ASX dives 10pc in worst daily drop since 1987 crash
The local sell-off accelerated at the close, finishing down 9.7pc with $162bn wiped off the boards in just one day.
- Daily drop worst since ’87 crash
- RBA ‘stands ready’ to start quantitative easing
- Woolies, Coles defy market meltdown
- Risk of emergency RBA cut rising: NAB
- US Fed slashes rates to fight COVID-19
That’s all from the Trading Day blog for Monday, March 16. Thanks for joining us for our special extended coverage amid the virus meltdown.
European shares have opened well down and US futures are pointing to falls on US markets later.
Australian shares faded further at the close to finish down 9.7 per cent for the session, the biggest daily drop since the 1987 crash, to the benchmark ASX200’s lowest trading level since April 2016.
It comes after the US Fed and the RBNZ both cut rates this morning, and after the RBA hinted at Quantitative Easing to start later this week.
The Aussie dollar hit fresh 11-year lows of US60.96c, and was trading slightly higher at US61.61c at the local close.
9.42pm: RBA outlines plans for Thursday ‘speech’
The Reserve Bank of Australia has just updated its schedule with Governor Philip Lowe to deliver a speech on Thursday at 4PM. The speech which is not titled will be broadcast on the RBA website. Earlier Monday Lowe outline plans for government bond buying program and said further policy measures will take place on Thursday.
John Durie 8.53pm: More Qantas fleet ‘cuts to come’
Qantas is set to unveil further significant fleet cuts on Tuesday in the wake of the slump in demand due to the coronavirus.
The company said in a statement earlier Monday the position was fluid and it is working on the full extent of changes to be unveiled as soon as Tuesday.
The company is unlikely to go as far as cutting its international division or as much as 80 per cent fleet cuts as some are tipping, but sources said the cuts would be significant.
Angelica Snowden 8.31pm: Westpac’s Evans ‘certain’ RBA will cut
Westpac’s chief economist Bill Evans said the Reserve Bank is likely to slash the cash rate to 0.25 per cent on Thursday when it announces further measures to help the economy.
“The one thing we can be certain of is that they’ll cut their cash rate in half to 0.25,” Mr Evans told the ABC.
Mr Evans said that the federal government is preparing to announce a second package so quickly after the first because Australia is likely to see a recession in the first half of this year.
“When we saw that first package, whilst we thought there were some very welcome aspects to it, we still expect that we’ll get a recession in the first half of this year and it’s likely to see the unemployment rate go above 6 per cent,” he said.
“I think the next round will be even more focussed on particular industries. What’s important is good companies don’t go to the wall, and what’s important is that the unemployment rate doesn’t go too far.”
Adam Creighton 8.17pm: Small businesses ‘smashed’ by virus
The share of businesses affected by coronavirus crisis has quadrupled in four weeks to 60 per cent, amid signs small businesses in NSW and South Australia are among the hardest hit according to the first national survey of businesses since the government released a stimulus package last week.
More than 80 per cent of firms with turnover between $1m and $5m said they were affected by the spread of the virus, according to Roy Morgan Research, a bigger share than for large businesses with turnover over $50m (73 per cent).
Roy Morgan chief executive Michele Levine said the government’s stimulus package “will need to be raised many times over to truly protect the Australian economy from a devastating recession the likes of which Australia hasn’t seen this World War Two”.
“These numbers are even more alarming for particular industries including Manufacturing, Wholesale trade, Recreation & Personal, Information, Media & Telecommunications, Property & Business Services and Transport, Postal & Warehousing. Over 70 per cent of businesses in these industries report being affected by COVID-19 coronavirus,” she added.
8.06pm: FTSE 100 down 5.92pc
The FTSE 100 fell 5.92pc on fears that the worsening coronavirus pandemic could take a severe toll on the economy as more and more countries take drastic action in an attempt to stop it spreading. Airlines and travel stocks were by far the worst hit as countries close borders and curtail travel, with TUI down 33pc, easyJet down 28pc and BA operator IAG down 23pc. Property stocks dropped sharply with Persimmon, Barratt Developments and Taylor Wimpey all down around 11pc. Retailers and insurers were also among the main fallers, while consumer goods company Reckitt Benckiser is the only riser, up 1.2pc. EasyJet said it would ground most of its fleet and warned on Monday that it is cancelling more flights due to the coronavirus pandemic. It added that there was no guarantee that European airlines would survive the crisis.
Dow Jones Newswires
7.45pm: European stocks open sharply lower
European stocks opened sharply lower on Monday as the impact of the spreading coronavirus on the world economy offset efforts by the US Federal Reserve to limit the fallout. The Stoxx Europe 600 opened about 5pc lower. The number of Italian COVID-19 cases surged as the US expanded a travel ban to the UK and Ireland, Germany announced it was partially closing its borders, France closed its famous cafes and restaurants and the Netherlands ordered its weed-selling coffee shops to close. The Federal Reserve on Sunday cut interest rates to nearly zero and said it would buy back $700 million of Treasurys and mortgage-backed securities. Futures on the Dow Jones Industrial Average were down over 1000 points.
Dow Jones Newswires
5.48pm: US, UK futures signal more pain ahead
US equity futures slid and bonds rallied after the Federal Reserve slashed its benchmark interest rate to near zero this morning, a sign that investors remain worried that the coronavirus will fuel a recession even with borrowing costs dropping.
Dow Jones Industrial Average futures, along with S&P 500 futures hit their trading limit of a 5pc decline during local market trade, suggesting Wall Street is poised to give up Friday’s spectacular rally.
Meanwhile, in the UK, FTSE 100 futures suggest a 3 per cent drop at when its market opens later this evenring.
Gerard Cockburn 5.37pm: Westpac confirms virus case
Westpac has confirmed the employee at the centre of its virus scare last week has tested positive for coronavirus.
On Wednesday, the bank cleared two floors of its Sydney headquarters for a deep clean, after three employees developed flu-like symptoms.
The bank confirmed today that one of its employees who works in the Barangaroo office has contracted the virus.
The two other workers suspected of having the virus have both been cleared.
“This individual has been in self-isolation since they started showing symptoms and were tested for the virus,” a spokesman said.
“All suspected cases have been in isolation, as have those people identified as close contacts.”
Ben Wilmot 5.35pm: Mirvac urges more flexible work options
Property developer and investor Mirvac has urged more companies to adopt flexible work practices as they look to battle the spread of coronavirus.
The company, which is also a major office landlord, is seeking to protect staff and has urged more companies to have employees work remotely wherever possible.
Mirvac joined the ranks of large companies taking radical steps to avoid spreading the virus, telling staff to work from home on Monday, if they could, while keeping its sites open.
Mirvac chief executive Susan Lloyd-Hurwitz called on other companies to change their practices in order to curtail infections.
“We need to flatten the curve. Now,” she said. “As we watch the horrendous impact of COVID-19 spread around the world, and now rapidly in our own country, Australia needs to act quickly and decisively to slow the rate of infection to enable our health services to cope over the coming weeks and months.”
