Trading Day: ASX snaps 3-day losing streak
ASX ends three-day losing streak with higher close; NSW changes Sydney Covid outbreak rules; Santos faces new Narrabri challenge.
- Payright slips on ASX debut
- Santos faces new Narrabri challenge
- Challenger buys My LifeMyFinance bank
- US sues Walmart over opioid crisis
That’s all from the Trading Day blog for Wednesday, December 23. Australian stocks closed up, ending a three-day losing streak, after Europe markets rebounded but Wall Street mainly fell. The Dow fell 0.7 per cent, the S&P 500 lost 0.2 per cent and the Nasdaq rose 0.5 per cent. Iron ore prices sank 6.1 per cent, while oil and gold also fell. Locally, attention was focused on NSW’s response to the Sydney COVID-19 outbreak.
James Kirby 7.32pm: Six potential 2021 investment surprises
If 2020 is any guide, the year ahead should be full of unexpected twists for investors. Here’s what might surprise.
RBA
What if the RBA were to drop its commitment to holding rates at current low levels?
Every month the Reserve Bank of Australia tells us that it plans to hold rates at current super low levels for the next three years: But the rebound in the local economy is stronger than almost anyone expected. Economists are already concerned over whether central banks have been too quick to splash cash during the crisis: Or, as economists might put it ‘calibrating the withdrawal of stimulus’ in the months ahead could be very difficult.
Next year even a gentle acceleration of the economic activity we witnessed in the final quarter this year would make the RBA’s three year promise even more of a stretch than it is today: Don’t be surprised if our central bank ‘changes the language’ around keeping rates at current levels in 2021.
Vaccine makers fail to fix the problem
What if the current crop of Covid vaccines are tested by new strains of the virus - or delivery programs are dogged by fights over who gets a jab first - or significant elements of the population refuse to be vaccinated?
Any failures or disappointments around the expected success of the global Covid vaccination effort will weigh heavily on investor confidence. Success around a global vaccine rollout is already built into asset prices, but we have yet to see if the global vaccine makers can pull off the great public health challenge of our times.
China kicks back on iron ore
The price of iron ore more than doubled in 2020, but China has no choice except to pay the spot price for imports.
Under current conditions, the majority of those imports must be from Australia.
The China Iron and Steel Association is already pressuring Australian miners to improve the situation - China will ultimately find alternatives.
Long term it will be iron ore imports from Africa, short term it might include a drive to optimise scrap metal.
Not that long ago iron ore price contracts were fixed following annual formalised negotiations.
Next year China just might find a way to escape its bind on Australian iron ore.
If it does, the price of our most important export commodity will fall.
Superannuation early release becomes permanent
The success of the government’s superannuation early release scheme has upturned a sacred cow.
Super was never meant to be touched except in cases of extreme hardship. Now a new generation have become accustomed to using super for purposes other than retirement savings.
Damon Kitney 6.05pm: Cut-price mid-caps on a roll: Bell
The chief investment officer of the $2.5bn global equity manager Bell Asset Management says he is optimistic about the outlook for international small and mid-cap stocks in the year ahead, as valuations have been kept in check by the absence of big passive funds from the sector.
Ned Bell, who in November marked his 20th anniversary with Bell Asset Management, says while COVID-19 had brought forward three to four years of growth for big tech stocks, it had also “signed the death warrant of a lot of businesses in secular decline”.
“For example: the big department stores in the US and the cruise ship operators. That has a way to play out. And the banks in the US, like here, have been holding back on foreclosing on a number of businesses. That will be a real challenge for the SME sector,’’ he told The Australian.
Elise Shaw 4.37pm: ASX closes up 0.7pc
The S&P/ASX 200 closed higher on Wednesday, up 43.5 points, or 0.7pc, at 6643.10, ending a three-day losing streak.
Real Estate shares led the sector gains, at 2pc higher. Energy was up 1.3pc and the Materials sector was the only index to end in the red, down 0.4pc.
Bank shares mainly rose, CBA up 0.9pc, ANZ 0.8pc higher, and NAB up 0.2pc.
Energy stocks saw Santos close up 1.6pc, despite news of the controversial Narrabri gas project being built by the company in the north west of NSW facing a fresh challenge, with an appeal launched against the Independent Planning Commission’s approval of the development.
Miners were lower as the iron ore price dropped, with BHP down 1pc, Fortescue 0.4pc lower and Rio Tinto down 0.5pc.
Gold miners suffered as the spot gold price fell overnight, but the precious metal was picking up slightly to trade at $US1865.01 an ounce in early London trade.
The Australian dollar was 0.35pc stronger against the US dollar, trading around US75.49c by the close of the ASX session.
Perry Williams 3.31pm: Chevron raises stakes over trademark use
Global oil heavyweight Chevron has dramatically raised the stakes in a legal battle with Ampol after filing an injunction seeking to stop the fuels retailer from using either Ampol and Chevron trademarks together.
