ASX edges higher to cap 4-day losing streak

Local stocks finished Friday’s session higher, their first gain for the week, but that did little to offset the hit from oil’s earlier dive.

David Rogers and Melissa Yeo

A vial of the drug remdesivir is inspected at a Gilead site in the US. Picture: AP

30 min read

6:29AMApril 24, 2020.

Updated 5:08PMApril 24, 2020

Shares cling to gains of 0.5pc
Mesoblast soars on virus breakthrough
BGH taps Moelis to weigh up Virgin
Domino’s cautious about outlook
Goldmans names top unloved defensive stocks

That’s it for the Trading Day blog for Friday, April 24. Australian shares finished the week off with a 0.5 per cent gain, still not enough to offset the earlier hit from oil’s turmoil.

Overnight, Wall Street pared early gains to close little changed after an early trial of a potential COVID-19 treatment showed disappointing results.

In local equities, Domino’s was trading lower after it said it was cautious of its outlook while Mesoblast soared on early trials of its drug for COVID-19 patients needing respirators.

4.50pm: Property harder hit than energy

While oil ructions were key in investor sights, the energy sector managed to cap out the week still ahead of property stocks, and not far behind consumer discretionaries, which took the biggest weekly hit after a barrage of weak data points.

A continued rebound in oil prices helped the energy sector to the march higher on Friday, finishing higher by 2 per cent – for the week, the sector is down by 3.7 per cent.

Woodside put on 1.8 per cent to $20.36 as Oil Search jumped by 4.4 per cent to $2.61, Santos edged up by 1.9 per cent to $4.34 and Beach Energy gained 4.2 per cent to $1.37.

Real estate trusts however, are down by 7.7 per cent for the week – as business shutdowns and potential for more retail collapses remains front and centre.

Here’s the biggest movers at the local close:

4.13pm: Shares cling on to gains of 0.5pc

Shares held on to gains for the first time in five sessions, but that still wasn’t enough to offset a dive earlier this week.

At the close on Friday, the benchmark ASX200 was higher by 26 points or 0.49 per cent to 5242.6 – trimming its weekly loss to 4.5 per cent.

Meanwhile, the All Ords put on 28 points or 0.53 per cent to 5300.7.

3.31pm: Energy rout threatens $A: Westpac

Westpac senior currency strategist Sean Callow says the energy rout threatens to undermine Australian dollar.

“The Australian dollar isn’t traditionally seen as being at much risk from low oil prices given that Australia is a net importer of crude,” Mr Callow notes.

“But LNG is now Australia’s number 3 export and its price is tied to oil. Moreover, coal prices are being dragged down by the oil rout, threatening the relative stability AUD/USD has enjoyed in recent days.”

AUD/USD is the best performing G10 currency in the past 4 weeks with a 6.6pc rise, even as the Brent crude oil price has fallen 19pc to $22 a barrel.

AUD/USD is also the second-best performing G10 currency in the past 5 days, but is the weakest so far today with a 0.3pc fall to 0.6345.

Gerard Cockburn 3.18pm: Young workers most at risk of job shock

ANZ economists have warned young people are more vulnerable to the employment shock from coronavirus higher proportions of workers are exposed to the hardest hit sectors.

The bank forecasts that the youth jobless rate will rise higher than the overall unemployment figure as a result of staff cuts in hospitality, retail and arts.

ANZ is predicting peak unemployment will hit 9.5 per cent.

Its economist note 45 per cent of young people aged between 15 and 24 work within the hospitality industry, and of that, 54 per cent are employed on a casual basis.

ANZ estimates 26 per cent of young workers have been with their current employer for less than 12 months, which would make them ineligible for JobKeeper support payments, if they are furloughed.

Australia's young people (15â€“24 yo) are more vulnerable to the impacts of the #pandemic on the labour market than older workers. They are more likely to work in the hardest hit industries and a quarter may not be eligible for #JobKeeper payments. #ausecon #Auspol @cfbirch pic.twitter.com/jDLSTLjNr9
— ANZ_Research (@ANZ_Research) April 23, 2020

3.10pm: Consensus hasn’t fully priced in COVID-19: UBS

UBS has called out consensus estimates of Afterpay, Westpac and Cochlear, among others, as markedly above its own earnings projections.

Analysts led by Pieter Stoltz question whether consensus has downgraded enough given the impact of COVID-19.

For the market since the end of February, UBS has revised lower CY19 EPS by 23 per cent, and DPS by 30pc.

“UBS expects lower EPS growth in 2020 but also a larger EPS growth recovery in 2021,” Mr Stoltz writes.

“Based on UBSe, EPS will not return to FY19 levels until FY23, while DPS will not return to FY19 levels until well after FY23. On a 12 month forward basis, consensus has the market on a 15.6x PE while UBS sees the market on a higher 16.6x PE.”

Afterpay, Seek, Westpac, NIB, Commonwealth Bank and Cochlear are several names of which UBS analysts have EPS estimates that are at least 10pc below consensus.