5.31pm: CBA faces action for problem gambler credit
The securities regulator is taking Commonwealth Bank to court over alleged contraventions of its responsible lending provisions in relation to loans to a problem gambler, as brought to light during the royal commission.
ASIC says the action against CBA is for “failures to take acount of a notification by a customer (Mr Harris) that he was a problem gambler and to take reasonable steps to verify his financial situation before offering and approving a credit card limit increase”.
“The amount of any penalty will be determined by the court and each party will be making their own submissions to the court on the penalty range,” it said.
During the royal comission, CBA admitted it should never have offered Mr Harris a final credit offer of $8,000 after he told his officers he had a gambling problem.
5.22pm: Just three names finish in the green
Three of the markets top 200 stocks finished in positive territory as the local market took its biggest daily hit since the 1987 crash.
Even supermarkets Woolworths and Coles, which had been trading higher for much of the session, finished at a loss as the market tumbled to new lows in the closing match.
By the close, Fisher and Paykel was the top performer, while Telstra edged up by a mild 1.8pc and Domino’s lifted 0.16pc - even as it said it was prepping its workforce for ‘zero contact’ deliveries.
Take a look at today’s biggest movers:
Perry Williams 5.11pm: Geminder lifts Pact stake as shares dive
Billionaire Raphael Geminder has seized on sharemarket turmoil to pick up an extra 3 per cent stake in packaging company Pact Group.
Mr Geminder, the brother-in-law of Australia’s richest man Anthony Pratt, boosted his grip on Pact to 44.3 per cent from his previous 41.3 per cent holding, according to a substantial holding notice lodged March 12 with the ASX.
Pact plummeted 16 per cent to $1.44 on Monday and has now shed 46 per cent of its value so far this year.
The Melbourne company said in February it would pay no interim dividend for a second year running and may cut manufacturing plants while cautioning on an uncertain outlook due to the coronavirus pandemic.
David Swan 4.52pm: Telstra hands out free data in virus plan
Telstra announced on Monday afternoon it would be giving its consumer and small business customers unlimited data until the end of April as part of its coronavirus response, and pensioners would receive unlimited home phone calls.
“The data, which will be provided automatically, will help facilitate videoconferencing; voice over Wi-Fi, and cloud connectivity, all important tools when working from home or in isolation,” Telstra chief Andy Penn said in a statement.
“We are also giving our consumer and small business mobile customers more data.”
Post-paid customers can receive an extra 25GB of data on their plan to use in Australia within 30 days while postpaid customers can apply for the extra data via the Telstra App until March 31.
4.39pm: Travel names take fresh hit
Travel names took another battering on Monday, after travel bans were ramped up at the weekend both at home and abroad.
Airports took a large hit – Sydney Airport gave up 17.7 per cent to $4.78, marking a near halving of the stock year-to-date, while Auckland Airport’s ASX-listed shares fell 24 per cent to $5.10 after it suspended guidance this morning to weigh the effect of strict new border controls.
In the airlines, Qantas lost 5 per cent to $3.02 as it made fresh cuts to its flying schedule and Virgin dropped 12.7 per cent to 6.9c while Air New Zealand remained halted as it counted the cost of new capacity cuts.
Flight Centre fell by 15.8 per cent to $16.12, Corporate Travel sunk by 15.3 per cent to $7.83 and Webjet tumbled 22 per cent to $4.32.
4.13pm: Daily drop worst since ‘87 crash
Broad global monetary stimulus provided little relief for Australian shares on Monday, plunging 9.7 per cent for the biggest drop since the 1987 crash.
Surprise rate cuts by the US Federal Reserve and Reserve Bank of New Zealand before the local market open had the opposite effect on shares, inciting more panic selling instead at the open.
Shares dropped more than 6pc early, and attempted a midmorning recovery but weak data and the likely need for more fiscal stimulus pushed shares to close at their daily lows – down 537.3 points or 9.7 per cent to 5002.
Michael Roddan 3.33pm: UniSuper cans lending to short sellers
One of Australia’s largest superannuation funds, the $85bn UniSuper fund, has pulled the pin on lending its stock to short-sellers in a bid to limit price plunges on equities markets.
UniSuper, which manages the savings of university staff members told its custodian, BNP Paribas Securities Services, to suspend its stock lending program effective immediately and appeared to encourage other large super funds to also stop lending shares out to investors that bet prices will fall.
While the Australian Securities and Investments Commission has no plans to revisit the move during the global financial crisis to ban short-selling, UniSuper said any effect its move to end its stock lending program would depend on “how many funds follow a similar path”.
The move has already enraged several hedge funds that rely on stock lending programs to bet against companies on sharemarkets, as they are given just two days to hand back any borrowed stock back to UniSuper.
Short selling is the practice of investors selling borrowed shares in the hope of buying the stock back later at a lower price to make a profit.
UniSuper chief investment officer John Pearce said in a normally functioning market the fund was “comfortable lending our shares as we genuinely believe that it adds to market efficiency”
Bridget Carter 3.31pm: Goldmans clears Sydney office
DataRoom | A Goldman Sachs employee in its Sydney office is understood to have tested positive for COVID-19.
Australian chief executive Simon Rothery sent a memo to clients on Monday informing them of the development.
Mr Rothery said the employee had been self isolating since Friday last week. As a result, the bank has cleared out its offices at Level 48 of Governor Phillip Tower in the city’s central business district.
The staff from that floor would be working from home and would not conduct face-to-face client meetings or conferences until further notice, Mr Rothery said.
3.14pm: Syd Airport can cop 6 week closure: CS
Analysts at Credit Suisse are tipping a 6-week shutdown for Sydney Airport but say its balance sheet is still solid and can ride out the coronavirus crisis.
In an analysis of the airport, they say their base case is for the airport to be closed for six weeks, with international traffic down 35pc and domestic down 20pc over the year.
“In our base case, EBITDA interest coverage falls to 2.2x (from 3.1x in 2019), and remains well above the likely debt covenants. We forecast 2020 dividend of 25c, down 36pc yoy but expect strong dividend growth in 2021 (38pc).”
That said, its bear case is for the airport to be closed for three months, and Virgin to enter administration.
The broker upgrades the stock to Neutral, but lowers its target price from $5 from $6.90. SYD shares last traded at $4.93.
2.40pm: Recession ‘very likely’: Capital Eco
Capital Economics economist Marcel Thieliant says recession is “very likely” in Australia after the comprehensive travel restrictions announced over the weekend.
In his view, Australia’s ruling that foreign visitors should self-isolate for 14 days means tourist arrivals will fall to near zero, knocking 0.5 percentage points off Australia’s GDP in both the March and June quarters, while the ban on mass gatherings of more than 500 people will affect spending on arts and recreation which accounts for 1pc of GDP.
