Trading Day: Market drops 13pc for the week as virus containment measures widen
The ASX rally lost steam at the close to clock a 0.7pc gain for the day as Commonwealth Bank slipped into the red.
- RBA completes first batch of QE
- Banks to defer repayments for SMEs
- Telstra puts job cuts on ice
- Stockpiling lifts sales, but not for long: Wesfarmers
- The latest wave of earnings withdrawals
That’s it for the Trading Day blog for Friday, March 20. The ASX trimmed a rise as much as 5pc to just 0.7pc, as the bank rally lost steam in the afternoon session. Banks had surged into double digit gains earlier after unveiling a $8bn package to relieve pressure on small business facing hardship amid the coronavirus crisis.
That’s after central banks worldwide unveiled sweeping emergency measures, lifting markets in the US and Europe, although volatility remains. The Dow closed 1.0pc higher, while the S&P 500 climbed 0.5pc and the Nasdaq jumped 2.3pc.
5.14pm: All home, business loans can defer: CBA
Commonwealth Bank says all home loan and small business loan customers were eligible to defer loan repayments by up to six months, a move it says provides up to $10bn in support for the local economy.
In a statement after the Australian Banking Association offered their business lifeline this morning, the Commonwealth Bank said it would auto-enrol 76,000 businesses into loan deferral arrangements, “ensuring immediate support for small businesses likely to be most impacted by the coronavirus”.
“The Commonwealth Bank will extend the ABA’s loan deferral scheme to include all customers with a home loan. This will provide support of up to $10 billion to Commonwealth Bank households and small businesses over the next six months,” chief Matt Comyn said.
5.11pm: Markets slip despite broad global stimulus: Oliver
AMP Capital economist Shane Oliver noted that there have been over 200 stimulus announcement globally since the coronavirus crisis began.
“While it’s not gone smoothly as policy makers (and most of us) did not initially realise the severity of the problem, central banks and governments seem committed to do “whatever it takes,” he said.
“Put simply the hit to the economy from coronavirus shutdowns could be worse than anything seen in the post world war two period. Our base case is now for a 3.5pc contraction in the Australian economy but it risks being much greater.
“The key for RBA and Australian Governments and their counterparts globally is to make sure that collateral damage to businesses and households is kept to a minimum through the shutdown period so once the virus comes under control the economy can quickly rebound.”
Local monetary stimulus put pressure on the Australian dollar, sending to it lows of US55.10c on Thursday before the RBA and US Federal Reserve commenced their temporary currency swap line to provide additional US dollar liquidity worth $102bn. That helped the Aussie dollar higher to trade at US58.60c at the local close.
Here’s the biggest movers at the close:
Michael Roddan 4.32pm: RBA completes first $5bn batch of QE
The RBA has purchased $5bn worth of government bonds marking the first instance of unconventional monetary policy in Australia, in which the central bank immediately expanded its easing program beyond shorter-dated bonds and into longer-term securities.
The purchases were spread across bonds with tenors between two and eight years, although the central bank’s purchasing of three-year bonds did not reduce the yield down to the RBA’s stated target yet.
The RBA bought $1.24bn worth of May 2028 notes at an average yield of 1.052 per cent and $1.6bn worth of November 2027 notes at a 0.972 per cent average yield. On the shorter-end of the yield curve, the central bank bought $658m worth of April 2023 notes at an average yield of 0.272 per cent, and $1.5bn worth of July 2022 notes at a 0.295 per cent average yield.
RBA governor Philip Lowe yesterday said the central bank was “not seeking to have the three-year yield identically at 25 basis points each and every day” and said the bank would, as necessary, purchase longer-dated securities if needed.
“There will be some natural variation, and it does not make sense to counter that. It may also take some time for yields to fall from their current level to 25 basis points,” Dr Lowe said.
4.13pm: Stocks slink to 13pc weekly loss
The local market has capped a volatile week at an 13 per cent loss, despite a slight lift on Friday – as local coronavirus cases eclipsed 800.
The week’s decline comes despite the heavy-handed monetary and fiscal stimulus across the globe – and amid further restrictions imposed by Prime Minister Scott Morrison to stem the spread of the outbreak.
Concessions by the major banks to stem the impact on small business helped the local market to notch gains as much as 5 per cent to 5016.1 but by the close, the ASX200 finished up a more moderate 34 points or 0.7 per cent at 4816.6.
Meanwhile the All Ordinaries added 45 points or 0.93 per cent to 4854.3.
3.23pm: California orders lockdown of 40m residents
California ordered its 40 million residents to stay at home except for essential activities beginning Thursday night in the largest such lockdown in the US, as the nation’s total coronavirus cases rose to more than 14,000 and an intensifying outbreak in Europe pushed State Department officials to advise citizens not to travel abroad.
In a letter to President Trump, California Governor Gavin Newsom said he estimated 56pc of the state’s population, or 25.5 million people, would be infected over an eight-week period.
Mr Newsom sent the letter - asking that a naval hospital ship be deployed to Los Angeles to increase health-care capacity - before the lockdown order. In calling for people to stay home, Mr Newsom asked the state’s residents to “bend the curve together.” Nearly half of residents in America’s most populous state had already been given stay-at-home orders from local cities and counties, including Los Angeles and the San Francisco Bay Area.
Dow Jones Newswires
Robyn Ironside 3.10pm: ‘Not the time for rivalry’: Virgin tells Qantas
Virgin Australia’s CEO has warned his Qantas counterpart not to treat the current coronavirus crisis crippling the airlineindustry as a “game of Survivor”.
Paul Scurrah was speaking after Alan Joyce told Sky News, it would be completely unfair for the federal government to nationalise Virgin Australia to see it through the coronavirus crisis.
In a blatant swipe to his smaller, loss-making rival, Mr Joyce said the government should not have to look after companies that had been badly managed for the past 10 years.
Mr Scurrah admitted he was taken aback by the remarks in the current climate, with both airlines being forced to axe most of their capacity in response to withering demand.
“We all need to remember we’re in a national crisis at the moment and now is not the time for rivalry, for these unhelpful comments,” Mr Scurrah said.
“This is not a game of Survivor. It’s a global pandemic creating unprecedented challenges that require unprecedented decisions.”
Read more: Government should not nationalise Virgin, says Joyce
2.50pm: BHP to launch 1500 jobs drive
BHP says it will hire 1,500 additional people to support its workforce operating across Australia.
The mining giant says the jobs will be offered as six-month contracts and cover a range of skills needed by BHP operations in the short term.
“These jobs will support and bolster our existing workforce during this difficult time. The roles will include machinery and production operators, truck and ancillary equipment drivers, excavator operators, diesel mechanics boilermakers, trades assistants, electricians, cleaners and warehousing roles across our coal, iron ore and copper operations in WA, QLD, NSW and SA.”.
The jobs will be offered through existing labour hire partners and BHP contracts in each state. Following the initial six-month contract, BHP says it will look to offer permanent roles for some of these jobs. BHP will continue to assess this program and may increase the number of jobs available.
