Trading Day: ASX rebound fuelled by US stimulus hopes, iron ore surge
The local market ran into profit taking after an exaggerated bounce, closing up 1pc at 5872.9.
- Online sales slow after strong growth
- Narrabri gas ‘unavailable until 2026’
- BHP, Rio upgraded on iron ore optimism
That’s all from the Trading Day blog for Thursday, October 1. The local market ran into profit taking after an exaggerated bounce, closing up 1pc at 5872.9. On Wall Street overnight, the Dow rose 1.2 per cent, the S&P 500 added 0.8 per cent, and the Nasdaq gained 0.7 per cent.
Cliona O’Dowd 7.52pm: Moody’s downgrades AMP Group
Moody’s Investors Service has downgraded AMP Group, AMP Group Finance Services and AMP Bank in a move the ratings agency said reflected the wealth manager’s weaker operating results, high outflows and sustained reputational damage from weak governance.
Moody’s on Thursday downgraded the entities to Baa2 from A3 and changed the outlook for all three to “stable” from “ratings under review”.
“Moody’s regards AMP Group’s corporate governance weakness as a governance risk under its environmental, social and governance framework, given its implications for the company’s compliance and reporting,” the ratings agency said.
“We expect the uncertain economic outlook and coronavirus-related early withdrawal of superannuation funds will continue to constrain the group’s ability to attract new funds and grow assets under management.
“This is partly offset by the continued strong fund inflows in the group’s asset management operations, which demonstrate a high level of resilience, partially mitigating the more challenging environment in wealth management.”
David Swan 6.40pm: Optus betting on gaming boom with new launch
Video games have soared in popularity during the pandemic and Optus is betting that gamers won’t be putting down their controllers any time soon as it readies to launch a $10 NBN plan add-on as part of a broader strategy to woo the gaming community.
Optus will next week introduce Game Path, a piece of computer software from Canadian start-up WTFast that it says will automatically route internet traffic over the most optimal path available, for lower latency and faster ‘frags’, otherwise known as video game kills. The telco said internet traffic was up around 75 per cent since quarantine came into effect, with much of that due to games like Fortnite and Call of Duty. Those games often rely on servers overseas, leaving Australian gamers frustrated and at a disadvantage.
“What Game Path does is help Australians get their data across the internet in the most efficient way possible; we have 250 different locations around the world and 60 different regions,” Optus VP for TV content and product development Clive Dickens told The Australian.
“It’s become more important during these COVID times in terms of the amount of time we’re now spending online, and gaming. This subscription product is $10 a month, there’s no contract, it attaches to all our eligible Optus NBN plans and it should significantly improve the gaming experience for those hardcore users.”
Mr Dickens said Optus was ranked as the top NBN provider for download speeds by the ACCC for the past four quarters, and that gaming speeds were a consideration for a growing number of customers. NBN competition is ramping up, with Telstra this week launching a 5G home service.
Bridget Carter 5.47pm: Select Harvest poised to announce acquisition
Select Harvest is poised to announce an acquisition of $150 million worth of almond farms, according to market sources.
It is understood that the company will launch a $120m equity raising at $5.20 per share to fund the acquisition.
More to come
Damon Kitney 5.14pm: ‘Multiple failures’ led to Crown arrests
Former Crown executive chairman John Alexander has admitted multiple failures in the company’s risk management processes and corporate governance in the lead up to the arrest of its staff in China in 2016.
Questioned on Thursday about his knowledge of a range of events including the fears expressed by Crown’s China staff for their safety following a Chinese government crackdown on gambling in foreign casinos, Mr Alexander said the board was not informed about their fears or even the crackdown.
“It is clearly a failure of information flow upwards. I cannot explain why the information was not passed on,’’ he said.
4.31pm: ASX gains 1% on US stimulus hope
Australian shares reacted positively to comments from US officials indicating that another major US fiscal stimulus in the order of $US1.5trn-$US2.2trn is near.
After plunging 2.3pc on Tuesday after the first US presidential debate cemented expectations of a win by Democrats and personal tax hikes after the US Presidential election next month, Australia’s S&P/ASX 200 index rose as much 1.7pc to an intraday high of 5916.5 amid light volume due to NSW school holidays as well as holidays through much of Asia.
S&P 500 futures rose 0.7pc as US Treasury Secretary Mnuchin hinted that a fiscal stimulus deal may be reached on Thursday.
But the local market ran into profit taking after an exaggerated bounce, closing up 1pc at 5872.9.
BHP, Fortescue and Tinto rose 1.2-2.3pc after spot iron ore rose 3.6pc to $US123.16 a tonne and Credit Suisse upgraded the miners.
Reliance Worldwide was the best performer in the ASX200, surging 11pc to a 7.5-month high close up $4.22 after reporting a 29pc year on year rise in US sales for September.
Real Estate was the strongest sector with Stockland, Scentre, GPT, Dexus, Vicinity Centres and Mirvac rising 2.3-4pc amid improving domestic coronavirus trends.
Banks lagged with the four majors rising between 0.5pc and 1pc.
Bridget Carter 4.22pm: Cheap as Chips potential sale
Alceon Group has tapped Miles Advisory for a potential sale of its Cheap as Chips retail business that could be worth as much as $250m.
The retailer is run by the former Dick Smith boss Nick Abboud and has about 40 stores in the regional areas of South Australia and Victoria, as well as a minimal presence in NSW.
The plan for Alceon has been to roll out additional stores nationally.
A move by Alceon to consider a sale comes after the private equity firm had received inbound approaches from prospective buyers, including other private equity firms.
It is understood to be a similar situation occurred when it sold its Eptec engineering contracting business.
The sale came after an approach by acquirer Next Capital.
Cheap as Chips has been owned by Alceon for about four years, buying the business from the founder, Ian Watkins.
The retailer operates in the discount variety category and one of its competitors is The Reject Shop, which has seen a surge in its share price since the onset of the global health crisis.
But unlike The Reject Shop, Cheap As Chips has a larger regional footprint.
The company is understood to have experienced strong growth this year and has recently launched online.
Alceon is run by a number of former high profile investment banking operatives such as Trevor Loewensohn, Richard Facioni and Phil Green and is a 36 per cent shareholder in Mosaic Brands.
It also owns online retailer SurfStitch, luxury fashion brand Ginger & Smart, the Pumpkin Patch brand and the right to roll out Lego stores in Australia.
The company has been building an online department store fronted by high profile model Jennifer Hawkins through its EziBuy business, a New Zealand-founded multichannel retailer it purchased from Woolworths in 2017.
EziBuy has been considered the largest fashion and homeware multichannel retailer in Australasia, mailing over 23 million catalogues every year and processing more than 1.75 million orders annually. It operates via websites, catalogues and stores across New Zealand.
Bridget Carter 4.15pm: Cooper Energy prepares for Eni buy
The $569 million oil and gas producer Cooper Energy is understood to have joined forces with Morgan Stanley Infrastructure Partners in its quest to buy Eni’s Australian energy assets that could be worth up to $1bn.
Morgan Stanley Infrastructure was always believed to be an eager acquirer of the portfolio, but has needed to find an operator to run the projects if it gained control of the assets.
Other parties said to be in the final round of the competition are Macquarie Group and Neptune Energy, backed by The Carlyle Group, and MedcoEnergi.
Cooper Energy is known to have partnered up with groups in the past to compete for oil and gas assets.
When Origin Energy placed its Lattice Energy business up for sale, Cooper was looking at the business in the early stages of the contest in partnership with private equity firm Warburg Pincus, but it did not progress to the final stages.
Cooper is believed to be looking at the portfolio of assets in partnership with Morgan Stanley Infrastructure after, like other oil and gas producers, its market value has almost halved in the past year.
The collapse of the oil price linked to the global health crisis has sent share prices of oil and gas groups reeling.
Cooper Energy posted an $86m loss for the 2020 financial year.
While delivering its result in August, Cooper’s managing director David Maxwell said the later-than-expected start-up of the company’s flagship Sole project due to delays with APA Group’s Orbost Gas Processing Plant had weighed on the bottom line.
