ASX recovers from 8-day low, Crown feels AGM heat
Stocks bounce to finish only slightly lower amid talk of US election interference and after Wall Street falls, as Crown faced AGM protest votes.
That's all from the Trading Day blog for Thursday, October 22. Australian stocks recovered some ground after falling sharply at the open, and closed slightly lower as global markets await the outcome of talks on a US stimulus deal.
David Rogers 8.15pm: Magellan defends Barrenjoey stake
Magellan Financial’s investment in Barrenjoey Capital Partners is a relatively small bet for the global fund manager and the newly formed full-service investment bank’s prospects are comparable to Magellan’s when it started in 2006, according to chairman and co-founder, Hamish Douglass.
While “meaningful”, the $155m investment was “actually very modest in the context of the size of Magellan and our financial resources” and met all of the fund manager’s criteria for principal investments, Mr Douglass told investors at the company’s annual meeting on Thursday.
“We are excited about the prospects for Barrenjoey and it reminds me of the early days here at Magellan,” Mr Douglass said.
“Fourteen years later, it is incredible to see what can be achieved by talented people who are aligned in a common goal, with a common purpose, backed by a strong balance sheet, and not being constrained by existing systems or processes.”
It comes after analysts questioned the investment when it was disclosed last month.
“At face value the investment looks questionable, given investment banks tend to trade on lower multiples versus Magellan and the investment will likely initially be loss-making, although a $155m investment for a $10bn company that is highly cash generative is only relatively small,” CLSA’s Ed Henning said in a report last month, even as he upgraded the fund manager to outperform.
Robyn Ironside 6.40pm: Virgin Australia facing ‘noodlegate’ backlash
Virgin Australia’s attempt to gain mileage from publicity about the airline’s business class offering of noodles might have backfired after out-of-pocket passengers turned on the carrier.
In a bold move, Virgin Australia posted an image of a 2-minute noodle cup that went viral last week when it was revealed the 80c meals were being served to premium passengers paying up to $2500 a seat.
The image carried the caption “forget two minutes, how about two years?” before pointing out that future travel credits being provided in the place of refunds for passengers could be used to book flights up until July 31, 2022 for travel until June 30, 2023.
Joyce Moullakis 4.40pm: Credit Suisse hires former BoQ’s Anthony Rose
Credit Suisse is boosting its local ranks by hiring former acting Bank of Queensland chief executive Anthony Rose to lead its financial institutions group.
The Australian understands Mr Rose, who was an investment banker at Merrill Lynch and Citigroup before having stints at Suncorp and BOQ, will join Credit Suisse as a managing director in coming weeks.
He replaces Jean du Plessis who decamped to Columbus Capital and will report to Credit Suisse’s local investment banking co-heads James Disney and Angelo Scasserra.
4.38pm: ASX rebounds to close slightly lower
Australia’s share market recovered strongly from a sharp intraday fall.
The S&P/ASX 200 finished down 18 points or 0.3pc at 6173.8.
It fell as much as 1.5pc to an 8-day low of 6100.6 on large selling as the open as S&P 500 futures dived as US lawmakers were still unable to agree on fiscal stimulus.
But it bounced 1.2pc off the low, consistent with potentially better economic prospects in Australia due to a simulatory budget, expectations of RBA easing next month and Australia’s much better trends in COVID and related restrictions.
Health Care, Consumer Staples, Materials and Banks recovered strongly throughout the day, leaving CSL down 0.3pc, Woolworths up 0.3pc, BHP and Rio Tinto up 1pc and NAB and Westpac down 0.5pc.
Unibail-Rodamco dived 9.3pc as it rejected calls to sell US assets instead of doing a capital raising, Resolute fell 6.4pc on a trading update, AMP fell 5.6pc on fund outflows, Zip Co lost 5.1pc on Westpac’s selldown, Bendigo Bank fell 3.9pc on APRA’s higher liquidity requirement and Origin lost 3pc on lower oil prices.
Healius surged 9.3pc on a stellar quarterly result, OZ Minerals jumped 5.3pc after raising its guidance for gold production.
The Australian dollar was 0.28 per cent weaker against the US dollar by the close of the ASX session, trading around US70.97c.
3.37pm: Don’t bet on RBA QE target: Westpac
Westpac chief economist Bill Evans argues that the RBA could go for an open-ended target for an expanded bond buying program - rather a set target - at its meeting next month.
“We had not envisaged the board setting a specific quantity target for the purchase program,” he says in a report.
“It is already setting a price target for the 3-year rate. Fixing both price and quantity may lead to unexpected difficulties down the track.”
Moreover, he notes that the markets “seem to differ, expecting a total purchase program and a weekly timetable for purchases.”
An open-ended commitment “might cause market disappointment” with a potential lift in market yields and the Australian dollar.
“If I was making the decision I would value flexibility over a possible short term overreaction,” Mr Evans says.
The RBA’s balance sheet is currently $300 billion or 15pc of GDP - slightly under the RBNZ and well below the Bank of Canada at 20pc, while the BoE and Fed are around 33pc and the ECB is at 47pc.
“I expect that RBA would factor in a further increase in the balance sheet to, say, $450 billion as the Term Funding Facilityis fully drawn down by June next year,” Evans says.
“In a world of consistent underperformance on inflation targets by central banks we are certainly, in the case of Australia, a fair way away from any upper limit.”
While the RBA would need to boost its balance sheet by $100bn to reach the Bank of Canada’s 20pc of GDP, he points out that there is still $114 billion in undrawn capacity in the Term Funding Facility.
Increasing the balance sheet to $450 billion would represent a 250pc increase on the pre-Covid level that compares with the Fed’s current increase of around 90pc since Covid.
That equates with a balance sheet of 23pc of GDP - higher than the Bank of Canada and RBNZ, but still well below the ratios of the Federal Reserve and Bank of England.
“It is ironic that the RBA is likely to announce a suite of policies that will, in part, be directed at the Australian dollar,” he says.
“Currency markets are notoriously pre-emptive. Arguably, the impact on the AUD from these RBA policy changes is already behind us.
Going forward the other fundamental forces discussed above are likely to replace RBA policy as the key drivers of the currency.”
Lachlan Moffet Gray 3pm: ACCC loosens collective bargaining rules
The competition watchdog has announced it will allow 98 per cent of Australian businesses such as car dealer franchisees, petrol retailers and other small businesses to negotiate collectively with their suppliers without the approval of the regulator.
The exemption to standard collective bargaining protocols is the first ever made by the ACCC and will apply from early next year.
The ACCC said in a statement that although collective action by small businesses doesn’t typically harm market competition, it previously was only available to businesses who applied for permission from the ACCC.
“We hope this class exemption will help a range of Australian small businesses and franchisees,” ACCC Commissioner Stephen Ridgeway said.“
There can be many benefits for businesses negotiating as a group rather than individually, including sharing the time and cost of negotiating contracts, and potentially giving group members more of a say on contract terms and conditions.”
“There are often also time and cost savings for the suppliers or franchisor the group is bargaining with.
“This change will mean the benefits for all parties can be gained through a much simpler and quicker process.”
The exemption applies to businesses and independent contractors who form a bargaining group, and had an aggregated turnover of less than $10m in the financial year before the group was formed.
Australian Automotive Dealers’ Association CEO James Voortman said the move would help franchise dealers negotiate with multinational car manufacturers.
“Franchised new car Dealers have huge trouble negotiating with their large offshore multinational franchisors, given the substantial differences in size and power of the parties involved,” he said.
“This is made even worse when individual Dealers have to try and negotiate alone.
“This class exemption provides Dealers with a much more effective and efficient negotiation tool and avoids Dealers having to navigate through complex red tape and administrative burdens to obtain collective bargaining rights.”