Richard Ferguson 2.31pm: Federal Budget delayed til October
The Federal Budget will be delayed until October 6 because of coronavirus, Scott Morrison have revealed.
The Prime Minister said the coronavirus crisis made it near impossible to create proper Budget forecasts and all states and territories will also reschedule their budgets.
“Putting budgets together at this time, with the great uncertainty that exists, is not something that any Commonwealth or State Government should be doing.” he said in Canberra.
“As a result, we have already decided that we will not be handing down a Budget until the first Tuesday in October, on the 6th of October.
“All other states and territories will be working to similar timetables. The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible.”
Follow live coverage of the coronavirus at The Australian’s live blog
Ewin Hannan 2.26pm: Woodside lay-offs ‘brutal bastardry’
Unions have accused gas giant Woodside of committing a “brutal act of industrial bastardry” by standing down more than 400 contractors without pay “of any kind”.
The Offshore Alliance of the Australian Workers’ Union and the Maritime Union of Australia said workers from Woodside’s Goodwyn and North Rankin platforms, along with Woodside floating production storage and offloading units, had been summarily stood down without pay.
The alliance said Woodside’s approach stood in contrast to Shell and INPEX, both of whom consulted with employees to minimise the impact of COVID-19 measures by providing additional flexibility and special payments.
AWU national secretary Daniel Walton said the alliance would fight “tooth and nail” to get Woodside to the table.
“Today’s decision by Woodside is maybe the most heartless corporate response we’ve seen to the COVID-19 crisis to date,” Mr Walton said.
WPL shares last up 5pc to $16.71.
Perry Williams 1.56pm: Lower Caltex bid or suitor walks: analysts
Couche-Tard may abandon its $8.8bn Caltex takeover bid unless a lower offer can be struck given market ructions and a steep drop in Caltex’s share price, BMO Capital Markets says.
Couche-Tard has a $35.25 a share bid on the table but huge volatility in equity markets and the plunging oil price has seen Caltex shares plummet 42 per cent below the offer price, even with a 6 per cent rebound on Friday.
“We believe if Caltex’s board is unprepared to renegotiate the proposed price, it may be unlikely the transaction will proceed, as the value of Caltex has fallen substantially below the
proposed offer price and given the volatility in the stock markets, other more attractive acquisition targets may arise,” BMO analysts said.
Couche-Tard said Thursday M&A multiples will fall given the industry downturn, hinting a deal may have to be struck at cheaper levels for it to proceed.
Couche-Tard could walk away given the risk of proceeding with a deal, CIBC Equity Research says. “In our view, Caltex carries above-average risk, and though it is certainly not impossible that a transaction is consummated, we would not be surprised to see Couche-Tard walk away,” CIBC said.
RBC was also circumspect on the chances of a deal progressing. “In our view, odds of a denouncement in the near term are low given economic and financial markets dislocation, but we would expect Couche-Tard to remain engaged.”
The $35.25 bid will have to be lowered for an offer to work, TD Securities says though Couche-Tard may encounter “a superior M&A environment on the other side — should it continue to pursue Caltex, we assume that the offer price will be adjusted to reflect the new market conditions”.
Caltex last up 5.7 per cent to $20.61.
Read more: Caltex takeover may be struck at lower price
1.43pm: $A climbs back above US58c
The Australian dollar is climbing by 2.3 per cent in afternoon trade, after news of a reciprocal swap line between the RBA and US Federal Reserve.
AUDUSD is up by 129 points or 2.23 per cent to US58.69c as the US dollar index slips 0.74pc.
In a statement, the RBA said it will establish a $US60bn ($102bn) swap line to provide US dollars in exchange for Australian dollars.
“The US dollars will be made available to local market participants by the Reserve Bank in US dollar repurchase agreements (repos) against Australian dollar-denominated securities. The US dollar repos will be allocated through an auction process,” it said.
1.35pm: ANZ cuts variable loans by 0.15pc
ANZ is the last of the big four banks to cut its interest rates, and the only to make any change to its variable home loan products.
The bank cut variable interest home loan rates by 0.15 per cent, effective March 27, while some fixed-rate loans for business were cut by 0.8pc per annum, and 0.49pc for home loan customers.
“Our decision to reduce variable home loan and small business rates is the right thing to do for our existing customers, particularly the significant number of our home loan customers who are self-employed and managing the effects of the COVID-19 crisis on their own businesses,” chief executive Shayne Elliot said.
“The highly competitive fixed-rates being offered will provide customers certainty over repayments with our lowest fixed-rates on record.”
ANZ last traded higher by 9.8pc to $16.47.
1.27pm: Afterpay stages stunning one-day swing
Wild stockmarket swings are something we’ve come to expect over the past weeks – as volatility reigns, a 5 or 6 per cent move in either direction is no longer alarming.
Still, a number of moves today are cutting through – especially a near 60 per cent surge in former market darling Afterpay.
The buy now, pay later stock has had a rough week – by the close yesterday shares were down by 57pc for the week to $9.90. That’s even after co-founder Anthony Eisen issued a letter to reassure panicked investors it was still on firm footing.
Just a day later though, and Afterpay was trading higher by 60pc to $15.86 – with $156.5m of shares traded.
Elsewhere, Lovisa is higher by 65.7 per cent to $4.06 after yesterday’s drop to $2.45 – while CIMIC is up by 45pc after sinking to $13 yesterday.
1.19pm: Westpac cuts fixed rates
Westpac has unveiled cuts to its home loan and business loan rates, saying it was determined to assist customers through “a once in a lifetime event”.
The bank set its one, tow and three year fixed home loans at 2.29 per cent, while reducing its variable small business loans by 100 basis points.
In line with moves by its rivals, Westpac also lifted its 12-month term deposit rate by 70 basis points to 1.7pc per annum, to provide customers a higher return on their savings.
“The comprehensive measures announced by the RBA and APRA yesterday provide a genuine economic stimulus by reducing uncertainty and allowing us to continue to support customers with confidence,” acting chief Peter King said.
WBC shares last up 11.4pc to $16.19.
1.02pm: Bank bounce fuels ASX recovery
The local market is pushing higher in lunch trade, with banks the key outperformers.
At 1pm, the benchmark ASX200 is higher by 4.3 per cent to 4987.3.
Westpac, the latest of the majors to slash its fixed home loan rates after the RBA’s cut yesterday, has surged by 10pc, Commonwealth Bank by 4.9pc, NAB by 10.6pc and ANZ by 9.5pc.
Here’s the biggest movers at 1pm:
12.57pm: Crown halted for virus response
Crown shares will be halted until Tuesday for the casino operator to work on its virus response strategy with the Victorian government.
Requesting the halt, Crown said it “intends to make an announcement once it receives further clarity on the outcome of these discussion”.
CWN last traded at $6.12.
12.56pm: RBA, US Fed establish swap line
The RBA has linked up with the US Federal Reserve to establish a swap line, in a bid to boost US dollar liquidity.
12.48pm: Crown enters trading halt
Casino operator Crown Resorts enters into trading halt, but is not specific.