Those with EPS estimates at least 10pc higher than consensus include South32, Santos, Fortescue, Rio and BHP.

Olivia Caisley 2.43pm: All states to broaden virus testing

Chief Medical Officer Brendan Murphy has confirmed COVID-19 testing will be extended across the nation in order to track clusters of community transition. “National Cabinet was informed today that every single jurisdiction has now – every state and territory has now broadened their testing criteria from today,” he said.

“So that anybody with acute respiratory symptoms – cough, sore throat, runny nose, cold symptoms, flu-like symptoms – can get tested.”

Dr Murphy said the move would significantly expand the amount of people being tested.

“We’re pretty confident that most of them will be negative, but this will give us a really broad reach of what we call passive surveillance.”

Dr Murphy flagged that the Morrison government was looking at a range of active surveillance mechanisms to test people without symptoms and that work in a range of frontline occupations.

“National Cabinet is very clear that they want to be absolutely confident before relaxing any measures that we are in a position in this country to detect any community transmission of any significance.”

Follow the latest coronavirus updates at our live blog

2.30pm: JB Hi-Fi faces medium-term macro headwinds

JB Hi-FI will have a strong second half but macro risk will weigh in the medium term, according to analysts at Credit Suisse.

The broker acknowledged that a surge in demand for home office supplies would boost the retailers earnings in the current half, but uncertainty in the broader economy could hit sales through the rest of year.

It estimates household and business cash flow is decelerating rapidly as household cash income drops by 5pc to 10pc “which is unprecedented”.

“While sales revenue would need to decline towards the upper end of that range to completely offset the benefit of the sales surge in March and April, the surge benefit does not extend to 1H21, and therefore the industry will be relying on more traditional rates of spending substitution to mitigate an income effect,” the broker writes.

“Technology is a ‘new essential’ and consumers presumably switch from travel to home-related expenditure and so some mitigation is likely — whether it’s enough to offset the expected income effect is unclear.”

It keeps a Neutral rating on the stock with a target price of $32.87. JBH last traded up 0.6pc to $33.45.

2.14pm: Record low rates to stay til 2023: Evans

The RBA will likely keep rates at record lows of 0.25 per cent until at least the end of 2023, according to Westpac chief economist Bill Evans.

At a speech earlier this week, governor Philip Lowe said he would not lift the cash rate before the three-year bond yield target was lifted, a move Mr Evans says demonstrates the central bank’s commitment to its targets.

“The choice of the three year bond target rate as the same as the cash rate target is strategic since it sends a clear message that if the Bank is prepared to purchase three year bonds at the overnight cash rate it is reasonable to expect that it is comfortable with the cash rate holding at 0.25pc for the full three years,” he says, adding that any higher target rate would imply a lift in the cash rate.

Mr Evans adds that his forecasts are largely in line with the RBA, except when it comes to growth – Westpac is tipping 4pc next year, while the RBA predicts 6pc to 7pc.

“It appears that, next year, we are heading for a repeat of the last few years when RBA growth forecasts were consistently significantly above our own forecasts,” he says.

“That bullish view is despite the observation that “the twin health and economic emergencies that we are experiencing now will cast a shadow over our economy for some time to come”.”

Governor of the Reserve Bank of Australia (RBA) Phillip Lowe. Picture: AAP / Joel Carrett.

1.52pm: ASX a rare gainer as Asia falls

Asian shares and US stock futures have fallen, spurred by doubts about progress in the development of drugs to treat COVID-19 and new evidence of US economic damage caused by the coronavirus pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan is trading down 0.3 per cent while the Shanghai Composite drops by 0.6pc and Japan’s Nikkei by 0.9 per cent.

US stock futures, the S&P 500 e-minis, are down 0.5 per cent.

The S&P 500 and the Nasdaq turned negative at the close on Thursday after a report that Gilead Sciences Inc’s antiviral drug remdesivir had failed to help severely ill COVID-19 patients in its first clinical trial.

Gilead said the findings were inconclusive because the study conducted in China was terminated early.

The markets’ sensitivity to news related to the medical treatment of COVID-19 reflected investors’ desperation for a sign of when the global economy might start returning to normal, Tim Ghriskey, chief investment strategist at New York-based wealth management firm Inverness Counsel.

“Any piece of bad news is likely to rattle the market,” Ghriskey said. “Investors are keen for a semblance of hope that they can soon crawl out of their homes and get on with some form of normal life, even if with trepidation and fear.”

AAP

1.28pm: Virgin collapse a cash cow for Deloitte

Deloittle’s is expected to generate between $20m and $30m in fees from the voluntary Administration of collapsed airline Virgin Australia “with further costs to be incurred in a liquidation” according to documents issued to creditors.

“This estimate is subject to the time frame and progress of the recapitalisation or sale, and any variation to the time frame will have a significant effect on our estimate,” the notice says.

The multinational professional services firm was appointed to handle Virgin Australia’s debt restructuring and recapitalisation this week, with the aim of saving the airline from collapse. The Deloitte administrator, Vaughan Strawbridge, previously said more than 10 sophisticated parties were interested with a transaction expected within two to three months.

