Bank of England slashes rates, ASX drops into bear market
The Bank of England has slashed rates by 50bps at an emergency meeting, the latest stimulus as the global banks grapple with the COVID-19 outbreak.
- BoE cuts rates 50bps
- $64bn drop pushes ASX into bear market
- Qantas at multi-year low on Macq downgrade
- Consumer sentiment falls to 5yr low
- Banks are ‘well capitalised’: Debelle
That’s all from Trading Day for Wednesday, March 11. A $64bn share slide cemented the local market firmly in bear market territory - its fastest bear decline in history.
That’s despite a near 5pc recovery on Wall Street overnight, with investors instead taking cues from concern the “major” US stimulus would not go far enough to offset the hit to the global economy. The Bank of England cut its benchmark interest rate in an unexpected move aimed at cushioning the UK economy from the impact of the coronavirus.
All ASX sectors finished the day in the red, led by the major banks, as RBA deputy governor Debelle noted that the bank was poised to start quantitative easing - a move that would squeeze bank margins and profitability. Meanwhile, Westpac’s index of consumer sentiment hit a five-year low.
Max Maddison 8.43pm: Stockland eyes and opening in Melbourne
The country’s largest residential developer Stockland has forged into Melbourne’s apartment market with the acquisition of a $15m site in Brunswick.
The Mark Steinert-led group flagged its intention to build 150 apartments and townhomes on the 4023sq m Albert Street site, adding to its high-rise pipeline that includes sites in Sydney’s Parramatta and Rosebery.
Stockland chief executive of communities Andrew Whitson said the purchase aligned with the company’s “strategic priorities”, which included built-form residential projects in major cities.
“Brunswick is forecast to be undersupplied over the next five years and this project will help us deliver new homes in a desirable, inner-city location as Melbourne continues to grow,” he said. “It will also broaden our customer reach in an established, growing market.
“We’ve taken a disciplined approach to growing our apartments business, focusing on opportunities in locations with strong customer demand.
“We have a clear strategy to leverage our capabilities and diversified business model to create assets to drive security-holder returns, and this project extends our strong communities brand into a deep, established market.”
Glenda Korporaal 8.30pm: Central bankers plan virus response
The Reserve Bank of Australia governor Philip Lowe was due to discuss potential responses to the coronavirus crisis with central bankers on Wednesday night, chairing a crucial meeting of the Bank of International Settlement’s Committee on the global financial system.
Lowe chairs the committee, which monitors developments in financial markets and financial systems, with representatives of central banks in the US, China, Canada, the UK, Europe, South Korea, Mexico, Canada and India.
The regular meeting of the committee, which was set up as a forum for discussing potential threats to the stability of financial markets and the global financial system, comes at a crucial time for central banks around the world as they consider their response to the coronavirus crisis and sharp swings in financial markets.
James Kirby 7.55pm: ASX ‘bear market on speed’
From a red hot market at risk of a “melt up” in early February to a level now of 5725.9 which is more than 20 per cent below the top. That’s a bear market on speed.
You might say we have only landed just millimetres inside the bear pit. True, to be precise the ASX is just 3 points on the wrong side of the line.
But any spell on the market where the nation’s biggest bank, CBA, can fall by 7 per cent in a single session means we are in treacherous waters.
With speculation that banks will struggle to pay full dividends in the coming term, all bank stocks fell on Wednesday. CBA’s 6.6 per cent decline was flanked by ANZ down 5.5 per cent, NAB 6.3 per cent and Westpac 5.3 per cent.
6.35pm: What’s ahead for US, UK markets?
A surprise 50bps cut from the Bank of England is helping FTSE futures higher, suggesting gains of 0.5 per cent on the overnight session.
Meanwhile, US futures paint a starkly different picture - with S&P futures lwoer by 2.4 per cent, with concerns still lingering that US stimulus measures won’t go far enough.
6.06pm: BoE cuts rates to combat COVID-19
Following an emergency meeting, the Bank of England has cut rates by 50 basis points to 0.25 per cent, in a bid to offset the economic disruption from the coronavirus outbreak.
At a special meeting ending today, the bank’s Monetary Policy Committee voted unanimously to cut rates, and to introduce a new term funding scheme that could provide more than £100bn ($198bn) to small and medium-sized enterprises.