“Trading in the securities of the entity will be temporarily paused pending a further announcement,” Crown says.
Shares last traded at $6.10, up 1.7 per cent.
Rival casino operator Star Entertainment yesterday announced it would restrict opening hours of its three casinos as it aims to prevent the gaming venues becoming coronavirus hot spots.
12.42pm: Overseas sales to buffer local blow: Carsales
Carsales has lauded its resilience in the Korean and Brazilian markets, as it withdrew its full year guidance, saying market uncertainty in Australia was behind the decision.
Just a month ago, the car retailer had forecast solid profit, but the rising economic uncertainty forced it to throw out those expectations with the impact on car buying and selling activity “hard to predict”.
“As a business, we had good momentum prior to the impact of COVID-19 and we are confident in the underlying performance and resilience of our business model. We have a strong balance sheet and prudent gearing, which positions us well to deal with this challenging environment,” chief Cameron McIntyre said.
It said Korean operational metrics were robust, along with those in Brazil, which reinforced continued strong growth in revenue and earnings for those markets.
12.35pm: Seek chairman lifts stake
Chairman of job seeking site Seek, Graham Goldsmith is making the best of the company’s recent share price weakness, scooping $74,000 worth of shares this week.
In a regulatory filing this afternoon, Seek said Mr Goldsmith, as trustee for the Goldsmith Superannuation Fund, had bought 5000 ordinary shares at an average price of $14.8134 apiece – a roughly $74,065 purchase.
That takes his indirect holdings to 50,000 shares.
12.29pm: Boeing director opposes bailout, exits
Former UN ambassador Nikki Haley resigned from Boeing’s board of directors, saying she was philosophically opposed to efforts to win a government bailout, the firm said Thursday.
Ms Haley, a former governor of South Carolina, said she had hoped “to be part of helping” Boeing as it contends with the coronavirus crisis on top of the travails with the 737 MAX.
But Boeing’s leaders and board “are going in a direction I cannot support,” Haley said in a resignation later included in a Boeing securities filing.
“While I know cash is tight, that is equally true for numerous other industries and for millions of small businesses,” she said, adding that she has “long held strong convictions” against government support.
Boeing is seeking at least $60 billion in federal support for the aerospace industry as the grounding of much of the global airline fleet due to coronavirus obliterates nearly term demand for commercial planes.
AFP
Joyce Moullakis 12.06pm: NAB cuts fixed rates, not variable
National Australia Bank has become the second major lender to cite the impact of the COVID-19 pandemic in slicing interest rates on business loans and fixed-rate mortgages, while stopping short of cutting variable home loan rates.
In a statement on Friday, NAB said it would reduce variable rates on small business loans by 100 basis points, effective March 30, adding to a 25 basis point cut on March 13.
The nation’s largest business bank will also slash 200 basis points from the rate on new loans and all overdrafts on its digital business product QuickBiz, effective March 30.
For fixed rate mortgages, NAB is making reductions of up to 60 basis and it is also allowing home loan customers experiencing “financial challenges” a repayment pause for up to six months.
It joins rival Commonwealth Bank in making changes after the Reserve Bank of Australia took drastic measures this week.
CBA is reducing its one-, two- and three-year fixed rate home loans by 70 basis points to 2.29 per cent, but not adjusting variable rates. The bank also announced on Thursday a 100 basis point interest rate reduction for all existing cash-linked small business loans.
Read more: Economy faces difficult period: Comyn
Ben Wilmot 11.47am: Aus Unity takeover collapses
A second property trust takeover has fallen victim to the coronavirus induced market volatility with Starwood Capital pulling its $485m bid for the Australian Unity Office Fund.
Starwood returned to bid for the Australian Unity-run trust after a play by property companies Charter Hall and Abacus Property for the AOF fell away last year, as the manager quietly campaigned against their scheme.
Starwood cited AOF’s announcement it had refinanced and extended an existing tranche of its debt facility for five years that was due to expire in June 2021 as meaning a condition of the Starwood bid could not be satisfied.
Starwood had made a proposal at $2.98 per share but the market had not expected it to go ahead and its shares slumped by 8.1 per cent to $1.865 in midmorning trade.
Earlier this week, the US company Public Storage dropped its $1.9bn takeover bid for the locally listed National Storage REIT.
11.44am: Bond yields dip as RBA buys $5bn
Australian bond yields are dipping but not by much after the RBA announced its first round of bond buying.
The RBA said it will buy up to $5bn of 2-year, 3-year, 7-year and 8-year ACGS bonds as starts its plan to target 0.25pc on the 3-year Australian Government bond.
But the market reaction so far looks disappointing – 3’s briefly fell an additional 1bp to be down as much as 6bps at 0.29pc while 10’s fell an additional 6bps to be down as much as 26bps at 1.23pc, before bouncing back.
Interestingly, the Australian dollar rose from 0.5744 to 0.5804 after the announcement.
Read more: Reserve Bank acts in ‘extraordinary times’
11.38am: Corporate Travel delays dividend
Corporate Travel Group has delayed payment of its 18 cent interim dividend until October citing the “rapidly changing landscape as a result of COVID-19.
“Given the current extraordinary circumstances and uncertainty over recovery time frames globally, Corporate Travel Management believes it is prudent to defer payment of the interim dividend,” the company said.
But its says it will review the decision closer to this time.
Corporate Travel says it is experiencing a “significant impact to its business following the introduction of additional government-imposed restrictions on international travel and major reductions in domestic capacity”.
However it reassures investors there’s no need to raise equity due to “strong liquidity position”.
It adds a high proportion of its cost base is variable and targeting a cost reduction of at least $10 million per month effective from the end of March.
CTD last up 17pc to $5.50.
11.17am: Banks to defer repayments for SMEs
Australia’s peak banking body has unveiled a multi-billion lifeline for small business, as it defers loan repayments for businesses affected by coronavirus for six months.
“This Assistance Package will apply to more than $100bn of existing small business loans and depending on customer take up, could put as much as $8bn back into the pockets of small businesses as they battle through these difficult times,” Ms Bligh said.
Read more: Banks offer $8bn small business loans lifeline
Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months. ABA CEO Anna Bligh today announced a small business relief package from Australia’s banks. #CoronaVirusUpdate
— Australian Banking (@ausbanking) March 20, 2020
Learn more here: https://t.co/nlI7adPYXS
Ben Wilmot 10.58am: French short bans no bother here: Unibail
Shares in Unibail Rodamco Wesfield, the French company that took over the offshore Westfield malls, are rebounding after a halt was lifted in its trade this morning.
The company had been halted on Thursday night, pending detail of short selling restrictions imposed on its primary listing in France.
After a near-50pc battering of the stock on the local exchange amid widespread mall closures, the French stock market regulator imposed a ban on short selling on shares that are listed in France.
This morning, the company reassured the ASX that the restriction does not apply to trading on the ASX and was not expected to materially affect the rights or obligations of the holders of Unibail’s CHESS Depositary Interests.
The CDIs were trading on Friday morning on the ASX and were part of the early dramatic rebound rally and were up by 11 per cent to $5.20.