Chevron initially launched legal proceedings on September 1 alleging breaches and infringements have occurred due to the use of non-compliant signage at 177 Ampol sites, together with an unspecified number of third party sites operating under sub-licence from Ampol.
The original court action came after Chevron issued a termination notice, requiring Ampol to rebrand from Caltex by December 31, 2022.
However, the stoush has now broadened with Ampol on Wednesday declaring it will “vigorously defend” the suit.
“Ampol advises that Chevron has filed an application for an interim injunction seeking to restrain Ampol from using the Ampol trademarks together with the Chevron trade marks in a manner which represents that the marks are owned by the same or associated entities,” Ampol said in a statement to the ASX on Wednesday.
“Ampol is confident of its position, continues with its re-branding strategy and intends to vigorously defend the application.”
An interim hearing date is expected in February 2021.
Caltex was using the brand name under licence from Chevron but the US giant terminated the deal in December after re-entering the Australian fuel retail sector.
Ampol said in September it had been in discussion with Chevron “for some time in an effort to resolve Chevron’s complaints.
Chevron made a surprise return to the convenience fuels sector in December after paying $425m to scoop up Puma Energy — Australia’s largest independent fuel retailer — just four years after selling its stake in Caltex.
The US major sold its 50 per cent stake in Caltex in 2015 for a whopping $4.7bn but Chevron‘s purchase of Puma gave it a new market supplying products from its stakes in three major Asian refineries in Singapore, Thailand and a giant facility in South Korea.
Chevron confirmed in August it would take back the Caltex name as it looks to rebrand its Puma service stations.
Elise Shaw 3.20pm: Jobs data ‘not all good news’: CommSec
The Australian Bureau of Statistics (ABS) released their quarterly labour market figures today, which includes a breakdown of jobs by industry. The data runs to November so includes the easing of Covid-19 restrictions in Victoria and the brief lockdown in South Australia. Encouragingly, there were strong job gains recorded over the three-month period with employment up by 248,800, notes Ryan Felsman, senior economist at CommSec.
“Jobs rose in 13 of the 19 major industry sectors, led by gains in Professional, Scientific and Technical Services (+80,200), Administration and Support Services (+53,300) and a continued recovery in Accommodation and Food Services (+45,800) positions.
“But it wasn’t all good news - astonishingly, 22,700 jobs were lost in the Health Care and Social Assistance industry, despite the coronavirus health crisis! And 23,100 jobs were lost in Wholesale Trade. Jobs were also shed in Agriculture, Forestry and Fishing (-19,900), Rental, Hiring and Real Estate Services (-18,900), and Manufacturing (-16,400) - serving to highlight the uneven nature of the pandemic labour market shock.
The Health Care and Social Assistance (1.8 million or 13.6 per cent) sector remained Australia’s largest employer in November. Retail Trade (1.3 million or 10 per cent), Professional, Scientific and Technical Services (1.2 million or 9.3 per cent), and Construction (1.2 million or 9.2 per cent) fill the other top places for Aussie jobs.
“Employer hiring intentions have improved since the depths of the pandemic crisis in April. In fact, skilled internet job vacancies have lifted for seven successive months with almost 170,000 available jobs posted in November. Victorian vacancies surged by 24.2 per cent in the month as the economy emerged from lockdown. Amazingly, recruitment activity is up 11.2 per cent over the year to November, despite the sharp economic downturn. Annual vacancies were up a staggering 33.3 per cent in Tasmania, with gains of 18 per cent or more in Queensland, the Northern Territory, South Australia and Western Australia.”
Business credit growth remains weak, contracting for a seventh successive month in November. Aussie firms continue to protect their balance sheets and pay down debt amid challenging business conditions, Felsman says.
“Annual business credit growth was the weakest in 8½ years with Australia-China trade tensions, border closures and Sydney’s virus flare up adding to heightened uncertainty.
“That said, Aussie businesses are hiring with job vacancies and advertisements increasing across a slew of leading indicators of job growth, including gauges from the National Skills Commission, ANZ and SEEK. The National Skills Commission recently found that 46.5 per cent of science, technology, engineering and mathematics (STEM) related occupations are considered resilient. Professional, Scientific and Technical Services jobs have been well insulated from the pandemic labour market shock with STEM occupations now sitting at 99.8 per cent of their pre-Covid-19 levels, according to the Commission.”
Lilly Vitorovich 2.42pm: Foxtel, Telstra extend AFL partnership
Foxtel and Telstra have extended their broadcast right deal with the AFL by two years until the end of 2024 season, six months after a similar deal with Kerry Stokes-controlled Seven West Media.
AFL boss Gillon McLachlan said the revised deal, together with Seven West’s contract extension in June, would deliver $946m to the AFL industry over 2023 and 2024.
“After a challenging and at times uncertain 2020, this is a massive vote of confidence in our game at all levels,” he said during a media video call with journalists.
“It provides greater financial certainty in the years ahead and ensures our fans continue to have the ability to watch men‘s and women’s footy wherever they are,” Mr McLachlan said.