“ The reduction in Bank Rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance,” it said.
“Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months.
“Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for short-term credit from households and for working capital from companies. Such issues are likely to be most acute for smaller businesses. This economic shock will affect both demand and supply in the economy.”
The Bank’s three policy committees have announced a comprehensive and timely package of measures to help UK businesses and households bridge across the economic disruption likely to be associated with Covid-19. https://t.co/xdbZqdO3BB
— Bank of England (@bankofengland) March 11, 2020
5.57pm: Telstra coronavirus leave plan
Telstra has outlined a coronavirus leave policy extending paid leave to casual staff. Up to 14 days paid leave will also be provided to where an employee is required to quarantine or self-isolate; where they’re caring for a child if their school or childcare is closed and unable to work from home.
The leave applies to permanent full-time, part-time and fixed-term Telstra employees in Australia and internationally, as well as employees of our wholly owned subsidiaries.
“Paid leave will also be available for our casual employees to cover any regularly rostered shifts that they may miss. This is important because most casuals don’t have the option to work from home or the safety net of sick leave,” Telstra says.
Casuals will also get access to up to 14 days leave paid at their base rate if they are unwell, have carer’s responsibilities or are in quarantine or self-isolation,” Telstra says.
“This is an unprecedented situation – one that requires us to step up, be there for our people and give those who need it most the support and reassurance to get through this difficult time,” Telstra says in a statement.
“For our people who need to be onsite – like those in our stores and contact centres – or out in the field serving our customers, we’ve introduced measures to help reduce their exposure,” the telco adds.
5.22pm: Banks still strong: Comyn
Commonwealth Bank chief executive Matt Comyn, speaking in capacity as chairman of the Australian Banking Association said that “Australia has a very strong financial system with banks that are well-capitalised and have strong balance sheets”.
“Banks have supported the country through difficult times in the past and continue to do so. We are very much open for business,” he said.
Hi comments follow this morning’s meeting with Treasurer Josh Fydenberg and the bank bosses to discuss the coronavirus crisis.
CEO of the Australian Banking Association Anna Bligh said “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible”.
“In particular any business financially impacted by the effects of COVID-19 should contact their bank to be assessed on a case by case basis to access the assistance on offer,” she said.
Banks are offering deferral of scheduled loan repayments for businesses; waiving fees and charges and interest free periods or no interest rate increases.
Bridget Carter 5.19pm: ESR to lift stake in Centuria
DataRoom | Warburg Pincus-backed ESR is securing up to 19.9 per cent of Centuria Group.
The property investor is attempting to buy shares at $2.55 each through Credit Suisse.
Centuria is believed to be advised by UBS and Moelis.
Sources believe that a takeover bid by ESR is not imminent.
More to come
4.48pm: Shares buckle under bank pressure
The prospect of quantitative easing, sooner rather than later, from the Reserve Bank weighed on the major banks, as investors weighed the threat to bank margins and profitability, sending the financial sector down by 5.3 per cent at the close.
Deputy Governor Guy Debelle told a forum in Sydney that the central bank was ready to “act in the government bond market as necessary” to keep yields on government bonds low. That was on top of reassurance that Australian banks were “well capitalised”.
Still, banks fuelled the day’s losses – Commonwealth Bank led the losers with a decline of 6.6 per cent to $68.50 as Westpac shed 5.3 per cent to $19.46, ANZ dropped 5.5 per cent to $19.96 and NAB fell 6.3 per cent to $19.78.
Here’s the biggest movers at the close:
4.13pm: $64bn drop pushes ASX into bear market
Another wild swing on the ASX sent the ASX into bear market territory with a $64bn drop, despite a strong lead from US shares, as the RBA said it was ready to move on unconventional policy.
Optimism fuelled by reports of global stimulus pushed the benchmark ASX200 into positive territory at the open, setting an intraday high of 5972.5, but any gains were short-lived as the US government stopped short of handing down the “major” stimulus that had been foreshadowed by President Donald Trump.
Even the announcement of as much as $20bn in local stimulus did little to rally the local market, shares closing out the session down 214 points or 3.6 per cent to 5725.9.