The Sole Gas project comprises two separate elements, an offshore project to develop and connect the gas field managed by Cooper Energy and an onshore project managed by APA Group to upgrade the OGPP to process Sole gas for supply into the Eastern Gas Pipeline.
Cooper Energy’s sales revenue still grew 3 per cent in fiscal 2020 and while the delays hurt the company, the $600m project in Victoria’s Gippsland Basin is now believed to be moving ahead.
Sole was scheduled to start producing gas around the middle of last year.
It entered into five to eight-year contracts some years ago with power retailers such as AGL Energy, EnergyAustralia and Alinta Energy that were keen to lock in supply.
On the Eni sales process, Morgan Stanley Infrastructure Partners and Cooper Energy are understood to be working with adviser Bank of America, while MedcoEnergi is working with Barclays Capital.
On offer by Eni as part of Project Ocean is a 10.99 per cent stake in Darwin LNG. Analysts estimate it is worth about $250m.
Also up for sale is the linked Bayu-Undan gas field project.
The Blacktip gas field project and the Yelcherr gas plant connected to the project are expected to fetch up to $500m.
Eni is also selling a 72.2 per cent interest in the Evans Shoal and Barossa gas field project off the coast of Darwin.
Jared Lynch 3.43pm: Tanarra enters dairy industry with 70pc stake in Barambah
John Wylie’s Tanarra Capital has taken a large slice of Queensland specialty dairy company, Barambah Organics, as part of its entree into the milk industry.
Tanarra has taken a 70 per cent stake in Barambah, which produces a range of cheeses, yoghurts and milk drinks that are sold across 800 stores in Australia and internationally.
The deal values Barambah, which husband and wife team Ian and Jane Campbell founded in 2002, at around $50m. It comes as speculation mounts that Tanarra is eyeing a bigger dairy acquisition - Lion’s dairy business - which is back on the block after the federal government rejected its planned $600m sale to China-based Mengniu.
Tanarra - which manages $1.7bn of funds across its operations in private equity, private credit, venture capital and selected strategic investments in public companies - aims to help fastrack Barambah’s growth, which includes expanding deeper into south-east Asia.
The Campbells will continue to manage Barambah’s operations, retaining a significant stake in the business.
3.28pm: ASIC and RBA outline expectations for CHESS replacement
ASIC and the Reserve Bank have said they expect the ASX to replace its CHESS clearing house system as soon as can safely be achieved.
In a joint announcement outlining expectations for the replacement, ASIC and the RBA – co-regulators of licenced clearing and settlement systems – said ASX is expected to demonstrate the readiness of a replacement system.
ASX will also be required to provide supporting independent assurances to the regulators before a new system is fully implemented.
“CHESS has supported the clearing and settlement of Australian equities for over 25 years but is becoming harder to maintain and is less flexible than contemporary software,” said RBA assistant governor Michele Bullock.
“Replacing the system with more modern technology is critical to ASX’s ongoing management of systemic risk.”
ASX said it welcomed the announcement, and said the rapid uplift in volumes experienced during the COVID period highlight why the implementation of the next generation of technology to support the digitisation of Australia’s equity market is a priority.
2.53pm: ACCC proceedings against Employsure dismissed
The Federal Court has dismissed a case against workplace relations advisor Employsure brought by the ACCC, finding that company did not engage in misleading marketing or behave un conscionably in its small business dealings.
The Australian Competition and Consumer Commission alleged that Employsure misrepresented to small business consumers that it was affiliated with a government agency, using Google Ads and through statements on its websites.
“We took this case because the ACCC had received over 100 complaints relating to Employsure, raising concerns including alleged misleading conduct, unfair sales tactics and unfair contract terms,” ACCC Commissioner Sarah Court said.
“We were particularly concerned that Employsure’s ads gave the impression that Employsure was a government agency or affiliated with government.
“Any attempt to misrepresent a business as being part of the government is a serious breach of trust, and of our consumer laws.”
But the Federal Court dismissed the case after finding that the ads were not misleading and considered that a reasonable business owner would not infer that an affiliation with the government existed.
“We are pleased with today’s judgement and the Court’s recognition of the important support we offer to small business owners through both our free and paid services,” Employsure said in a statement.
“Our focus now is to move forward and keep doing what we do best: helping small businesses build safe and fair workplaces so they can grow their business and protect their employees, a service that is more important than ever as we collectively navigate the uncertain times ahead.”
Glenda Korporaal 2.30pm: Director didn’t share Packer news: Crown inquiry
Crown Resorts director John Poynton did not feel the need to tell the Crown board of James Packer’s proposal to sell a large part of his shareholding in the company to Macau casino operator Lawrence Ho when he was told by Packer in phone call before it was publicly announced.
Giving evidence to an inquiry into Crown’s suitability to hold a casino license in NSW, Mr Poynton, who is also chairman of Crown Perth, said he received a phone call from Mr Packer in May 30 last year telling him he was planning to sell a 19.9 per cent stake in Crown to Mr Ho.
Mr Poynton said he did not feel the need to call other directors of Crown to discuss the share sale with them.
This was despite the fact that it was a specific condition of Crown’s license to operate in New South Wales that Crown have nothing to do with Lawrence Ho’s father, Macau casino operator, Stanley Ho.
Read more: Crown director didn’t share Packer news
Richard Ferguson 2.26pm: PM confident of a new IR framework
Scott Morrison says he will forge a new industrial relations framework with the unions and business, despite tensions at Sydney ports and fights within the government’s working groups.
Government ministers have blasted the blockage of ports like Port Botany by the MUA and there have been divisions within the business community over the level of ground given to the ACTU in the discussions on a new framework being led by Industrial Relations Minister Christian Porter.
The Prime Minister told The National Press Club on Wednesday that a deal can still be struck on a new IR system, but militant action cannot continue in the midst of a pandemic.
“There have been a few disagreements along the way, not to be - not unexpected. But at the same time, people have remained at the table,” he said.
“And the Attorney-General and I have been very grateful for that, as has the Treasurer. And we have finished that round of the process, and that is being distilled by the Attorney-General, as Minister for Industrial Relations, and he is now fashioning a plan that will come forward to the Cabinet.
“We can’t have the rather militant response and approach that we’re currently seeing out there in Port Botany ... My hope is that is an outlier, that that is an aberration, that that is not a position that is more broadly shared amongst those in the industrial relations area.”
2.23pm: Credit falls again in August
Credit to the private sector fell for the fourth straight month in August, as the economic fallout from the coronavirus crisis sparked a reduction in the appetite for borrowing.
“Further falls in credit are in prospect over the months ahead,” said Westpac senior economist Andrew Hanlan, noting that the results were the weakest for private sector credit since the GFC.
Annual credit growth has moderated to 2.2 per cent, the latest data shows, while credit recorded a 0.03 per cent fall for the month of August.
“With the onset of the pandemic, businesses are in survival mode,” Mr Hanlan said.
“The initial reaction by many firms was to draw down on existing lines of credit in March, leading to a one-off spike in business credit, up 3.0 per cent in the month.
“Subsequently, firms are looking to cut non-essential spending, including investment.”
He said that falls in business credit over the last four months is the start of a trend and is broadly consistent with the experience of past recessions.
2.10pm: White House offer above US$1.5tn: Meadows
The White House counter-offer to Democrat’s $US2.2tn fiscal stimulus proposal is above $US1.5tn, according to White House chief of staff Randall Meadows.
The counter-offer includes more aid for airlines, he also said, according to Bloomberg.
This is consistent with earlier comments from US Treasury Secretary Mnuchin that he saw a $US1.5tn-$2.2trn deal.
The question now is whether either side prepared to walk across the gap this close to the election.
Republicans may not be inclined to do so with Trump well behind in the polls and the stock market still relatively buoyant. Democrats have little motivation to give Trump a free kick before the election, but stranger things have happened in US fiscal policy.
The news is supporting risk assets after intraday agains.
The S&P/ASX 200 was 1.5pc at 5895 after hitting an intraday high of 5915.
AUD/USD was up 0.2pc at 0.7176 after reaching a 2-week high of 0.7184.
