Second bird flu outbreak for Farm Pride

One of the nation’s biggest egg producers, the ASX-listed Farm Pride Foods, has revealed a second outbreak of bird flu at its operations, impacting a Victorian farm that houses 40,000 hens.

The state government agency Agriculture Victoria have confirmed the avian influenza outbreak and ordered for all 40,000 hens on the company’s farm to be destroyed. This process has now commenced.

The latest culling takes the total number of hens the company has lost to 380,000 hens due to a series of influenza outbreaks.

Farm Pride, which reported its first outbreak of avian influenza in August, owns businesses that produce more than 7 million eggs per week.

The further outbreak at its Lethbridge farm occurred despite strict monitoring and controls that have prohibited movements of birds, equipment and products within and out of restricted areas of the farm.

“It is disappointing that despite the highest biosecurity levels and efforts of the farm management and Ag Vic that this site has now succumbed to the virus,’’ Farm Pride said.

The company said the impact of the second outbreak of avian influenza would take the percentage of its total hen flock lost to 33 per cent, with the full financial impact still being determined but material.

FRM shares last traded at 19c.

11.53am: ASX headed for worst day in 4 weeks

Australia’s share market is heading for its biggest one-day fall in 4-weeks, as it falls 80 points or 1.4pc to a 6-day low of 6080.1 amid broadbased losses.

Key chart support now lies at the 6060 pivot point. A break could test the next level at 5960, while a bounce could retest resistance from the 200-day moving average at 6146 and the June-August peaks near 6200.

Banks and resources are accounting for almost half of the fall with the major banks down more than 2pc, Suncorp down 3.7pc ex-dividend and BHP and Rio Tinto down 1.1pc and 1.7pc respectively.

Utilities are weakest with APA Group down 5pc after its 2020-21 earnings guidance missed the consensus estimate by about 4pc while AGL is down 4.2pc ex-dividend.

Other significant drags include Transurban down 2.9pc and Telstra down 2.9pc ex-dividend, while Afterpay is down 2.3pc.

CSL is in the green along with Fortescue Metals and Cleanaway is up 8pc after its results.

John Stensholt 11.46am: Software founder quietly heads to $700m worth

Meet the $700m overnight success story that has been more than thirty years in the making.

The little-known Objective Corporation has been one of the best performers on the All Ordinaries Index in the past 12 months, and has its founder and chief executive Tony Walls headed towards the ranks of The List – Australia’s Richest 250, published by The Australian.

Objective Corp lodged its 2020 financial year results on Wednesday morning, confirming earlier guidance in announcing a 13pc lift in revenue to $70m and a 22pc increase in net profit to $11m.

The company has $51m cash in the bank and announced a 7c per share fully franked final dividend.

Mr Walls founded Objective Corp in 1987, and its shares quietly but steadily traded for years before a surge in the past 12 months. His stake is now worth a cool $733m with Objective shares trading up 10c or about 0.9pc on Wednesday morning.

Its shares are up 248pc in the past year, putting Objective Corp among the top 15 best performing stocks on the All Ordinaries Index along with the likes of big names Afterpay, Kogan.com, Sezzle and Mesoblast.

Mr Wall’s company has enjoyed a share price rise of about 78pc since January 1 alone, posting a string of ever-increasing record highs along the way. Its market capitalisation has reached $1.4bn in the process.

Objective Corp mainly sells its software and services to government departments, councils and other authorities, mainly helping improve document handling and other processes.

OCL last traded up 1.8pc to $11.22.

11.29am: Results add to ASX drag

Reaction to the latest results is overwhelmingly negative in early trade, with substantially more negative moves than positive.

Waste management group Cleanaway is the best performing after detailing how its operations were continued to thrive amid pandemic, prompting an increased payout while Whitehaven Coal takes a hit after profit plunged by 95pc.

ASX last traded down 1.2pc to $6086.4. Here’s the score after the first hour:

COMPANY	% CHANGE	LAST TRADED
Cleanaway	7.59	$2.41
Worley	7.57	$9.80
Adbri	1.88	$2.44
Seven Group	-0.26	$19.13
National Storage	-0.54	$1.85
Spark	-1.32	$4.48
Eagers Automotive	-1.74	$9.04
Perseus Mining	-2.37	$1.36
Steadfast	-3.13	$3.41
Regis Resources	-3.42	$5.36
APA	-4.88	$10.33
Whitehaven Coal	-9.64	$1.13
Bravura	-16.90	$3.59

Ben Wilmot 11.09am: Scentre’s tough stance could pay off

Scentre Group’s tough stance towards collecting rents from major tenants in the local Westfield empire may be working according to two key equity houses.

Morgan Stanley analysts Simon Chan and Lauren Berry say Scentre has had more success collecting rent from retail tenants than its peers, managing to gather 48pc of rent during the June quarter – much stronger result than Vicinity Centres’ 38pc and GPT’s 36pc.