10.47am: Drop in US futures trims ASX lift
A tumble in US futures is trimming the local market’s early rally, ahead of the announcement of sweeping new virus fighting measures from the major banks.
The S&P/ASX 200 rose 3.8pc to 4782.9 following overnight gains in shares and a 24pc jump in WTI crude. But since then, US futures have tumbled more than 2pc.
That’s contributing to a fading of the local market to be up a more moderate 2.6 per cent to 4905 in super volatile trading.
It comes after Donald Trump launched his strongest attack yet on China over the coronavirus, saying the world was “paying a big price” for Beijing’s role in the now global pandemic.
All eyes will be on ABA CEO Anna Bligh at 11am with banks set to unveil economic support measures.
Read more: ‘World is paying for what China did’
10.45am: No penalty for delayed AGMs: ASIC
The Australian Securities and Investments Commission said it will take no action if some annual meetings of shareholders are postponed until the end of July amid the coronavirus pandemic.
ASIC said the guidance was for companies whose fiscal years end on December 31, and which would otherwise be required by law to hold an annual meeting before the end of May.
ASIC said it supports the use of technology to enable annual meetings to go ahead, noting the restrictions imposed by the Australian government on gatherings of 100 people or more.
Still, the regulator said companies must provide shareholders with a reasonable opportunity to participate in the meeting.
Dow Jones Newswires
Bridget Carter 10.33am: Quadrant preys on oOh!media
DataRoom | oOh!media or its representatives are believed to be holding talks with Quadrant Private Equity Friday as the company explores ways to boost its cash levels.
The billboard owner and operator is working with adviser Macquarie Capital, which is understood to be considering a capital raising or a merger with rival QMS, now owned by Quadrant, for its client.
Some estimate that oOh!media could be seeking about $100m or $200m through the equity markets but all options are said to be currently on the table.
There was talk in the market on Friday that the planned equity raising was likely to involve a placement, so it would be interesting to see if Quadrant acquires a stake in the business.
However, some say a merger between QMS and oOh! Media without asset sales could face opposition from the Australian Competition and Consumer Commission.
oOh! media’s shares have fallen to 84c and its market value $203.6m.
The company said it remained in a trading halt while it considered a capital raising.
It has net debt of $354.5m as at December, which had equates to 2.6 times its underlying earnings before interest, tax, depreciation and amortisation.
Read more: No liquidity issues: oOh!media boss
10.29am: Air NZ shares tank after NZ lifeline
Air New Zealand may have been given a lifeline by the NZ government, but its shareholders are quick to pull the pin on Friday, with ASX-listed shares in the airline down by 42 per cent in early trade.
The NZ government agreed to provide a $NZ900m ($891m) loan to the national flag carrier for the next 24 months in an attempt to keep it flying even as global travel restrictions cull passenger demand to near zero.
AIZ last traded down 42pc to 91c, after briefly hitting 80.5c.
Read more: NZ government to prop up Air New Zealand
Leo Shanahan 10.18am: No liquidity issues: oOh!media boss
oOh!media chief Brendan Cook says the company has no liquidity issues, as shares in the group were halted this morning for a capital raise.
In a filing to the market, the group announced a trading halt of 48 hours in order to meet with shareholders and lenders to discuss a capital raising.
The outdoor advertiser and owner of Junkee website is understood to be experiencing debt issues but CEO Brendan Cook has told The Australian this morning “there is not a liquidity issue”.
Mr Cook was due to step down from the role this year but a replacement is yet to be named.
10.13am: Shares make decisive move higher
The local market has jumped 3.7 per cent at the open, with all sectors bar health care in the green.
At the open, the benchmark ASX200 is higher by 179 points or 3.73 per cent to 4961.4.
The major banks are leading the recovery ahead of an announcement on their measures to relieve pressure on customers slated for later this morning.
10.06am: Telstra puts job cuts on ice
The nation’s biggest telco Telstra has put any job cuts on hold as it brings forward 5G investment in a bid to stimulate the economy- even as it said its earnings would could be flat for the full year.
In an update to the market, Telstra said it would not announce any job reductions in the next six months, and in fact recruit an additional 1,000 temporary contractors locally to help manage call centre volumes.
Chief Andy Penn said the impact of coronavirus would be material, but was difficult to assess at this time.
Based on data available at present, the telco estimates underlying earnings and free cash flow at the bottom end of its previously guided range, while capex costs are likely to be at the top end.
That’s as the company brings forward $500m of capex from the second half of FY21 into the calendar year 2020 in a bid to increase its capacity and inject investment into the economy.
9.53am: Banks well poised to save economy: UBS
UBS analyst Jon Mott says the banks are “well positioned” to help save the Australian economy.
“Over the last decade, the Australian banks have built significant capital, funding and liquidity buffers, reaching ‘unquestionably strong’ benchmarks,” he says.
“This will enable the banks to help customers, support the economy and employment.”
The first option Mr Mott considers is moving all mortgagors to Interest-Only on an opt-out basis.
The second main option would be more support for small and medium enterprises via non recourse loan top-ups at 0.25pc and 0pc risk weighting.
The third option would be to reducing risk-weighted assets buffers and waiving debt covenants for corporates.
9.45am: The latest wave of earnings withdrawals
There has been no lessening of the unprecedented wave of earnings guidance withdrawals and opening-ended profit warnings from Australian companies.
In a note yesterday, Morgan Stanley’s Chris Nicol noted that while the delays to guidance were prudent, the move “also delays true assessment of just what the earnings base will be once we are through this crisis event”.
“Against this backdrop – earnings growth will certainly be negative but our early call out for 10pc down could be conservative.”
Here’s who has dumped guidance so far today:
- Wesfarmers said panic buying had lifted its Bunnings and Officeworks stores but issued a warning on broader retail sales as restrictions on movement increase
- Sims Metal Management
- Flexigroup
- Vicinity Centres said the virus had further damaged an already weak retail environment
- Sonic Healthcare warned testing volumes were likely to be impacted in the short to medium term as many people self-isolated or are quarantined
- McMillan Shakespeare (after the close yesterday) said public health measures were already starting to impact enquiry levels for new novated leases
9.37am: Futures point to early lift
Australia’s S&P/ASX 200 share index is set to jump based on overnight futures, but may not rise as much as expected initially.
Overnight futures relative to fair value suggests the S&P/ASX 200 will open up 4.1pc at 4980 after the index dived 3.4pc to 4782.4 yesterday to be 33pc off its February 20 record of 7162.5.
But after the S&P 500 pared a 3.3pc fall to close up 0.5pc overnight, US futures are down about 1pc, and as much as 2pc, albeit above the lows of the past two days.
WTI crude futures dipped 1.9pc in early trade after surging 24pc to $US25.22 on US Treasury Secretary Mnuchin’s proposal to buy $US20bn of US crude for the Strategic Petroleum Reserve.