Lachlan Moffet Gray 2pm: Reliance shares surge on strong sales
Shares in plumbing fixtures manufacturer Reliance Worldwide jumped by more than 10 per cent on Thursday after the company reported strong sales growth from its American businesses.
The company reported an average 22 per cent increase in sales over the three months to September as North Americans under COVID-19 lockdown turned their attention to DIY plumbing projects.
In FY2020, sales in North America were worth $1.16bn.
In an update to the market ahead of an investor presentation, Reliance said the growth was driven by a strong increase in retail and hardware sales.
But CEO Heath Sharp warned investors that the sales quantities were unlikely to become a permanent fixture of the businesses.
“The first quarter of the 2021 financial year has been particularly strong from a sales perspective,” he said.
“Looking ahead, we remain cautious.
“The US has been boosted by the surge in DIY activity and the return of construction activity to pre-COVID levels, but without further government stimulus measures this growth is likely to slow.”
Sales in Europe in the UK saw a complete reversal of fortunes, growing by 5 per cent in August and 24 per cent in September after contracting 4 per cent in July.
Mr Sharp said the jump in sales over September was attributable to “pent-up” demand and channel partners being able to restock inventory that was depleted earlier in the pandemic.
1.55pm: Freedom Foods appoints new CFO
Freedom Foods has appointed InvoCare CFO Josee Lemoine as its new chief financial officer. She will take up the role on November 16.
“We are delighted that Ms Lemoine has accepted our invitation to join the Company as CFO,” said interim chief executive Michael Perich.
“She brings extensive experience as a CFO, in strategic finance and governance roles in ASX listed entities. We look forward to her contribution as the CFO of Freedom Foods Group Limited.”
The company’s former chief executive Rory MacLeod resigned in June shortly after former CFO Campbell Nicholas stepped down, as the company investigated a series of accounting discrepancies.
Shares in the company remain suspended after they were first placed in suspension in June.
In August, Freedom Foods told shareholders that the investigation was ongoing.
1.40pm: Former Leighton executive acquitted
Former Leighton executive Peter Gregg has been acquitted on appeal after he was convicted of two counts of falsifying the books of the engineering company, which is now known as CIMIC.
Mr Gregg was convicted in the NSW District Court of two offences contrary to the corporations act, after it was alleged that he engaged in conduct that resulted in the falsification of the company’s books.
He was sentenced to 12 months’ imprisonment for count one and two years on count two.
The guilty verdicts were quashed on appeal, ASIC said today.
Bridget Carter 1.25pm: Adore Beauty prices IPO
Online cosmetics retailer Adore Beauty has priced its initial public offering at $6.75 per share, taking its market value to $635m.
The company, owned by founder Kate Morris and Quadrant Private Equity, will lodge the prospectus for its float next week.
It comes after investment banks Morgan Stanley and UBS recently carried out meetings with prospective investors to shore up early demand through a cornerstone process.
The price equates to 3.9 times the company’s revenue for 2020 and comes as online retail stocks surge on the Australian Securities Exchange amid the global COVID-19 pandemic.
Including debt, the business is valued at $618m.
The company is expected to raise around $250m.
1.15pm: Westpac predicts $240bn budget deficit
Westpac estimates that next week’s federal budget will forecast a deficit of about $240bn.
The bank’s chief economist, Bill Evans, said the government should focus on a package that includes personal tax cuts as well as policies to boost business and infrastructure investment.
He said the government’s budget should look at the extension and redesign of JobSeeker and JobKeeper, an expanded HomeBuilder scheme, and a manufacturing strategy.
“Readers might be surprised that we advocate the bringing forward of the Stage 2 tax cuts to July 2020 and the Stage 3 tax cuts to July 2021,” Mr Evans said.
“Such a move would be a strong statement from the government that it is serious with its efforts to boost demand through tax cuts.”
1.07pm: Tokyo trade halted for day
Trade on Tokyo’s stock exchanges was halted for the whole day Thursday after a technical glitch forced activity to be suspended before the market opened.
“TSE (Tokyo Stock Exchange) has decided to halt all listed stocks for all of today. When trade will resume has not yet been decided,” operator Japan Exchange Group said in a statement.
Earlier, the precise nature of the glitch was not explained, but it meant the country’s top indexes -- the Nikkei 225 and the Topix -- were unable to open at the start of the trading day.
The issue was also affecting trade on several other exchanges, including in Nagoya and Sapporo.
The trading halt closed one of the few major markets open in Asia on Thursday, with bourses in Hong Kong, Shanghai, South Korea and Taipei all closed for holidays.
This is the first significant glitch for Tokyo’s exchange since 2018, when a trading system problem left some securities firms unable to execute orders. But that issue did not halt all trade, having what was described as a limited effect on overall market activity for the day.
The last time all stocks trade was suspended due to system glitch was on November 1, 2005, when trade was suspended for the whole morning session.
The New Zealand Exchange was hit in August by cyberattacks that forced it to halt trading three times in as many days. The attacks also crashed the exchange website.
AFP
Michael McKenna 1.05pm: Adani mine royalties deal agreed
The Palaszczuk government has signed the long-stalled royalties agreement with Adani over its controversial coal mine project in central Queensland.
Only days out from the beginning of the state election campaign, the Indian conglomerate and treasurer Cameron Dick have struck a deal over the $2 billion mine, expected to go into production next year.
Sources said the new royalties deal was negotiated in haste over the past few weeks amid concerns it would become an issue ahead of the October 31 election, with Labor under threat in a number of marginal seats in regional Queensland.
Adani’s Carmichael mine has dominated Queensland politics over the past five years, with Labor’s Left faction leading a cabinet revolt which scuttled an earlier royalties deal - involving a deferred payment schedule – ahead of the 2017 state election.
The Palaszczuk government then withdrew support for a proposed $1bn federal loan for the project’s rail line, across the burgeoning Galilee Basin coal province, and after its re-election demanded new environmental reviews that delayed final approval of the project.
Labor’s poor results in regional Queensland at last year’s federal election were blamed on community outrage over the delays.
After the federal election, Annastacia Palaszczuk ordered the fast-tracking of approvals for the mine, which will initially produce 10million tonnes a year.
Construction of the mine - 780km northwest of Brisbane - began in July.
12.48pm: House delays vote on $US2.2tr aid bill
The House of Representatives postponed a vote on a $US2.2 trillion coronavirus aid package as Democrats tried to find common ground with the White House on a bipartisan agreement, though they remained far apart on key issues.
Democratic aides said the delay was to allow the two sides one more day to keep talking before a vote. As written now, the legislation has no hope of advancing in the GOP-controlled Senate, but many centrist Democrats were eager to pass a new bill before they returned to campaigning in their home districts.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi met Wednesday afternoon for 90 minutes and failed to reach an agreement.
“We found areas where we are seeking further clarification,” Mrs. Pelosi said as she announced plans to hold a vote. “Our conversations will continue.”
The updated legislation released earlier this week shaved the price tag of economic relief to $US2.2 trillion, compared with the $US3.5 trillion bill the House passed in May.
In an interview with Fox Business Network Wednesday night, Mr. Mnuchin said he had a productive conversation with Mrs. Pelosi about the administration’s new relief proposal, which he said is in the neighborhood of $US1.5 trillion.
The proposal includes additional aid for small businesses, the airline industry and schools, Mr. Mnuchin said. He said he and Mrs. Pelosi have also agreed that any deal will include another round of stimulus checks.
Asked why his outlook for a deal had improved, Mr. Mnuchin noted that today’s meeting was the first time in weeks the two sides had seriously engaged in relief discussions.
Dow Jones
12.45pm: Job vacancies recover following largest fall on record
Job vacancies increased nearly 60 per cent in the quarter through August compared to the May quarter, with 206,000 vacant positions on a seasonally adjusted basis, the latest figures released by the Australian Bureau of Statistics reveal.
“Job vacancies rose sharply in the August 2020 quarter, following the largest fall on record in the May 2020 quarter, when vacancies decreased by 43 per cent,” said ABS head of labour statistics Bjorn Jarvis.