With the RBA noting it stands ready to buy government bonds in the secondary market to ensure liquidity, while also saying it will reveal more stimulus measures on Thursday, Mr Thieliant says this will no doubt include a cut in the cash rate to the RBA’s stated floor of 0.25 per cent and the start of “full-blown quantitative easing” on Thursday.
“Our baseline assumption is that the Bank will pledge to buy $60bn of government bonds per annum, which is equivalent to 10 per cent of the outstanding stock,” he says.
“However, it’s possible that the Bank will launch a target for government bond yields instead.”
2.28pm: GrainCorp demerger gets investor approval
GrainCorp shareholders have overwhelmingly voted in favour of the demerger of its malt arm, with trade in the new entity, United Malt Group, to begin on the local market by next month.
At a meeting in Sydney this morning, 99.69 per cent of shareholders backed the move, paving the way for the company to seek orders from the Federal Court later next week.
GrainCorp chairman Graham Bradley thanked shareholders for their “overwhelming support”.
“Subject to Court approval, the Demerger has the potential to unlock significant value for shareholders, with GrainCorp and United Malt having strong foundations for success and growth,” Mr Bradley said.
He added that if the court approved the scheme, it intended to lodge orders with ASIC by March 23, and consequent listing on the ASX by April 2.
GNC shares last down 7.3pc to $7.07.
Lachlan Moffat Gray 2.21pm: Woolies to close early to restock
Woolworths will close all 995 stores across Australia by 8pm every evening indefinitely to give staff time to restock shelves, The Australian has confirmed.
A Woolworths spokesman said there was no goods shortage, but staff needed the additional time to ensure shelves across the country remain full.
Read more: Woolies to close early for restocking
Perry Williams 2.19pm: LNG shipments to Asia fall 13pc
Australian shipments of LNG to Asia buyers fell 13 per cent in February as the spread of coronavirus disrupted trade, consultancy EnergyQuest said.
The nation’s gas exports fell to 6.1m tonnes of LNG in February split across 90 shipments from 7m tonnes in January from 103 cargoes.
China only received 29 cargoes in February from Australia, its biggest supplier, compared with 40 in January while Japan took 31 deliveries from 45 the previous month.
Western Australian LNG shipments fell 16 per cent to 4.3m tonnes in February from 5.1m tonnes the prior month.
“Australian LNG is starting to experience a double-whammy of lower volumes and lower prices,” EnergyQuest chief executive Graeme Bethune said.
“The disruption to trade with China and Japan from the coronavirus is starting to become evident in cargoes, not yet substantial but most pronounced in shipments from Gladstone, which supplies Chinese customers CNOOC and Sinopec.”
The oil price crash may take two to three months to filter through to LNG prices but will have a significant impact.
The LNG price falls by 46 per cent to $US4.20 per million British thermal units at an oil price of $US35 a barrel compared with $US7.80 per mbtu at a $US65 crude price, based on a 12 per cent slope.
Geoff Chambers 2:05pm: More fiscal stimulus on the way
Scott Morrison is moving to expand the $17.6 billion stimulus package ahead of parliament next week as the government ramps up emergency response restrictions.
Ahead of the national cabinet meeting on Tuesday night, the Prime Minister has held meetings with Josh Frydenberg and Mathias Cormann to consider additional economic stimulus measures.
With wider restrictions expected on enclosed gatherings and aged care visitations, the government’s expenditure review committee of cabinet is assessing impacts of its public health crackdown on the economy and businesses.
Mr Morrison, who met with Health Minister Greg Hunt and Australian Medical Association president Tony Bartone on Monday before travelling back to Canberra tonight, is also holding rolling meetings with cabinet ministers in key sectors ahead of his meeting with state and territory leaders.
Read more at our COVID-19 live blog
Bridget Carter 2.00pm: Speedcast lenders call advisers
DataRoom | Lenders to satellite provider Speedcast are believed to be in the process of drafting in a corporate adviser to help assess their $US600m worth of loans to the struggling telecommunications services provider.
Speedcast has $US600m worth of Term Loan B debt with US based banks and a $100m revolving credit facility. The syndicate that holds the revolving credit facility includes Credit Suisse, Citi, Macquarie Group, ING and Credit Agricole.
It comes as advisory firm Moelis is understood to be positioning itself to work on the satellite provider Speedcast, which many believe is heading for a collapse amid the current market turmoil.
On Friday, Speedcast made a request to the ASX to extend its trading halt after initially entering a halt on February 5. This was in relation to its interim results, and it is now expected to release its results this month.
The group’s market value is less than $200m now but it was worth $1.4bn in 2018.
Bridget Carter 1.36pm: Spark waives plans to lift TransGrid stake
DataRoom | Spark Infrastructure is understood to have waived any plans to increase its interest in the New South Wales electricity business TransGrid because it cannot easily raise equity amid a period of market volatility.
The Australian listed company was understood to have had Macquarie Capital on standby as it weighed a potential move to lift its interest in the $3.04bn electricity provider.
However, the current market volatility linked to the coronavirus outbreak makes raising equity an almost impossible task for the Australian listed infrastructure owner.
The stock was trading at around $1.78 around lunchtime at the start of the year, shares were at $2.09.
1.20pm: China industrial production contracts
China’s industrial production, retail sales and investment all contracted in the first two months of the year after the coronavirus epidemic wreaked havoc on the economy, official data showed Monday.
Industrial production for January and February shrank 13.5 per cent, the first contraction since the early 1990s
AFP
Ben Wilmot 1.15pm: Lendlease sold-off on virus fear
Global developer Lendlease has been hit again in the sell off on the back of fears that coronavirus will crimp its international operations and make doing property deals tougher.
The company’s shares collapsed by 11 per cent to drop to $13.56 on Monday in mid-day trading as concerns grow about the spread of the virus n key parts of Britain, Europe and the United States, where the company has operations.
Lendlease last week closed the work site for the £1bn Google headquarters in London’s King’s Cross after it was hit by the outbreak.
The site was closed after a trade contractor who had access to the site office tested positive for COVID-19 and went into self-isolation. The area was closed for two days to allow a deep-clean of the facilities.
Macquarie analysts have also trimmed their earnings and valuation for Lendlease given the wider implications of the virus, saying development was a key risk.
The analyst chopped its valuation by 22 per cent, reflecting lower capital recycling earnings and earnings multiple.
Damon Kitney 1.09pm: Virus threat prompts Carbon Revolution raise
The recently listed carbon wheel manufacturer Carbon Revolution has told investors the developing global and local situation with respect to coronavirus has dramatically changed its short term outlook, which has led the company to launch a surprise equity raising of $25m.
On 14 March, Ferrari announced a two week closure, while Lamborghini and Fiat have also made closures. Carbon Revolution told investors global supply chains were under stress and stress on the supply of raw materials was also expected.
The deteriorating local business environment has also been materially disrupted by the COVID-19 outbreak, leading the company to impose a “business employee freeze“ now to reduce COVID-19 outbreak risk in the company’s Geelong factory.