Gerard Cockburn 1.24pm: Westpac offers credit card relief

Westpac is offering customers facing financial distress the option of having interest payments wiped, as part of a coronavirus support package.

Australia’s second largest bank will offer a three-month support package, which will enable credit card users to have charged or accrued interest payments applicable to their outstanding debt waived.

Customers who suffered a loss of income due to job losses or reduced hours will eligible for the scheme.

1.01pm: Shares surge to daily highs

The local market is trading at its daily highs at lunch, shaking off a weak start to trade higher across all sectors.

The benchmark ASX200 is higher by 44 points or 0.84 per cent to 5260.8.

CSL is the key driver of the market turnaround as it trades higher by 2.3 per cent while the major banks and miners are decisively higher too.

Still, US futures are lower by 0.5 per cent.

Mackenzie Scott 12.55pm: Landlords facing 20pc slide in rents

Landlords could be facing a 20 per cent fall in rental prices as a result of coronavirus, says property data researcher CoreLogic, with declines likely to outpace those expected in the housing market.

CoreLogic’s head of residential research, Eliza Owen, warned the rental market should brace for “a pretty dramatic revision” in prices as lower demand for housing coupled with more available properties creates a looser market.

“We expect the impact of COVID-19 on the rental market will be worse than the impact on property values,” Ms Owen said.

“There are two main pressure points for the rental market. First, there are job losses which create less demand for rental housing. That’s where you see the consolidation of two group households, like people moving back in with their parents.

“On the other hand is the increased supply of rental properties … (with) higher vacancies and anecdotal instances of short term rental accommodations, namely Airbnb, being converted to the long-term rental market.”

12.43pm: Yowie immune from stockpiling boost

Shoppers left their children at home and Yowies on the shelf during the coronavirus-fuelled stockpiling rush, which the troubled Australian chocolatier blames for another big quarterly sales decline.

The Perth-based confectionary firm said its customers across the US and Australia shunned novelty chocolate items for pantry staples when stockpiling groceries in March before steering clear of the shops altogether when the coronavirus lockdowns hit.

Yowie said it had been hurt by shoppers leaving their candy-loving kids at home. The company also blamed a continued earnings bleed on the hefty advertising shadow cast by its biggest rival – Ferrero’s Kinder Surprise – although the Aussie firm again declined to directly name its competitor in a downbeat release to the ASX.

Quarterly sales of Yowie chocolate fell by 36 per cent to $US2.36m ($3.71m).

Another $US682,000 was wiped from Yowie’s quarterly earnings as the company continued its years-long struggle to turn the ship around.

YOW last traded at 3.7c.

12.30pm: Oil rises on output cuts, tensions

Oil extended gains in Asian trade Friday on signs that producers are already cutting output and rising US-Iran tensions, recovering from unprecedented lows triggered by the coronavirus pandemic.

US benchmark West Texas Intermediate (WTI) for June delivery was up 4.61 per cent to $17.26 a barrel in early trade, after settling 20 per cent higher in New York overnight.

International benchmark Brent for June was changing hands at $21.97 a barrel, up 3.0 per cent.

Oil prices have been hit hard as the pandemic strangles demand due to lockdowns and travel restrictions, with US crude falling into negative territory for the first time this week as storage space runs low.

AFP

Bridget Carter 11.47am: Seven West land deal worth $75m

DataRoom | Seven West Media is believed to be nearing a deal to sell the headquarters of The West Australian and The Sunday Times to local developer Prime West for $74.5m.

It is a move seen as one that will provide some much needed financial relief for the Kerry Stokes-backed free-to-air broadcaster.

It comes after DataRoom revealed in February that Seven West, which owns Pacific Magazines and West Australian Newspaper Holdings as well its free-to-air television Channel 7 Network and about 20 regional newspaper titles, was selling its real estate sites in a move to boost its cash flow and meet all its payment obligations.

Should a deal proceed with Prime West, it will offer some help for Seven West to address its net debt that was last reported to be $541m.

Prime West, a Perth-based property syndicator with over $3.8bn of real estate under management, will be buying Seven West’s office and print centre, covering three properties within Osborne Park, with three-storey office buildings on just over 2 hectares of land at 50 Hasler Rd on the outskirts of Perth’s central business district.

No doubt, a sale and leaseback will be on the cards for Seven West.

SWM last at 8.6c

11.47am: Shares jump 0.7pc

A 1.4pc rise in CSL helped push the ASX200 up 0.7pc to an intraday high of 5254.2.

But while a majority of sectors are higher, the index is struggling to hold onto its gain.

Volume is very light considering that much of the early trade related to settlements after Thursday’s expiry of equity options for April.

Meanwhile, S&P 500 futures have extended their intraday fall to a hefty 0.8pc.

S&P/ASX 200 last up 0.3pc at 5332.4.

11.20am: Mesoblast soars on early trial results

Mesoblast shares have jumped by more than 20 per cent in early trade after reporting initial positive results in trials for its treatment of patients with respiratory syndromes associated with COVID-19.