“By August, vacancies were around 9 per cent below February, highlighting the extent of recovery from the fall in May.”
Private sector vacancies lifted by 65.4 per cent, while public sector vacancies rose 22 per cent on the May quarter.
Vacancies were down 8.1 per cent on the same period a year ago.
Arts and recreation services, rental, hiring and real estate services and accommodation and food services saw the biggest increase in job vacancies. Those sectors had experienced the largest fall in vacancies in the May quarter.
Despite the recovery in the arts and recreation services industry, vacancies in the sector remained around 40 percent below February, following almost no vacancies in May, the ABS said.
12.25pm: No word on Tokyo resumption
A technical problem forced a halt to all trading on Tokyo’s stock exchanges, with no information on when activity would resume, the bourse’s operator said.
“Trading in all shares on the Tokyo Stock Exchange is suspended due to glitches linked to the delivery of market information,” Japan Exchange Group said in a statement.
An official told AFP that trade was suspended from 8:35am local time. Orders were also not being received.
The precise nature of the glitch was not explained further, but it meant the country’s top indexes -- the Nikkei 225 and the Topix -- were unable to open at the start of the trading day.
The issue was also affecting trade on several other exchanges, including in Nagoya and Sapporo.
The trading halt closed one of the few major markets open in Asia on Thursday, with bourses in Hong Kong, Shanghai, South Korea and Taipei all closed for holidays.
This is the first significant glitch for Tokyo’s exchange since 2018, when a trading system problem left some securities firms unable to execute orders. But that issue did not halt all trade, having what was described as a limited effect on overall market activity for the day.
The last time all stocks trade was suspended due to system glitch was on November 1, 2005, when trade was suspended for the whole morning session.
The New Zealand Exchange was hit in August by cyberattacks that forced it to halt trading three times in as many days. The attacks also crashed the exchange website.
12.24pm: American Airlines, United to cut 32,000 jobs
American Airlines and United Airlines will go forward for now with a total of more than 32,000 job cuts after lawmakers were unable to agree on a broad coronavirus-relief package, the airlines told employees.
The job reductions could put pressure on lawmakers who have negotiated on and off for months over an aid package that could include relief for airlines and other hard-hit industries like restaurants and small businesses. Both carriers said they would bring workers back if a deal is reached in the next few days.
“We implore our elected leaders to reach a compromise, get a deal done now, and save jobs,” United said Wednesday night. The airline said over 13,400 employees will be out of a job starting Thursday.
American, which has planned deeper cuts than any other carrier, also told Treasury Secretary Steven Mnuchin that it will bring its 19,000 workers back if lawmakers can approve more aid in the next few days, Chief Executive Doug Parker told employees in a letter.
“Unfortunately, there is no guarantee that any of these efforts will come to fruition,” he wrote. “I am extremely sorry we have reached this outcome. It is not what you deserve.”
Airline workers had been largely insulated from the deep declines in travel due to the conditions imposed on $US25 billion in government aid approved under the broad economic stimulus package passed in March.
Dow Jones
12.09pm: Layoffs loom for US airline industry
Workers from the beleaguered US airline industry were making a last-ditch public appeal this week to coax more money from Capitol Hill power brokers to save their jobs.
The first day of October concludes the period when US carriers that received billions in aid from Congress promised to refrain from laying off workers.
American Airlines was the first to announce cuts, saying it will begin furloughing 19,000 workers from Thursday as US officials have failed to reach a deal on fresh aid to the pandemic-hit air travel sector.
A package of loans totaling up to $US25 billion to seven US carriers announced Tuesday night by the Treasury Department provides funds for airlines to ride out a prolonged downturn amid the coronavirus, but won’t affect plans for furloughs, airline sources said.
Treasury Secretary Steven Mnuchin said Wednesday on CNBC he was hopeful airlines would postpone layoffs if congressional leaders can reach a framework for a deal, saying it was “critical” for Congress to act.
While the stalemate in Washington over stimulus has pinched unemployed workers and put public sector employees on notice, vulnerable airline workers have in some ways been the poster children for the impasse.
House Speaker Nancy Pelosi and Mnuchin held talks again Tuesday and agreed to keep negotiating. But a deal is still far from assured.
Airline workers are hardly the only losers from Washington’s inability to enact fiscal stimulus.
Laid-off workers had been receiving $US600 in weekly supplemental unemployment benefits under a provision of the CARES Act that expired at the end of July.
President Donald Trump authorized an additional $US300 in weekly spending by tapping federal emergency funds, but those funds are also running out and expected to be gone in October, said Nancy Vanden Houten of Oxford Economics.
AFP
12.02pm: ASX extends rebound to midday
Australian shares remained volatile at lunch, with renewed hope of US fiscal stimulus supplanting fear of a Democratic Party election win leading to tax hikes.
The S&P/ASX 200 index was up 96 points or 1.7pc at 5913.1 at midday after diving 2.3pc to a five-day low of 5815.9 on Wednesday.
The index was driven by comments from Treasury Secretary Steven Mnuchin indicating that agreement on a $US1.5trn-$US2.2trn fiscal deal could be reached by Thursday.
But it rose much more than S&P 500 futures, perhaps due to the fact that the local bourse underperformed so much before the month’s end. S&P 500 futures rose 0.6pc.
The Materials sector led broad-based gains with BHP, Rio Tinto and Fortescue up 2.4-3.1pc after spot iron ore jumped 3.6pc and Credit Suisse upgraded the miners.
The Real Estate and Industrials sectors were also outperforming with Unibail Rodamco up 5pc and Reliance Worldwide up 11pc.
Reliance shares surged to a 7.5-month high of $4.30 after reporting a 29pc year on year rise in US sales.
The Financials sector continued to lag with the four major banks up 1pc-1.5pc.
11.30am: Online sales slow after strong growth
NAB’s online retail sales index slowed to 4.2pc in August, on a month-on-month, seasonally adjusted basis, from 6.6pc in July.
Year-on-year growth of 60.6pc remained near a record high of 63.8pc growth in the year to July, due to the pandemic.
Exceptionally strong growth in Victoria due to lockdowns in August, outweighed falls in Queensland, WA, Tasmania and NT, while NSW and ACT rose slightly.
Growth was led by larger sales categories, department stores, personal and recreational goods, and smaller sales category, games and toys.
The second largest category - grocery and liquor - has now recorded continuous growth for the past 14 months.
The largest sales - category, homewares and appliances - was flat in the month.
At the other end of the scale, media contracted in all states and territories in the month.
But in year-on-year terms this category is currently the 4th fastest and has contributed strongly to the headline growth.
NAB estimates that in the 12 months to August, Australians spent $39.2 billion on online retail - about 11.5pc of the total retail trade estimate and about 33.6pc higher than the 12 months to August 2019.
“Victoria recorded the strongest growth in the month, well above growth in the other states (as) the lock-down is clearly impacting the result as businesses adapt, with contactless pickup and discounted or free delivery,” said NAB chief economist, Alan Oster.
“In year-on-year terms, online sales in Victoria are more than double what they were in the same month 2019.
“This is well beyond any Christmas period trading that we have observed for Vic online retail in both growth and absolute dollar terms.
“The state also led growth in each category, except media, and takeaway food in the month.”
11.20am: ASX extends gains on US stimulus hopes
Buoyant US index futures have seen the Australian share market extend its intraday rebound.
The S&P/ASX 200 rose 1.5pc to 5900.5 as S&P 500 futures gained 0.5pc after US Treasury Secretary Steven Mnuchin gave hope of a new fiscal stimulus agreement.
Roll Call said Mnuchin offered Pelosi more state and local relief aid and proposed a $US400 per week unemployment benefit.
11.15am: Aberdeen promotes in Australian equities team
Fund manager Aberdeen Standard Investments has promoted Natalie Tam to deputy head of Australian Equities, and Camille Simeon to investment director.
“I am delighted to award these promotions to Natalie and Camille, who have been committed members of the Australian equities team over the last 15 and 12 years, respectively,” said Michelle Lopez, Aberdeen Standard’s Australian equities head.