Still, the company booked a $3.6bn first half loss but this was driven by $4.1bn in property write downs.

Of the $400m of rent uncollected, Scentre has expensed just 58pc, with the remaining $170m booked in trade debtors, and therefore booked in revenue, a “relatively aggressive” move as opposed to about 85pc expensed in key peers Vicinity and GPT.

Notably all Scentre’s new leasing deals retained traditional features such as fixed rent, and had no percentage rent like Premier Investments has advocated. The landlord said the rents also had annual contracted increases of CPI+2pc in centres outside Victoria.

Morgan Stanley kept its Overweight rating and bumped its price target up to $2.70 as it sees Scentre as offering “one of the best exposures to any recovery trade as COVID-19 concerns soften over the next one-two years”.

JPMorgan analysts Richard Jones and Ben Brayshaw said the first half FFO of $362m was below expectations due to higher COVID-19 related rent waivers and provisions.

The pair have called a 30pc peak-to-trough correction in retail book values over the next 12 months and are assuming Scentre sells $3bn of assets to absorb part of the impact.

But the analysts also called out its tougher approach. Scentre provided rent waivers and provisions totalling $232m or about 24pc of net income in the second half of 2019 while rival shopping centres averaged 37pc.

“Scentre has booked lower rental provisions than its retail peers, we believe, reflecting; lower Victorian exposure; stronger performing assets which retailers are committing to and tougher lease negotiations by the landlord,” JPMorgan said.

SCG last traded down 4pc to $2.03.

Read more: Scentre ready to push back on rent relief

Ben Wilmot 10.39am: S&P warns on Scentre ratings outlook

Credit agency S&P Global Ratings says the fallout from COVID-19 has eroded local Westfield owner the Scentre Group’s rating buffer.

The agency warned it could lower the rating by one notch if Scentre Group’s funds from operations to debt weakened to sustainably below 9pc.

“This scenario could arise due to prolonged reduction of earnings because of a combination of lower portfolio occupancy, rental abatements, and negative rental reversions (lower rents on renewals),” S&P said.

“We believe downgrade risks are now more pronounced given Scentre Group’s weak results for the first-half ended June 30. Scentre Group’s financial profile has substantially weakened; however, we believe management remains committed to preserving the ‘A’ rating amid a weak market environment,” S&P said.

Scentre’s FFO fell to $361.9m, down from $670.5m in the first half of 2019 as it incurred a statutory loss of $3.61bn, reflecting a negative property revaluation of $4.08bn.

Westfield is at loggerheads with major tenants including Mosiac Brands and Premier Investments, who are seeking sales-based rents, what could have flow-on effects to the group’s credit rating.

“We consider uncertainty has risen in the retail landscape given that the pandemic has triggered discussions between tenants and landlords on future lease structures. Any changes in long-term lease structures and Scentre Group’s ability to re-lease stores in the current subdued environment remain important credit considerations, in our view,” S&P said.

The agency also called out the prospect of an economic slowdown once JobKeeper and other packages ran out.

Read more: Westfield’s owner’s $3bn loss sparked by COVID-19

Scentre’s Westfield at Bondi Junction. Picture: NCA NewsWire / Gaye Gerard.

David Swan 10.27am: Zip rockets to new high on eBay deal

Listed buy now, pay later provider Zip is rocketing higher by more than 10pc this morning as it capitalises on fierce demand for BNPL services, kicking off a new business product, Zip Business, as well as a new partnership with e-commerce platform eBay.

Zip told investors on Wednesday that 40,000 SMEs would be able to access Zip through eBay, which would include risk decisioning and real-time onboarding features. The company joins Afterpay on eBay’s platform, after Afterpay announced a partnership in April 2020.

“Zip is extremely excited to formally launch its Zip Business platform to create a suite of products for the small business community, a segment that has been underserved by the traditional lenders in recent years,” Zip co-founder and chief operating officer Peter Gray said.

“This comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflow and ongoing business investment.”

Zip also announced a $100m debt funding facility with US outfit Victory Park Capital Advisors.

“Once established, the facility will give Zip the flexibility and capacity required to support the launch of Zip Business,” the company said.

It comes after New York-based Zip acquisition target QuadPay recorded a record monthly transaction volume in excess of $US70m ($97m)— for July, up 30pc month-on-month and up 600pc on July 2019.

Zip and Afterpay will both report their financials this week. Zip last traded at $7.57.

Shares rose as much as 12.4pc to a new record of $8.51 in early trade Wednesday, and last traded up 10.4pc to $8.36.

10.11am: Shares drop 0.5pc

Shares are giving back all of yesterday’s gains in opening trade as banks and utilities take a hit.

At the open, the benchmark ASX200 is off by 33 points or 0.54pc to 6128.2.