The banks are set to unveil a coronavirus-fighting package to relieve pressure on customers and stop small and medium businesses going under, after negotiations with the Morrison Government. Josh Frydenberg on Friday flagged a “significant” announcement from the banks as he prepares his own second round of fiscal measures to rescue businesses and individuals from the COVID-19 downturn.
Technically the major support level now is the 2016 low at 4706.7. Initial resistance is at Thursday’s high of 5102.5, followed by recent highs at 5300 and 5500.
The market may bounce today but the risk is that a 33pc bear market so far isn’t enough for a potentially major recession where stimulus can’t easily restore demand and supply.
9.33am: oOh!Media halted for raise
Outdoor advertising group oOh!media is halted ahead of the open, as the company prepares to raise capital.
In a notice to the market, oOh!media said it was considering a capital raising as it requested a halt in trade until March 24.
Last week, the company abandoned is earnings guidance, blaming the declining macroeconomic conditions and market uncertainty.
OML shares last traded at 84c.
9.21am: What’s on the broker radar?
- ANZ raised to Outperform – Credit Suisse
- Alumina raised to Buy – Goldmans
- BHP raised to Buy – Deutsche
- Boral raised to Buy – Citi
- Carsales.com cut to Hold – Jefferies
- GUD Holdings cut to Neutral – JP Morgan
- Gold Road Resources rated new Buy – Hartleys
- Medibank Private raised to Outperform – Credit Suisse
- NAB raised to Outperform – Credit Suisse
- OZ Minerals raised to Neutral – Goldmans
- REA Group raised to Buy – Jefferies
- Regis Resources raised to Sector Perform – RBC
- Sandfire Resources raised to Neutral – Goldmans
- Sonic Healthcare cut to Hold – Jefferies
9.07am: Wesfarmers sales at risk as virus spreads
Wesfarmers has warned of weakness in sales of discretionary products, especially at its Target stores, as it said the shift in consumer behaviour was a risk to the outlook for retail sales more broadly.
In an update to the market, the retailer said its Bunnings and Officeworks stores had “played an important role providing retail and commercial customers with critical products as they respond to and prepare for COVID-19” with Kmart also feeling some uplift from panic buying.
But it said the longer term trend in customer patterns was a risk to retail sales across the group.
“Despite the continuation of sales growth to date across most operating divisions and moderated supply chain risks, there has in recent days been weakness in sales of discretionary products such as apparel, particularly in Target,” it said.
“This shift in customer behaviour is expected to continue and represents a risk to the outlook for retail sales across the Group as Australian and other governments take action to contain the impact of COVID-19.”
Wesfarmers said it expects additional operating costs as it prepares for and responds to the coronavirus outbreak, and said a lower Australian dollar would increase the cost of goods sold.
“The Group’s balance sheet remains very strong and was further strengthened by the sale last month of 4.9 per cent of the Group’s interest in Coles for approximately $1,050m, providing significant flexibility and support to the Group’s operating businesses,” the company added.
9.04am: Scentre cuts guidance
Westfield owner Scentre Group has followed down the same path as rival shopping mall companies by withdrawing its forward guidance this morning.
In a statement to the ASX on Friday morning, the company said it will be suspending its 2020 outlook due to increased uncertainty and market volatility caused by the coronavirus pandemic.
It follows similar withdrawals by rival shopping mall owner Vicinity Centres, who last night cut its guidance for the remainder of the financial year.
Scentre Group said it will provide further updates at it annual general meeting which is scheduled for April 8.
Eli Greenblat 8.57am: Premier warns its ready to shut stores
Billionaire Solomon Lew’s Premier Investments has posted an interim net profit of $99.6m, a gain of 12.15 per cent, as sales at its portfolio of fashion stores boomed but has warned landlords it is prepared to close shops across its global store network unless offer relief to tenants.
The company warned it was bracing for possible “significant hardship” across its business as the coronavirus pandemic sends shockwaves through the economy.
Mr Lew, whose Premier group own chains including Just Jeans, Portmans, Peter Alexander, Dotti and Smiggle, also said it has previously diversified its supply chain away from China but that its Chinese factory suppliers had reopened and that it had secured the majority of its fashion products for the second half, albeit at slightly higher supply chain costs.
Premier this morning said revenue for the first half rose 7.53 per cent to $733.873m and declared an interim dividend of 34 cents per share, up from 33 cents. However it won’t be paid until the end of September.
Richard Ferguson 8.50am: Don’t nationalise airlines: Business Council
Business Council of Australia chief executive Jennifer Westacott has railed against the idea of nationalising firms to fight the coronavirus economic downturn, saying Australia cannot go back to the 1950s.
Qantas chief executive Alan Joyce earlier today warned the Morrison Government against nationalising struggling competitor Virgin Australia.
Ms Westacott said a “modern market economy” could still survive the pandemic.
“We do know that this will come to an end, unlike the GFC … the job is to keep companies going,” she told Sky News.
“The problem with nationalisation is what Alan Joyce said, it’s about picking winners.
“What we need to come out of this crisis is a modern market economy, not an economy that looks like something out of the 1950s. That is not the way to bounce back from this.”
Gerard Cockburn 8.35am: Vicinity drops forecasts
Vicinity Centres has withdrawn its 2020 financial year earnings guidance, saying coronavirus has made retail trading conditions uncertain.
The co-owners of Chadstone shopping mall noted on Thursday the pandemic has further damaged an already weak retail environment, with mall earnings under pressure.
Chief executive Grant Kelly said its centres will remain open as part of the federal government’s pledge to keep essential services going.
“Shopping centres have been defined as providing ‘essential services to the community’ by the federal government, and as such we will continue to be open for our customers, retailers and the broader community,” Mr Kelly said.
“We are currently operating well within our covenants and have $1.3 billion of undrawn facilities. We also have flexibility to defer capital expenditure on major projects until COVID-19 uncertainties are resolved.”
Vicinity Centres also said prudent approaches to capital management and volatile market conditions have prompted it to suspend its share buyback program.
Richard Ferguson 8.12am: Banks ready virus package
The banks are set to unveil a coronavirus-fighting package to relieve pressure on customers and stop small and medium businesses going under, after negotiations with the Morrison government.
Josh Frydenberg on Friday flagged a “significant” announcement from the banks as he prepares his own second round of fiscal measures to rescue businesses and individuals from the COVID-19 downturn.
“The banks are also working on another package of significant initiatives which will be looking to relieve some pressures on their customers,” the Treasurer told Sky News.
“I was in discussions late last night with the banks as well as the prudential regulator and there will be an announcement later today.”
The Australian on Thursday revealed the government was in negotiations with the big banks on a rescue plan for small and medium-sized firms that could see taxpayers underwriting loans to avoid businesses going under.
8.00am: Cautious optimism on Wall St
US stocks capped a wobbly day on Wall Street with solid gains, reflecting cautious optimism among investors that emergency action by the US government and central banks will cushion the global economy from a looming recession caused by the coronavirus pandemic.
The swings in the market were markedly less volatile than recent days.