Mr McLachlan said he was “very pleased” with Wednesday’s deal, adding that its partnership with Foxtel and Telstra continues to showcase its game to as many people as possible.
“This new deal will also result in a massive boost for sports fans and event goers at Marvel Stadium,” he said.
“Telstra and the AFL will partner with the ambition to make Marvel become one of the world’s most technologically connected and innovative sports and entertainment venues.”
Under Wednesday’s extended agreement, Foxtel will broadcast the 2023 and 2024 AFL Premiership seasons and the AFLW seasons live on subscription television and digital platforms including Kayo, Foxtel Go and Foxtel Now.
Telstra has locked in highlight, replay and on demand rights, and will roll out its latest technology at Marvel Stadium, from booking a seat and parking, and engaging with the game.
The announcement comes six months after Seven West locked-in a two-year contract extension with the AFL for its free-to-air TV network. Seven West and Foxtel also secured revised broadcast deals with the AFL for the 2020 season and the following two years.
At the time, Seven West forecast $87m in net benefits over the existing three-year contract in media rights, production savings and other benefits.
2.00pm: Trump calls for changes to Covid package
President Trump in a tweeted video has criticised the roughly $US900 billion coronavirus relief deal passed by Congress, saying the bill has “almost nothing to do with Covid” and calling for lawmakers to increase direct payments to Americans to $US2000 from $US600.
“I am asking Congress to amend this bill and increase the ridiculously low $US600 to $US2000 or $US4000 for a couple,” he said.
The President’s announcement stunned Washington, where Monday’s deal -- with concessions from both parties -- had capped a bitter, monthslong fight. Democrats said they would press to pass more assistance next year.
The legislation passed both chambers by wide margins -- 92-6 in the Senate and 359-53 in the House -- and had been expected to be signed by the president. If he vetoes the bill, lawmakers would need to either pass new legislation meeting his demand for larger stimulus checks or vote to override his veto, which requires a two-thirds threshold for passage in each chamber.
Both chambers on Monday also passed a seven-day extension of government funding, which Mr. Trump signed early Tuesday morning (US time).
If Mr. Trump doesn’t sign the aid package or have a veto overridden by next Monday the government could shut down.
The president’s announcement also upends a plan announced by Treasury Secretary Steven Mnuchin on Monday for the first batch of payments to go out at the beginning of next week.
The White House didn’t immediately respond to a question about whether the president planned to veto the bill. But the president indicated he wouldn’t sign the current version.
Statement by Donald J. Trump, The President of the United States
— Donald J. Trump (@realDonaldTrump) December 23, 2020
Full Video: https://t.co/avKfYctPAD pic.twitter.com/i8IMLhH53Q
Dow Jones
Eli Greenblat 1.55pm: Monash IVF facing landmark class action
More than 100 men and women who were patients of Monash IVF, one the oldest and largest national fertility clinics, have launched a landmark class action against the company in the Supreme Court of Victoria for destroying potentially viable embryos based on genetic testing technology now thought to be unreliable.
The law firm leading the action believes there could be as many as 1000 victims who had their embryos discarded.
The legal action claims that Monash IVF, Monash IVF Group and a related company Adelaide Fertility Centre (trading as Repromed) may have incorrectly classified potentially viable embryos as abnormal and may have then destroyed these viable embryos.
The possibly unreliable technology used to determined the viability of an embryo under Monash IVF’s care could have been used as much as on 13,000 occasions before its use was stopped.
The class action lawyers will argue the new non-invasive preimplantation genetic testing technology is now known to be significantly less reliable than it was first said to be. The members of the class action are seeking compensation for economic loss as well as pain and suffering, with some of the women and couples fearing they may have lost their chance to ever have children.
1.14pm: Banks lead as ASX up 0.5pc
The benchmark S&P/ASX 200 index pared mid-morning gains to be up 0.5 per cent in lunchtime trade, putting it in course to break a three-day losing streak.
At 1.15pm (AEDT) the index was up 0.5 per cent at 6634.
The ASX has posted three straight sessions of losses, amid coronavirus-forced border curbs and fears on global markets of a fast-spreading new COVID-19 strain. The benchmark index has dropped more than 2 per cent over the past three sessions.
The materials sector was down after falls in the prices of iron ore and gold, but big banks, utilities and tech were higher.
ANZ was up 0.9 per cent, CBA rose 0.72 per cent and NAB was 0.78 per cent higher. Among miners, BHP was down 0.65 per cent.
It came as NSW announced modest changes to its coronavirus restrictions in Sydney, after only eight new cases overnight.
11:30am: Payright slips on ASX debut
Junior buy now, pay later player Payright has seen its shares trade at a discount on its ASX debut on Wednesday, with shares opening at $1 each compared to the $1.20 they were sold at in the initial public offering.
Payright raised $18.5m, including oversubscriptions. On debut the company has a market capitalization of $89.1m
The company was launched in 2016 by co-founders, brothers Myles and Piers Redward. It specialises in both in-store and online buy now, pay later services, but focusses on high-end purchases between $1000 and $20,000, as opposed to lower-value purchases.