”This will slow the production ramp,’’ the company told investors. It said the equity raising of $25m+ would ”ensure the company can withstand a prolonged COVID-19 impact period and then resume its growth trajectory“.
The issue will be priced at $2.10, compared to the current share price of $2.51 before trading in the shares was halted.
1.02pm: Shares extend decline
Shares are pulling back near daily lows at lunch, as the RBA flagged the possible start of government bond buying later this week.
The benchmark ASX200 had recovered slightly but is now down 368 points or 6.64 per cent to 5171.4.
Major banks are leading the decline – Commonwealth Bank lower by 7.3pc, Westpac by 7.8pc, ANZ by 8.5pc and NAB by 8.8pc.
Woolworths is still holding higher while travel names continue to feel the pressure.
Check the biggest movers at 1pm:
12.54pm: JPM: What’s left in the Fed’s arsenal?
The decisive move by the US Fed to cut rates out of cycle is proof that the central bank is determined to avoid a “credit crunch” but might not go far enough, according to JP Morgan global market strategist Kerry Craig.
In a note, she says that surprise move could be a “shot in the arm for risk assets” but “it also raises the question of whether the Fed has anything left in the tank should the spread of the virus not be contained”.
“The US is seemingly at the very early stages compared to what has played out in some Asian economies. With little economic data to go on it’s not clear just how deep the economic impact will be,” she notes.
“Our view is that the drag on the services sector from social distancing policies and shock from the fall of the oil price on the energy sector will be enough to tip the US into recession, but not necessarily a long one. “
She adds that while markets may be increasingly expecting a repeat of the 2008 recession which lasted 18 months, most recession were less than eight months, and this time around, “stimulus measures globally are likely to cushion the economic impact”.
12.26pm: Dutch lockdown dents Collins Foods
Collins Foods, which operates fast food chains including KFC, says the Dutch Government has announced overnight that, among other measurements, all restaurants must close immediately until April 6.
Shares in the retailer have slumped 17 per cent this morning to $4.96.
As a result, Collins Foods’ KFC restaurants in the Netherlands will not be able to operate as normal. The Government has yet to announce whether restaurants can continue to trade through channels such as delivery and/or drive through, the company said.
Collins Foods also confirmed that its KFC Deagon restaurant in Queensland has reopened following the implementation of a deep clean and clearance for our employees to return to work. “The situation is moving quickly, and Collins Foods will keep the market informed accordingly.”
A staff member at the site had recorded a positive test for coronavirus.
12.19pm: Bond yields dive on start of QE
Local bond yields are taking a battering in lunch trade after Governor Philip Lowe set out the likely start of quantitative easing later this week.
Australian 3-year yields are down by 12.7 points to 0.411pc, while 10-year yields are sliding by 14 points to 0.856pc.
RBA QE to come, although devils in the detail, but likely center on 3-5 maturities - Aussie 3yr getting smacked..AUDNZD parity soon? pic.twitter.com/JVg43rl93E
— Chris Weston (@ChrisWeston_PS) March 16, 2020
Michael Roddan 12.14pm: Challenger warns outlook is deteriorating
One of Australia’s biggest investors in junk corporate bonds, life insurance group Challenger, has thrown out its month-old profit guidance and warned of a deteriorating fixed income market amid the coronavirus sell-off.
Challenger, which sells longevity insurance products known as annuities to thousands of retirees, said the company was “well capitalised” and was “actively” managing its investment portfolio to maintain is “strong capital position”, telling shareholders in a letter on Monday it had $150 million in undrawn debt and $250m held in cash.
Shares in Challenger have collapsed more than 40 per cent since late February amid the coronavirus as the company faces significant pressure from low interest rates and fears of a wave of corporate debt defaults.
At the end of December, Challenger held $3.2 billion worth of sub-investment grade bonds, known as junk bonds – accounting for about a quarter of the group’s fixed income portfolio. The company also had $2.85bn worth of BBB-rated bonds, just one notch above junk status.
12.04pm: RBA flags start of QE
The RBA has flagged the start of bond buying, a form of quantitative easing, later this week after emergency rate cuts from the US Fed and RBNZ earlier today.
Governor Philip Lowe said the Reserve Bank “stands ready” to purchase government bonds in the secondary market “to support the smooth functioning of that market”, while it also conducts one-month and three-month repo operations in its daily market operations.
He added that the bank would announce further policy measures to support the Australian economy on Thursday.
Local 10-year bond yields dropped 12 points to 0.872pc.
Read more: RBA ‘stands ready’ to resort to QE
Bridget Carter 11.56am: UBS equities veteran to exit
DataRoom | One of the top equity capital markets specialists, Robbie Vanderzeil, has announced his retirement amid one of the most unprecedented periods of volatility in market history.
His retirement after 21 years comes at a time that panic selling sends markets more than 30 per cent lower since January.
Mr Vanderzeil has widely been considered one of the best market operatives when it comes to floats and equity raisings in Australia and an internal UBS memo written by country head Anthony Sweetman describes him as one of the key contributors to both the UBS equities
and global banking businesses, helping to maintaining the bank’s number one mark position.
He has been responsible for raising more equity than anyone in the industry.
Lilly Vitorovich 11.35am: oOh!media drops 12pc as guidance scrapped
oOh!media shares drop more than 12 per cent after the outdoor advertising group dumps its 2020 earnings guidance, blaming the declining macroeconomic conditions and market uncertainty caused by the coronavirus.
It is the first company within the Australian media sector to issue a statement to the ASX about the financial implications from COVID-19.
The broader media industry is down amid growing investor fears about the financial impact on consumer demand and worsening advertising slump from the coronavirus, with more grim trading updates expect to be filed with the ASX.
HT&E down 11 per cent to $1.22; Nine Entertainment drop 11 per cent to $1.19; Seven West Media down 7.8 per cent to 12c.
11.29am: All eyes on RBA’s next move: MS
Morgan Stanley equity strategist Chris Nicol says all eyes will now be on the RBA after market dislocation and volatility saw another round of central bank action delivered to start the week.
The US Fed cut the Fed Funds rate to the zero lower bound and officially restarted QE, the RBNZ cut to 25bp and began to signal QE while Australia’s Council of Financial regulators made a joint statement focused on sustaining liquidity in financial markets.
In Asia, the Hong Kong Monetary Authority cut its base rate 64bps to 0.86pc, and the Bank of Japan is holding an emergency meeting.
Australia’s regulators also said they will “where warranted” provide relief of waivers from regulatory requirements”, including laws tied to secondary capital raising, annual general meetings and audits.
“The potential for red tape removal around secondary raisings also aligns with our view around heightened equity activity levels as safe harbours are tested and company boards take conservative action in the event of deteriorating operating and funding environments,” Mr Nicol says.
“All eyes will now be on the RBA as to whether they break with their previous tradition and (like other central Banks) move outside of formal meeting structures and take additional steps towards both ZLB (zero lower bound) and its own QE program.”