The Dow Jones Industrial Average gained almost 200 points, or 0.9pc. The S&P 500 rose 0.5pc after bouncing between a gain of 2.9pc and a loss of 3.3pc early. That would be a notable change in normal times, but the index has had eight straight days where it bounced up or down between 4.9pc and 12pc.
Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other. Markets got more of each overnight.
The number of Americans filing for unemployment benefits jumped by 70,000 last week, more than economists expected, in one of the first signs of lay-offs sweeping across the country. Wide swathes of the economy are grinding closer to a standstill, from the travel industry to restaurants, as authorities ask Americans to stay home to slow the spread of the virus. Another weak manufacturing report, this time in the mid-Atlantic region, added to the worries.
But the world’s largest central banks announced their latest efforts to support financial markets and the economy. The European Central Bank launched an expanded program to buy up to 750 billion euros ($US820 billion) in bonds, and the Bank of England cut its key interest rate to a record low of 0.1pc.
The Federal Reserve unveiled measures to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash.
The dash for cash has strained markets, and sellers of even high- quality bonds say they’re having difficulty finding buyers at reasonable prices. Many of the Fed’s moves, which are getting revived after being used in the 2008 financial crisis, are aimed at smoothing out operations in such markets.
Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections on Wednesday.
The price of US crude oil notched its biggest one-day jump on record Thursday, climbing nearly 24pc. With the gain, oil recouped nearly all its losses from the day before.
AP
7.57am: US market snapshot
Major indexes closed with solid gains on Wall Street after shaking off a rocky start. Trading was still bumpy but nothing like the wild swings seen in recent weeks.
Investors were cautiously optimistic after steps by the Federal Reserve and other central banks as well as governments to support credit markets and the economy.
Even so the devastating impact of the coronavirus outbreak is starting to show up in economic data.
On Thursday: The S&P 500 index rose 11.29 points, or 5%, to 2,409.39.
The Dow Jones Industrial Average rose 188.27 points, or 0.9%, to 20,087.19. The Nasdaq rose 160.73 points, or 2.3%, to 7,150.58.
The Russell 2000 index of smaller company stocks rose 67.58 points, or 6.8%, to 1,058.75.
For the week: The S&P 500 is down 301.63 points, or 11.1%.
The Dow is down 3098.43 points, or 13.4%.
The Nasdaq is down 724.30 points, or 9.2%.
The Russell 2000 is down 151.42 points, or 12.5%.
For the year: The S&P 500 is down 821.39 points, or 25.4%.
The Dow is down 8,451.25 points, or 29.6%.
The Nasdaq is down 1,822.03 points, or 20.3%.
The Russell 2000 is down 609.75 points, or 36.5%.
AP
7.50am: Adani-linked Siemens replaces CEO
German industrial conglomerate Siemens says CEO Joe Kaeser will be replaced by current deputy Roland Busch by February 2021.
“Siemens is setting the course for establishing the next generation of management,” the company said in a statement, announcing that 61-year-old Kaeser would not be pursuing a contract extension. Busch, 55, would take the reins as president and CEO “at the latest” at the next annual shareholder’s meeting, scheduled for February next year, Siemens said.
Like other German industrial giants, the group has been struggling for several months against a slowing global economy, and now faces the dramatic challenge of the current coronavirus crisis.
In January, the company drew the wrath of environmentalists when it decided to continue its involvement in the controversial Adani coalmining project in Australia, even as the country was being battered by unprecedented wildfires.
AFP
7.48am: Copper at 2016 low
Copper languished near four-year lows overnight as the spread of the coronavirus intensified fears about global economic growth and demand for industrial metals.
Economic activity in top consumer China and other major economies has been shredded by government measures to contain the virus, which has so far claimed more than 9,000 lives, sparking recession fears around the world.
“The metals markets are still in panic mode which is ongoing and even a rebound from current levels in unlikely to last,” said Commerzbank head of commodities research Eugen Weinberg.
Benchmark copper on the London Metal Exchange snapped a three-session losing streak to close 2 per cent up at $US4,835 a tonne after bargain-hunting by some players, one trader said.
Earlier, the price fell as low as $US4,371 a tonne, its lowest since January 2016, and has shed about 12 per cent so far this week.
Copper, which is used by investors as a bellwether for global economic health, is still within striking distance of its lowest since the global recession in 2009.
Reuters
7.45am: Gold drops 1pc
Gold prices slipped more than 1 per cent as the dollar jumped to multi-year highs, with the coronavirus pandemic threatening to cripple economic activity and prompting investors to sell assets to keep their money in cash.
Spot gold was down 1.2 per cent at $US1,468.42 per ounce, while US gold futures settled up 0.1 per cent at $US1,479.30.
“Clearly gold’s safe-haven status has not been held up,” said David Meger, director of metals trading at High Ridge Futures. “Players are moving towards cash.”
Reuters
7.40am: Michael Hill shuts Canada stores
Jeweller Michael Hill International is closing its Canada store network for two weeks amid the coronavirus crisis and will stand down most of its workforce there.
The ASX and NZ listed jeweller says it is “actively managing the trading and operational impact of public health measures related to the management of COVID‐19 in each of its trading markets of Australia, New Zealand and Canada”.
Michael Hill says the last two weeks has seen a significant drop off in foot traffic in its stores, with a corresponding impact on sales.
“The company has not provided guidance on its earnings for the current financial year and is not in a position to provide a reliable forecast. Existing analyst forecasts of earnings are also
unreliable as they were prepared on the basis of a more predictable trading environment.”
7.30am: NZ keeps its airline afloat
Air New Zealand has received a financial lifeline from the government that will allow it to keep operating.
The government has agreed to provide a $NZ900 million loan to the national flag carrier for the next 24 months, Finance Minister Grant Robertson said.
“Without this intervention, New Zealand was at risk of not having a national airline,” Mr. Robertson said.
New Zealand closed its borders to foreign visitors on Thursday in an attempt to slow the spread of the novel coronavirus. Air New Zealand had already cut international flights by 85pc as travel restrictions around the world escalated in the past month.
Air New Zealand will play a part in ensuring that New Zealanders overseas can return home and that essential flights and freight routes for goods such as pharmaceuticals remain open, Mr Robertson said.
“Air New Zealand has a unique and critical role in our economy and society,” he said.
The loan to the airline, which is 52pc owned by the government, could be repaid by raising capital or by the government converting the debt to equity, according to the agreement between the carrier and the government.
As a condition of the loan, Air New Zealand cancelled a $NZ124 million interim dividend payment to shareholders. It will also not pay dividends while the loan facility is in place.
Dow Jones Newswires
7.15am: ASX poised for a bounce
The rollercoaster Australian stock market looks set to rise after oil prices jumped and central banks moved to ease liquidity concerns.
At 7am (AEDT) the SPI200 futures contract was up 119 points, or 2.47 per cent, at 4944 points, suggesting a bounce at the open of trading.
David de Garis of NAB’s morning call podcast says some of the optimism is coming from a flood of coronavirus management policy announcements and as central banks ease liquidity concerns.
US oil prices surged 35 per cent overnight after a three-day sell off and the global benchmark Brent also lifted as financial markets assessed the impact of massive central bank stimulus measures.