The float was backed by Bell Potter, which was lead manager, and Canaccord Genuity and MST Financial were co-managers.
Perry Williams 11.17am: NSW gas plant may be even bigger
Snowy Hydro’s proposed gas plant in NSW’s Hunter Valley may be more than double its original size as the federal and state governments look to prioritise the project ahead of the Liddell coal plant closing in the 2022-23 summer.
Scott Morrison shocked investors in late September after revealing the government-owned Snowy was developing options to build a 350MW gas generator in the Hunter Valley at Kurri Kurri if private investors failed to step up and build new supplies before AGL Energy’s Liddell coal unit closes.
The NSW government - which declared the project critical state significant infrastructure on Wednesday - now says the Kurri Kurri plant could generate up to 750MW of electricity, making it one of the largest gas facilities in the state.
“With another player in the energy market, it increases competition and will help mitigate the closure of Liddell’s coal-fired power station in 2023, putting downward pressure on electricity prices,” NSW Planning Minister Rob Stokes said.
A breakdown at the half century old Liddell plant last week has increased the potential for power blackouts during heatwaves this summer.
The power station would be located on the site of the former Kurri Kurri aluminium smelter which ceased operations in 2012 and has since been demolished.
The Australian Energy Council — which represents power giants AGL Energy, EnergyAustralia and Origin Energy — has previously said the government’s interventionist threat may end up being counter-productive and deter investment.
Snowy Hydro is also considering boosting the size of its two Victorian gas-fired power plants to aid growing renewables generation.
Joyce Moullakis 11.16am: IAG beats raising target
Insurance Australia Group has exceeded its capital raising target by attracting $125.9m from a share purchase plan offered to mum and dad investors.
In an ASX statement on Wednesday, IAG said it had used “its discretion” to surpass the $100m raising target in the share purchase plan to accept $125.9m. That adds to a $650m placement of new stock to institutional investors, taking the total raised before costs to $775.9m.
The share purchase plan will see about 25.3 million ordinary shares issued at $4.97. The new stock under that part of the raising will start trading on the ASX on January 4.
IAG’s statement said the average application amount under the offer was $10,800.
The share purchase plan was part of a broader emergency capital raising launched by IAG last month which included a $650m placement of stock to institutional investors.
LINK: IAG rushes $750m raising after virus test case loss (theaustralian.com.au
The capital raising followed an adverse ruling by the Court of Appeal in NSW on a business interruption insurance test case. AT the time, IAG said it would recognise a post-tax provision of $865m.
Jessica Malcolm 11.02am: Only eight new coronavirus cases in Sydney
Premier Gladys Berejiklian says eight new coronavirus cases were recorded in the last 24 hours following 42,000 tests. Seven of the cases were directly linked to the Avalon cluster and the eighth was from yesterday’s numbers.
Modest changes to Christmas Eve and Christmas Day restrictions have been made, with the northern beaches region largely staying in lockdown and the rest of greater Sydney allowed 10 adult visitors.
The NSW Premier has announced residents in greater Sydney will be able to have more than 10 people in homes on Boxing Day, Christmas Day and the 27th.
People in the northern beaches will be stuck in lockdown with the exception of having five people from within the same area on the 24th, 25th and 26th of December. For the southern part of the northern beaches residents can have 10 people from their home on the condition they do not leave their area.
Ms Berejiklian has announced that all hospitality venues must have the Service NSW app for QR Codes, following issues from alternative tracing applications connected to the northern beaches outbreak.
“By January 1, we want all hairdressers, all hospitality venues to be using the Service NSW app and the Service NSW QR system,” Ms Berejiklian said.
Read more in The Australian’s coronavirus live blog
10.49am: Auctus buys stake in Impact IP
Auctus, the ASX-listed investment group backed by a branch of the billionaire Wilson family, owners of bathroom products giant Reece, is acquiring up to 24 per cent of Impact Investment Partners, an investment manager focused on infrastructure and social infrastructure investments in Australia’s indigenous communities.
Impact IP is currently engaged with a number of potential investors across superannuation funds, family offices and Indigenous fund investors.
Managing director of Impact IP, Chris Croker, said the deal would help “improve Indigenous economic participation and access to infrastructure services such as reliable electricity, clean and safe drinking water, improved health care and act as a catalyst for addressing the long-term disadvantage of indigenous people in Australia.
“The Auctus investment will assist Impact IP to increase our engagement with indigenous communities and delivering on our community-led infrastructure model. Auctus’ experience with aligned social infrastructure investments also complements our expertise in community engagement, funds management and infrastructure delivery.”
Auctus revealed last month that it was raising up to $50m to support the growth strategy of Australasia’s largest family-owned pet specialty retailer, PETstock, which has more than 170 stores across Australia and New Zealand providing products and services for all pet owners.
Auctus has grown to have more than $230m in assets under management, focusing on opportunities across private equity, infrastructure and private real estate.