11.24am: Mall owners dip on fear of rent assistance
Shopping centre owners were pushed lower on Monday morning with analysts warning about the impact of likely rental cuts as stressed tenants demand relief as traffic in key centres falls away.
Vicinity Centres was off by 4.57 per cent to $1.67 after touching a low of $1.57. Scentre, owner of the local Westfield empire, was down 4.23 per cent to $2.49 after touching a low of $2.43.
Measures to contain the spread of coronavirus will cut into foot traffic to malls and discretionary spending is also expected to dive, although they can remain open under federal government rules, partly to ensure access to supermarkets, pharmacies and other necessities.
The shopping centre industry must also deal with collapsing consumer sentiment, that is piling atop concerns that mall owners may have to provide temporary abatements, particularly to small and medium size tenants.
Morgan Stanley’s Simon Chan and Lauren Berry said big owners, Vicinity and Scentre, may potentially have to provide rent cuts to tenants if COVID-19 uncertainties continue to hurt their malls foot-traffic.
They estimated that a 50 per cent rent cut to 50 per cent of tenants, for three months would lower Vicinity’s fiscal 2020 Funds From Operations guidance of 17.2c-17.4c by 1c per security and cut Scentre’s guidance of 25.3c by 1.8c per security.
Neither of the mall giants have provided clarity on any rent relief assistance to tenants. But mall tenants are looking to cut costs on the back of lower sales, including shrinking opening hours, and rent cuts.
Both listed real estate trusts are trading at distribution yield of more than 9 per cent but the traditional metrics of this gap of bond yields had become irrelevant in the turmoil.
Eli Greenblat 11.18am: Woolies, Coles defy downturn
Woolworths and Coles this morning were the biggest risers on the leaders board of the sharemarkets as a wave of panic buying at the supermarkets drives unprecedented levels of store sales.
Before noon share in Woolworths were up 1.6 per cent to $37.65 and Coles was up 4.3 per cent to $16.75 to make it the biggest rise for the top 200 on a day when the market is down 5.6 per cent.
11.13am: Fed cut reaction disappointing: Westpac
Westpac’s head of FX strategy Richard Franulovich says the market reaction to emergency action by the Fed today has been “disappointingly negative’, with US equity futures quickly trading down by their daily limit of 5pc.
“This is arguably the most comprehensive set of policy actions to support the economy, credit and address impaired liquidity conditions ever announced all at once by the Fed,” Mr Franulovich says.
“A sudden stop in the US and global economies assures a deep recession near term, though these actions should at the margin alleviate even more widespread dislocations in funding and credit markets and offset a likely seizing up of credit flow to the economy. Returning rates to zero and at least $700bn in QE in coming months should weigh on the USD versus majors as US bond yields across the curve head toward zero, if not below.”
US 10-year bond yields have plunged 34bps to 0.62pc and will likely retest their record low of 0.31bps from here. Meanwhile the US dollar index dived 1.1pc to 97.64 points and USD-JPY dipped 1.8pc to JPY105.74.
Westpac’s Franulovich says the strong prospect of easing measures elsewhere will be an offsetting factor for the USD, though only partially, since the Fed has notably more policy space than others.
But he expects the US dollar to keep rising against EM and commodity currencies (including the Australian dollar) “as global growth comes to a grinding halt and amid ongoing extreme market volatility.”
11.01am: Travel names hit with latest bans
Sydney Airport shares slump 15.3 per cent, to be trading at $4.92.
The airport, like the airlines, is one of the hardest hit on moves to force all international arrivals to self-isolate for 14 days.
The move effectively shuts down the tourism industry.
Likewise ASX-listed shares in Auckland International Airport down 16.3 per cent at $5.60, with New Zealand the first to introduce tough travel restrictions over the weekend.
Webjet shares are lower by 16pc, Flight Centre by 12pc and Corporate Travel by 15pc.
Eli Greenblat 10.44am: Domino’s could ban delivery contact
The nation’s biggest pizza chain Domino’s could soon ban close personal contact between its pizza delivery workers and consumers, including keeping distances at its stores for pick-up orders as the coronavirus pandemic triggers a clamps down on social interaction.
Domino’s Pizza, the ASX-listed pizza chain that operates stores in Australia, New Zealand, Japan and parts of Western Europe including France, will initiate a range of measures to limit social contact in the wake of the coronavirus outbreak.
In a statement issued on Monday, Domino’s said it was following the advice of government and health authorities to ensure, as far as practicably possible, it stores could continue to safely operate and deliver meals to customers.
Stores in France were being permitted to serve customers through delivery and takeaway, following recent government initiatives to deal with COVID-19
But the pizza chain is prepared to move to 100 per cent “zero contact” ordering if necessary. That means that pizzas delivered to homes or other properties would be left at the doorstep, with staff keeping a distance from consumers.
10.41am: Bank dividends face up to 35pc cut
Brokerage Macquarie Equities says bank dividends expected to be cut between 7-35 per cent in current environment.
The brokerage says in addition to credit losses that will impact banks’ profitability and capital generation in a deteriorating credit environment, banks’ capital positions will also be impacted by the need to protect balance sheets.
“In this environment, we expect the Boards to become more conservative around capital preservation and see an increased likelihood of more aggressive dividend cuts. As banks’ share prices are approaching or are falling below net tangible assets, the rationale for issuing additional stock to support elevated payout ratios is increasingly difficult to justify,” Macquarie says.
“We have around 7 per cent to 35 per cent dividend cuts incorporated in our forecasts relative to FY19 dividends,” Macquarie says. Comes as bank fall sharply across the board on opening this morning.
10.36am: Postpone gatherings of 50+ people: CDC
The US Centre for Disease Control has recommended cancellation of events with 50 or more people for the next two months.
10.24am: ASX smashed as rate cuts backfire
Australia’s sharemarket has been smashed 404 points or 7.4pc to 5130 early as central bank action to add liquidity and support risk assets appears to backfire.
An emergency 1pc interest rate cut and restart of QE by the Fed, plus an RBA commitment to pump liquidity via repos has fallen on deaf ears.
And if anything an ASIC directive on banks to reduce their number of executed trades by up to 25 per cent from the levels executed on Friday, is adding to the sense of panic.
“This action will require high volume participants and their clients to actively manage their volumes. We do not expect these limits to impact the ability of retail consumers to execute trades,” ASIC said.
The Industrials, Energy, Consumer Discretionary and Tech sectors are underperforming in a broadbased sell-off.
Cochlear is taking a 19 per cent hit to $175.27 after withdrawing its guidance, and following a 21pc rally on Friday.
Damon Johnston 10.21am: Crown unveils social distancing measures
The James Packer backed Crown has announced a policy covering a number of social distancing measures at its Crown Melbourne complex. They include
- deactivation of every second gaming machine and electronic table game;
- distancing at seated table games between players, including no standing players;
- restricting the number of players at each stand-up table game to five players; and
- restricting the number of patrons in individual food & beverage, banqueting and conference facilities to 450 persons with a prescribed maximum density.