The biotech this morning said its drug Remestemcel-L had a survival rate of 83pc when tested on ventilator-dependent COVID-19 patients with moderate/severe acute respiratory distress syndrome (ARDS).

It said 75 per cent of patients have successfully come off ventilator support within a median of 10 days.

The drug has been permitted for use under emergency compassionate grounds at New York’s Mt Sinai hospital.

“The remarkable clinical outcomes in these critically ill patients continue to underscore the potential benefits of remestemcel-L as an anti-inflammatory agent in cytokine release syndromes associated with high mortality, including acute graft versus host disease and COVID-19 ARDS,” chief Silviu Itescu said.

“We intend to rapidly complete the randomised, placebo-controlled Phase 2/3 trial in COVID-19 ARDS patients to rigorously confirm that remestemcel-L improves survival in these critically ill patients.”

MSB last up 22.1pc to $2.40 after hitting $2.60.

11.18am: Store rollout a key risk for Domino’s

Citi’s Craig Woolford says store rollout remains the key risk for Domino’s after a “mixed” trading update.

He notes that Domino’s has opened 34 stores so far in 2H20, whereas a “typical half” should be 100.

“We are surprised Domino’s stuck with store opening medium-term targets,” Mr Woolford says. “We think FY21 and FY22 openings will be lower than the 200 store annual run-rate embedded in guidance.”

He is 4pc below consensus on store count by FY22 and sees 3pc downside risk to consensus EBIT of $239m for FY20.

“We have a Sell rating on Domino’s given its high PE ratio,” he adds. “The company has a solid position and will still see earnings growth, but at 29x PE FY20e is too steep.”

He also notes that FX boosted earnings over the 12 months to December 2020.

DMP last down 3.1pc at $48.10.

11.14am: Shares take strides higher

After a shaky start, the ASX is higher by 0.61 per cent, with gains in all sectors bar staples and real estate.

The ASX is now trading at 5248.7 after slipping to lows of 5207.5 early in the session.

All of the major banks are now in the green – adding between 0.7pc and 1.3pc while heavyweight CSL jumps by 1.3pc.

11.09am: 26 million US jobless claims

US jobless figures released overnight paint a grim picture of the world’s largest economy:

10.38am: US futures sap ASX positivity

Local share gains are being restrained by weakness in US futures, as real estate, discretionary and IT stocks underperform.

The S&P/ASX 200 has traded about 0.2pc either side of the unchanged mark, weaker than projected by overnight futures relative to fair value.

A 0.6pc fall in S&P 500 futures seems to be restraining the local bourse but on a positive note, June WTI crude oil futures are up another 5pc after rising 20pc overnight.

The Energy sector is therefore outperforming with the best gains so far today and Materials are going along for the ride.

Oil Search is up 3.6pc, Fortescue is up 2.8pc and BHP is up 1.8pc.

On the downside, Challenger is down 3.5pc, Janus Henderson is off 3.3pc and Domino’s is down 2.8pc.

Bridget Carter 10.30am: BGH taps Moelis to weigh up Virgin

DataRoom | Australian-based private equity firm BGH Capital is understood to have tapped advisory firm Moelis for a potential recapitalisation of Virgin Australia.

Moelis counts high profile restructuring experts within its ranks such as Chris Wyke, who is the Australian co-chief executive, and Janna Robertson, who joined the firm as chief operating office from Deloitte, where she left last year.

BGH Capital is understood to have been in discussions with Virgin Australia for about two weeks, a similar time frame to when Deloitte was involved with the company, and had been in the airline’s data room as recently as last week.

The Australian-listed BGH Capital was launched in 2017, beginning fund raising attempts in October of that year and raising $2.6bn for its first fund.

While the firm is cashed up, some suspect that it would unlikely vie for the airline alone, rather working as part of a consortium.

10.16am: Session off to choppy start

The local market is choppy in early trade, following Wall Street lower after hopes of a coronavirus treatment were dampened overnight.

At the open, the ASX200 is lower by just 2 points or 0.04 per cent to 5215 – after slipping to 5207 early.

Real estate stocks are the biggest drag – down by 1.8 per cent while energy stocks continue to rebound.

10.04am: GS picks top underloved defensive stocks

Goldman Sachs equity strategist Matt Ross notes that continued outperformance by those stocks deemed to be the most defensive in the current market is making it increasingly difficult for investors to find a safe place to hide.

Against this backdrop he asked his Equity Analyst teams to identify Buy-rated names where they feel the market is under-appreciating their defensive characteristics.

They include Aurizon, Freedom Food, Charter Hall Social Infrastructure REIT, Cleanaway Waste, St Barbara and Telstra.

“These stocks are all more than 25 per cent off their year highs and each offer over 19pc upside to our analysts’ 12- month target prices,” Mr Ross says.

Gerard Cockburn 9.54am: MyState credit rating under review

Tasmanian MyState Bank says it is managing its capital and liquidity ratios, despite credit rating agency Moody’s flagging a potential downgrade to its financial outlook.