Lachlan Moffet Gray 2.48pm: Crown tallies shareholder votes
All of the Crown shareholder votes have been tallied and released to the ASX.
Three directors - Jane Halton, Professor John Horvath and Packer nominee Guy Jalland were up for re-election.
All three survived on the basis of the proxy votes cast before the AGM this morning, but Professor John Horvath said he would resign if it eventuated that he wouldn’t be able to survive without the support of Packer’s 36.7 per cent stake via Consolidated Press Holdings.
Mr Horvath received a total of 58.53 per cent of votes in his favour and 41.47 per cent against, meaning that he will likely hold true to his promise and resign.
Guy Jalland, who also serves as an executive for CPH, received 58.53 per cent of votes in his favour and 41.47 per cent against. He said during the AGM that he intends to stay a board member.
Jane Halton, the newest board member up for re-election, received 75.20 per cent of votes in her favour and 24.60 per cent against.
The remuneration report was favoured by 65.66 per cent of shareholders, with 34.34 per cent voting against - still high enough to ensure a first strike.
Rosie Lewis 2.38pm: Australia Post boss asked to stand aside
Australia Post CEO Christine Holgate has been asked to stand aside while the federal government investigates the purchase of four $3000 Cartier watches for senior executives.
Communications Minister Paul Fletcher told federal parliament he was “shocked and concerned” by revelations the government-owned company had purchased the watches for $12,000 and has asked for an investigation into the matter.
“I have spoken to the chair of Australia Post (Lucio Di Bartolomeo). I have explained that the government’s view is that boards and management of government business enterprises need to take great care with taxpayers’ money,” Mr Fletcher said in question time.
“I have informed the chair of Australia Post that the shareholder ministers (Mr Fletcher and Finance Minister Mathias Cormann) have asked our respective departments to carry out an investigation into this matter and I have asked the chair to provide the full support of the company for this investigation. And I have also asked the chair to inform the chief executive as she will be asked to stand aside during the course of this investigation.
“This is a matter that the Australian government takes very seriously. We expect the board and management of government business enterprises to deal with taxpayers’ money with scrupulous care and that is what this investigation will be focused on and it will examine the conduct of all involved in how this matter occurred.”
Read more: Aust Post boss stood aside over $3000 Cartier watches
2.35pm: ASX recovers somewhat
The ASX 200 has staged an impressive rebound in afternoon trade after falling as much as 1.5 per cent to and eight day low of 6100.6 this morning.
The index is trading down 0.44 per cent at 6164.30, despite S&P 500 futures still down 0.7 per cent.
The major banks are still lower with CBA down 1 per cent and Westpac down 0.7 per cent.
Resolute mining is down 6.2 per cent after its quarterly production report and Unibail-Rodamco is down 7.8 per cent after the company rejected activist shareholder attempts to sell US properties rather than do a capital raising.
2pm: Inquiry ‘increasing pressure’ on Crown credit rating: S&P
S&P Global Ratings is “closely monitoring” developments from the New South Wales Independent Liquor and Gaming Authority inquiry into Crown’s suitability in holding a casino license in the state, after saying that several investigations into the company increases downside pressure to its credit ratings.
The ratings agency cited allegations of money laundering, breaching gambling laws, and partnering with junket operators with links to organized crime; as well as COVID-19 disruptions it said were “eroding Crown’s significant rating headroom”.
“Our negative outlook on Crown incorporates the downside risks associated with the various proceedings currently underway,” S&P said,
“The company has acknowledged the need for significant reforms and has committed to strengthening its accountability and transparency, compliance culture, and protections against criminal elements.
“We also expect changes at the Board and senior management level.”
S&P said it expected the company’s underlying assets to continue to service its debt obligations irrespective of any ownership changes.
“Our investment-grade rating on Crown already factors in a high degree of influence from its controlling shareholder, Consolidated Press Holdings,” the ratings agency said.
“The New South Wales inquiry’s public hearings appear to corroborate this view.
“CPH’s creditworthiness remains broadly commensurate with that of Crown’s, and any material reduction in CPH’s shareholding is unlikely to have a material effect on Crown’s credit quality.”
Ben Wilmot 1:40pm: Mayfair warns on liquidation of Dunk Island unit
Fund manager Mayfair 101 has told a court that a liquidation of the business unit that is backing the redevelopment of Dunk Island and Mission Beach into a $1.5bn tourism mecca could result in a fire sale of the assets.
The embattled funds manager is fighting an application brought by the corporate regulator to wind up the M101 Nominees Pty Ltd unit and has flagged it will put up a rescue scheme to investors shortly.
But the group failed to convince the federal court, which is hearing an application by the Australian Securities and Investments Commission to wind up M101, to give it an adjournment so it had more time to ready its turnaround plan.
“I‘m not satisfied … that there is a sufficiently viable, restructure proposal that presently exists.” Justice Stewart Anderson said. He said whether there was a “viable” restructuring proposal was a matter to be considered ”down the track” when the corporate regulator’s wind up application is handled and is planning a February hearing.
Bridget Carter 1.37pm: Booktopia priced ahead of IPO
Australia’s largest online book retailer, Booktopia, is understood to be on the brink of pricing its initial public offering through a cornerstone process, with the company shaping up to be one with a market value of between $310m and $315m.
The group’s IPO size is expected to be about $40m.
It is understood that the price of the float will be finalised Thursday or Friday.
Chief executive and co-founder Tony Nash is expected to retain his stake in the business once listed and all of the senior management and shareholders will stay on after the float.
For the 2021 financial year, the company’s revenue is expected to be about $200m.
Booktopia’s prospectus is due out in November ahead of its listing in December.
Booktopia made efforts to list in 2016, seeking to raise $40m to float with a $100m market value, but those plans were later shelved.
Working on the listing this time is Shaw and Partners and Morgans.
More to come.
Lachlan Moffet Gray 12.30pm: Crown ‘not sure’ about Rankin
Crown Chair Helen Coonan says she’s “not sure” under what circumstances ex-chair Robert Rankin, who refused to appear in front of the NSW inquiry into the company, would come to Australia.
Yesterday the counsel assisting the inquiry recommended that the NSW Independent Liquor and Gaming Authority refer Mr Rankin for investigation by ASIC for breach of his duties as a director in light of his refusal to appear.
“My understanding is that Mr Rankin, who I haven’t seen since he left the board, doesn’t reside in Australia,” Ms Coonan said at the AGM.
“I am not at all sure under what circumstances he could come to Australia if he was motivated to so.
“I don’t think it would be appropriate for me to make any additional comment.”
Former chair John Alexander clarified that he was not out of the country when he was removed from the role in January and said he would remain working for Crown under a management contract that expires next January.
The circumstances surrounding Mr Alexander’s departure and his ongoing role at the company has been a subject of discussion at the NSW inquiry.
Glenda Korporaal 12.23pm: First strike for Star Entertainment
Star Entertainment has suffered a first strike against its remuneration report at its annual meeting – the first in its history.
In voting at its virtual annual meeting on Thursday, Star shareholders lodged a vote of 44.9 per cent against the remuneration report.
Under the Companies Act, a vote of more than 25 per cent of shareholders against the remuneration report represents a “first strike” against the company.
Announcing the results, which showed that 54.59 per cent of shareholders voted in favour of the report, the chairman Mr O’Neill said the company was headed for its first ever first strike.
He said shareholders had traditionally lodged votes of 97 per cent of more in favour of the report.
In his address to shareholders before the vote, Mr O’Neill defended the payment of bonuses to executives despite the company’s earnings being down as a result of the COVID-19 pandemic closures.