The social distancing policy for Crown Melbourne has been approved by the Victorian Chief Health Officer.
10.13am: Shares down 7pc at the open
The local market is lower by 7.1 per cent in early trade, shrugging off the strength in the US on Friday and taking direction instead from growing panic of the impact of the coronavirus.
The benchmark ASX200 is lower by 394 points or 7.12 per cent early to 5145.
Michael Roddan 10.00am: RBA, ASIC move to soothe markets
The Reserve Bank has pledged to pump billions into the inter-bank lending market in a highly-unusual intervention designed to smooth out volatile ructions in the financial system amid the coronavirus panic.
Compounding the regulatory action, the Australian Securities and Investments Commission has also told the biggest investment banks in Australia to “limit the number of trades executed each day until further notice” after the watchdog was overwhelmed by record-setting trading volumes last week.
In a statement released before the open of trade on Monday, the Council of Financial Regulators announced a swag of measures designed to keep the financial system operating in the face of the unprecedented disruption to normal operations.
The CoFR, which counts among its members Treasury, the RBA, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, said it would be meeting with the nations’ biggest banks later this week to discuss how they could keep their loan books open “through this challenging period”.
This is the most amazing directive I have seen #ausbiz
— Evan Lucas (@EvanLucas_INV) March 15, 2020
ASIC is clearly on the verge of closing the market..... pic.twitter.com/zT7dqlLgmz
9.52am: Cochlear withdraws guidance amid outbreak
Cochlear has withdrawn its earnings guidance for the full year, saying a growing number of countries were deferring surgeries, particularly in the US and Western Europe.
“Since the update we provided on 18 February, we have seen COVID-19 spread rapidly across many countries. We are now seeing a growing number of health authorities either recommend or enforce surgery deferrals,” chief Dig Howitt said.
He added that the company was expecting “a significant decline in sales in the immediate future” but that it not in a position to provide an updated outlook given the uncertainty in the market.
Shares in the group surged 21 per cent on Friday, to close out the session at $216.11.
Perry Williams 9.45am: Downer suspends mining sale
Downer has suspended plans to sell its mining business due to volatility from the coronavirus pandemic.
The resources contractor has been hoping to land a potential $700m deal with Perenti Global but has frozen the process.
“Downer announced today that the review process relating to its mining business, including a potential sale, had been suspended due to the extraordinary market volatility caused by the COVID-19 pandemic,” the company said in a statement.
“The process in relation to the potential sale of Downer’s Laundries business is continuing and Downer will keep the market informed.”
The mining business was “performing well” and is well positioned to build on its strong market position and pipeline of work, chief executive Grant Fenn said.
Perenti earlier advised investors that it had suspended its participation in the sales process.
“We will maintain a watching brief on the situation and do not rule out re-engaging with Downer if market conditions improve,” group managing director Mark Norwell said.
9.41am: US futures tumble despite Fed cut
A cut by the US Fed has failed to ignite any positivity in US markets, with futures this morning dropping near their daily limits to suggest more pain ahead.
S&P futures are lower by 4.8 per cent ahead of the local open, while Dow Futures are down by 4.6pc.
Remember, moves on the US futures markets are limited to a 5pc decline in any session, with trade halted if it reaches the limit down level.
9.36am: Investors Mutual postpones roadshows
Investors Mutual Limited has indefinitely postponed its investor roadshows – which were due to start this week – due to the virus and related health warnings.
9.31am: Panic selling a threat for shares
Australian shares face panic selling at the open despite massive and co-ordinated central bank stimulus this morning.
The stimulus is preventing a credit crunch and making shares more attractive but it is also highlighting the extent of official concern about the virus.
An expected 2pc rise in the S&P/ASX 200 based on overnight futures relative to fair value is now redundant. The index is more likely to open down 2 per cent in line with a global sell-off today.
New Zealand’s NZX50 is down 2pc despite an emergency 75bps RBNZ rate cut to 0.25pc, guidance to keep it there for 12 months and preparedness to start QE via $US700bn treasury and mortgage bond buying.
Similarly, S&P 500 futures fell as much as 4pc in early trade despite an emergency 1pc Fed Funds rate cut and restart of QE.
The Australian dollar jumped from 0.6121 to 0.6307 as the Fed cut before falling to an 11-year low of 0.6109 as the market now expects the RBA to cut this morning.
The S&P/ASX 200 rose 4.4pc to 5539.3 on Friday.
Lilly Vitorovich 9.27am: oOh!media dumps guidance
oOh!media has dumped its earnings guidance for 2020, blaming the worsening macroeconomic conditions and market uncertainty caused by the coronavirus.
The outdoor advertising company is the first within the Australian media sector to be hit by COVID-19.
The group said revenue for the year to date has been in line with last year, with the first quarter consistent with delivering full-year earnings guidance provided at its 2019 results on February 24.
“However, the deteriorating macroeconomic conditions and resultant market uncertainty caused by COVID-19 has made forecasting full year revenue in the current environment difficult,” oOh!media said in a statement before the start of trade on Monday.
This is particularly relevant for the company, given it has nine months remaining in its financial year to December.
In accordance with continuous disclosure obligations, oOh! has withdrawn its 2020 earnings guidance “for the time being”.
OML shares last traded at $1.55.
9.20am: Rate cut expectations dent $A
Expectations that the RBA will follow New Zealand and the US with emergency rate cuts is erasing any of the Aussie dollar’s earlier rally.
A cut from the US Fed pulled its dollar lower and had fuelled a rally in the Aussie dollar to US62.85c earlier this morning.
But now, AUDUSD is trading down at US61.77c.
Eli Greenblat 9.15am: Reject shop reveals panic buying boost
The Reject Shop has become the first national retailer to reveal that the panic buying now sweeping Australia due to consumers filling their homes in the wake of the coronavirus outbreak has put a rocket under its sales.
It’s same store sales have risen more than sixfold in recent weeks compared to its sales performance at the start of calendar 2020.
Others retailers, especially the supermarkets led by Woolworths and Coles, are also expected to have recorded unprecedented sales boosts as their shelves are stripped by anxious shoppers who are hoarding everything from toilet paper to pretzels as the nation fears that soon large sections of the population will have to seek self isolation at home.
The Reject Shop is in the midst of a capital raising and this morning updates its latest sales performance for investors. It also said product from China was arriving.
“In the last three weeks, The Reject Shop has experienced a material increase in sales driven by customer concerns around coronavirus,” the company said.
Read more: Sales surging, says Reject Shop
John Durie 9.12am: Another RBA coming cut today, tomorrow
The Reserve Bank of Australia is set to join its global peers in cutting interest rates and in the wake of the coronavirus.
The move will follow the Reserve Bank of New Zealand decision to cut its official rates by 75 basis points and the US Fed’s decision to cut rates to zero.
Traders in Australia say it is inevitable the RBA will move either today or tomorrow.