In a statement to the ASX on Friday morning, the wealth group indicated that the international agency had placed all its current ratings in a state of “review for downgrade”.

MyState Managing Director Melos Sulcich said the potential decline has come off the back of a broader negative outlook for the Australian banking sector.

“As a result of the economic disruption caused by the COVID-19 pandemic, Moody’s changed their outlook for the Australian banking sector to negative on 2 April 2020,” Mr Sulcich said.

Mr Sulcich noted the bank’s regulatory and capital ratios remain at “appropriate” levels and are compliant with APRA’s standards.

“We will continue to focus on maintaining a strong bank and providing support for our customers as the nation manages its way through these extraordinary times.”

MyState Bank last traded at $3.78 per share.

MyState CEO Melos Sulcich. Picture: Sam Rosewarne.

9.28am: Charts point to retest of March lows

Australia’s sharemarket is likely to fall based on a bearish wedge pattern that points to a retest of the March low at 4402.5 on the S&P/ASX 200.

Thursday’s high at 5282.6 may offer resistance and Wednesday’s low at 5100.7 may offer support, while the next support level is around 5000.

Overnight futures relative to fair value imply an opening rise of 0.4pc to about 5238 for the index, but S&P 500 futures are down 0.4pc in early trading.

Moreover, the S&P 500 erased a 1.6pc intraday rise after the FT reported that a Chinese trial of Gilead Sciences’ antiviral drug Remdesivir had flopped. Gilead said the results didn’t give a meaningful conclusion because the study ended early due to low enrolment. Gilead shares fell 4.3pc.

Crude oil surged with June WTI futures up 20pc to $16.50 as the Wall Street Journal said some OPEC members were considering cutting production as soon as possible. Bloomberg reported that Kuwait said it has already started cutting production while US Treasury Secretary Mnuchin said the government was considering a lending program for US oil companies.

The rebound in oil made Energy the strongest US sharemarket sector and should see the local Energy sector outperform. However extremely low oil prices still threaten to trigger a wave of bankruptcies that could spillover to the US financial sector.

Bridget Carter 9.22am: Icon likely in Ramsay’s sights

DataRoom | The $2bn-odd Australian cancer care provider Icon Group has been tipped as a likely acquisition target for Ramsay Health Care in the upcoming months after Ramsay’s $1.4bn capital raising this week leaves it cashed-up for future deal-making.

Ramsay is understood to be interested in expanding its pharmacy business and Icon is thought to be attractive because of its compound pharmacy business, selling drugs not commercially available over the counter.

It also fits the bill for Ramsay because it is a business of scale and Ramsay has always looked at big ticket acquisitions that complement its existing network.

Gerard Cockburn 9.13am: MinRes resource outlook unclear

Mineral Resources says coronavirus has not yet impacted its mining operations, but is wary the pandemic could drag down future production levels.

The West Australian mining company released its third quarter results on Friday, noting iron ore production levels had still increased over the January to March period.

However, the company’s shipments for resources were lower than the previous quarter and iron ore pricing lower by 5pc from the previous quarter to $US75 per dry metric tonne of iron ore.

“The coronavirus (COVID-19) crisis did not materially impact MRL’s operations during Q3 FY20,” the company said.

“At this time, it is unclear what impact it will have on the remainder of the calendar year, including on demand and consumption for either iron ore or lithium.”

8.54am: What’s on the broker radar?

A2 Milk cut to Market-Weight – Wilsons
Alumina raised to Outperform – Credit Suisse
Alumina cut to Neutral – Macquarie
AMP target price cut 11pc to $1.25 – Citi
API raised to Neutral – Credit Suisse
API cut to Neutral – Citi
Carsales.com raised to Buy – Jefferies
Carsales.com raised to Overweight – JP Morgan
Carsales.com raised to Outperform – Macquarie
Evolution cut to Hold – Jefferies
Evolution cut to Neutral – Credit Suisse
Evolution raised to Buy – Citi
Infomedia cut to Sector Perform – RBC
IAG raised to Overweight – Morgan Stanley
McPhersons raised to Buy – Shaw and Partners
Mystate raised to Buy – Bell Potter

8.40am: ASX set for soft open

Australian stocks appear set for a flat morning after mixed movements on Wall Street overnight.

At 8am (AEST) the SPI 200 futures contract was up by 12 points, or 0.23 per cent, to 5,218.0.

IG Markets analyst Kyle Rodda said he expected a “soft” opening for the ASX200.

US markets enjoyed a rally until news that an experimental coronavirus drug flopped in its first randomised clinical trial.

The Chinese trial showed Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream. The S&P 500 finished at 2,797.80, down 1.51 points.

The Dow Jones Industrial Average rose 39.44 points, or 0.2 per cent, to 23,515.26 after losing almost all of a 409-point gain. The Nasdaq composite slipped 0.63 points to 8,494.75.

The early gains were likely based on data showing the number of US workers filing for unemployment in the past week was 4.4 million, a lower figure than the 5.2 million the previous week.