Banks are a key drag, with losses between 1.3pc and 1.6pc in the majors, while likely profit taking sends Afterpay down 2pc from yesterday’s new record highs.

Metcash is lifting 4.1pc on its results, while Bravura takes a 15.3pc hit on its outlook. Cleanaway jumped 8.5pc and Worley rose 5.2pc after their reports, Metcash gained 3.8pc on a strong sales update and Oil Search climbed 2.8pc after Citi and Morgans upgraded.

Jared Lynch 10.09am: Japara scraps dividend amid $290m writedown

Aged care provider Japara Healthcare has confirmed COVID-19 has infected four of its nursing homes in Melbourne as it writes down the value of its assets by $291.9m and scratches its final dividend.

The non-cash impairment pushed the company deep into the red, swinging from a $16.43m profit in 2019 to a $292.09m loss in the year to June 30.

The shortcomings of the aged care sector – fresh from being battered by a Royal Commission, which detailed shocking stories of abuse and neglect – has been highlighted again during the coronavirus pandemic.

Victoria’s fresh COVID-19 spike which began in June has ripped through nursing homes across Melbourne, killing 304 aged care residents as of Monday. This compares with a national coronavirus death toll of 335.

Japara chief executive Chris Price said the Melbourne outbreak has spread to four of the company’s nursing homes.

“We acknowledge the deeply concerning outbreaks and the tremendous impact this has had and is having on residents, families and staff, particularly in Melbourne where community transmission of the virus increased in July and four of our homes have residents and staff greatly affected,” Mr Price said.

“Our top priority remains ensuring the safety and wellbeing of our residents and staff.

Perry Williams 10.04am: APA warns of weakness ahead

Gas pipeline giant APA Group delivered a 5pc rise in annual earnings but warned 2021 earnings could fall as economic jitters potentially lower gas volumes and projects face delays.

Earnings before interest, tax, depreciation and amortisation for 2018-19 increased 5.1pc to $1.653bn, at the top end of an updated $1.635bn-$1.655bn range given in April after delays to its Orbost gas plant on Victoria’s east coast, and marginally ahead of $1.643bn market consensus.

While the company’s mainstay pipeline business remained resilient through the pandemic, APA expects earnings within a $1.625bn – $1.665bn range for the 2021 fiscal year, meaning either flat or falling profits during the earnings period.

“Although APA is an essential part of the energy supply chain, no business is entirely immune from an economic downturn,” APA chief executive Rob Wheals said.

“While our capacity contracts and regulated revenues mean that our business is somewhat resilient through economic cycles, APA’s revenues are still subject to recontracting decisions by customers, throughput volumes on certain assets, the timing of customer final investment decisions, as well as lower CPI across the contracts portfolio.”

APA shares are down 2.8pc in early trade to $10.56.

Eli Greenblat 9.56am: Holden exit rocks Eagers

The nation’s largest car dealer, Eagers Automotive, has reported an 80pc slump in its statutory half-year profit to $8.32m and cancelled its interim dividend as the shock exit of Holden from the Australian car market and restructured property valuations forced it to book impairments of $40.4m in the period.

The car dealer said impairment charges of $34m primarily related to new car showroom leased assets associated with Holden dealership operations as a result of US giant General Motors planned exit from Holden vehicle sales in Australia and New Zealand by the end of 2020.

There were also operating adjustments including business acquisition and integration costs of $1.9m, property revaluation losses of $6.4m, COVID-19 wage subsidies and rent waivers of $72m and employee underpayment costs of $1.3m.

The car dealership, which last year bought rival AHG for $2bn, said on Wednesday that profit before tax from continuing operations rose 4.6pc to $61.4m. Underlying operating profit before tax fell 23.8pc to $40.3m.

AP Eagers, which is controlled by The List billionaire Nick Politis will not pay an interim dividend, against an interim dividend of 14 cents per share this time last year, as the board fights to maintain a strong balance sheet through the COVID-19 crisis that has dented already weakened car sales.

Eli Greenblat 9.49am: Metcash lifts sales amid lockdowns

Wholesaler Metcash has continued to benefit from the change in consumer behaviour since the outbreak of COVID-19 with total food sales in the first quarter of 2021 up 14.9pc on the prior year and supermarket wholesale sales, ex tobacco, up 13.8pc.

Shareholders at the grocery, hardware and liquor wholesaler were told at the annual general meeting that supermarket wholesale sales better by 18.4pc, excluding the impact of the loss of its key Drakes supply contract in South Australia last year. Metcash also lost the 7-Eleven contract.

The AGM was told that liquor was performing well with sales in the quarter so far up 11.4pc. Excluding those customers and areas affected by strict COVID-19 restrictions, liquor sales were better by 23.2pc.

Its hardware wholesale sales were underpinned by strength in the DIY and home projects area, with first quarter sales up 19.2pc.

9.42am: What’s on the broker radar?