Read more: RBA will join Fed, RBNZ in cuts, say traders
9.06am: Air NZ halted as it slashes capacity
Air New Zealand has entered a trading halt this morning as it slashes its capacity and weighs the impact of global travel restrictions in the wake of the coronavirus outbreak.
In a notice to the market this morning Air NZ said it would be reducing its capacity by 85 per cent over the coming months and “operate a minimal schedule to allow Kiwis to return home and to keep trade corridors with Asia and North America open”.
Across its long haul network, the airline will suspend flights between Auckland and Chicago, San Francisco, Houston, Vancouver, Tokyo and several other major cities from March 30 to June 30.
Its London-Los Angeles service will be suspended from March 20 to June 30 also.
“Customers are advised that due to the unprecedented level of schedule changes they should not contact the airline unless they are due to fly within the next 48 hours or need immediate repatriation to New Zealand or their home country,” the airline said.
8.56am: Risk of emergency RBA cut rising: NAB
Fresh rate cuts by the RBNZ and US Federal Reserve are increasing the risk of an emergency cut from the RBA, according to NAB.
In a note before the US cut rates this morning, NAB noted “fast-changing events mean the risk of an inter-meeting rate cut by the RBA to 0.25pc is likely to have increased sharply”.
“This was not how the RBA behaved during the global financial crisis or even after the 9/11 terrorist attacks, preferring to move at scheduled Board meetings,” global head of research, Ivan Colhoun said.
“However, with the next Board meeting still three weeks away on April 7 and the world and Australian economies continuing to rapidly deteriorate, there seems little point in waiting three weeks to deliver further support to the Australian economy on the interest rate front.”
8.40am: Trump hails Fed cuts
President Donald Trump, a frequent critic of the independent US Federal Reserve, praised the drastic emergency measures it took to confront economic fallout from the new coronavirus pandemic.
“I want to congratulate the federal reserve,” Trump said at a White House briefing of his coronavirus task force. “What’s happened with the Fed is phenomenal news.” “I can tell you, I’m very happy. I didn’t expect this. And I like being surprised.”
AFP
8.28am: Aussie jumps after Fed
The Australian dollar jumped to US62.94c from US61.38c after the Fed slashed interest rates to try to stop market disruptions worsening an expected US slowdown.
8.02am: Fed slashes rates to fight coronavirus
The Federal Reserve has slashed its benchmark interest rate to near zero and said it would buy $US700 billion in Treasury and mortgage-backed securities in an aggressive bid to prevent market disruptions from aggravating what is likely to be a severe slowdown from the coronavirus pandemic.
“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed’s rate-setting committee said in a statement Sunday. “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.”
Fed Chairman Jerome Powell is set to hold a news conference at 9am (AEDT)
The Fed will buy at least $US500 billion in Treasury securities and $US200 billion in mortgage-backed securities over the coming months to help unclog markets that grew dysfunctional last week, the central bank said. It said it would initiate the program, called quantitative easing, on Monday.
The Fed said it was activating with five other central banks, including the European Central Bank and the Bank of England, swap lines to smooth out disruptions in overseas dollar-funding markets, effectively encouraging foreign central banks to use existing facilities to supply dollars to their own financial systems.
The central bank also announced a series of steps to boost lending, including by lowering the rate charged to banks for short-term emergency loans from its discount window to 0.25pc from 1.75pc. It said it would encourage banks to tap their capital and liquidity buffers to lend to households and businesses affected by the coronavirus.
Dow Jones Newswires
7.50am: Gold dives
Gold tumbled as much as 4.5 per cent on Friday as investors embarked on a selling spree to hoard cash and meet margin calls across other markets which have been battered by the impact of the coronavirus outbreak.
Palladium slid nearly 11 per cent, a day after a 28 per cent plunge, headed for its biggest weekly percentage decline on record.
Spot gold slid 4 per cent to $US1,513.11 per ounce. For the week, it was down more than 9 per cent, the most since 1983. US gold futures settled down 4.6 per cent at $US1,516.70.
Reuters
7.40am: Auckland Airport suspends guidance
Auckland International Airport has suspended its earnings guidance due to strict new border controls amid the outbreak of the coronavirus.
New Zealand is requiring all incoming travellers to self-isolate for two weeks on arrival, including its citizens in a bit to stem the outbreak of COVID-19.
Chief executive Adrian Littlewood said given the unprecedented scale of the new border restrictions announced over the weekend and uncertainty over the impact on the business, Auckland Airport has withdrawn its earnings and capital expenditure guidance for the current financial year to 30 June 2020.
“Auckland Airport is a strong, diverse and resilient business, but these are unprecedented times,” said Mr Littlewood.
Auckland Airport is working to communicate the border changes to the 30 airlines that fly routes to the airport, but says it is too early to judge the impact on future passenger and cargo air services.
The airport had downgraded its earnings guidance on Friday to between $210 million and $235 million, down from $260 million to $270 million.
AAP
7.20am: Dollar slumps again
The Aussie dollar was buying US61.35 cents at 7am (AEDT), down from US62.98 cents as the market closed on Friday.
7.00am: Oil in biggest weekly loss since 2008
Oil prices on Friday posted their biggest week of losses since the 2008 global financial crisis, rocked by the coronavirus outbreak and efforts by top exporter Saudi Arabia and its allies to flood the market with record levels of supply. The rare combination of severe shocks to both supply and demand has caused the crude market to collapse as producers around the world steel themselves for an unexpected glut of oil in coming weeks.
“It’s a problem of an oil price war in the middle of a constricting market when the walls are closing in,” US energy historian Daniel Yergin said.
Major oil producers were pumping more crude into the market as demand collapses. Saudi Arabia has chartered more than 30 crude supertankers to export oil in coming weeks, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share. Goldman Sachs said it now expected a record oil surplus of six million barrels per day by April, in a global market that usually consumes about 100 million bpd.
On Friday, prices were higher, rebounding after the United States and other nations signalled plans to support weakening economies.
But Brent crude dropped 25 per cent on the week, the biggest weekly fall since the 2008 global financial crisis.
On Friday, Brent rose 63 US cents to settle at $US 33.85 a barrel. US West Texas Intermediate crude futures fell about 23 per cent on the week, their biggest percentage decline since 2008. WTI rose 23 US cents to settle at $US31.73 a barrel, after earlier gaining to $US33.87 a gallon. Hopes for a US stimulus package that could ease an economic shock from the coronavirus provided some support to the oil and stock markets on Friday.
Reuters
6.50am: Markets brace for wild week
Investors are steeling for another fraught week on financial markets as Europe goes into lockdown and the US Federal Reserve prepares to slash rates, with analysts warning of increased volatility and further declines ahead as the coronavirus pandemic threatens to plunge the global economy into recession.
The warnings come after Australian and US sharemarkets staged a stunning rebound on Friday on the back of central bank action and US President Donald Trump declaring a national emergency, unlocking $US50bn ($80bn) in funds to support the US economy.
Locally, the Australian market posted its best-ever intraday turnaround on Friday, swinging from an 8 per cent loss to a 4.4 per cent gain in the space of a few hours as the Reserve Bank injected $7bn of liquidity into the financial system.