“While the last nine months have been challenging, both Natalie and Camille have stepped up and led on projects in addition to their day-to-day analysis and portfolio management responsibilities, which have been extraordinarily demanding during these times.”
Ms Tam joined Aberdeen Standard in 2005 from Deutsche Bank and Ms Simeon joined from Citigroup in 2008.
David Ross 11am: AIG backs govt’s manufacturing sector support
Manufacturing peak body Australian Industry Group head Innes Willox has welcomed the government’s announcements to support the Australian manufacturing sector.
“They have picked six priority areas but that’s not to the exclusion of everything else and nor should it be seen that way, but these are six areas where we do have competitive advantage or real strengths either through natural resources or skill,” he said, speaking on ABC News.
“The COVID pandemic has really made everyone sort of rethink the role of industry in Australia’s economy. There’s been many story, many, sort of, obituaries written for manufacturing and industry and they have proven to be wrong.”
Mr Willox said going forward Australia needed to focus on innovation and development of key sectors of the economy.
‘This package alone is very important at setting benchmarks for us as a country but we now need to develop the tax base, the skills base, the energy base, all of these to turn what this vision into a reality,” he said.
“We really need to develop our skills base and that’s - over time and we need to look to become technology leaders and innovation leader and the word “innovation” needs to be back on the agenda.”
10.56am: Moody’s downgrades AMP
Moody’s Investors Service has downgraded AMP to reflect its weaker operating results and the ongoing challenges the embattled financial services company is facing in its wealth management business, where net cash outflows remained high.
“We expect the uncertain economic outlook and coronavirus-related early withdrawal of superannuation funds will continue to constrain the group’s ability to attract new funds and grow assets under management,” Moody’s analysts said.
“This is partly offset by the continued strong fund inflows in the group’s asset management operations, which demonstrate a high level of resilience, partially mitigating the more challenging environment in wealth management.”
Moody’s also said the move – which lowers both the AMP Group and its Group Finance Services arm to Baa2 from an A3 rating – also reflected AMP’s governance weakness.
Still, Moody’s said that despite the challenges, Australia’s compulsory super system was supportive for the group’s credit profile.
Greg Brown 10.53am: Gas shortage looms: Zibelman
The outgoing chief executive of the Australian Energy Market Operator says new gas supply will be needed over the coming decade and warned this was the “last generation on Earth that can combat climate change”.
Audrey Zibelman, who announced on Tuesday she would leave AEMO for a position at Google’s X, said she was concerned that Australia would face a shortage of gas by the mid-2020s.
“We do need to get gas developed,” Ms Zibelman told the Global Smart Energy Summit, hosted by the Smart Energy Council.
But with the government preparing a gas-led recovery out of the COVID-19 crisis, Ms Zibelman said new gas generation would depend on government policies to lower the price of the fossil fuel.
“It really depends on battery storage, what happens with storage technologies, and what happens to the price of gas,” Ms Zibelman said.
“We don’t necessarily pick the technology, but we do know that at different price points battery emerges a winner or gas emerges a winner.”
10.45am: American Airlines to lay off 19,000
American Airlines will begin furloughing 19,000 workers, the company announced, as US officials have failed to reach a deal on fresh aid to the pandemic-hit air travel sector.
US carriers that received billions in aid from Congress had promised to refrain from laying off workers until the end of September, setting the stage for potentially thousands of job cuts in October.
“Our elected officials have not been able to reach agreement on a Covid-19 relief package...As a result, tomorrow, we will begin the difficult process of furloughing 19,000 of our hardworking and dedicated colleagues,” CEO Doug Parker said in a letter.
However, he sounded a note of hope saying that if lawmakers are able to hammer out a deal for new assistance, the furloughs would be cancelled and the affected teams recalled.
Since the coronavirus intensified in March, US airlines have been grounding planes and delaying jet deliveries to limit their cash-burn as air travel remains at about only one-third of its level a year ago.
AFP
11.20: ASX extends rise to 1.5%
Hope of fresh US fiscal stimulus has seen the Australian share market extend its rebound.
The S&P/ASX 200 rose 1.5pc to 5901.8 as S&P 500 futures gained 0.5pc after US Treasury Secretary Steven Mnuchin gave hope of a new fiscal stimulus agreement on Thursday.
Roll Call said Mnuchin offered House Speaker Nancy Pelosi more state and local relief aid and proposed a $US400 per week unemployment benefit.
Sarah Elks 10.40am: Qld, NSW border could reopen Nov 1
The earliest Queensland’s border could reopen to all of New South Wales is 1am on November 1, deputy premier Steven Miles has confirmed.
Queensland’s criteria for reopening its borders is 28 days without an “unlinked case” in another state, Chief Health Officer Jeannette Young said.
For NSW to hit the 28-day milestone, the earliest that could happen would be October 22.
That would then trigger discussions between health authorities, government and police about the border potentially reopening.
Mr Miles said those discussions and decisions would still happen, even though the government would be in caretaker mode, ahead of the October 31 state election. Mr Miles said Opposition leader Deb Frecklington would continue to be offered briefings with the Chief Health Officer whenever she wanted them.
“We’ll continue to make them as we have been based on the health advice, we continue to be the government right through to election day,” he said.
Usually, the government begins the discussions about the borders on the 22nd of each month, and then border restrictions are eased at 1am on the first day of the new month, he said.
Mr Miles said if NSW hit the 28 days of no unlinked cases, the earliest the border could hypothetically reopen would be 1am November 1.
10.37am: Refinitiv acquisition cleared by ACCC
Australia’s competition watchdog says it won’t oppose the proposed acquisition of Refinitiv Parent by the London Stock Exchange Group, both of which supply financial markets infrastructure products to the Australian market.
London Stock Exchange Group supplies clearing services for over-the-counter interest rate derivatives, venue data and licensing of fixed income and cash equities indices. Refinitiv distributes venue data and indices via consolidated data feeds and desktop terminals as well as licenses the WM/ Reuters foreign exchange benchmark rates.
The ACCC said it examined horizontal overlaps and found no material competition concerns related to the merger of the two companies.
“We determined that the merged entity was unlikely to engage in anticompetitive foreclosure as a change to the established open access approach was likely to lead to commercial, reputational and regulatory risks,” ACCC chair Rod Sims said.
10.23am: ASX jumps at open
Australian shares have rebounded strongly after yesterday’s sharp fall.
The S&P/ASX 200 jumped 0.9pc to 5869.9 in early trading after dropping 2.3pc on Wednesday.
Gains in US stock index futures helped, with S&P 500 futures up 0.3pc after US Treasury Secretary Mnuchin said he was hopeful of agreement on a $US1.5trn-$US2.2trn of US fiscal stimulus.
Technology was the strongest sector, with a 3pc rise in Afterpay making it the 7th biggest contributor to strength in the index.
Iron ore miners BHP, Fortescue Metals and Rio Tinto jumped 2pc, 2.8pc and 1.9pc respectively after Credit Suisse upgraded them and the spot iron ore price jumped 3.5pc.
Reliance Worldwide jumped 10pc to a 7.5-month high of $4.20 - the best rise in the ASX200 - after its America’s sales rose 29pc in the year to September.
Banks staged a modest rebound with the four majors up 0.3-0.9pc.
10.21: Glitch halts Tokyo trade
A technical problem forced a halt to all trading on Tokyo’s stock exchanges on Thursday, with no information on when activity would resume, the bourse’s operator said.
“Trading in all shares on the Tokyo Stock Exchange is suspended due to glitches linked to the delivery of market information,” Japan Exchange Group said in a statement.
AFP
10.12am: Shares halted after documents delays
Helloworld shares have been suspended from trade after the company failed to lodge its financial report by the due date.
The company blamed the COVID lockdown in Melbourne for the delay, saying in a statement to the market that it should have included a statement in its Appendix 4E release explaining that it had planned to use an ASIC relief extension.
Cirralto, Quantum Health, Raptis Group, Simavita, Structural Monitoring Systems and Victor Group have all been suspended this morning for breaching listing rule 17.5, which requires entities to give ASX required documents by their due date.