Traders’ fortunes followed a similar day in Australia on Thursday. The benchmark S&P/ASX200 index gained early but closed down 4.1 points, or 0.08 per cent, at 5,17.1 points.

The All Ordinaries closed down one point, or 0.02 per cent, at 5,272.8 points.

The Australian dollar was buying US63.72 cents, up from US63.43 cents at Thursday’s close.

AAP

8.30am: Domino’s cautious about outlook

Domino’s Pizza has released a relatively positive business update, while being cautious about the outlook.

It says in Australia and Europe, same store sales performance has been “positive”, although consumer behaviour in the coronavirus pandemic was affecting individual stores in each market unevenly.

Outlets in France were reopening, New Zealand was preparing to reopen when trading restrictions were lifted, and Japan and Germany had continued their “strong sales performance”.

“The company’s balance sheet remains strong, with significant headroom on its committed debt facilities and covenants,” Domino’s said.

“Domino’s reiterates its policy is not to provide short-term guidance and any previous statement which might be construed as earnings guidance for the current financial year is withdrawn.”

7.55am: Speedcast files for bankruptcy

Speedcast International, an Australian satellite-communications company that connects cruise ships and oil rigs to internet and phone services, filed for bankruptcy protection in the US as the energy downturn and the coronavirus pandemic have wiped out much of its business.

The Sydney-based company sought chapter 11 protection in U.S. Bankruptcy Court in Houston because it is running out of cash.

Speedcast executives and advisers had been in talks since last month with a group of lenders on a debt-for-equity swap, but the rapid decline in demand for its services as a result of the OPEC price war and collapse of cruise-ship tourism meant the company had to seek refuge in bankruptcy court before a restructuring deal could be completed, according to court papers.

Dow Jones Newswires

7.45am: Gold jumps

Gold prices jumped as much as 1.5 per cent to more than a one-week high overnight, after hopes of more stimulus from the United States to cope with a coronavirus-led lockdown.

Spot gold was up 0.8 per cent at $US1,726.94 per ounce. Earlier in the session, it reached $US1,738.58, the highest level since April 14. US gold futures settled up 0.4 per cent, at 1,745.40.

Reuters

7.30am: ASX set to edge up

Traders on the Australian stock exchange appear set for slight gains after mixed results in overseas markets overnight.

At 7am (AEST) the SPI 200 futures contract was up by 12 points, or 0.23 per cent, at 5,218.0.

Investors on Wall Street enjoyed a rally until news that an experimental antiviral drug for the coronavirus flopped in its first randomised clinical trial.

A Chinese trial showed Gilead Science’s remdesivir did not improve patients’ condition or reduce the pathogen’s presence in the bloodstream.

The S&P 500 finished at 2,797.80, down 1.51 points.

The Dow Jones Industrial Average rose 39.44 points, or 0.2 per cent, to 23,515.26 after losing almost all of a 409-point gain. The Nasdaq composite slipped 0.63 points to 8,494.75.

That followed a similar day’s trade in Australia on Thursday. The benchmark S&P/ASX200 index gained early but closed down 4.1 points, or 0.08 per cent, at 5,17.1 points.

The All Ordinaries closed down one point, or 0.02 per cent, at 5,272.8 points.

The Australian dollar was buying US63.71 cents, up from US63.43 at Thursday’s close.

AAP

7.20am: Air NZ postpones NY flights

Air New Zealand says its Auckland-to-New York route that it had planned to start in October has been postponed to late 2021 at the earliest.

In other international network changes, suspended services between Auckland and Buenos Aires and between Los Angeles and London will not be revived, the airline said.

The coronavirus pandemic has forced airlines to dramatically pare back international flights. Air New Zealand says it has cut international capacity by 95pc through to the end of June and will assess demand on a route-by-route basis after that.

“It’s deeply disappointing to be in this position,” Air New Zealand said. “Our people have worked tenaciously over the years to build these markets and excitement was growing for our non-stop New York flight.”

The company, which received a $NZ900 million credit lifeline from the government, said it expects most countries to take a cautious approach to international travel over the next year.

Air New Zealand planes sit idle on the tarmac at Christchurch Airport. Picture: AP

Dow Jones Newswires

6.06am: US stocks give up gains

US stocks swung sharply, with the Dow Jones Industrial Average giving up most of a 400-point rally on reports that a potential treatment for COVID-19 disappointed in a clinical trial.

Major indexes traded higher for most of the day but ended the session largely flat after the Financial Times and other media reported that remdesivir, a Gilead Sciences drug, “flopped” in its first randomised, clinical trial. Gilead shares dropped 4.3 per cent and were briefly halted for volatility.

Many investors have been hopeful that a quick remedy for the virus would allow the economy to open more quickly than expected and help spur a V-shaped recovery — a sharp slowdown and then a quick bounceback.

Volatility in the stock market has surged since the coronavirus pandemic effectively brought the country to a halt. The Dow and S&P 500 have rebounded sharply since late March but remain down more than 13 per cent for the year. The Nasdaq Composite, on the other hand, is off just 5.3 per in 2020 as big technology stocks have powered much of the recent rebound.