Wall Street on Friday night surged close to 10 per cent following Mr Trump’s announcement as the US Federal Reserve signalled it would boost its cash injections to $US5.4 trillion over the next month.
ASX futures point to gains at the open, with the SPI futures index predicting a rise of 61 points at the open, although observers doubt the gains will hold.
6.40am: RBNZ slashes cash rate
The Reserve Bank of New Zealand slashed its cash rate by 75 basis points to 0.25pc and delayed implementation of higher capital requirements for banks, freeing up billions of dollars for lending as the economy reels from the coronavirus pandemic.
The Reserve Bank said on Monday that the cash rate will remain at 0.25pc for at least a year. If more stimulus is required, the bank’s preference is to purchase government bonds rather than cut the cash rate again, it said.
The central bank said higher capital requirements for banks will be delayed by one year or longer, which will free up $NZ47 billion for lending to businesses and households.
Hoping to slow the spread of coronavirus, New Zealand’s government on the weekend imposed two weeks of self-quarantine for everyone who arrives in the country.
International tourism is expected to dry up, causing a significant shock to the economy. The border restrictions will be reviewed after 16 days.
Dow Jones Newswires
6.38am: Air NZ to cut staff, flights
Air New Zealand says it will reduce staff as border restrictions aimed at slowing the spread of coronavirus force it to slash flights.
The airline on Monday said that for at least the coming months it will be a “smaller airline requiring fewer resources, including people.”
Multiple international destinations will be suspended and long-haul seat capacity will be cut by 85pc over the coming months, the airline said.
The carrier, half owned by the New Zealand government, said it will reduce domestic capacity by about 30pc in April and May.
The airline said it’s in discussions with the government. It has requested a trading halt on its shares while it assesses the total financial impact of border restrictions.
Hoping to slow the spread of coronavirus, New Zealand’s government on the weekend imposed two weeks of self-quarantine for everyone who arrives in the country.
International tourism is expected to dry up, causing a significant shock to the economy. The border restrictions will be reviewed after 16 days.
Dow Jones Newswires
6.35am: Luxury hand gel
The French luxury group LVMH said it would begin producing sanitising hand gel at three of its perfume and cosmetics sites in France, for distribution to French hospitals fighting the country’s coronavirus outbreak.
Twelve tonnes will be produced as soon as this week, instead of the usual Christian Dior, Guerlain and Givenchy scents and make-up usually made at the three factories.
They will be delivered “at no charge” to French health authorities, in particular the 39 public hospitals in Paris, the group said.
AFP
6.30am: Gulf shares down
Gulf shares dropped Sunday amid unprecedented shutdowns to ward off the spread of coronavirus, despite tens of billions of dollars in stimulus packages announced by oil-rich governments.
The Saudi Tadawul market, the region’s largest, dropped 1.1 per cent despite the kingdom announcing a $US13.3 billion stimulus package to help the national economy cope with the effects of the virus and a low oil price.
The market was also impacted by a 20.6 per cent dive in 2019 net profit of energy giant Saudi Aramco whose shares ended down 1.0 per cent.
UAE’s bourses in Dubai and Abu Dhabi ignored a $US27.2 billion stimulus package announced by the central bank, mainly directed at banks which were asked to delay debt payments of customers for up to six months.
Dubai shares dipped 3.4 per cent, sliding below the 2,000-point mark for the first time since 2013, and the Abu Dhabi stock market ended the day down 1.9 per cent.
Boursa Kuwait was the biggest loser with the Premier Index sliding 6.5 per cent and the All-Shares Index shedding 5.5 per cent as the country announced stringent virus containment measures.
AFP
6.25am: Aramco profit slides
Saudi Aramco reported Sunday a 20.6 per cent drop in 2019 net profit due to lower crude prices and production levels, in its first earnings announcement as a listed company amid an escalating price war.
The world’s most valuable firm also announced it was slashing its capital expenditure for this year, as the price war with Russia and the spreading coronavirus pandemic rattle energy markets.
These are the first financial results after Aramco’s historic $US29.4 billion initial public offering and listing on the domestic Tadawul exchange last December. Last week, Aramco shares slipped below the IPO price for the first time.
“Net income was $US88.2 billion for the full-year 2019, compared to $US111.1 billion in 2018,” Aramco said in a statement.
“The decrease was primarily due to lower crude oil prices and production volumes, coupled with declining refining and chemical margins.” The company also declared $US1.6 billion of impairment provisions for losses associated with Sadara Chemical Company, an Aramco subsidiary.
AFP
6.20am: Wall St recap
Wall Street roared back Friday to conclude a bruising week on a more upbeat note as US President Donald Trump declared a national emergency due to the coronavirus pandemic.
The Dow Jones Industrial Average surged late in the day, finishing with a gain nearly 2,000 points or 9.4 per cent to end the week at 23,185.62, recovering most of Thursday’s losses.
The broadbased S&P 500 jumped 9.3 per cent to 2,711.02, while the tech-rich Nasdaq Composite Index climbed 9.4 per cent to close at 7,874.88.
Stocks were in positive territory all day, but dramatically added to gains in the last 30 minutes during a White House announcement.
Accompanied by health care and retail executives, Trump announced plans to radically increase testing for the virus as the US tries to control a public health crisis that largely shut down the economy in China and Italy.
Trump also announced plans to buy oil for the Strategic Petroleum Reserve, a US emergency stockpile, and to waive interest rates on student loans, while accessing $50 billion to address the crisis.
Art Hogan, chief market strategist at National Securities, said Trump’s announcement met expectations as far as laying out a health care response to the crisis.
“It’s the first time we’ve heard any details that have been elucidated as far as concrete steps,” Hogan said.
The measures come on the heels of emergency steps by the Federal Reserve to boost market liquidity and cut interest rates.
Markets are also anticipating a US fiscal response to the crisis, although Trump and congressional Democrats have not reached agreement on that.
Wall Street’s recovery came after major US indices Thursday suffered their worst session since 1987 on recession fears as numerous major sporting and entertainment events were cancelled as much of the United States hunkers down.
All 30 members of the Dow advanced Friday. The biggest gainers were American Express, Intel and JPMorgan Chase, each of which gained nearly 20 per cent.
Other beaten-down stocks that rose included Delta Air Lines, up 13.8 per cent, cruise company Carnival, up 17.4 per cent and Halliburton, up 11.4 per cent.
AFP
More Coverage
ASX 200 falls on China update; BHP leads mining reversal
Iron ore, copper futures, AUD down after China's underwhelming economic update. RBA's 'step down' in hawkishness evident in September minutes, but deputy governor Andrew Hauser says inflation job's not done yet.
ASX 200 rises on banks; Arcadium top gainer
Rio Tinto's takeover approach lifts Arcadium Lithium appeal. West African Resources drops on Burkina Faso mining concerns. Qantas may avoid second strike after proxy backing.