• Ansell price target raised 17pc to $41 – Citi
• Bingo raised to Buy – Citi
• Bingo cut to Neutral – Credit Suisse
• HUB24 price target raised 22pc to $17.55 – Citi
• Integral Diagnostics raised to Outperform – Credit Suisse
• Oil Search raised to Buy – Citi
• Oil Search raised to Add – Morgans
• Perenti cut to Hold – Moelis
• Sims Metal Management cut to Hold – Morningstar
• Stockland price target raised 16pc to $3.65 – Citi
• Stockland cut to Hold – Jefferies
• Stockland cut to Neutral – Credit Suisse
• Western Areas raised to Outperform – Credit Suisse

9.39am: Ex-dividend trade to weigh on shares

Australia’s share market is expected to fall slightly as Telstra, AGL Energy, and Suncorp trade ex-dividend.

Overnight futures suggest the S&P/ASX 200 will open down 0.5pc at 6130 points, erasing the previous day’s rise but it’s hard to see much downside before a potentially dovish speech from Federal Reserve chair Jerome Powell on Thursday night.

Overnight, the S&P 500 rose 0.4pc to a record high of 3443.6 and the Nasdaq rose 0.8pc to a record high of 11466.5, while the DJIA fell 0.2pc to 28248.4.

While US 10-year bond yields rose 3bp to 0.6825pc, the US share market was helped by the reaffirmation of commitment to the ‘Phase One’ trade deal by the US and Chinese officials during Asia/Pacific trading.

Apple fell 0.8pc but the NYFANG index rose 1.1pc with Facebook up 3.5pc after unveiling a series of tools designed to expand shopping on its platforms.

Bridget Carter 9.38am: Flexigroup taps Citi to raise $140m

DataRoom | Flexigroup has tapped investment bank Citi to raise $140 million at $1.14 per share to strengthen its balance sheet.

The raise is at a 12.6pc discount to the last closing price of $1.305.

The raise is by way of an accelerated non-renounceable entitlement offer, with $115m underwritten. Share holders will receive 1 share for every 3.2 held.

Founder and Chairman, Andrew Abercrombie, who is Flexigroup’s largest shareholder with a 23pc stake, will participate in the entitlement offer, offering $7.5 million, or 22.7pc of his pro-rata entitlement.

It comes as the group announces a $21.4m net profit.

More to come

Lachlan Moffet Gray 9.31am: Cleanaway lifts payout

Waste management group Cleanway has managed to maintain profitability and pay an increased dividend in the face of the COVID-19 pandemic, with all segments except industrial waste seeing revenue increases.

The company reported a full year net profit after tax of $112.6m, down 6.6pc on 2019, with the final result impacted by underlying adjustments of $37.4m after tax related to acquisition costs of rival Tox Free and recycling company SKM.

Earnings increased by 2.5pc to $473m and a final dividend of 2.1 cents a share was declared, bringing the full year dividend to 4.1 cents a share, 15pc above last year’s payout.

Cleanway CEO and managing director Vik Bansal said the company’s result highlighted the defensive nature of the waste management business.

“Each of our operating segments – solid waste services, industrial & waste services and liquid waste & health services – performed well during the year despite the effect of COVID-19,” he said.

Cleanway did not provide official guidance, citing COVID-19 uncertainty.

9.20am: Surprise dividend as Aus Ethical outperforms

Bumper performance fees and record inflows boosted Australian Ethical Investment’s profit by 46pc for the full year and prompting a special dividend for shareholders.

The $4.05bn fund, which invests in line with its ethical charter, posted net profit after tax of $9.5m for the year, helped in large part by a $3.6m performance fee after its Emerging Companies fund outperformed over the year.

As such, the group declared a final ordinary dividend of 2.5c per share, along with a special performance fee dividend of 1c per share – taking the total dividend for the year to 6c, up 20pc on 2019.

The group said funds under management had been spurred on by a strong increase in customers following the past summer’s bushfires in January, with total funds up 19pc to $4.05bn by year’s end, even taking into account super withdrawn through the government’s early access scheme.

Looking ahead, chief John McMurdo said the fund was still “highly leveraged to the markets at a time when economic uncertainty remains high, interest rates low and COVID-19 still unbeaten”.

“FY21 will be a difficult year as market volatility continues and our revenue growth is partly suppressed by the full year impact of the super fee reductions we implemented for the benefit of future and current members”

David Ross 9.15am: Writedowns drag Steadfast to annual loss

Insurance broker network Steadcast has posted an underlying net profit after tax of $108.7m, but writedowns and impairments have seen that slump to a net loss of $55.2m.

The writedowns include a $135.8m cut to the carrying value of intangible assets and goodwill along with an impairment of $40.7m.

This comes as Steadfast has been on an acquisition tear, growing from 375 brokers in 2019 to 458 by year’s end.