Auctus’s biggest backer is Wolf Capital, a private investment company established by Bruce Wilson in 2011. Bruce and his brothers Alan and John Wilson and the Wilson family own 67 per cent of the listed Reece Group.
10.15am: Australian stocks open higher
Australian shares have opened up on Wednesday, lifting by up to 0.7 per cent, following a mixed night on global markets.
Wall Street’s benchmark S&P 500 ended the session down 0.7 per cent, while the tech-focused Nasdaq Composite closed up 0.5 per cent and European shares staged a recovery.
Locally, the benchmark S&P/ASX 200 Index opened up 43.6 points at 6643.2 points. The SPI 200 futures index had pointed to an increase of 1 per cent on opening.
At 11am (AEDT) the NSW Government will announce whether to extend a lockdown of Sydney’s northern beaches in a bid to contain a COVID-19 outbreak in the region.
Elsewhere iron ore futures traded in Singapore fell 6.1 per cent on Tuesday as a Chinese exchange tightened trading limits, putting local miners including BHP, Fortescue and Rio Tinto under pressure.
Among local moves A2 Milk is up almost 5 per cent and shopping mall owner Scentre Group is up 2.6 per cent. AGL Energy is down 4.6 per cent and online retailer Kogan.com is off 4.4 per cent.
Santos faces a legal challenge over its controversial Narrabri gas project in NSW with an appeal launched against the Independent Planning Commission’s approval of the development.
Elsewhere, Challenger has entered into an agreement to acquire MyLifeMyFinance, an Australian-based customer savings and loans bank, for an acquisition price of $35m.
The Australian dollar has been little changed in early trade at US75.23c after being sold down on Tuesday.
Over the last five days, the ASX/S&P 200 has lost 0.5 per cent, but is largely unchanged over the last year to date.
Perry Williams 9.47am: Santos faces new Narrabri challenge
Santos faces a legal challenge over its controversial Narrabri gas project in NSW, with an appeal launched against the Independent Planning Commission’s approval of the development.
Judicial review proceedings have been lodged in the NSW Land and Environment Court by Mullaley Gas and Pipeline Accord, a community group, represented by the Environmental Defenders Office.
The case says the IPC failed to consider the environmental impacts of a gas pipeline which has yet to be approved and did not properly consider Narrabri emissions and their impact on climate change.
“Our client will therefore ask the court to find that the approval for the Narrabri Gas Project is invalid,” EDO director of legal strategy Elaine Johnson said on Wednesday.
Santos won approval for Narrabri from the IPC on October 1 and is now undertaking a 12-18 month appraisal program to assess gas resources at the project.
The legal stoush is the second major challenge to a gas project launched this week after the Conservation Council of Western Australia started a legal case against Woodside Petroleum’s Burrup Hub plans in the Supreme Court on Monday.
Woodside plans to send gas from the $16bn Scarborough project offshore WA to expand its Pluto LNG plant and develop the giant Browse gas field to help fill the NW Shelf facility.
The Conservation Council, also represented by the EDO, alleges WA government approvals were given in contravention of the Environmental Protection Act, which requires Environmental Impact Assessment for any developments that would have a significant impact on the environment.
Woodside on Monday said it plans to “vigorously defend” its position.
Damon Kitney 9.45am: Markets ‘underappreciating Covid immunity’
Global sharemarkets are still underappreciating key elements of the recovery, according to the world’s oldest mutual fund, MFS Investment Management.
“There is still much we do not know about the COVID-19 virus and the vaccines in development, such as the long-term safety of those vaccines (which is getting a lot of attention right now),” Nicholas Demko, equity research analyst covering healthcare based in Boston told clients overnight.
“However, the market is really underappreciating the duration of immunity. How long will the vaccine protect you? Many experts today think that somewhere between one and three years of immunity is reasonable, but the reality is that we do not know.
“If immunity lasts only a few months or the virus mutates, the current generation of vaccines might prove ineffective.
“At the industry and sector level there are unknowns related to long-term consumer preference, i.e. we have seen consumer preferences change during the pandemic out of necessity, but they might actually be a better way to do things over the longer term.
“Areas such as airlines and cruises, and hotels are the ones in the headlines, but consumer preference changes could be much more pervasive across every industry.”
He stressed a return to a relatively normal lifestyle was “not going to happen with the flip of a switch.”
“There will be a slow progression; lower-risk activities will likely come back faster than higher-risk,’’ he said.
MFS manages more than $US$489bn globally and $28bn on behalf of Australian investors, including for a range of big industry funds.
9.42am: Omni keeps ‘buy’ rating despite litigation crackdown
Brokerage Goldman Sachs keeps its “Buy” rating and price target of $5.50 on litigation funder Omni Bridgeway despite this week’s release of 31 recommendations to tighten up the class action industry in Australia.
Goldman Sachs says Omni Bridgeway, a global player in litigation funding, can navigate the bulk of the recommendations.
Among key proposals ligation funders would be forced to return a minimum of 70 per cent of proceeds from a case to class action participants.
“Our observation is that regulation is targeting opportunistic funders taking advantage of the light touch regulatory environment in Australia,” Goldman Sachs said.