He said questions had been raised about the supposed conflict of the company approving bonuses for its executives when it was registered for JobKeeper payments for its staff.
Mr O’Neill said Star had passed on payments of $64.8 million to its employees under the Federal Government’s JobKeeper program.
Mr O’Neill said bonuses given in the 2020 financial year were equity incentives made out of new share issues and not cash.
“There was no connection between JobKeeper and bonuses,” he said.
He said Star had given “consideration to retaining key talent” as it prepared for competition from the opening of Crown’s new casino in Sydney in December in its decision to award executives bonuses.
Lachlan Moffet Gray 12.10pm: Packer’s company abstains from AGM vote
The James Packer company through which he owns his Crown shares, Consolidated Press Holdings, did not vote on the company’s remuneration report.
Had it done so, Crown might have avoided a damaging “first strike” protest vote from shareholders at today’s AGM.
Packer-aligned CPH executive and Crown board member Guy Jalland said the decision not to do so was “appropriate.”
“In respect of the remuneration report, I don’t propose going to CPH’s deliberations, but you are correct that mathematically we did abstain from voting on the remuneration report, and we proposed that was the appropriate, conservative approach to take,” he said.
Mr Jalland acknowledged the “serious and significant” proxy vote against his re-election and pleaded he is doing “everything I can at the Crown board to have the company do better.”
Crown chair Helen Coonan mounted a defence of CEO Ken Barton at the company’s AGM, after a shareholder questioned his ability to change the culture at Crown.
“We have every confidence in Mr Barton’s ability to execute in his new role as CEO,” Ms Coonan said.
“Mr Barton has demonstrated a recognition of the board’s need for change and the company’s need for change and his value in this role is to bring stability and experience, which I will believe will serve the company well at a time of great economic and social challenge.”
Director Jane Halton also clarified in response to a shareholder question that she was not approached by James Packer to join the Crown board.
Ms Halton was approached by ex-chair John Alexander regarding the position, but said she had met Mr Packer “In the ordinary course of my previous employment.”
12.03pm: ASX recovers but still down 0.7pc
The ASX 200 has recovered some ground but remained 0.7 per cent lower at midday at 6148.2.
The index fell as much as 1.5pc to an eight-day low of 6100.6 in morning trade.
The drop came as S&P 500 futures fell as much as 0.7 per cent on indications that a pre-election fiscal deal was unlikely to come before the presidential election.
The major banks fell with CBA down 0.8 per cent and Westpac down 0.6 per cent. AMP was down 4.2 per cent despite saying its assets under management had improved slightly.
CSL was the biggest weight on the market, trading 0.8 per cent lower, while Woodside was down 2 per cent after unveiling a 42 per cent fall in third-quarter sales revenue.
Lachlan Moffet Gray 11.55am: Crown rules out capital raising
Crown’s chairman and board fielded several questions at the AGM related to the historical conduct of various board members and executives that have been subject of the NSW inquiry.
The directors declined to comment specifically on matters that have come forth at the inquiry, but CPH-aligned Packer nominee director Mike Johnston has said he will remain on the board despite the inquiry hearing he failed to inform the full board about what he knew about Crown’s staff in China prior to their 2016 arrest.
“I do think it is appropriate that I remain on the board,” he said.
To the extent that I saw the issues as significant. I did inform others and given the circumstances. I’ll leave it at that, but no doubt the inquiry will make relevant findings.”
CEO and managing director Ken Barton said Crown would not conduct an institutional raising to either shore up its balance sheet or to dilute the shareholding of James Packer.
“We’ve been pretty clear through the course of this calendar year about our plans to get through to the other side of the pandemic with the balance sheet in good place and with the liquidity that we’ve put in place,” he said.
“Doing something now on the shareholder basis would be inconsistent with our strategy of getting through without having to rely on additional funding from shareholders, particularly at a time when our share price has obviously been affected by the closure of Melbourne.”
On Wednesday Moody’s announced it was placing Crown’s credit rating under review due to the impacts of the pandemic and the potential findings of the inquiry.
Nick Evans 11.45am: Whitehaven touts stronger coal prices
Whitehaven Coal says coal prices are back on the way up as Asian economies recover from the coronavirus crisis, as about 5 per cent of the company’s shareholders abstained from a vote on resolutions aimed at directing its board to wind the company up.
Activist group Market Forces proposed two resolutions at Whitehaven’s annual shareholder meeting today – the first a change to Whitehaven’s constitution to allow advisory votes, and the second a proposal that its board plan to wind the company up to limit the impact of its coal products on global warming.
Whitehaven’s board unanimously rejected both resolutions and the miner’s shareholders appeared to have followed suit, according to proxy votes cast at the meeting.
Whitehaven did not disclose the proxy votes cast in favour of the wind-up motion, as it would not be formally put to the meeting unless the constitutional change succeeded.
But only 0.4 per cent, or 2.2 million shares, were voted in favour of the motion.
Another 32.3 million shares were abstained from the vote, or about 5.2 per cent of shares voted.
And with the activist shareholder motions falling flat, Whitehaven chairman Mark Vaile was bullish on the company’s outlook, telling shareholders the recent uptick in the thermal coal price, with the Newcastle benchmark price for coal lifting back above $US60/t, looked like the start of a “meaningful improvement” in pricing.
Ben Wilmot 11.40am: Charter Hall leases space to Amazon
Online retail behemoth Amazon and Australia Post have each signed new leases with developer Charter Hall at its TradeCoast Industrial Park in Pinkenba, Brisbane.
Amazon is expanding its network of last mile delivery facilities around Australia as online shopping surges, with the smaller facilities complementing its larger fulfilment centres.
The TradeCoast Industrial Park has become one of the best logistics estates in Brisbane with a value of about $115m.
It is owned by the Charter Hall Prime Industrial Fund and the park also houses tenants including Caroma, AP Eagers and Sandvik.
An unnamed global logistical company will also take a new 11,281sq m facility that has been purpose built and also includes corporate grade offices.
Overall the TradeCoast Industrial Park has more than 50,500sq m of space and about 11.5ha that was consolidated through strategic and staged acquisitions.
The site has good connections to the Brisbane Airport, the Port of Brisbane and the Brisbane CBD, with access to the main Brisbane arterial motorways only minutes away.
Amazon has opened new facilities including a delivery centre near Melbourne Airport at Tullamarine. In Melbourne it has a larger fulfilment centre in Melbourne’s southern suburb of Dandenong South and another delivery centre Mulgrave.
In Sydney it has opened a new delivery distribution hub at Frenchs Forest, adding to delivery centres at Regents Park and Botany. It is also building a robotics fulfilment centre at Kemps Creek in Sydney’s west, near the planned Western Sydney airport, adding to its existing centre in Moorebank.
Charter Hall’s Queensland regional portfolio manager, Elena Seymour, said that underpinning the TradeCoast Industrial Park was the developer’s ability to deliver energy efficient warehousing solutions for Amazon, Australia Post and Caroma, “who are all repeat tenant customers across multiple states”.
Lachlan Moffet Gray 11.12am: Crown suffers first strike at AGM
Crown has received a first strike vote against its remuneration report at its annual general meeting, while long-time director Professor John Horvath has signalled his intention to step down from the board.
The proxy votes for the re-election of Crown directors Jane Halton, John Horvath and Guy Jalland saw the three directors scrape back in.
Professor Horvath said that as it appeared he wouldn’t have won general support without the benefit of James Packer’s 36 per cent stake, he said he would likely step down when the full results come in.
“The proxy position displayed on the screen indicates that without the vote of CPH, shareholders are not supporting my re-election today as a director,” he said, after receiving 68.54 per cent vote in favour and 31.27 per cent against from proxies who voted before the meeting.