The local bourse shrugged off an RBA rate cut on Thursday to close in negative territory.
The ASX200 has lost 33.5 per cent in the past four weeks.
The Australian dollar plunged to a low of US55.08 cents at one point on Thursday, a level last seen in October 2002.
But by 7am one Aussie dollar was buying US57.52 cents.
AAP
7.10am: Wall St rises after bank action
US stocks rose after central banks deployed a flurry of emergency measures to try to buffer the global economy from fallout stemming from the coronavirus pandemic.
The Dow Jones Industrial Average added 189 points, or 1pc, to 20088. The S&P 500 advanced 0.5pc and the Nasdaq Composite gained 2.3pc, boosted by a rally in shares of technology companies.
Australian stocks are set to join the market recovery, with futures pointing to a rise at the open of 119 points, or about 2.4pc. The Aussie dollar was at US57.49, up from US55c.
The Brent benchmark oil price also rebounded, soaring 14.4pc.
Policymakers have moved aggressively this week to try to stop strains in funding markets from aggravating what they believe will already be a severe halt to economic growth.
In the last 24 hours, the Federal Reserve has launched a new lending facility to backstop US money-market mutual funds and extended its currency exchange program with other central banks including Australia’s, while the Bank of England lowered its benchmark interest rate to a record low.
Markets have nevertheless remained volatile — with the Dow industrials down more than 700 points before it turned sharply higher. Investors and analysts have attributed the swings to uncertainty about whether central banks’ actions will be enough to offset shocks rippling through the financial system and the economy.
“This is a market that has nothing to hold onto to steady it,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
It was reassuring to see central banks and government officials step in to try to ensure the stability of the financial system and slow the spread of the coronavirus. “But until we see a peak in cases, we’re not likely to see the market bottom,” Mr. Kleintop said.
In the US, data has already shown the pandemic taking its toll on the economy. The number of workers applying for first-time unemployment benefits jumped to the highest level since September 2017, Labor Department data for the week through March 14 showed.
Economists fear that number will only rise in the coming weeks.
“When you have whole economies or whole populations shut down, it is going to have a massive economic effect and no one knows how long that will go on for,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe, the Middle East and Africa.
In the US, shares of technology companies led Thursday’s rally.
Dow Jones Newswires
6.45am: Wall St gains momentum
US stocks were holding on to gains after a wobbly day on Wall Street amid cautious optimism among investors that emergency action by the US government and central banks will cushion the global economy from a looming recession caused by the coronavirus pandemic.
The swings in the market were markedly less volatile than recent days.
The S&P 500 rose 1.3pc after bouncing between a gain of 2.9pc and a loss of 3.3pc early. That would be a notable change in normal times, but the index has had eight straight days where it bounced up or down between 4.9pc and 12pc.
The Dow Jones Industrial Average was up 200 points, or 1pc, to 20,099 in afternoon trade. It had been down as much as 721 points earlier and as high as 543. The Nasdaq, which is dominated by tech giants like Apple, was up 3.8pc.
The world’s largest central banks announced their latest efforts to support financial markets and the economy. The European Central Bank launched an expanded program to buy up to 750 billion euros ($US820 billion) in bonds to support the economy, and the Bank of England cut its key interest rate to a record low of 0.1pc.
The Federal Reserve unveiled measures to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash.
Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections on Wednesday. That likely helped boost the price of US crude oil by almost 24pc, nearly making up all of its losses from the day before.
AP
5.50am: Wall St lifts on bank moves
US stocks jumped after central banks deployed a flurry of emergency measures to try to buffer the global economy from fallout stemming from the coronavirus pandemic.
In afternoon trade the Dow Jones Industrial Average added 450 points, or 2.4pc, to 20386. The S&P 500 advanced 2.6pc and the Nasdaq Composite gained 4.8pc, boosted by a rally in shares of technology companies.
After yesterday sinking to a new four-year low despite sweeping monetary and fiscal measures, the ASX is set to join the market rebound. The SPI futures index at 6am (AEDT) was pointing to a rise of 197 points, or about 4 per cent.
The Aussie dollar also recovered after hitting US55c yesterday and this morning was at US57.72c.
Policymakers have moved aggressively this week to try to stop strains in funding markets from aggravating what they believe will already be a severe halt to economic growth. In the last 24 hours, the Federal Reserve has launched a new lending facility to backstop US money-market mutual funds and extended its currency exchange program with other central banks, while the Bank of England lowered its benchmark interest rate to a record low.
Markets have nevertheless remained volatile — with the Dow industrials down more than 700 points before it turned sharply higher Thursday. Investors and analysts have attributed the swings to uncertainty about whether central banks’ actions will be enough to offset shocks rippling through the financial system and the economy.
“This is a market that has nothing to hold onto to steady it,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
It was reassuring to see central banks and government officials step in to try to ensure the stability of the financial system and slow the spread of the coronavirus. “But until we see a peak in cases, we’re not likely to see the market bottom,” Mr. Kleintop said.
In the US, data has already shown the pandemic taking its toll on the economy. The number of workers applying for first-time unemployment benefits jumped to the highest level since September 2017, Labor Department data for the week through March 14 showed.
Economists fear that number will only rise in the coming weeks.
“When you have whole economies or whole populations shut down, it is going to have a massive economic effect and no one knows how long that will go on for,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe, the Middle East and Africa.
Dow Jones
5.50am: EU faces ‘considerable decline’
The president of the European Central Bank (ECB) Christine Lagarde said the novel coronavirus pandemic would lead to a “considerable decline” in economic activity in the euro area.
In an op-ed published in several European newspapers, Lagarde said that as governments imposed containment measures to slow contagion, “a large part of the economy is being switched off … as a result, economic activity across the euro area will decline considerably.”
“Public policies cannot prevent this. What they can do is ensure that the downturn is no longer and deeper than it needs to be,” she added.
Lagarde said the pandemic was “an unbearable human tragedy” with “few precedents in recent history” and said the ECB would do all it could to assuage the economic impact.
“We will do everything necessary within our mandate to help the euro area through this crisis, because the ECB is at the service of the European people,” she said.
AFP
5.40am: Stocks spike as banks act
World stock markets spiked as massive central bank action finally got the attention of investors who had earlier shrugged off dizzying amounts of liquidity pouring into the financial system to fight the coronavirus impact.
The Bank of England came back with its second rate cut within days and unleashed its “biggest ever one-off round of asset purchases”, said Kallum Pickering, senior economist at Berenberg.
The Bank threw “the kitchen sink” at the coronavirus, said Craig Erlam, senior market analyst at OANDA, a day after the European Central Bank fired its most impressive monetary salvo yet in a bid to prevent a credit crunch in a stuttering eurozone economy.
The Federal Reserve also injected more funds into money markets. The central bank action, combined with fiscal measures across the globe, helped stock market turn a corner after earlier weakness, with Wall Street more than one per cent higher in midday trading, and key European equity markets packing even stronger gains.