“We view the most significant of the recommendations as the potential regulation of litigation funding fees, which may limit (Omni Bridgeway’s) returns on Australian class actions or otherwise lower its risk appetite on these cases”.
“We see OBL as well positioned to adapt to the changing regulatory requirements and see it potentially as a net beneficiary as competition may lessen. We highlight that Australian class actions comprise a shrinking part of the portfolio. Going forward, other types of investments in offshore jurisdictions are the growth drivers for the business,” Goldman Sachs said.
Omni Bridgeway last traded at $3.78.
9.20am: Stockland in new venture with JPMorgan
Stockland says it has partnered with JP Morgan Asset Management on a new venture aimed at building a portfolio of industrial and logistics assets worth up to $1bn.
The capital partnership with a special purpose vehicle advised by JP Morgan Asset Management is part of a strategy to broaden capital partnering initiatives and enhance risk-adjusted returns, Stockland said.
“We have a clear goal to introduce third party capital with trusted, quality partners to help fast track the delivery of our development pipeline and expand our acquisition capability, and we’re delighted to have partnered with such a highly regarded, international group,” said Stockland chief executive Mark Steinert.
The venture will be seeded with two properties in Victoria worth a combined total of roughly $110 million.
Dow Jones Newswires
8.35am: Tourism Holdings expects bigger loss
Recreational vehicle company Tourism Holdings said it expects to report a bigger annual loss than analysts currently expect, given upcoming domestic travel in New Zealand looks weak.
Tourism Holdings made the preliminary forecast based on trading in November and early December, which pointed to domestic demand for travel in late January to March being lower than originally expected.
“Given the significant reliance of the New Zealand businesses on international tourism, they are expected to incur the largest loss in fiscal 2021 across our businesses,” Tourism Holdings said.
Elsewhere, Tourism Holdings said vehicle sales in Australia have been positive but it expected to report a negative EBIT result in FY 2021 in the country, albeit to a smaller extent than in its New Zealand business.
In the US, rental revenue in November and early December was higher than a year earlier.
“Given the success of vehicle sales to date and having achieved targeted fleet size, the business is now focused on retaining strong sales margins on lower sales for the remainder of fiscal 2021,” Tourism Holdings said.
Shares in Tourism Holdings were down 5.5 per cent at $NZ2.40 in early New Zealand trading.
Dow Jones Newswires
8.27am: Challenger buys MyLifeMyFinance bank
Challenger says it will acquire Australian-based customer savings and loans bank MyLifeMyFinance for $35m.
It was bought from MyLifeMyMoney Superannuation Fund, also known as Catholic Super.
Challenger says the purchase gives it the opportunity “to significantly expand its secure retirement income offering”.
Following the deal, Challenger will hold an APRA-authorised deposit-taking institution (ADI) licence, giving it access to Australia’s $1 trillion term deposit market.
Challenger says it will initially focus on expanding MLMF’s term deposit offering by replicating its term annuity strategies.
Challenger CEO Richard Howes said: “Adding a digital domestic banking capability to sit alongside our existing life and funds management operations will further broaden the ways in which we provide financial security for retirement and will further diversify our distribution channels.
“Term deposits represent a significant asset class for Australian retirees and entering the market provides an opportunity to play a greater role supporting the retirement incomes of our customers, while also attracting a new cohort of customers.”
The acquisition, which is subject to approval by both APRA and the Federal Treasurer, is expected to reduce Challenger’s FY21 normalised net profit before tax by about $3m.
Challenger continues to expect normalised net profit before tax for FY21 to be within its guidance range of between $390m and $440m.
8.20am: Musk ‘approached Apple about buying Tesla’
Tesla CEO Elon Musk says that he once approached his Apple counterpart about the possibility of the iPhone maker buying the electric-vehicle company.
“During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value),” Mr. Musk said in a tweet. Mr Cook, he said, “refused to take the meeting.”
Apple didn’t immediately respond to a request for comment.
Dow Jones Newswires
During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value). He refused to take the meeting.
— Elon Musk (@elonmusk) December 22, 2020
8.15am: ASX set to open higher
Australian stocks are set to open firmly higher, after European stocks rebounded and Wall Street was mixed.
Shortly after 8am the SPI futures index was up 63 points, or one per cent.
Yesterday, the S&P/ASX 200 suffered a 1.1pc fall to close at a three-week low.
Brent-crude futures dropped 1.6 per cent to $US50.09 a barrel.
Iron ore also retreated, down 5.6 per cent to $US167.00 a tonne.
The gold futures price fell 0.7 per cent to $US1,870.30 an ounce.
The Australian dollar was lower at US75.24.
8.05am: Wall St mainly down amid travel curbs
The Dow Jones Industrial Average fell as concerns about elevated COVID-19 infection levels and a new strain of the virus in Europe overshadowed Congress’S approval of a virus relief package.