Gross written premiums soared up 34.8pc on the back of the expansion to $8.3bn. Revenue is up 20pc to $826.3m.

Steadfast forecasts a more rosy 2021, setting profit guidance of between $115m to $122m.

A final dividend of 9.6 cents a share will be paid.

Samantha Bailey 9.06am: Lovisa warns of rocky start to 2021

Accessories retailer Lovisa has flagged challenging trading conditions for the start of the new financial year as it unveiled a full-year net profit down nearly 70pc on the prior period and scrapped its final dividend.

The company booked a statutory net profit after tax of $11.2m for the full-year through June 30, which included the impact of the temporary closure of all stores globally due to COVID-19 restrictions, as well as impairment charges associated with Lovisa’s exit of its Spanish business.

These impacts were offset by the continued growth of the store network, which increased by 45 stores through the 2020 financial year, the company said.

The group, which operates in Australia, New Zealand, Asia, Africa, Europe and the Americas, recognised $11.8m in wage subsidies for the period.

Lovisa says trading conditions are challenging for the start of FY21. Picture: Alix Sweeney.

9.05am: Worley boosts payout, Jacobs buy pays off

Worley said its annual net profit rose by 13pc, as benefits from its $US3.3bn acquisition of Jacobs Engineering Group’s energy, chemicals and resources division offset stiffening headwinds from this year’s oil-price rout.

Worley reported a net profit of $171m for the 12 months through June, compared with a net profit of $152m a year earlier. The period included a full year of ownership of the Jacobs ECR business.

Directors of the company declared a final dividend of 25 cents a share, up from a payout of 15 cents a year earlier. That brought the full-year dividend to 50 cents.

Dow Jones Newswires

Lachlan Moffet Gray 8.52am: Adbri ‘largely uninterrupted’ by pandemic

Construction materials and lime producer Adbri has posted increased half-year profit despite the pandemic, saying its operations were “largely uninterrupted” by any government restrictions.

The ASX-listed company, which withdrew earnings guidance in April, recorded net profit after tax of $29.1m – compared to a loss of $17.9m last financial year – and declared an interim dividend of 4.75 cents a share.

The profit was achieved on the back of a 7pc fall in revenue to $700.7m, which the company attributed to “lower residential activity as anticipated and the impact of bushfires, floods and smoke in NSW and Queensland earlier in the year”.

However, ongoing activity in the mining sector ensured lime and cement returns increased in Western Australia while demand in the Victorian market “exceeded expectations” despite the renewed spread of coronavirus in that state, but did weaken somewhat in August.

The company recognised a pre-tax non-cash impairment charge of $20.5m associated with the non-renewal of a lime supply contract by aluminium company Alcoa in July and anticipated it would come at an annual cost of $70m in lower revenue.

CEO Nick Miller said Adbri remains well poised to benefit from continuing strong activity in the mining industry and anticipated stimulus measures from federal and state governments fast tracking infrastructure spending.

The company did not provide official guidance

Jared Lynch 8.40am: Australia Post execs blasted

Senior Australia Post executives and staff showed “a lack of understanding of the critical scrutiny role played by the Senate” and have been urged to complete remedial training along with other government businesses to ensure they remain fully accountable to Australian taxpayers.

The Senate has completed its inquiry into regulatory changes to Australia Post, which will allow it to deliver letters every other day in cities and push out delivery times on some routes.

The inquiry was scathing about responses provided by Australia Post, which delivered evidence from chief executive Christine Holgate and general counsel and corporate Secretary Nick Macdonald, during its hearings.

“The committee is concerned that some responses provided by Australia Post to senators’ questions suggest a lack of understanding of the critical scrutiny role played by the Senate, and of the particular responsibility of Australia Post as a publicly-owned entity to be accountable to the people of Australia through the Parliament and its committee system,” the inquiry’s committee said in its report.

“All GBEs (government business enterprises) must ensure senior staff and officials have a clear understanding of the importance of parliamentary scrutiny, and have the skills and capability to meet their obligations in relation to committee processes.”

The committee highlighted the postal service’s response to questioning about alleged efforts to monitor Australia Post staff for leaks in the media as an example, labelling it as “inadequate”.

8.30am: Biogen meeting spread COVID to Australia

An international meeting of Biogen managers in Boston last February likely helped spread the novel coronavirus to thousands of people as far away as Michigan, Virginia and Australia, according to researchers who conducted a new genetic analysis.

By identifying the genetic profile of the virus that infected meeting attendees or their contacts, the researchers found that the Biogen conference was a “superspreader event,” in which clusters of infections are created through rapid transmission.

From Boston, the virus strain spread out around Massachusetts and eventually to cities around the US and the world, the researchers said in a paper posted online in an database for early versions of scientific papers.