“Should the final poll confirm this position, it is my intention to retire as a director of Crown.
“I intend to remain a director of Crown until alternative arrangements can be affected.”
CPH-Packer aligned Guy Jalland only just scraped by with 58.42 per cent of the vote and 41.39 per cent voting against while Ms Halton received a 75 per cent proxy vote in her favour, with 24.80 per cent voting against.
Chair Helen Coonan last week signalled her intention to restructure the Crown board, indicating she would remove directors who had a long tenure.
Professor Horvath, who was once Kerry Packer’s physician, has sat on the Crown board since 2010.
Crown also received a “first strike” against the adoption of its remuneration report, with 34.33 per cent of valid pre-meeting proxies voting against it.
The voting threshold for a “first strike” is 25 per cent, meaning Crown must attempt to justify the structure of the remuneration package.
If the shareholders subsequently vote against it at next year’s meeting, another AGM must be called to determine whether all directors need to stand for re-election.
The vote represents considerable shareholder discontent with the revelations about failures in the company’s corporate governance that have been brought forward through a NSW inquiry into the company’s conduct.
Jared Lynch 11.09am: API unveils full-year loss
Pharmacy chain owner and distributor, Australian Pharmaceutical Industries, says its network stands ready to rapidly deploy COVID-19 vaccines to the community, despite Melbourne’s ongoing lockdown hammering the company to a $7.94m full year loss.
The federal government has invested $1.7bn in a partnership with CSL to produce 80 million doses of two COVID-19 vaccines, which are expected to become available by the first half of next year if clinical trials are successful.
As well as working on developing and securing vaccines, governments have been working with logistic companies and pharmaceutical distributors to ensure the community can be immunised swiftly, particularly the elderly and vulnerable.
Australian Pharmaceutical Industries (API) chief executive Richard Vincent confirmed the company was in talks with the federal government about distributing a COVID-19 vaccine.
“If and when a vaccine becomes available, a co-ordinated, whole of healthcare approach involving GPs, nurses, hospitals, aged care homes and pharmacists will serve Australia well again,” Mr Vincent said.
“The strength of our pharmacy distribution system in delivering vital medicines during the bushfire and COVID-19 emergencies was clearly demonstrated and we stand ready to play whatever part the Government determines is necessary to ensure speedy delivery of a vaccine to the Australian community.”
The 2021 arrival of a vaccine is underpinning federal budget forecasts and business plans across the country, particularly in Melbourne which has remained under a hard lockdown since August.
Despite running essential businesses, API has not been immune from Victoria’s harsh restrictions, which has resulted in the state losing the AFL grand final to Queensland and families forced to dramatically scale back funerals to loved ones.
API’s net profit in the year to August 31 plummeted 114 per cent, while revenue firmed 0.2 per cent to $4.02bn.
API shares last down 2.1 per cent at $1.05.
Glenda Korporaal 11.03am: Star in new revenue deal with NSW Govt
Star Entertainment will be entitled to financial compensation if the NSW Government allows Crown’s Sydney casino to use poker machines at any time over the next 21 years.
Addressing the Star annual meeting on Thursday, Star chairman John O’Neill said Star’s new revenue deal with the NSW Government allows it to continue to be the exclusive provider of poker machines in casinos in NSW.
Mr O’Neill said Star, which has casinos in Sydney, Brisbane and the Gold Coast, had been able to negotiate favourable new gaming tax arrangements with the NSW government.
“We have competitive neutrality on the table game taxes with Crown Sydney and fixed rates on electronic gaming machines through to June 2041,” he said.
“Star will continue to be the exclusive casino provider of electronic gaming machines in Sydney,” he said.
But he said it would be “entitled to financial compensation from the NSW Government should electronic gaming machines be installed at Crown Sydney at any time until June 2041.”
Mr O’Neill’s comments come as the Star group is gearing up to face its first competitor in the Sydney market with the opening of Crown’s $2.2 billion casino at Barangaroo on December 14.
Crown’s chair Helen Coonan told the NSW gaming inquiry this week that the company still planned to go ahead with its opening in December despite the fact that the inquiry would not make its report until February 1 next year.
The inquiry has been told that Crown’s agreement with the NSW Government also allows it to be compensated financially if the government changes the conditions of its license.
The Crown and Star annual meetings are both being held on Thursday.
Star shares last down 1.7 per cent at $3.56.
Read more: Crown says sorry, flags reforms
10.50am: ASX sinks to eight-day low
Australia’s share market has crumbled 1.5pc to an eight-day low of 6100.6.
It comes as S&P 500 futures dive 0.7pc as US intelligence officials say Iran and Russia have tried to interfere with the US election by spreading false information.
“We have confirmed that some voter registration information has been obtained by Iran, and separately by Russia,” Director of National Intelligence John Ratcliffe said in a press conference.
“This data can be used by foreign actors to attempt to convey misinformation.”
But Tesla is up 3.3pc in after-hours trading after strong quarterly results.
Ben Wilmot 10.48am: Centuria snaps up Visy facility
Expanding property funds manager Centuria Capital Group has snapped up a Visy Glass industrial facility in Auckland, via Augusta Capital arm, for $NZ178.3m.
The facility was bought on a 20-year sale-and-leaseback, triple net lease, and is the latest move by the manager.
It has secured more than $700m of healthcare and industrial assets this financial year and has a further $300m under due diligence.
With the additional Visy Glass acquisition, Centuria’s assets under management are set to expand to $10bn.
The expansion has prompted Centuria to upgrade its fiscal 2021 guidance with operating earnings per security rising to 11.5–12.5 cents per security, up 9.1 per cent from previous guidance, and the distribution per security up 5.9 per cent to 9 cents per security.
The Visy Glass facility will form a new, New Zealand single asset unlisted fund, underwritten by Centuria. It will be the largest single asset unlisted fund launched by Centuria to date.
Centuria joint CEO John McBain said the Visy Glass acquisition in New Zealand followed the recent $416.7m acquisition of Telstra’s data centre in Victoria.
The acquisition extends Centuria’s relationship with Visy, with more than 123,000sq m leased to the international paper, packaging and recycling company across Centuria’s industrial platform.
The Visy Glass facility is New Zealand’s only glass bottle and jar manufacturing site since 1922. It provides a 20-year lease.
Centuria’s industrial portfolio includes 90 properties worth $3.1bin, up from 2017 when the company assumed management of the former 360 Capital industrial portfolio, which included 36 assets worth about $900m.
The Visy Glass acquisition will be funded by a $100m equity raising, via Moelis and Morgans, including an $80.5m entitlement offer and $19.5m underwritten institutional placement.
10.25am: ASX tumbles at the open
Australia’s share market fell sharply in line with overnight futures.
The S&P/ASX 200 opened down 1.1pc at a six-day low of 6124.1 despite slight falls on Wall Street.
The Energy sector was weakest, with Oil Search down 4pc after WTI crude oil dived 4pc on a jump in US fuel inventories.
But banks were the biggest drag with NAB down as much as 2pc after recent strong gains in the sector.
Bendigo Bank fell 3.6pc after APRA raised its liquidity requirement over a breach of its prudential standard.
Resolute mining was weakest with a 7pc fall after its quarterly production report.
Unibail Rodamco lost about 6pc after the company rejected activist shareholder attempts to sell US properties rather than do a capital raising.
Zip Co dived 4.1pc after Westpac sold a 10.7pc stake in the company.
Ben Wilmot 10.04am: Mirvac lifts sales after stimulus
Property developer Mirvac Group has become the latest residential player to report strong home sales on the back of government stimulus with the company also making a push into the build-to-rent sector.