Mackenzie Scott 10am: National property prices dip for fifth straight month
Australia’s smaller capital cities experienced a significant bump in residential housing prices last month from confidence gained through virus control and lessen social and economic restrictions.
Property prices rose in all capital cities except Sydney and Melbourne through the month of September, according to housing researcher CoreLogic’s latest monthly index.
Brisbane prices were up 0.5 per cent, outpaced by Adelaide (up 0.8 per cent). Hobart and Canberra each rose by 0.4 per cent while Perth prices increased 0.2 per cent. Darwin continued its pattern of renewed strength, up 1.6 per cent for the month, and reported the strongest growth for the third quarter of 2020 of any capital (up 2.3 per cent).
Sydney and Melbourne housing markets still felt the impact of the circulating virus, down 0.3 per cent and 0.9 per cent respectively.
Given the two cities make up approximately 40 per cent of the country’s housing market by number of properties, they effectively pushed the national price result down for a fifth straight month, dipping 0.1 per cent over September.
CoreLogic’s head of research Tim Lawless said that while the roll back of economic stimulus and the looming “fiscal cliff” may be of some concern moving forward, the housing market is still in a good place to continue its recovery.
“The headwinds are very clear,” Mr Lawless said.
“We are expecting that as we see home loan deferrals either expiring or resulting in urgent listings coming into the market, there could be some downward pressure. You‘ve also got the wind back of fiscal stimulus.”
9.50am: What’s impressing analysts?
BHP raised to Outperform: Credit Suisse
Rio Tinto PLC raised to Neutral: Credit Suisse
Fortescue raised to Neutral: Credit Suisse
Bank of Queensland raised to Buy: Morningstar
Platinum Asset raised to Buy: Morningstar
Whitehaven Coal raised to Buy: Shaw & Partners
West African Resources raised to Outperform: Macquarie
9.45am: ASX set for postive start
Australia’s share market should rebound Thursday.
Overnight futures versus relative to fair value pointed to an opening rise of 0.2pc.
But US stock index futures rose on encouraging comments from US Treasury Secretary Steven Mnuchin after the US close.
Mr Mnuchin told Fox Business he saw a potential stimulus deal in the $US1.5 trn-$US2.2trn range.
S&P 500 futures pared a 0.6pc intraday rise to 0.2pc after Mnuchin said he sees opportunity for more progress on a deal on Thursday rather than Wednesday.
Combined with the fact that the ASX200 fell 2.3pc on Wednesday - its biggest fall in 4 weeks - renewed hopes of US fiscal stimulus could see a strong rebound in the local market on Thursday.
While there’s negligible chart support until last week’s low at 5763.2, there’s also negligible resistance until the 100-day moving average at 5935, implying a potential 2pc intraday bounce.
The local bourse should outperform before potentially significant macroeconomic stimulus from RBA board meeting and federal budget next Tuesday, particularly since COVID-19 and reopening trends and better here than in the US and Europe.
Both the Eurozone and the US are currently stalling on fresh fiscal stimulus whereas the Australian government is indicating that next week’s budget will be supportive, with PM Morrison due to give a budget preview at 1230pm Thursday.
Also encouraging for the local bourse was a rebound in commodity prices, with spot iron ore up 3.6pc to $US123.16, WTI crude up 2.4pc to $US40.22 and LME copper up 1.4pc to $US6668 a tonne. Credit Suisse has upgraded BHP, Rio Tinto and Fortescue and BHP’s ADRs equivalent close at $36.12 was a 1.5pc premium to BHP’s Sydney close.
US economic data including ADP private sector payrolls, Chicago PMI and pending home sales beat estimates overnight, helping the US share market shake off the increasing prospect of a Democratic party winning the presidential election and lifting taxes.
But with high frequency data such as HomeBase suggestive of stalling in the US labour market according to NAB, the US share market may be sensitive to ISM PMIs, weekly jobless claims and non-farm payrolls data before the weekend.
Bridget Carter 9.36am: Software company in $25m capital rasing
Over the Wire Holdings is raising $25m by way of a placement and share purchase plan through E.L & C Baillieu and Morgans.
Shares are being sold at $4 each, a 6.1 per cent to the last closing price of $4.26.
The company describes itself as a telecommunications, cloud and IT solutions provider.
Perry Williams 9.30am: Narrabri gas unavailable until 2026: UBS
Gas from Santos’ Narrabri project in NSW will likely cost at least $8 a gigajoule or nearly double a target sought by Andrew Liveris and may not be available for users until 2026, analysts say.
Santos received approval for Narrabri from the Independent Planning Commission on Wednesday with attention now turning to the cost and timing of gas supplies from the development which could supply more than half the state’s gas needs.
Narrabri gas will need to be sold for $8 to $10 a gigajoule to achieve an economic return on investment assuming well performance, as well as capital and operating costs similar to Queensland coal seam gas fields, JP Morgan said.
Andrew Liveris, an adviser to the Morrison government, has targeted $4 a gigajoule gas as an achievable target for the east coast market despite producers rejecting it as an unrealistic price.
UBS expects Narrabri gas at $8 a gigajoule but said at a fixed price it may still be attractive to big industrial users and cheaper than LNG imports.
“Our analysis indicates the all-in production cost for Narrabri is ~A$6.5/GJ ex-plant and gas is sold under contract at $8/GJ. This remains more competitive than the equivalent imported LNG price of $8.90/GJ ex-plant based on current $US5.5/mmbtu Asian spot LNG prices,” UBS analyst Tom Allen said.
“While Narrabri’s production exceeds the $4-6/GJ ex-plant gas price industrial buyers are lobbying the Government to support with market intervention, we believe Narrabri’s ability to offer a fixed price not linked to international oil prices will be attractive for industrial users.”
Gas may not be delivered until 2026 or 2027 given a lengthy appraisal drilling program before Santos takes a final investment decision sometime in 2022, JP Morgan said.
“While the prospect of a new significant supply source could be a headwind for gas prices, we note that the long-dated nature of the development could mean first gas is not available until 2026-27. Santos have indicated that appraisal drilling could take 12-18 months, suggesting an investment decision will not be made until 2022,” JP Morgan analyst Mark Busuttil said.
UBS is more bullish and expects Narrabri gas could start production in the second half of 2024, although an appeal to the IPC decision could lead to further delays.
9.18am: Goldman Sachs, Allstate announce layoffs
Goldman Sachs Group and Allstate have each announced layoffs, a day after Walt Disney said it would cut 28,000 jobs.
Goldman Sachs plans to cut about 1pc of its workforce, or just under 400 people, according to a person familiar with the matter. The company ended its 2019 fiscal year with 38,300 employees. Bloomberg News first reported the layoffs.
A Goldman Sachs spokesman said the company suspended job cuts amid the pandemic but was now moving forward with “a modest number of layoffs.”
Allstate said in a news release on Wednesday that the company was cutting 3,800 jobs, affecting employees mostly in claims, sales, service, and support roles.
“Implementing this plan is difficult as we still deal with the impact of the pandemic but necessary to provide customers the best value,” Allstate CEO Tom Wilson said in a news release. “We have expanded transition support for impacted employees including prioritized internal hiring, extended medical coverage, expanded retraining support and help in employment searches.”
Allstate expects to incur about $US290 million in restructuring charges, mostly due to severance and employee benefits, as well as real estate exit costs related to office closures.
John Durie 9.06am: Gregg wins Leighton accounts appeal
Former Primary Health chief executive Peter Gregg says he is delighted to have won his appeal against a District Court ruling that he falsified accounts in his time as CFO of Leighton.
In a decision handed down this week the Full Court of the NSW Supreme Court dismissed the ruling.
ASIC can appeal the decision.
Gregg was a highly-regarded former CFO of Qantas and Leighton as well as being chief executive of Prime Health before stepping down in 2017.
The issues at the centre of the case were based around dealings at Leighton in 2011.
Robyn Ironside 8.50am: Sydney Airport backs review into ‘restrictive’ regulation
Sydney Airport CEO Geoff Culbert has thrown his support behind a federal government review of regulations that “restrict the way the airport operates”.