The ECB’s massive action, meanwhile, undermined the euro against the dollar, which got a shot in the arm from investors buying into safety, even prompting speculation of possible Fed intervention to stem its rise.
The biggest impact of the smorgasbord of monetary efforts was on global bond markets, where yields fell on expectations that central banks will now be gobbling up any long-term debt that governments, and large corporations, are willing to issue.
But voices warning of the limits of monetary policy would not be silenced. “What if liquidity support is not enough?” asked Holger Schmieding, at Berenberg, wondering whether governments might be tempted to take direct stakes in companies, if only to save them from hostile takeover — a policy shift he called “a potential risk”.
Relief across markets was tempered by the fear of a terrible economic impact still ahead, analysts said.
“Markets are in risk-averse mode,” said Christopher Dembik, head of economic research at Saxo Banque in Paris.
Investors were now expecting a global recession “of a singular size”, he told AFP, adding that solace was nowhere to be found “even if enormous means are being deployed”.
But in the short term, those means did provide some relief to frayed investor nerves.
Investors saw “the European Central Bank calm markets, at least for now, with their stimulus package”, Scope Markets analyst James Hughes said.
The so-called Pandemic Emergency Purchase Programme came six days after the ECB unveiled a big-bank stimulus package that failed to calm nervous markets and had piled pressure on the bank to open the cash floodgates.
After announcing the move, ECB boss Christine Lagarde tweeted that “extraordinary times require extraordinary action”.
Markets.com analyst Neil Wilson said the ECB action “looks more like a bazooka than anything they’ve done thus far”.
London closed up 1.8 per cent, Frankfurt ended 2.0 per cent higher and Paris rose 2.9 per cent.
Earlier Thursday, Asia stocks initially climbed on the ECB’s midnight announcement but soon tumbled as investors contemplated months of economic hardship.
Oil prices rebounded almost as spectacularly as they had dropped on Wednesday when US benchmark WTI lost around a quarter of its value.
AFP
5.35am: Vaccine to take 12-18 months
The pharmaceutical industry expects it will take 12 to 18 months to roll out a coronavirus vaccine, executives said Thursday, as they jointly pledged to make it available worldwide based on need.
Bureaucracy could be slashed to speed up the process — but the time needed for safety testing could not be compromised, industry chiefs and the International Federation of Pharmaceutical Manufacturers and Associations told a virtual press conference hosted in Geneva.
“We’re confident technology will arrest this disease,” said IFPMA president David Ricks, the chairman of Eli Lilly and Company.
AFP
5.37am: Oil rebounds
The price of benchmark WTI oil rebounded by more than 23 per cent on hopes that a slump in crude demand caused by the coronavirus pandemic can be curbed.
WTI, which shed around one quarter of its value Wednesday, surged 23.42 per cent to $US25.06 per barrel. Brent North Sea crude recovered 11.1 per cent to $US27.63.
AFP
5.35am: BoE cuts rates again
The Bank of England has slashed its key interest rate to 0.1pc, its lowest-ever level, amid global economic turmoil sparked by the coronavirus pandemic.
The bank’s Monetary Policy Committee says the unanimous decision is part of moves “to meet the needs of UK businesses and households in dealing with the associated economic disruption.”
Thursday’s rate cut came a week after the central bank cut its rate from 0.75pc to 0.25pc.
Joining other central banks in stepping up action over the virus, the Bank of England has also increased holdings of UK government and corporate bonds to £645 billion ($US766 billion).
This increases by £200 billion the BoE’s so-called quantitative easing, a process firmly established by central banks following the global financial crisis more than a decade ago to pump out much-needed liquidity.
AP
5.30am: Fed in currency swaps with RBA
The Federal Reserve has set up a program to exchange dollars for foreign currency with nine central banks to support dollar lending in global markets that are under pressure from the impact of the viral outbreak.
The move, announced Thursday, enables foreign banks to provide dollars to their banks that sometimes lend and trade in US currency.
It is the latest effort by the Fed to smooth the functioning of financial markets, as investors, banks, and companies rush to stockpile cash amid plunging stock markets and a sharply slowing economy.
Late Wednesday, the Fed also reactivated its third lending facility dating from the financial crisis intended to provide more cash to banks in the form of short-term loans.
The currency swaps established overnight are capped at $US60 billion for six central banks in Australia, Brazil, Mexico, Singapore, Korea and Sweden. The exchange lines are capped at $US30 billion for central banks in Denmark, Norway and New Zealand. Under the swaps, the Fed provides dollars for an equal amount of foreign currency, which it can also use in short-term lending to banks if needed.
AP
5.27am: EU’s Barnier has coronavirus
Michel Barnier, the European Union’s chief negotiator for the bloc’s future relationship with Britain after Brexit, has been infected with the new coronavirus.
The 69-year-old Barnier said in a Twitter video message Thursday that he is doing well and is in good spirits, while the EU’s executive arm said negotiations with British officials can continue.
“I am following all the necessary instructions, as is my team,” Barnier said from his home, where he has been confined. “For all those affected already, and for all those currently in isolation, we will get through this together.”
AP
5.25am: US jobless claims jump
With lay-offs on the rise due to the coronavirus pandemic, claims for US unemployment insurance have surged, particularly for hotel and restaurant workers, the Labor Department reported.
For the week ending March 14, initial jobless claims jumped 70,000 to 281,000, its highest level since September 2017, the report said. Economists expected a jump, but that was far higher than the consensus forecast.
The increase was “clearly attributable to impacts from the COVID-19 virus,” the Labor Department said, noting that “many states reported increased lay-offs in service related industries broadly and in the accommodation and food services industries specifically, as well as in the transportation and warehousing industry.”
AFP
5.22am: Lufthansa warns on flying’s future
The chief executive of German airline giant Lufthansa warned that governments might need to save the industry from the coronavirus crisis, as “drastic cutbacks in flight operations” have grounded over 90 per cent of its planes.
Some 700 of Lufthansa’s 763 aircraft are “temporarily parked” following massive reductions in its flight operations over the coming weeks.
“The longer this crisis lasts, the more likely it is that the future of aviation cannot be guaranteed without state aid,” chief executive Carsten Spohr said.
The International Air Transport Association said Thursday up to $US200 billion could be needed worldwide to rescue airlines.
AFP
5.20am: Mideast airlines lose $US7bn
Seven Middle Eastern countries have suspended all commercial flights due to a fast-spreading new virus as the aviation industry’s largest trade association announced that airlines in the region have already lost more than $US7 billion in revenue.
The International Air Transport Association, which represents around 290 airlines worldwide, said the travel restrictions that countries have imposed to slow down the spread of the virus “have more far-reaching implications than anything we have seen before.”
The group called for emergency aid of up to $US200 billion for airlines globally. In the Middle East alone, 16,000 passenger flights have been cancelled since the end of January. The financial losses translate into hundreds of thousands of jobs at risk, IATA said.
Already, major carriers like Emirates have urged pilots and cabin crew to take unpaid leave. Reports have emerged that Qatar Airways laid off several hundred employees. The airline did not immediately respond to a request for comment.
AP
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