Mirvac chief executive Susan Lloyd-Hurwitz backed the expansion of federal and state government packages that have lifted listed players, including Stockland, and private developers selling land on estates around the country.
“In addition to existing stimulus from both federal and state governments, recent announcements in the federal budget to assist a further 10,000 homebuyers through the First Home Loan Deposit Scheme will continue to support demand. The changes made to include off-the-plan purchases as well as adjustments
to qualifying prices are welcome expansions to the original scheme,” Ms Lloyd-Hurwitz said.
Exchanges were up 40 per cent compared to the previous quarter as 660 lots sold, above pre-COVID-19 volumes, with the increase primarily driven by land projects benefiting from government stimulus as well as apartment projects in WA and Queensland.
The company is targeting a payout ratio of 65-75 per cent of operating earnings in line with its policy to pay up to a maximum of 80 per cent of operating earnings but did not set guidance.
“It is impossible to predict the length, nature and effects of the ongoing pandemic and as such, Mirvac does not have sufficient certainty to provide earnings and distributions guidance for fiscal 2021,” Ms Lloyd-Hurwitz said.
But signs are positive with the residential unit recording a 34 per cent jump in leads in the September quarter and completed 483 settlements, with defaults kept in check at 1.9 per cent.
9.56am: Crown says sorry for failings
Crown chairman Helen Coonan has apologised to shareholders for the governance and risk management failings that have been uncovered in the inquiry into the company’s suitability in holding a casino licence in NSW.
In a speech released to the ASX ahead of Crown’s annual general meeting today, Ms Coonan said that the board expects to have implemented a number of significant reforms by the time the inquiry’s report is handing down on February 1.
“Having a gaming licence is a privilege that we as an organisation do not take for granted,” she will tell shareholders at the AGM.
“As your new chairman, I am focused on driving the necessary change to ensure that Crown has the highest standards of governance and compliance, and an organisational culture that meets community expectations.”
Ms Coonan said that senior executives will lose up to half their cash bonus payment in the event of adverse compliance issues arising in that period.
Late last night Crown said it had suspended a protocol that allowed major shareholder James Packer to receive confidential financial information from the company.
9.55am: What’s impressing analysts
Metcash raised to Outperform: Macquarie
Coles cut to Neutral: Macquarie
Atlas Arteria raised to Add: Morgans Financial
Xero cut to Neutral: Credit Suisse
Megaport raised to Buy: UBS
EML Payments raised to Outperform: RBC
Orora cut to Hold: Morningstar
Sims cut to Hold: Morningstar
Temple & Webster cut to Hold: Bell Potter
Whispir raised to Positive: Evans & Partners
Bridget Carter 9.53am: Centuria in $100m raising
Centuria Capital Group is launching a $100m equity raising.
The raise includes a one for 15 share non-renounceable entitlement offer worth $80.5m and a $19.5m underwritten institutional placement.
Working on the raise is Moelis Australia and Shaw and Partners.
Shares are being sold at $2.25 each, representing a 1.7 per cent discount to the last closing price of $2.29.
The funds are being used to pay down $39.5m of debt and for other capital management initiatives.
These include funding flexibility to execute new transaction opportunities, including underwriting support for the Visy Facility acquisition.
In a term sheet, investors were also told that the group had increased its operating earnings per security guidance for the 2021 financial year to 11.5 to 12.5 cents per security, which is 9.1 per cent higher than previous guidance.
The fiscal 2021 guidance for distributions per security has increased to 9c per security, up 5.9 per cent from earlier.
9.36am: ASX tipped for large fall
Australia’s share market is expected to suffer a disproportionately large fall based on futures.
Overnight futures relative to fair value suggest the S&P/ASX 200 will open down 1.1pc at a seven-day low of 6123.7.
That’s much more than a 0.2pc fall in the S&P 500, even though there was a lack of market moving news locally.
UK and European markets fell, with the Euro Stoxx 50 down 1.5pc and the FTSE 100 down 1.9pc on worsening trends in coronavirus and mobility restrictions.
However, those trends are vastly better in Australia. Victoria has just reported just 5 new COVID cases and no deaths in the past 24 hours.
Recent technical developments on the S&P/ASX 200 have been very encouraging with a double bottom pattern and break above the 200-day moving average near 6000 followed by multiple new 8-month highs and two daily closes above the August rebound peak at 6199.2.
Thus, while it will be disappointing to see the S&P/ASX 200 dip below the low end of the former resistance band in the 6160-6200 area, it should be well supported on this dip. Very strong support should now be located at 6000.
But S&P 500 futures have fallen slightly in early trading despite a 2.6pc rise in Tesla after its adjusted quarterly profit of 76 cents a share beat the 55 cents consensus estimate by 38pc.
The US share market may be vulnerable to economic worries, because much-needed fiscal stimulus continues to be delayed.
US lawmakers signalled that while making progress toward a stimulus deal, it’s unlikely to become law before the election.
Energy was the worst sector in the S&P 500 as WTI crude fell 3.5pc to $US40.01 as US gasoline inventories rose the most since May and gasoline consumption hit a 4-week low.
Newmont rose 0.5pc as spot gold rose 0.9pc to $US1924.16, while BHP ADR’s equivalent close at $36.07 was a 0.1pc discount to its Sydney close.
Elsewhere in commodities, spot iron ore rose 0.8pc to $US120.40 and LME copper rose 1.4pc to $US6989.3.
The KBW Bank index fell 1pc, even though US 10-year bond yields rose 4bps to a 5-month high of 0.8226pc.
Otherwise the focus today is mainly on AGMs and production reports.
9.34am: Alsco withdraws Spotless bid
US-owned laundry giant Alsco has pulled its bid for Spotless’s garment laundering business and withdrawn a request for ACCC approval on the proposed acquisition.
The competition watchdog began its informal review of the merger in June and expressed preliminary concerns about the deal earlier this month, stating that the proposed acquisition was likely to substantially lessen competition in the supply of commercial laundry services for garments around the country.
“We were concerned Alsco’s closest competitor in garments laundering would be removed, leaving garments customers with few comparable suppliers in terms of scale and geographic reach,” ACCC Commissioner Stephen Ridgeway said.
The ACCC’s separate merger review into South Pacific Laundry’s proposed acquisition of Spotless Laundries is continuing.
Spotless Garments is part of Spotless Group Holdings Limited which is wholly-owned by Downer EDI Limited.
9.26am: Star lifts margins despite revenue hit
Star Entertainment Group says EBITDA margins had lifted year-to-date despite lower revenues, which had driven strong cashflow generation and enabled significant debt reduction.
In an update to the ASX ahead of the company’s annual general meeting today, chief executive Matt Bekier said group domestic gaming revenue for the financial year so far was at about 75 per cent of that of the previous corresponding period, while revenue was 70 per cent of the prior period, on reduced capacity at all its casinos.
“Across the group, loyalty gaming revenue remains strong, enhanced by the newly-opened Sovereign private gaming room in Sydney,” Mr Bekier will tell shareholders at today’s AGM.
“The VIP Rebate business continues to be impacted by the closure of the international and domestic borders with negligible turnover in the period.”
He said that the Queensland properties had traded strongly with domestic gaming revenue broadly in line with the prior period, while Sydney continued to be impacted by “more onerous” constraints, including a cap on the number of patrons in an area.
9.22am: Woodside revenue falls
Woodside Petroleum said third-quarter sales revenue fell 42 per cent from a year earlier as lower realised liquid natural gas prices more than offset a rise in production.
The company said it produced 25.3 million barrels of oil equivalent in the three months through September, down 2.3 per cent from the second quarter, but up 1.6 per cent on the same period a year earlier. Sales revenue fell to $US699 million from $US768 million in the second quarter, and from $US1.21 billion in 3Q of FY 2019.