The review of Sydney’s demand management system is flagged in an issues paper to be released on Thursday by Deputy Prime Minister Michael McCormack.
Demand management at the airport is handled in a number of ways including the 11pm to 6am curfew, an 80-runway movements an hour cap and a slot management system, allocating time windows to airlines for takeoffs and landings.
Mr Culbert said the airport noted the government’s intent to review Sydney
Airport’s demand management regime, and many of the regulations that underpin it.
“Many of the regulations that restrict the way the airport operates are decades old and no longer fit for purpose – regulation should never be ‘set and forget’,” Mr Culbert said.
“This is doubly important as Australia seeks to build back better following the COVID-19 crisis.”
He said the terms of reference for the review were yet to be released and it was therefore “premature to speculate about specific areas of regulation that will be
examined”.
“But our view is the 11am to 6am curfew plays an important role in protecting the quality of life of our local community,” said Mr Culbert.
“However, there are many layers of red-tape that prevent the airport playing a bigger role in Australia’s post-COVID economic recovery and restrict the benefits the airport could deliver in terms of jobs and economic growth in local and regional communities.”
8.47am: CBA’s loan deferrals decline
Commonwealth Bank says that it had a total of 174,000 temporary loan repayment deferrals as of August 31, down from 182,000 in July and 210,000 in June.
The bank’s loan deferral balances totalled $59bn, down from $62bn in July and $67bn in June.
“Since the onset of the pandemic, our priority has been to do what we can to assist our customers in managing the challenges of COVID-19, including providing temporary loan repayment deferrals on approximately 250,000 home, personal and business loans,” said CBA chief executive Matt Comyn.
“As we approach the end of the initial deferral periods, we have been contacting all customers with deferred loans to talk with them about their options, including returning to full or part time payment, or converting their loans to interest only.
“Many of those contacted will be able to recommence their repayments.”
His comments come after the latest APRA data revealed that 8.5 per cent of total loans in Australia had been deferred, totalling $229bn.
A survey released by UBS found that the credit quality of customers intending to ask their bank to extend their deferral past the end of a six-month period this month was “concerning”.
Read more: Concern over ‘liar loan’ deferral extensions
David Ross 8.44am: Australia Post to hire 4000 for Christmas
Australia Post will hire 4000 people as part of efforts by the postal service to cope with expected Christmas demand on the back of the COVID-19 hit.
The jobs splurge follows a huge surge in recent months across the postal network that saw an 85 per cent growth in parcel volumes in August, the busiest month in the system ever.
Parcel postal volumes in Victoria were up 170 per cent in August due to the lockdown.
Auspost will hire nearly 2900 Christmas casuals across its transport and delivery services, while another 300 customer contact centre staff will be hired in Brisbane and several regional areas.
The postal service is also planning to hire about 900 roles in other areas of the business to assist with customer service in the peak period.
“In managing all the necessary COVID-safe requirements, including a reduced workforce in our Melbourne facilities during the recent Stage 4 restrictions, our people have gone over and above to provide critical services for businesses and their customers and delivered for over 8.1 million households who have shopped online between March and August alone,” Auspost executive general manager people & culture Sue Davies said.
“This is a record-breaking recruitment drive for what we expect to be a Christmas unlike any we’ve had before in Australia Post’s history.”
7.30am: Flight Centre to close 90 more stores
Flight Centre says it will shut a further 90 stores across Australia as pandemic travel restrictions hammer the industry.
The ASX-listed travel agent has already closed about 280 of its 700 local branded stores since the start of the year due to COVID-19.
The group has made about 4000 local staff redundant this year, cuting the workforce to about 3000.
Bridget Carter 6.46am: Serko to raise $NZ55m
Travel software company Serko is raising $NZ55m through Craig’s Investment Partners, Cameron Partners and Ord Minnett, as it seeks to ride out a travel slump brought on by the coronavirus pandemic.
Shares are being sold in a book build with bids taken in 5c increments between $NZ4.35 and $NZ4.65.
The floor price is a 3.5 per cent discount to last close of $NZ4.51 per share on September 30.
The proceeds are being used to add scale to the business ahead of the travel recovery.
The offer includes a NZ$45m placement and a $NZ10m share purchase plan.
Serko, which has cash reserves of $NZ33.6 million, forecast monthly cash losses of $NZ2 million to $NZ4 million over the remainder of its current financial year.
It said the fundraising will allow it to take advantage of growth opportunities when international travel returns to more normal levels.
6.20am: ASX to rise after Wall Street gains
Australian stocks are set to open higher after rises on Wall Street capped another quarter of dramatic gains in the US.
At about 6am the SPI futures index was up 10 points, or 0.2 per cent.
Yesterday, Australian shares broke a five-month winning streak with a 2.3 per cent drop, delivering the second worst quarter in nearly two years.
The Australian dollar was higher at US71.66.
The spot price of iron ore continued to surge, rising 3.5 per cent to $US123.15 a tonne.
Brent oil slipped 0.2pc to $US40.95 a barrel.
6.10am: US stocks end second quarter of big gains
US stocks posted a second consecutive quarter of dramatic gains, continuing a historic stockmarket recovery that few predicted in the depths of the March downturn.
The S&P 500 and Nasdaq Composite hit a string of records in July and August, a journey that has confounded many investors with its sheer velocity and strength. Despite a stretch of volatility that dampened momentum in September, the S&P 500 and Dow Jones Industrial Average gained 8.5 per cent and 7.6 per cent, respectively, for the quarter as of the close of trading in New York.
The advances built on even bigger gains in the previous period, capping the best two-quarter performance since 2009. Both indexes are up more than 25 per cent since the end of March. The Nasdaq Composite surged 11 per cent for the third quarter and is up 43.7 per cent over the past six months, its biggest two-quarter gain since 2000.
All three indexes rose Wednesday. The Dow Jones Industrial Average led the way, rising 328 points, or 1.2 per cent. The S&P 500 added 0.8 per cent, while the Nasdaq gained 0.7 per cent.
Many investors attribute the strong performance to an economy that has steadily improved -- though it remains far from where it was to start the year -- as well as a powerful surge in big technology stocks that has steered the market higher and higher. Consumer spending has ticked up from abysmal levels earlier in the year and hiring in the U.S. has picked up for four consecutive months.
Meanwhile, the Federal Reserve approved a shift in how it sets interest rates in the third quarter, signalling it would leave them low for years.
Many are closely tracking the presidential election in November, wary that the result may not be known immediately. This has spurred bets on volatility through the end of the year in markets from derivatives to currencies and bonds.
“In the short-term, both interest rates and risk sentiment have the potential to shift postelection, leading to sharp changes in equity prices,” Goldman Sachs analysts wrote Tuesday in a note to clients. The firm expects the S&P 500 to hit 3600 by the end of the year, about an 8pc jump from Tuesday’s close.
Despite the market’s gains since March, stocks are essentially back to where they started the year. The S&P 500 was up 3.2pc for 2020 through Tuesday, while the Dow industrials were down 3.8pc. Only the tech-heavy Nasdaq Composite had clinched a meaningful gain for the year, up 24pc.
Dow Jones Newswires
6.05am: Fed extends US bank dividend cap
The biggest US banks will face restrictions on dividends and share buybacks for another three months, the Federal Reserve said, citing the need to conserve capital during the coronavirus-induced downturn.
The Fed said it would maintain prohibitions on share buybacks and a cap on dividend payments by banks with more than $US100 billion in assets until the end of year. The restrictions, imposed for the third quarter, were due to expire Wednesday.
The action is intended to “ensure that large banks maintain a high level of capital resilience,” the central bank said in a statement. “The capital positions of large banks have remained strong during the third quarter while such restrictions were in place.”
Dow Jones
5.55am: Copper rises after China data
Copper prices climbed, advancing back toward a multiyear high hit in mid-September after data showed China’s economic recovery is gathering momentum.
Most actively traded copper futures for December delivery added 1.4pc to $US3.0325 a pound, moving back toward a recent peak of $US3.116 hit on Sept. 18.