The index of blue-chip stocks tumbled about 201 points, or 0.7 per cent, as of the close of trading in New York. The S&P 500 dropped 0.2 per cent, following three consecutive days of losses. The tech-heavy Nasdaq Composite, in contrast, ticked up, rising 0.5 per cent.
Much of the stock market has lost steam this week as some nations began taking steps to curtail travel in an effort to contain the emergence of a fast-spreading variant of coronavirus from England. The UK imposed stringent restrictions on social and business activity, prompting concern that more countries may also be required to adopt measures that would hamper the global economic recovery.
“It would be a brave man to suggest this will just remain a UK-specific issue,” said Derek Halpenny, head of research for global markets in the European region at MUFG Bank. “Are we going back into another phase of more pronounced global lockdowns again?”
Oil prices slipped for a second day amid growing worries over the new restrictions imposed on travellers from the U.K. to other countries. Brent crude futures, the benchmark in international energy markets, dropped 1.6 per cent to $US50.08 a barrel.
A fresh $US900 billion fiscal stimulus package was passed by Congress, ending weeks of anticipation from investors about whether lawmakers could end their stalemate. Even so, the bill’s passage wasn’t enough to propel stocks higher.
“We’ve had the positive news on the vaccines and the fiscal deal, so there’s probably not a catalyst to drive stocks meaningfully higher in the next few weeks,” said Brian Levitt, global market strategist at Invesco.
Still, Mr. Levitt noted that he maintains a positive outlook on equities.
“In my opinion, betting against stocks over the next year and beyond is betting against medicine, science and policy makers, and I’m not willing to make those bets,” he said.
In corporate news, Apple rose 2.9 per cent after Reuters reported that the iPhone maker intends to develop its own self-driving car technology.
Meanwhile, Tesla tumbled 2.5 per cent, extending its losses for the week to more than 8 per cent. The electric-car maker made its S&P 500 debut Monday.
Moves in stocks could be big and markets may be especially choppy in coming days because fewer people are trading as the holiday period starts, said Salman Ahmed, global head of macro at Fidelity International.
Still, there were small signs of optimism. Data from the Commerce Department showed Tuesday that US gross domestic product -- the value of all goods and services produced across the economy -- increased at an annualised rate of 33.4 per cent in the third quarter, slightly stronger than the previous estimate issued last month.
Dow Jones Newswires
6.25am: Google, Facebook accused of teaming up on antitrust action
Facebook and Alphabet’s Google agreed to “co-operate and assist one another” if they ever faced an investigation into their pact to work together in online advertising, according to an unredacted version of a lawsuit filed by 10 states against Google last week.
The suit, as filed, cites internal company documents that were heavily redacted. The Wall Street Journal reviewed part of a recent draft version of the suit without redactions, which elaborated on findings and allegations in the court documents.
Ten Republican attorneys general, led by Texas, are alleging that the two companies cut a deal in September 2018 in which Facebook agreed not to compete with Google’s online advertising tools in return for special treatment when it used them.
Google used language from “Star Wars” as a code name for the deal, according to the lawsuit, which redacted the actual name. The draft version of the suit says it was known as “Jedi Blue.”
The lawsuit itself said Google and Facebook were aware that their agreement could trigger antitrust investigations and discussed how to deal with them, in a passage that is followed by significant redactions.
Dow Jones
6.20am: US sues Walmart over opioid crisis
The Trump administration sued Walmart, accusing the retail giant of helping to fuel the nation’s opioid crisis by inadequately screening for questionable prescriptions despite repeated warnings from its own pharmacists.
The Justice Department’s lawsuit claims that Walmart sought to boost profits, understaffed its pharmacies and pressured employees to fill prescriptions quickly. That made it difficult for pharmacists to reject invalid prescriptions, enabling widespread drug abuse nationwide, the suit alleges.
Walmart, the country’s largest retailer by revenue, has been expecting this complaint and sued the federal government in October to fight the allegations pre-emptively.
In its suit, Walmart accuses the Justice Department and Drug Enforcement Administration of attempting to scapegoat the company for what it says are the federal government’s own regulatory and enforcement shortcomings.
The Justice Department’s lawsuit alleges Walmart created a system that turned its network of 5,000 in-store U.S. pharmacies into a leading supplier of highly addictive painkillers. The allegations date to June 2013, according to the suit.
Walmart started with cut-rate prices on opioids that initially drove shoppers to its stores, the government alleges. Middle managers -- under direction from executives at company headquarters -- pressured their pharmacists to work faster, the suit says, believing that quick-fill prescriptions drew customers to stay and keep shopping.
Dow Jones
6.15am: Credit Suisse told to boost money laundering controls
The Federal Reserve ordered Credit Suisse’s US division to tighten its compliance programs after finding “deficiencies” in oversight of money laundering, according to an enforcement order.
Credit Suisse must submit a written plan to the Fed and the New York Department of Financial Services within 90 days to improve compliance with the Bank Secrecy Act and Anti-Money Laundering rules (BSA/AML) and to bolster risk management generally.
The Swiss bank must undertake a review of all business lines, ensure accurate and comprehensive customer and transaction data and line up adequate personnel and procedures for elevating concerns, according to the agreement.