The markets completely lack direction,” said Agnes Belaisch, chief European strategist at Barings Investment Institute. “There’s just no ground on which to anchor your forecasts because the size of this shock is completely unknown.”

The Dow climbed 39.44 points, or 0.2 per cent, to 23515.26, after rising as much as 409 points earlier in the session. The S&P 500 slipped 1.51 points, or less than 0.1 per cent, and the Nasdaq Composite fell 0.63 points to 8494.75.

After closing largely flat on Thursday, Australian stocks are set to open steady, or slightly lower. At 6am (AEST) the SPI futures index was down four points, or 0.1 per cent.

All three US indexes are on course for modest weekly losses, following a sharp sell-off to start the week when turmoil in the oil market pulled US crude prices negative for the first time ever.

Stocks initially rallied after the Labor Department said the weekly number of Americans applying for jobless benefits eased slightly. About 4.4 million Americans applied for jobless benefits in the week ended April 18, bringing the total for the past five weeks to more than 26 million. That was slightly more than the 4.3 million economists had expected, but down from 5.237 million and more than 6 million in the previous two weeks.

“The key is we’re now looking at the reopening of the US economy and the assumption that when it reopens, these claims will start to reverse themself,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “This is going to be a very uneven gradual process.”

Meanwhile, surveys of US purchasing managers showed a sharp decline in April activity as lockdowns remain in place, with the services sector suffering unprecedented falls in output while businesses cut payrolls.

With first-quarter results in from about 20 per cent of the companies in the S&P 500, earnings are expected to drop more than 15 per cent from a year earlier, according to a Factset analysis of analysts’ estimates.

Oil prices extended Wednesday’s rebound, sparked by the prospect of fresh US-Iran tensions. Strains in the Middle East can boost crude prices by signalling potential disruptions to shipments of oil around the world and possible supply shortages. US crude-oil futures for June delivery jumped 21 per cent to $US16.73 a barrel. Brent crude, the global gauge, rose 5.2 per cent.

Overseas, the pan-continental Stoxx Europe 600 rose 0.9 per cent. Preliminary surveys of French and German purchasing managers showed gauges hitting record lows in April, suggesting a stark drop in activity in the manufacturing and services sectors.

In Seoul, the Kospi Composite closed almost 1 per cent higher. Those gains came even as data showed South Korea’s trade-reliant economy shrank 1.4 per cent in the first quarter, the steepest decline since the global financial crisis a dozen years ago.

Dow Jones

5.50am: Oil closes higher

Benchmark US crude oil for June delivery rose $US2.72, or 19.7pc, to close at $US16.50 a barrel.

Brent crude oil, the international standard, rose 96 cents, or 4.7pc, $US21.33 a barrel.

Gold rose $US7.10 to $US1,745.40 an ounce, silver rose 2 cents to $US15.36 an ounce and copper rose 2 cents to $US2.31 a pound.

5.45am: EU agrees budget, recovery plan

European Union leaders agreed to revamp the EU’s long- term budget and set up a massive recovery fund to tackle the impact of the coronavirus and help rebuild the 27-nation bloc’s ravaged economies but deep differences remain over the best way to achieve those goals.

With more than 100,000 Europeans known to have died from the virus, according to the European Centre for Disease Prevention and Control, and business only slowly starting to open in some countries, the urgent need for funds in hard-hit countries like Italy and Spain has never been starker.

“This pandemic is putting our societies under serious strain. The wellbeing of each EU member state depends on the wellbeing of the whole of the EU. We are all in this together,” European Council President Charles Michel told reporters after chairing their videoconference summit.

The uneven impact of the virus on countries with very different budgetary means has eroded trust, with Italy and Spain notably lacking confidence that relatively wealthier northern EU partners like Austria, the Netherlands or Germany – who have suffered less from the disease – are willing to take swift, sweeping measures backed by real economic firepower.

But the leaders did agree to task the European Commission with revamping the EU’s next seven-year budget, due to enter force on January 1 but still the subject of much disagreement, and devise a massive recovery plan. While no figure was put on that plan, officials believe that 1-1.5 trillion euros ($US1.1-1.6 trillion) would be needed.

5.40am: Oil prices roar back

Oil prices made a spectacular comeback as fresh US-Iran tensions erupted, also helping equities advance after US labour market figures provided a glimmer of hope for the world’s top economy.

At one point the US crude oil benchmark WTI was up by 20 per cent on the day, having earlier this week plunged below zero.

“Heightened risk in the Middle East” triggered the upturn, said analysts at Phillip Futures, after US President Donald Trump tweeted he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea”.

Iran, meanwhile, said it put its first military satellite into orbit. Washington alleges the space program is a cover to develop ballistic missiles.

Short of halting the world’s oil production there is little producers can do to help the oil price, said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.

“One other option is to fuel geopolitical tensions in the Middle East to threaten supply and support prices. This is what Donald Trump is doing right now,” she said.