Chief Executive Peter Coleman said lower LNG prices reflected a price lag in many of its contracts. He said he anticipated higher prices in the next two quarters amid higher oil prices.
Woodside said it cut the number of direct employees by 8 per cent over the third quarter, and continued to pursue cost-cutting opportunities.
Dow Jones Newswires
Nick Evans 9.13am: OZ Minerals lifts gold forecast
OZ Minerals has lifted its gold output guidance as the price of the precious metal stays high, with the company poised for a strong finish for the year as copper prices also lift.
And the company said its new Carrapateena mine was tracking ahead of expectation, with the company expecting the deep underground operation to reach a steady state of production by the end of the year.
The Australian copper miner released its September quarter production report on Thursday, adding an extra 10,000 to 15,000 ounces to the expected gold output from its Prominent Hill mine in South Australia as the company takes advantage of elevated copper prices.
Gold is still hovering just above $2700 an ounce, in Australian dollar terms, and copper prices lifted above $US7000 a tonne on the London Metals Exchange, hitting two year highs in Wednesday trading.
OZ Minerals lifted gold production from Prominent Hill on steadily rising prices this year, processing gold-rich stockpiles at the mine to take advantage of the price and to run down gold hedging contracts.
The company lifted 2020 group gold output guidance to 242,000 to 259,000 ounces on Thursday, from 227,000 to 249,000 previously. Expected group copper output remained unchanged at 88,000 to 105,000 tonnes.
Read more: OZ Minerals lifts its gold output guidance
9.11am: APA reaffirms guidance
Gas pipeline giant APA Group says its confident in the strong financial and operation position of the company, despite the ongoing coronavirus challenges.
In an update to the market ahead of APA’s annual general meeting today, chairman Michael Fraser reiterated the company’s full-year earnings guidance, which is expected to be within the range of $1.63bn and $1.67bn.
“While we’re not immune from the present economic downtown we are resilient and, pleasingly, our trading performance during the first quarter is in line with our expectations,” Mr Fraser said.
9.06am: Santos cuts cost guidance
Santos has reported record production in its fiscal third quarter and cut its full-year cost guidance.
The Australian firm said it produced 25.1 million barrels of oil equivalent in the three months through September, up 22 per cent on the second quarter. It said that was primarily driven by higher volumes of domestic gas and liquefied natural gas, although production of oil, condensate and liquefied petroleum gas also rose.
Sales revenue rose to $US797 million from $US785 million in the prior quarter, it said.
Santos cut its FY 2020 guidance for upstream unit costs to $US8.25-$US8.75 per barrel of oil equivalent. It previously anticipated a $US8.50-$US8.90 range.
Production, sales and capital expenditure guidance remained unchanged.
Dow Jones Newswires
9.00am: US buys lift Restaurant Brands
KFC and Taco Bell franchise owner Restaurant Brands NZ says total sales for the September quarter lifted 12.8 per cent, boosted by the inclusion of its new California restaurants.
Same store sales lifted 6.5 per cent on the same quarter last year.
“Total year to date sales were $NZ623.3 million, an increase of 2.4 per cent on the prior year, despite the full closure of the New Zealand stores for most of April,” the company said in an update to the ASX this morning.
Company store numbers grew by 64 to 348, following the acquisition of 69 stores in California in September.
8.28am: Auckland Airport sees travel bounce
Auckland International Airport said its first-quarter financial performance was stronger than it had expected, partly reflecting a bounce back in domestic travel.
Operating earnings for the July-September period averaged $NZ10 million a month compared with expectations for small losses, chief executive Adrian Littlewood said.
The company said it isn’t providing earnings guidance for the 2021 financial year because of uncertainty stemming from the pandemic, but will reassess that decision at its interim result in February.
Dow Jones Newswires
7.40am: Tesla extends profit streak
Tesla extended its profitability streak in the third quarter, defying the global economic turmoil wrought by the coronavirus pandemic and bolstering the outlook for mass-market electric vehicles.
The Silicon Valley car maker on Wednesday posted a net profit of $US331 million for the three-month period ended Sept. 30. It marks Tesla’s fifth-consecutive quarter in the black and keeps the company on track for 2020 to be the first calendar year of profitability after years of losses.
Tesla also revived a pre-pandemic target to build at least 500,000 vehicles this year, which Chief Executive Elon Musk laid out in January, an increase of at least 36 per cent from last year. Tesla didn’t formally withdraw that guidance, but until now had largely ignored the projection that seemed improbable at the onset of the pandemic, when it temporarily shut down its lone US factory as local health officials worked to contain the spread of the coronavirus.
“While achieving this goal has become more difficult, delivering half a million vehicles in 2020 remains our target,” the company said.
The company was buoyed by efficiencies in manufacturing, including lower labour costs at its production facility in China, as well as growing demand in that country for electric cars. Its ability to sell emission credits to rivals to meet regulatory requirements has padded the bottom line.
Tesla on Wednesday reported a record $US8.77 billion in revenue for the quarter, a 39 per cent jump from a year ago. Analysts surveyed by FactSet expected sales of $US8.28 billion.
Dow Jones
7.33am: AMP announces ‘slight’ lift in AUM
AMP says Australian wealth assets under management increased 0.3 per cent in the third quarter to $121.4 billion, supported by improved investment markets.
Average third quarter assets under management rose 2 per cent to $122.1bn.
AMP says net cash outflows of $1.95bn were broadly flat “with signs of underlying improvement after adjusting for $692m of early release of super payments”.
AMP chief executive Francesco De Ferrari said: “Our business has performed resiliently through the challenges of COVID-19 and a period of internal change in the third quarter.
“Assets under management have increased slightly in our wealth management businesses in Australia and New Zealand and were resilient in AMP Capital. AMP Bank continues to adapt in a challenging market environment as we complete the renovation of our core systems to enable future growth.”
Mr De Ferari said AMP was “accelerating” its business transformation, while its client remediation program remained on track to complete in 2021.
Read more: AMP seeks to reassure investors on outflows
7.20am: ASX to fall as markets await stimulus deal
Australian stocks are set to sink in early trade as global markets monitored continuing talks on a US stimulus package.
European markets fell and Wall Street dipped after a volatile day of trading.
At around 7am the SPI futures index was down 69 points, or about 1.1 per cent.
Yesterday, Australian stocks closed slightly higher amid progress on US stimulus talks.
Brent oil shed 3.3 per cent to US41.73.
The Australian dollar surged to US71.17, from US70.80 yesterday.
7.06am: US stocks dip as stimulus talks continue
US stocks traded in a narrow range, closing down, as investors assessed prospects for a fresh stimulus bill and the health of major American businesses through their quarterly reports.
The S&P 500, which drifted between gains and losses, was down 0.2 per cent as of the close of trading in New York, while the Dow Jones Industrial Average fell 99 points, or 0.4 per cent. The tech-heavy Nasdaq Composite Index lost 0.3 per cent.
Treasury yields extended their climb, with the yield on the 10-year note reaching its highest level since June. The 10-year recently yielded 0.801 per cent, from 0.796 per cent Tuesday.
Most investors have recently been focused on any developments in Washington over a possible stimulus package. Democratic negotiators and the White House have said they would press ahead with talks on the next coronavirus-relief package, setting aside a Tuesday deadline proposed by House Speaker Nancy Pelosi to hammer out the accord. Mrs. Pelosi signalled there was progress after her conversation with Treasury Secretary Steven Mnuchin.