The plan must provide “timelines, to remediate deficient due diligence” that ensures timely reporting of all violations of law or “suspicious transactions” to authorities and procedures to
ensure timely detection and investigations of such transactions.
AFP
6.12am: Macquarie ups Alaska offer
Alaska Communications System Group said its original bidders for a takeover, Macquarie Capital and GCM Grosvenor, have upped their offer to $US3.26 a share from $US3.20 a share, valuing the deal at about $US325 million, including debt.
The bid is a penny a share higher than a competing offer Alaska Communications disclosed last week.
The two investment firms have increased their bid from about $US300 million, as a “go-shop” period allowed the broadband and information technology-services company to review competing offers.
Dow Jones Newswires
6.10am: European stocks recover from rout
European stock markets rebounded from the sharp coronavirus-related falls seen a day earlier.
Asian stock markets retreated, however, as investors continued Monday’s sell-off, and, in the US, the Dow Jones index in New York also slipped in midday trading.
The US dollar climbed higher however after US lawmakers, as expected, agreed on a massive financial stimulus package.
The pound and crude oil, which slumped Monday on UK virus and Brexit fears, retreated further, but their losses were less pronounced.
As year-end holidays approach, “the playbook for many traders remains to buy every major dip as governments and central banks will keep the support coming next year,” commented Edward Moya, an analyst for the online broker Oanda.
Meanwhile, British Prime Minister Boris Johnson and EU chief Ursula von der Leyen tried to break a logjam over fishing rights with just nine days to go before Britain leaves the EU single market and customs union.
London closed up 0.6 per cent, Frankfurt added 1.3 per cent and Paris gained 1.4 per cent.
AFP
6.02am: US airlines to recall furloughed staff
US airlines say they will rehire workers laid off during the pandemic after Congress passed a new economic relief package, but one large carrier warned that anemic travel demand means long-term employment prospects remain shaky.
After months of partisan wrangling, Congress finally approved the $US900 billion stimulus just before midnight, which includes $US15 billion in airline worker support payments and requires carriers to recall involuntarily furloughed employees, provide back pay and keep the workers on payroll through March 31, 2021.
Executives at United Airlines, which furloughed 13,000 workers, applauded the package, but described the status of rehired staff as temporary.
AFP
5.58am: US consumer confidence drops
US consumer confidence sank in December amid a resurgence of Covid-19, while home sales in November dropped for the first time in six months, according to private data.
The data underscored the faltering economic recovery as the coronavirus death toll spiked over 300,000, which prompted US lawmakers to overcome partisan squabbling and approve a $US900 billion pandemic relief package late Monday.
The Conference Board’s consumer confidence index fell to 88.6 from 92.9 last month, the second consecutive drop, driven by a sharp slide in Americans’ feelings about the present situation.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” The Conference Board’s Lynn Franco said in a statement.
AFP
5.55am: German consumer confidence dips
German consumers’ mood darkened at the end of 2020 due to new restrictions to tame a punishing second wave of coronavirus infections, a closely watched survey showed.
The GfK institute’s forward-looking survey of consumer confidence heading into January dipped to minus 7.3 points, down 0.5 points from its December level, which was revised to minus 6.8 points based on new data.
It was the third decline in as many months for the survey as the economic toll of increasingly strict measures to curb the virus outbreak hits Germans’ pocketbooks.
AFP
5.50am: Norway court rejects challenge to Arctic oil exploration
Norway’s Supreme Court struck down a challenge from environmental groups trying to stop oil exploration in the Arctic, after a historic battle over the country’s climate change commitments.
By a vote of 11 to four, the top court rejected the argument of two organisations -- Greenpeace and Young Friends of the Earth Norway -- which said that the granting of 10 oil exploration licences in the Barents Sea in 2016 was unconstitutional.
Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees celsius above pre-industrial levels, the organisations argued that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.
Their claims have already been rejected in two instances and hopes were finally dashed by the Supreme Court, which delivered the verdict by videoconference.
AFP
5.45am: US Congress approves $US900bn stimulus package
US lawmakers on have approved a $US900 billion relief package for the world’s biggest economy that will provide a long-sought boost for millions of Americans and businesses battered by the coronavirus pandemic.
Overwhelming approval in the Senate and House of Representatives cleared the way for the legislation to be sent to President Donald Trump to be signed into law.
Trump signed a stopgap measure to keep the federal government funded until December 28 and avert a shutdown.
“The American people can rest assured that more help is on the way, immediately,” Republican Senate leader Mitch McConnell said on Twitter.
As the Covid-19 death count rises amid a massive coronavirus resurgence that further threatens the economy, Republican and Democratic legislators have finally hammered out a bill after months of wrangling and partisan finger-pointing.
The deal will spare millions of jobless workers who were days away from seeing their unemployment benefits expire, and provide a new round of cash payouts.
Small businesses will benefit from more government grants, while the package also includes rental assistance and help to families facing eviction.
AFP
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.