The tensions offset news of another surge in US crude stockpiles as the pandemic crushes demand for energy.

“Oil prices are enjoying another little bounce on Thursday but don’t be fooled, at these levels, the percentage change can be very misleading,” cautioned Craig Erlam, an analyst at Oanda.

Things were looking up “as the price doesn’t start with a minus”, he said, “but I wouldn’t bet against visiting those depths again”.

Equity markets meanwhile were posting solid gains by the late European afternoon, partly because of higher oil prices, and partly because US unemployment claims rose by less than the market had expected, said analysts at Charles Schwab.

The eurozone economy headed by Germany is suffering an “unprecedented” collapse according to a PMI index released Thursday by analysis firm IHS Markit.

Meanwhile, the Bank of England warned that Britain was heading for a recession that could be the worst in centuries.

London closed up 1.0 per cent, Frankfurt ended 1.0 per cent higher and Paris Gained 0.9 per cent.

AFP

5.35am: Lufthansa seeks state aid

German airline giant Lufthansa said the group was in “intensive negotiations with the governments of its home countries … to sustainably secure the group’s solvency”, as it reported a 1.2-billion-euro operating loss in the first quarter.

“The business outlook, existing multi-billion liabilities related to trade payables and refunds of cancelled tickets as well as upcoming repayments of financial liabilities” meant the group, which also includes Austrian and Brussels Airlines and Swiss, would need state bailouts, Lufthansa said, adding it was “confident” of an agreement with national capitals.

AFP

5.32am: Norway oil fund shrinks

Norway’s sovereign wealth fund, the world’s biggest, reported negative growth as a scandal surrounding its new boss intensified.

The fund posted a negative return of 14.6 per cent for the first quarter, equivalent to a loss of 1.35 trillion kroner ($US127 billion, 117 billion euros).

Already in March the fund had announced major losses as global markets collapsed under the economic fallout from the COVID-19 pandemic.

The loss reported on Thursday was mostly in line with preliminary figures released on April 2, and Norwegian media instead focused on a scandal involving the fund’s new CEO Nicolai Tangen, set to take over from Yngve Slyngstad in September.

The appointment of Tangen, who currently runs the hedge fund AKO Capital in London, came under scrutiny after it emerged that he invited 150 people, including Slyngstad, to a three-day “dream seminar” in Philadelphia in the US.

Guests were treated to private jet flights, hotel nights, food and a private concert with Sting and Gregory Porter, according to newspaper VG.

The seminar was held in mid-November last year, only weeks after Slyngstad announced he would be stepping down. On March 26 the fund announced Tangen would succeed Slyngstad.

AFP

5.30am: Credit Suisse boosted

Credit Suisse, Switzerland’s second-biggest bank, recorded strong first-quarter profits thanks to exceptional gains linked to the transfer of a funds platform.

Its net profit jumped 75 per cent on the same period in 2019, to 1.3 billion Swiss francs ($US1.3 billion) — the bank’s highest quarterly result in the last five years, the bank said in a statement.

The bank meanwhile built up reserves of one billion francs during the quarter to cope with the economic upheavals of the coronavirus crisis and said further reserve build could take place in the coming quarters.

A branch of Swiss bank Credit Suisse in Gstaad. Picture: AFP

AFP

5.29am: US new home sales plunge

Sales of new single-family houses collapsed in March as the lockdowns to contain the coronavirus outbreak took effect, dropping 15.4 per cent compared to February, according to government data.

Sales fell to a seasonally-adjusted annual rate of 627,000, 9.5 per cent below the March 2019 pace, with the deepest decline seen in the Northeast and West.

The median sales price fell to $US321,400 from $US330,100, according to the report.

AFP

5.25am: 26m seek US jobless aid

More than 4.4 million laid-off workers applied for US unemployment benefits last week as job cuts escalated across an economy that remains all but shut down, the government said Thursday.

Roughly 26 million people have now filed for jobless aid in the five weeks since the coronavirus outbreak began forcing millions of employers to close their doors. About one in six American workers have now lost their jobs since mid- March, by far the worst string of lay-offs on record.

Economists have forecast that the unemployment rate for April could go as high as 20pc. The enormous magnitude of job cuts has plunged the US economy into the worst economic crisis since the Great Depression of the 1930s.

5.20am: Europe on course for recession

European economies are heading for an unprecedented recession as a result of the lockdown measures put in place by governments to get a grip on the coronavirus pandemic, closely watched surveys indicated.

The scale of the decline in business activity recorded in monthly surveys was staggering, worse even than the most pessimistic forecasts, and is likely to lend urgency to discussions of European Union leaders about a rescue support package.

“The harsh lockdown measures to slow the spread of COVID-19 have crippled economic activity across the continent,” said Florian Hense, a European economist at Berenberg Bank.

EU leaders were holding a virtual summit Thursday at which they were expected to endorse a financial aid package worth 540 billion euros ($US587 billion) that would help support wages, keep companies afloat and fund health care systems. EU institutions and nations have already mobilised around 3.3 trillion euros ($US3.6 trillion).