The industrial metal has risen about 8pc for the year and recovered roughly 40pc in the past six months following an early-year sell-off. Prices tumbled after the Chinese economy shut early during the coronavirus crisis but have benefited with economic activity in the world’s biggest commodity consumer rising lately.
China accounts for roughly half of global copper demand, making its manufacturing sector a primary driver of prices. Copper is a key component of everything from electric vehicles to smartphones.
Figures Wednesday showed China’s official manufacturing purchasing managers index rose more than expected in September, the latest data point indicating an upbeat recovery in China after new coronavirus cases in the country generally stopped rising. A separate private gauge of manufacturing activity also pointed to a healthy rebound driven in part by government stimulus.
Dow Jones
5.52am: Total SA pledges renewables push
Total SA pledged to ramp up its spending on renewable energy and reduce its dependence on petroleum, the latest move by a major oil company toward cleaner power.
The French company said it plans to spend $US3 billion a year on renewables by 2030, about 20pc of its annual investment budget and up from $US2 billion this year. Over the same period, it said it also plans to reduce its sales of oil products such as gasoline and diesel by 30pc, while increasing its sales of natural gas, electricity and biofuels.
Overall, Total said its energy production was set to grow by a third in the coming decade. Of that, roughly half would come from liquefied natural gas and the other half from electricity -- mostly from growth in solar and wind power.
Dow Jones
5.50am: BHP, Rio upgraded on iron ore optimism
Analysts at Credit Suisse have revised up their global steel forecasts by 7pc next year. So they are also more bullish on a key ingredient for steel -- iron ore.
Credit Suisse lifted its iron ore prices between 17pc and 30pc over the next three years, and also its hard coking coal forecast by 6pc.
That translates into a big bump in operating profit forecasts for BHP Group and Rio Tinto. Credit Suisse lifted its rating on BHP to outperform from neutral, along with its target price to GBP18 ($US46.50 per U.S.-listed share of the U.K.-domiciled company) from GBP14.50. On Rio Tinto, it lifted its rating to neutral from underperform, and its target to GBP50 ($US65) from GBP41.
The analysts say BHP is its preferred pick, since it not only provides upside to iron ore but also has a more diversified portfolio, which could benefit from a pick-up in copper prices as well as strengthening metallurgical coal demand.
On Rio Tinto, they said “ESG [environmental, social and corporate governance] concerns are, to an extend, behind the company with the management reshuffle,” referring to the planned ouster of Chief Executive Jean-Sébastien Jacques after the company blew up two ancient caves at Juukan Gorge, Western Australia.
“We remain neutral as the valuation gap between RIO and BHP that opened post-Juukan is likely to remain given uncertainty over RIO’s new leadership team, and given subsiding momentum for iron ore,” they said.
In Wednesday afternoon trade in London, Rio Tinto shares fell to GBP46.89, and BHP’s slipped to GBP16.68.
Dow Jones Newswires
5.44am: Palantir worth $US21.7bn in US debut
Palantir was valued at more than $US20 billion in the Wall Street debut for the secretive data analytics giant specialising in national security and law enforcement.
The shares under the symbol PLTR opened at $US10, equating to a market value of $21.7 billion, and drifted higher in the ensuing trades.
The debut came without fanfare, as the trade opened with no splashy bellringing event for Palantir at the New York Stock Exchange.
The company, created in Silicon Valley and recently relocated to Denver, has argued that its tech platform helps catch terrorists and keep people safe.
But some activists argue that Palantir’s technology -- which scoops up financial records, social media posts, call records and internet records -- enables unprecedented opportunities for mass surveillance with little oversight on privacy and fundamental rights.
AFP
5.37am: TikTok ‘must become US firm’
TikTok must become a “US based company controlled by US investors” or will be banned in the United States, Treasury Secretary Steven Mnuchin said.
Mnuchin’s comments come amid uncertainty over a US-brokered deal to reorganise ownership of the popular Chinese-owned video-sharing app which US officials have called a national security risk.
Mnuchin said the deal brokered by the Trump administration to allow Silicon Valley giant Oracle and retail powerhouse Walmart a stake in a new operating entity called TikTok Global is “a great outcome.” “If the deal can be closed on our terms, we’ll do it,” he told CNBC television. “If not, it would be shut down. Any deal will fully satisfy all of our national security issues.” Mnuchin said the plan would “build a world class US based company controlled by US investors” and fully satisfy all US national security issues.
AFP
5.35am: Nikola postpones December event
Electric truck start-up Nikola said it was postponing a December launch event due to COVID-19 as it seeks to reset expectations following recent controversies.
The Arizona-based company said the “Nikola World” event, which had been billed a potential launch of new vehicles and technology on December 3, would be rescheduled to a time when “we can bring the Nikola community together safely.” The company, which has been beset by questions over its business viability and its former chairman, also put out a timetable with targets for completing a US factory, finishing vehicle prototypes and commencing production, according to a press release that boosted shares.
AFP
5.30am: Markets mixed after Trump-Biden debate
European stock markets fell back as investors left the chaotic US presidential debate behind, while strong US jobs data helped the mood on Wall Street.
With the debate out of the way, the markets could switch their focus to more concrete topics, several analysts opined.
In London, investors had to digest data that confirmed Britain’s virus-hit economy collapsed by almost a fifth in the second quarter.
They pushed the FTSE 100 index into negative territory at the close of the day. London and Frankfurt both closed down 0.5 per cent, while Paris lost 0.6 per cent.
In New York, the Dow Jones index was 1.6 per cent higher in midday exchanges following the release of positive job numbers in the private sector.
The payroll services firm ADP said that private US employers added 749,000 jobs in September as employment continues to rebound from the economic hit caused by the coronavirus.
Economists view the ADP data as a preview of the monthly Labor Department employment report due Friday that encompasses both private and government hiring.
Markets were encouraged by news that US Democratic House Speaker Nancy Pelosi had spoken for a second straight day with Treasury Secretary Steven Mnuchin over a much-anticipated stimulus package to rescue the battered US economy.
Earlier in the day, a Chinese purchasing managers index (PMI) also showed improvement in both manufacturing and services in September. But that produced only mixed results in Asia, as the persistent gloom of rising virus infections continued to dampen the mood.
AFP
5.30am: Lay-offs loom for US airline industry
Workers from the beleaguered US airline industry are making a last-ditch public appeal this week to coax more money from Capitol Hill powerbrokers to save their jobs.
The first day of October concludes the period when US carriers that received billions in aid from Congress promised to refrain from laying off workers.
A package of loans totalling up to $US25 billion to seven US carriers announced Tuesday night by the Treasury Department provides funds for airlines to ride out a prolonged downturn amid the coronavirus, but won’t affect plans for furloughs, airline sources said.
Treasury Secretary Steven Mnuchin said on CNBC he was hopeful airlines would postpone lay-offs if congressional leaders can reach a framework for a deal, saying it was “critical” for Congress to act.
AFP
5.25am: US private-sector jobs climb
US private employers added 749,000 jobs in September, payroll services firm ADP said Wednesday, as employment continues to rebound following the economic hit caused by the coronavirus downturn.
The report was above analysts’ expectations and came ahead of Friday’s release of the September unemployment rate by the Labor Department, the last before voters decide whether to give President Donald Trump a second term in the November election.
The business shutdowns beginning in March to stop COVID-19 did grievous harm to the economy but ADP showed recovery in hard-hit sectors like leisure and hospitality, which added 92,000 jobs, and manufacturing, which added 130,000.
AFP
5.20am: Caesars to buy UK bookies William Hill
US casino giant Caesars Entertainment announced a deal to buy UK betting group William Hill, which has a large online sports gambling presence in the United States.
The deal worth £2.9 billion ($US3.7 billion) is subject to shareholder approval.
“The opportunity to combine our land-based casinos, sports betting and online gaming in the US is a truly exciting prospect,” Caesars CEO Tom Reeg said in a statement.
“William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.” “We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment,” he added.
US gambling activities are on the rise after the country’s Supreme Court legalised sports betting in 2018.
The deal values each William Hill share at 272 pence, up 58 per cent compared with its closing price at the start of September when Caesars made an initial approach.
AFP
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