The two sides didn’t decisively establish whether a deal will be possible before Election Day, though White House chief of staff Mark Meadows said Mrs. Pelosi and the administration are trying to secure an agreement before the weekend. Any deal is likely to face deep opposition from Senate Republicans, especially if the proposed spending package approaches $US2 trillion.
“What we are seeing at the moment is the market trading on these headlines, but to us, a pre-election stimulus deal seems unlikely,” said Seema Shah, chief strategist at Principal Global Investors. “We can hear as much as we want from Pelosi and Mnuchin about progressing talks, but some senators have said simply that they won’t support any package.”
Investors are also parsing third-quarter earnings reports to gauge how businesses are weathering the economic downturn.
The recent economic data suggests the recovery of corporate profits remains ongoing, said Dan Suzuki, chief investment officer of Richard Bernstein Advisors LLC, who noted reports on the manufacturing sector, the housing market and labour.
Among recent earnings reports, Snap shares jumped 29 per cent after its revenue grew by more than half, significantly exceeding analysts’ expectations. Shares of other social-media companies also rose.
Netflix shares fell 5.4 per cent after the company said subscriber growth slowed in the third quarter, highlighting the fresh challenges from competitors ramping up their own streaming services.
The pan-continental Stoxx Europe 600 fell 1.3 per cent.
In commodity markets, oil prices edged lower. Brent crude, the international benchmark, dropped 1.1 per cent to $US42.69 a barrel. Gold ticked 0.7 per cent higher.
Dow Jones Newswires
6.45am: US firms more optimistic: Fed
Businesses around the country were a bit more upbeat about their prospects coming out of the worst months of the pandemic, but worries remain, including about jobs and retail, the Federal Reserve said.
While growth picked up speed, commercial real estate remains a soft spot, with offices remaining empty and stores going bankrupt or unable to pay their rent, according to the Fed’s latest “beige book” survey of economic conditions.
The November 3 presidential election was mentioned only a handful of times in the report, the last before Americans go to the polls to determine whether Donald Trump will get another four years in the White House.
Trump’s handling of the Covid-19 pandemic, which inflicted severe damage on the US economy, is a key issue in the election and after tens of millions of job losses he trails behind Democratic challenger Joe Biden in opinion polls.
“Economic activity continued to increase across all Districts,” the report said, although the pace of growth was described as “slight to modest.” Contacts across the Fed’s 12 regions said their outlooks were “generally optimistic or positive, but with a considerable degree of uncertainty,” the report said.
While employment increased in almost all regions, “growth remained slow” and “firms continued to report new furloughs and lay-offs.”
AFP
6.25am: Stimulus vote may be after election
White House officials and House Speaker Nancy Pelosi opened the door to passing a coronavirus relief package after the election, a signal that time and political will has likely run out to enact legislation before then.
“I’m optimistic that there will be a bill. It’s a question of, is it [in] time to pay the November rent, which is my goal, or is it going to be shortly thereafter and retroactive?” Mrs. Pelosi, a California Democrat, said on MSNBC.
Larry Kudlow, a top White House economic adviser, said there might not be enough time left to execute a sweeping package and said negotiators were “running out of time, at least between now and the election.” Wrapping up work on a relief package in a lame-duck session, after the election but before the next administration begins, “could be a possibility,” he said on CNBC.
Punting a relief bill until after the presidential election would likely imperil its passage for months, since the November 3 election could change the political calculus. If Democratic nominee Joe Biden wins the White House, Democrats would have an incentive to wait until he is in office, where then they would have increased leverage to push for a larger bill, with more Democratic policy provisions.
“The lame duck is a really hard time to get much done -- in any lame duck,” Senator Roy Blunt of Missouri, a member of Senate GOP leadership, said Wednesday. “I don’t see why this one would be different.”
The White House’s most recent $US1.88 trillion proposal narrowed the distance with Democrats’ last $US2.2 trillion relief bill, though the overall spending level and several thorny policy issues remain unresolved.
Dow Jones
6.00am: Oil falls
Oil futures declined, with US prices at their lowest in over a week. Prices found little support as traders continued to fret over the potential for further pandemic-related economic shutdowns that would weaken energy demand.
The Energy Information Administration on Wednesday reported a weekly decline in US crude supplies-the second one in a row, but it was smaller than expected.
December West Texas Intermediate crude fell $US1.67, or 4 per cent, to end at $US40.03 a barrel on the New York Mercantile Exchange.
Brent crude, the international benchmark, dropped 1.1 per cent to $US42.69 a barrel.
Dow Jones
5.55am: Wall St in narrow range as stimulus talks continue
US stocks traded in a narrow range as investors assessed prospects for a fresh stimulus bill and the health of major American businesses through their quarterly reports.
In afternoon trade the S&P 500, which has drifted between gains and losses, recently traded up 0.4pc, while the Dow Jones Industrial Average rose 34 points, or 0.1pc. The tech-heavy Nasdaq Composite Index rose 0.4pc.
Most investors have recently been focused on any developments in Washington over a possible stimulus package. Democratic negotiators and the White House have said they would press ahead with talks on the next coronavirus-relief package, setting aside a Tuesday deadline proposed by House Speaker Nancy Pelosi to hammer out the accord. Mrs. Pelosi signalled there was progress after her conversation with Treasury Secretary Steven Mnuchin.
The two sides didn’t decisively establish whether a deal will be possible before Election Day, though White House chief of staff Mark Meadows said Mrs. Pelosi and the administration are trying to secure an agreement before the weekend.
Any deal is likely to face deep opposition from Senate Republicans, especially if the proposed spending package approaches $US2 trillion.
“What we are seeing at the moment is the market trading on these headlines, but to us, a pre-election stimulus deal seems unlikely,” said Seema Shah, chief strategist at Principal Global Investors. “We can hear as much as we want from Pelosi and Mnuchin about progressing talks, but some senators have said simply that they won’t support any package.”
Dow Jones
5.55am: Vaccine trial volunteer dies
Brazil’s health authority Anvisa said a volunteer taking part in clinical trials for the Covid-19 vaccine being developed by AstraZeneca and Oxford University has died.
Anvisa said it wouldn’t halt the trials for now, and was investigating the death. While the health authority declined to give any information on the identity of the volunteer, local press in Brazil reported that the volunteer was a Brazilian man in his 20s from Rio de Janeiro.
Dow Jones Newswires
5.10am: US stocks mixed as stimulus talks continue
US stocks were mixed as investors assessed prospects for a fresh stimulus bill and the health of major American businesses through their quarterly reports.
The S&P 500 was 0.1 per cent higher in afternoon trade, after adding 0.5 per cent yesterday on optimism that Congress would reach an agreement on a spending package.
The Dow Jones Industrial Average was down 0.1 per cent, while the tech-heavy Nasdaq Composite Index advanced 0.1 per cent.
Treasury yields extended their climb, with the yield on the 10-year note reaching its highest level since June at 0.812 per cent, from 0.796 per cent Tuesday.
Democratic negotiators and the White House said they would press ahead with talks on the next coronavirus-relief package, setting aside a Tuesday deadline proposed by House Speaker Nancy Pelosi to hammer out the accord. Mrs. Pelosi signalled there was progress after her conversation with Treasury Secretary Steven Mnuchin.
The two sides didn’t decisively establish whether a deal will be possible before Election Day, though White House chief of staff Mark Meadows said Mrs. Pelosi and the administration are trying to secure an agreement before the weekend. Any deal is likely to face deep opposition from Senate Republicans, especially if the proposed spending package approaches $US2 trillion.
The number of daily coronavirus infections reported in the U.S. grew for a third straight day, with an indicator suggesting cases have been rising for more than two weeks. Hospitalisation continue to rise as well, triggering concern among investors that local authorities may need to step up lockdown measures, dealing a blow to the economic recovery.