“Any infection that happens early on in an outbreak like this, where it’s exponential, it’s either going to peter out very quickly or wind up infecting a lot of people very quickly,” said Stephen Schaffner, a study co-author and computational biologist at the Broad Institute of Harvard and MIT.

“February 2020 was nearly a half year ago and was a period when general knowledge about the coronavirus was limited,” a Biogen spokesman said. “When we learned a number of our colleagues were ill, we did not know the cause was COVID-19, but we immediately notified public-health authorities and took steps to limit the spread.”

The coronavirus strain identified by the researchers likely originated in Europe before being introduced to the Boston area, their study said.

The strain was then spread at the two-day strategy meeting of 175 Biogen senior managers, according to the study, some of whom had travelled from other parts of the US and from around the world.

The researchers found evidence that the strain led to community transmission — where new infections can’t be traced back to other infected or high-risk individuals — in Michigan, Virginia and Australia.

Dow Jones Newswires

8.25am: Teva indicted for price fixing

The US business of Teva Pharmaceutical Industries Ltd. has been indicted on charges the drugmaker fixed prices on generic drugs, according to a person familiar with the matter.

The Justice Department is expected to announce the charges imminently, the person said.

The indictment is the highest-profile action in a long-running investigation of the generic-drug industry that has resulted in more than 10 cases against companies and executives.

Most companies so far have agreed to settle charges by paying criminal penalties, admitting wrongdoing and agreeing to co-operate, in exchange for deferred prosecution agreements in which the government would drop the cases eventually, so long as the defendant companies fulfilled their obligations under the settlements.

Among those that reached such deals were Novartis AG’s Sandoz subsidiary, which in March agreed to pay a $US195 million criminal penalty, and Taro Pharmaceuticals Inc., which agreed last month to pay $US205.7 million.

Dow Jones

7.55am: Meridian halts capital management

Meridian Energy raised its final dividend, but said it has ceased its capital management program following Rio Tinto’s decision to close its smelter in New Zealand.

Meridian, which generates around 30pc of New Zealand’s electricity, said its net profit totalled $NZ176 million in the 12 months through June, down from $NZ339 million a year earlier.

The drop in annual net profit reflected higher depreciation on previously revalued assets and movements in forward prices and rates on financial instruments used to manage risk, the company said.

Earnings before interest, tax, depreciation, depletion, amortisation, impairment, fair value changes and other gains and losses — or ebitdaf — were up 2pc at $NZ854 million.

Directors of the company declared a final dividend of 11.2 New Zealand cents a share, which was 4 per cent higher than a year earlier.

Meridian said Rio Tinto’s announcement of its intention to close the Tiwai aluminium smelter, drove the decision to stop its capital management program. The last payment was a 2.44 cent-a-share special dividend declared in February.

In 2018, Meridian had outlined a capital management plan of $NZ250 million over the two years through February 2022.

“There are significant challenges on the horizon, particularly the global impact of the COVID-19 pandemic and, the closure of the Tiwai Point Aluminum Smelter,” said Chief Executive Neal Barclay. “These changes will affect the way in which we operate our business.”

Dow Jones Newswires

Perry Williams 7.50am: Seven holds fire on guidance

Billionaire Kerry Stokes‘ conglomerate Seven Group lifted annual earnings by two per cent due to strong growth from its mining machinery supplier WesTrac but withheld guidance for the 2021 financial year due to COVID economic volatility.

On an underlying basis, earnings before interest and tax rose to $740m from $728m with the bulk of the boost derived from WesTrac, which offset flat earnings from Coates Hire and a fall from its energy unit as the oil market crash hit.

The company had previously expected underlying EBIT to grow by the high single digits, but withdrew that guidance in April due to volatility from the pandemic.

Underlying net profit after tax rose 3pc to $474m, beating a UBS estimate of $442m.

Earnings from WesTrac jumped 22pc to $371m, Coates increased 1pc to $204m and its energy division sunk 19pc to $127m. Its media division earnings also went backwards, falling 25pc to $48m for the 12-month period.

Seven noted recent contract wins at WesTrac including projects with all the major iron ore miners who are cashing in on high prices and strong volumes.

Group revenue of $4.572bn was up 12pc on last year while an annual dividend of 21c per share was in line with a UBS forecast and steady on last year’s payout.

Its statutory earnings were hit by $382m of writedowns including $358m already disclosed to the market on Seven West Media and its Bivins Ranch oil and gas deposit in Texas. Statutory net profit after tax fell 42pc to $116m reflecting impairments.

6.20am: ASX poised to open lower

Australian stocks look set for a weaker open after a mixed night on Wall Street.

Around 6am (AEST) the SPI futures index was down 35 points, or 0.6pc.

Yesterday, the local market finished higher by 0.5pc thanks to gains in banks and tech stocks, taking cues from Wall Street amid investor optimism over a coronavirus vaccine.

The Australian dollar was higher at US71.96.