Overseas, the pan-continental Stoxx Europe 600 fell 0.8 per cent.
In Asia, markets were buoyed by signs of progress in the stimulus talks. Japan’s Nikkei 225 index rose 0.3 per cent by the close of trading, and the Hang Seng Index climbed 0.8 per cent.
In commodity markets, oil prices edged lower. Brent crude, the international benchmark, dropped 1.1 per cent to $US42.69 a barrel. Gold ticked 0.7 per cent higher.
Dow Jones Newswires
5.07am: Quibi may have to shut down
Quibi Holdings considering shutting itself down, according to people familiar with the matter, a move that points to a possible crash landing for a once-high-flying entertainment start-up that raised $US1.75 billion in capital.
The US streaming service has been plagued with problems since it launched in April, facing lower-than-expected viewership, disappointing download numbers and a lawsuit from a well-capitalised foe.
The service is aimed at mobile viewers, but the coronavirus pandemic forced would-be subscribers away from the kinds of on-the-go situations Quibi executives envisioned for its users.
Quibi attracted blue-chip advertisers including PepsiCo Inc., Walmart Inc. and Anheuser-Busch InBev SA, securing about $US150 million in ad revenue in the run-up to its launch. Those deals came under strain earlier this year amid lower-than-expected viewership for Quibi’s shows, prompting advertisers to defer their payments.
In recent weeks, Quibi hired a restructuring firm to evaluate its options, the people said. The firm recommended the options to the board of directors this week, laying out a list of options that included shutting the company down.
Dow Jones
5.05am: Purdue Pharma in $US8.34bn opioid settlement
The US Justice Department reached an $US8.34 billion settlement with OxyContin-maker Purdue Pharma, the agency said, helping clear the way for the bankrupt drugmaker to turn over future profits to cities and states that accuse it of fuelling the opioid crisis.
The settlement resolves yearslong criminal and civil probes by federal prosecutors into Purdue’s marketing and distribution of powerful opioid painkillers. The final price tag for Purdue, however, is largely symbolic: Because the company’s assets fall well short of $US8 billion, it will pay $US225 million and the federal government is expected to cede most of the rest to allow more money to flow to states, counties and Native American tribes.
Purdue has agreed to plead guilty to three counts related to payments to healthcare providers and other actions. The deal doesn’t prevent the government from prosecuting owners or employers of Purdue in the future.
Purdue’s owners, members of the Sackler family, will separately contribute $US225 million to resolve civil claims, the Justice Department said.
Purdue filed for bankruptcy more than a year ago under the weight of thousands of lawsuits filed by state and local governments alleging the company’s aggressive marketing of OxyContin helped lead to widespread drug addiction and overdose deaths. Since 1999, at least 450,000 people in the US have died from overdoses of prescription and illegal opioids.
Dow Jones
5.00am: European stocks slide awaiting US stimulus
European stock markets slid and the dollar faltered despite more upbeat talk in Washington on a US stimulus package.
The pound climbed higher meanwhile thanks to hopes that Britain and the European Union will strike a post-Brexit trade deal despite renewed tensions.
Oil prices plunged by 3.0 per cent or more, however, following the release of data that showed an increase in US stocks of petrol, whereas analysts had expected a decrease.
“European equity markets are in the red... as traders are growing tired of the fact that US politicians have yet to strike a deal with respect to the stimulus package,” noted David Madden, analyst at CMC Markets UK.
After months of talks, Democrats and the White House said they were closing the gap on their stimulus proposals, and House Speaker Nancy Pelosi said legislation was being drawn up.
President Donald Trump’s administration sent three top officials to speak on three different TV networks Wednesday to tout what they called progress made toward a deal.
The White House has upped its offer by $US80 billion to $US1.88 trillion, which is still short of the Democrats’ $US2.2 trillion plan, but US President Donald Trump has said he is willing to go higher.
The Dow Jones index was nonetheless in negative territory in midday New York trading.
London closed down 1.9 per cent, Frankfurt shed 1.4 per cent and Paris fell 1.5 per cent.
In Asia, the Tokyo stock market closed with a gain of 0.3 per cent, while Hong Kong added 0.8 per cent and the main stock index in Shanghai dipped following recent gains.
Elsewhere, coronavirus vaccine hopes were raised after US biotech firm Moderna said its candidate could be given approval for emergency use as early as December.
The disease has flared up again across the United States and Europe, where many countries have been forced to introduce targeted lockdowns that have fanned fears for business survival and warnings of a possible double-dip recession.
AFP
4.55am: Bitcoin spikes on PayPal news
The world’s most popular virtual unit Bitcoin rallied to a 13-month peak after US online payments provider PayPal announced that it would enable account holders to use cryptocurrency.
San Jose, California-based PayPal Holdings said in a statement that the new service will also permit customers to buy, hold and sell cryptocurrency units -- and use them for payments at retailers.
Bitcoin jumped as high as $12,854.50 according to data compiled by Bloomberg.
“Bitcoin rose to its highest level in over a year, hitting levels not seen since July 2019 after PayPal said it will enable cryptocurrencies on its platform,” noted analyst Neil Wilson at trading website Markets.com.
“Initially it will allow users to buy, hold and sell Bitcoin, Ethereum, Bitcoin Cash, and Litecoin in the PayPal wallet. It will also enable users to spend cryptocurrencies for purchases at its 26 million merchants worldwide.
“It is hard to know for sure right now what it means, but because of PayPal’s sheer scale and reach I would think the development may be a potential game-changer in the mass use of cryptos -- though of course there are many other barriers to its widespread consumer and business adoption.”
AFP
4.50am: Royal Mail launches doorstep package collection
Postal operator Royal Mail, which has been delivering mail for over 500 years, announced plans to start collecting parcels from homes throughout the UK in the wake of the COVID-19 pandemic.
“The new service -- Parcel Collect -- means postmen and postwomen will now be able to collect parcels as well as deliver them on their daily round,” Royal Mail said in a statement.
“It is one of the biggest changes to the daily delivery since the launch of the postbox in 1852,” it added.
Former state-run Royal Mail has experienced a surge in parcel deliveries as COVID-19 fuels online shopping.
Parcel Collect will pick up a maximum of five packages per address, avoiding the need for a post office visit.
Each item is picked up for 72 pence (94 US cents, 79 euro cents), in addition to postage costs.
The new service will also collect prepaid return items for 60 pence each. The nationwide launch follows an initial rollout of Parcel Collect in western England.
AFP
4.45am: UK inflation rises as cheap meal scheme ends
British inflation rose to 0.5 per cent in September, official data showed Wednesday, as the UK government ended a meals discount scheme boosting the restaurant sector battered by the coronavirus pandemic.
The annual inflation rate, as measured by the UK’s Consumer Prices Index, increased from a near five-year low of 0.2 per cent in August.
The ONS said that along with transport costs, “restaurant and cafe prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions” to inflation in September.
The “Eat Out to Help Out” incentive in August saw the UK government subsidising meals eaten also in pubs.
Britons enjoyed more than 100 million meals under the discount scheme, according to recent data.
Some analysts have argued that the measure may have fuelled cases of coronavirus.
Britain has suffered Europe’s worst death toll from COVID-19, with nearly 44,000 deaths, while the pandemic has caused the country’s deepest recession on record.
The extent of the financial cost was updated in separate official data Wednesday revealing that UK national debt last month hit a record £2.06 trillion ($US2.65 trillion, 2.23 trillion euros) That pushed state borrowing up to 103.5 per cent of Britain’s annual gross domestic product, the ONS said.
The government borrowed £36.1 billion in September -- £28.4 billion more than one year earlier.
AFP
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