Brent oil lost 1.6pc to $US45.86 a barrel. Spot iron ore was down 2.4pc to $US121.50.

6.10am: Trade talks cheer markets

The S&P 500 edged higher as investors cheered trade talks among senior US and Chinese officials following weeks of escalating tensions between the world’s two largest economies.

The broad stock index edged up 0.4pc to set another closing record, while the Dow Jones Industrial Average dropped 0.2pc. The tech-heavy Nasdaq Composite added 0.8pc.

US stocks have advanced in recent days, boosted by investors’ optimism about a potential treatment for coronavirus. Last week, the S&P 500 notched its first closing record since February, and it has climbed from there.

“It’s tough to really push through all-time highs,” said Matt Hanna, portfolio manager at Summit Global Investments. “We have some resistance there.”

Senior US and Chinese officials said they were committed to carrying out the phase-one trade accord signed in January. A videoconference late Monday brought together US Trade Rep. Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He for a formal review of the deal.

Trade tensions between the US and China buffeted markets last year before the world’s two largest economies struck the phase-one deal in January. As relations soured over COVID-19, technology and the national-security law imposed by China on Hong Kong, investors worried that new frictions to trade and commerce would hurt the global economy.

“Of course it’s positive when you have that kind of news flow — it’s reassuring,” said Nadège Dufossé, head of cross-asset strategy at asset manager Candriam. “It’s not in the US and China’s interest to have a new trade war.”

Still, Ms Dufossé said she wouldn’t make investments based on Monday’s review of the deal.

“It’s positive in the short term, but it can change very rapidly,” she said, adding that President Trump might seek to campaign for re-election by being tough on China. “On the technology front, I think frictions are here to stay.”

Overseas stock markets were mixed. The regional Stoxx Europe 600 dropped 0.3pc. In Asia, Japan’s Nikkei 225 rose 1.4pc by the close. China’s Shanghai Composite Index and Hong Kong’s Hang Seng both posted muted losses.

Dow Jones Newswires

5.50am: Virgin Atlantic creditors approve restructure

Virgin Group’s Virgin Atlantic said it has secured the support of all its creditors for its restructuring plan.

The embattled airline said the restructuring plan is based on a five-year business plan and that, with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it will allow it to rebuild its balance sheet and return to profitability.

The company said it will receive a refinancing package worth 1.2 billion pounds ($US1.57 billion) over the next year and a half, which will complement the company’s cost savings of GBP280 million a year and GBP880 million in rephrasing and financing of aircraft deliveries over the next five years.

Virgin Atlantic said that shareholders have agreed to provide GBP600 million in support over the life of the plan. It added that this will include GBP200 million in investment from Virgin Group, as well as the deferral of around GBP400 million in shareholder deferrals and waivers.

“The next step is an English High Court hearing on Sept. 2 to sanction the restructuring plan. We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the restructuring plan,” a Virgin Atlantic spokesman said.

Dow Jones Newswires

5.45am: Oil higher

Oil futures finished higher, with US benchmark prices settling at their highest since early March.

Traders eyed disruptions to energy output in the Gulf of Mexico as Hurricane Laura looked to reach the US Gulf Coast later this week. Weekly data on U.S. petroleum supplies are also due out late Tuesday from the American Petroleum Institute and the Energy Information Administration.

October West Texas Intermediate oil rose 73 cents, or 1.7pc, to settle at $US43.35 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since March 5, according to FactSet data.

Dow Jones Newswires

5.40am: Stocks wobble after US consumer news

Stock markets wobbled as fading US consumer confidence undermined news that China and the United States would pursue a trade pact.

In New York, the Dow Jones index was 0.6pc lower in midday trading, but oil prices held onto gains as an upgraded hurricane Laura threatened US oil installations in the Gulf of Mexico.

European markets started the day in an upbeat mood after China and the US said top representatives had held phone talks on the trade agreement they signed in January.

There had been concerns about the future of the deal as the countries’ relationship grows increasingly fraught over issues including Hong Kong, the virus, Huawei and TikTok.

But later in the day, a closely tracked survey of US consumer confidence showed it had fallen further in August as cases of the coronavirus continued to rise.

Joshua Mahony, a senior analyst at the online group IG, commented that “given how reliant the US is upon domestic consumption, the dramatic collapse in consumer confidence does little to lift sentiment over forthcoming spending levels for US businesses.”

Global markets had previously also been underpinned by growing optimism that a coronavirus vaccine could be in the offing, and by an upbeat German business confidence indicator.

But with British pharmaceutical giant AstraZeneca “pointing towards a wait until winter 2021 for their vaccine, hopes of a speedy implementation could be ill-founded,” Mahony noted.

London closed down 1.1pc while Frankfurt and Paris both ended flat.

AFP

5.35am: American Airlines flags more lay-offs

American Airlines said it will lay off 19,000 workers on October 1, in addition to thousands more who left the company or agreed to voluntary furloughs, unless Congress offers more aid.

“Approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on October 1,” American said in a regulatory filing, explaining the cuts are needed because flights have not recovered amid the coronavirus pandemic.

However, the company said the job losses could be curbed if Congress extends a program under the CARES Act rescue package that helped airlines struggling due to the coronavirus pandemic retain their staff through the end of September.

More job cuts loom at American Airlines. Picture: AFP

AFP

5.32am: US consumer confidence fades

US consumer confidence continued to deteriorate in August, falling below the level seen in the early weeks of the pandemic as coronavirus cases rise, according to a survey.

After dropping in July, the Conference Board’s consumer confidence index fell further to 84.8 in August from 91.7 the month prior as sentiment about the present situation and near-term prospects worsened further.

The survey showed attitudes about “both business and employment conditions had deteriorated over the past month,” said Lynn Franco, The Conference Board’s senior director for economic indicators.

AFP

5.30am: Credit Suisse in digital shift

Credit Suisse, Switzerland’s second-biggest bank, said it would reorientate its domestic services towards digital banking, with a quarter of its Swiss branches to close and hundreds of jobs at risk.

“In the last two years alone, use of online banking at Credit Suisse has grown by approximately 40pc, while the use of mobile banking has more than doubled,” the bank said in a statement.

“The COVID-19 crisis has further accelerated these trends. In contrast, the number of visits to branches has been declining for years.

“Credit Suisse will introduce a new digital offering and a future-oriented branch concept at the end of October.” The bank also plans to merge the activities of regional subsidiary Neue Aargauer Bank with those under the Credit Suisse brand to avoid duplication.

With its realignment, the bank intends to reduce annual costs by around 100 million Swiss francs ($US110 million, 93 million euros) from 2022 onwards.

A Credit Suisse office. Picture: Reuters

AFP

5.25am: US new home sales jump

Sales of new homes leapt 13.9pc in July compared to the prior month, demolishing expectations as the US housing market continues to heat up, according to government data.

The sales pace surged to an annual rate of 901,000 homes sold, more than 36pc above July 2019, helped by very low borrowing rates.

But the results were uneven, with sales in the Midwest jumping an eye-popping 58.8pc, while the Northeast posted a 23.1pc drop.

AFP

5.22am: Germany announces big deficit

Germany, long adverse to being in the red, posted a public deficit of 51.6 billion euros for the first half of 2020, with coronavirus lockdowns undercutting government revenue as it increased spending.

The emergency spending has been credited with helping Europe’s top economy weather the pandemic-induced shock better than many of its neighbours, and a separate survey on Tuesday showed German companies were optimistic about the rebound.

The German economy posted a deficit of 3.2pc of Gross Domestic Product (GDP) in the six months to June, according to federal statistics agency Destatis, above the 3.0pc limit under EU rules that Brussels suspended due to the pandemic.

In the same period of 2019, Germany recorded a public surplus of 2.7pc of GDP, or around 46.5 billion euros.

AFP

5.20am: Germany pushes for digital tax plan

German Finance Minister Olaf Scholz said he was “quite confident” that a blueprint for taxing digital giants could be agreed on an international level later this year.

In January, 137 countries agreed to negotiate a deal on how to tax tech multinationals by the end of 2020 under the auspices of the Paris-based Organisation for Economic Co-operation and Development (OECD).

However, talks to come up with a new global tax system at the OECD have faced opposition by the US.

Scholz said Germany, which currently holds the EU’s rotating presidency, was pushing for an agreement on the digital tax, as well as a minimum tax in the next few months.

AFP

5.15am: Ant Group files for IPO

Ant Group, the Chinese financial-technology giant controlled by billionaire Jack Ma, revealed how highly profitable its business has been as it gears up for what is likely to be a record-breaking initial public offering.

The owner of the popular payments and lifestyle app Alipay on Tuesday filed listing documents for IPOs on stock exchanges in Shanghai and Hong Kong, publicly disclosing for the first time detailed financial data showing the size and scale of its business.

Ant said it made 21.2 billion yuan ($US3 billion) in net profit for the six months to June 2020, on revenue of 72.5 billion yuan ($US10.5 billion). That implied a net profit margin of around 30pc, fairly high for a relatively young company that is growing rapidly.

The Hangzhou-headquartered company is aiming to go public as soon as this fall, and is targeting a market valuation above $US200 billion, The Wall Street Journal previously reported. Ant said in one of its filings that the new shares it plans to sell would comprise at least 10pc of the company’s share capital, implying that it could raise more than $US20 billion.

If achieved, it would propel Ant into the ranks of China’s most valuable listed companies and the world’s top financial-technology companies, in the vicinity of PayPal Holdings and MasterCard, which recently had market capitalisations of $US233 billion and $US344 billion respectively.

Dow Jones