That’s a 20.05 per cent decline from the benchmark’s 7162.5 record close just 14 days ago.
Meanwhile, the All Ordinaries fell 207 points or 3.44 per cent to 5789.3.
4.07pm: Protests virus double whammy hits Cathay
Cathay Pacific on Wednesday said profits plunged in 2019 as it reeled from political unrest in Hong Kong, while it warned financial losses lay ahead owing to the spread of the coronavirus.
The flagship carrier was hammered throughout the second half of last year as violent pro-democracy protests raged for months in Hong Kong, sparked by widespread public anger at Beijing’s rule.
The protests, which saw battles between police and protesters rage for seven straight months, hammered tourist arrivals into the city, traditionally one of the world’s busiest transport hubs.
On Wednesday the flagship carrier reported an attributable profit of $HK1.7bn ($US220m) for 2019, a significant drop from the $HK2.3bn it made in 2018. And it warned of slipping into the red as airlines around the world suffer the huge travel disruptions caused by the rapid global spread of the deadly coronavirus.
“We expect to incur a substantial loss for the first half of 2020,” chairman Patrick Healy said.
“The outbreak of COVID-19 since January 2020 has resulted in a challenging operational environment, and will adversely impact the Group’s financial performance and liquidity position,” the airline said in a statement.
AFP
Max Maddison 3.57pm: Westpac clears office floor in virus scare
Three employees with suspected cases of COVID-19 have forced Westpac to deep clean two floors at its Sydney headquarters.
It is understood that the employees had developed flu-like symptoms after returning from countries significantly impacted by coronavirus.
In a statement, a spokesman said the bank was currently taking precautions, but employees would return on Thursday morning.
“Westpac is currently taking precautions in relation to [three] employees with suspected cases of COVID-19 at its Sydney head offices. Anyone who has come into close contact with these employees, as well as those who work on the same floor, are now at home,” the spokesman said.
“We are supporting impacted employees and any potentially affected floors are undergoing extensive cleaning which is in line with health authority guidelines during this time.”
Eli Greenblat 3.45pm: ASIC forum officially cancelled
The Australian Securities and Investments Commission has announced it will cancel its annual forum and dinner for 2020, also known as the ‘summer school’, as a consequence of the growing spread of the coronavirus and moves against having public meetings or social gatherings.
A spokesman for ASIC told The Australian this afternoon that the annual forum would now be deferred until later this year, or early next year, given travel issues and uncertainty over attendances.
The ASIC annual forum was to be held at the Sydney Hilton on March 25 and 26 where a range of panels and briefing sessions were set to discuss a host of regulatory and financial issues.
The annual event is a key conference for the finance and corporate sector where discussions are held with regulatory officials and important economic, legal financial matters are discussed.
3.40pm: Is this the fastest bear drop in history?
Australia’s S&P/ASX 200 share index is on the cusp of a “bear market” defined as a fall of at least 20 per cent from the peak of a “bull market”.
After falling 3pc to 5760.6 points today the index is 19.5pc from its record high close of 7162.5 three weeks ago. A daily close at 5730 or lower would constitute a bear market according to the standard definition. This would be the first bear market on the ASX200 since early 2016 after falling peaking 10-months earlier.
If it does this by 19th March, it will be the fastest Australian bear market in history.
Such a move, if it occurs, will highlight the significance of the tightening in financial conditions caused by this selloff, which may be damaging in itself. But of course what matters more than the bear market threshold is whether the fall is sustained.
The oil price shock is one fact that can be resolved quickly if Saudi Arabia and Russia agree to curb supply. But the coronavirus outbreak is not something that can be fixed quickly.
With monetary policy ammunition severely depleted, it remains to be seen if governments will do whatever it takes.
Patrick Commins 3.09pm: Aussie AAA rating not under threat: S&P
Some good news: S&P Global Ratings today said that it believed Australia, and its coveted AAA debt rating, can “weather a temporary economic shock”.
The agency said Australia’s rating was “not under immediate threat from the now likely technical recession and the fiscal cost of the government’s imminent stimulus package following the outbreak of COVID-19”.
S&P’s confidence was based on their expectation that the global outbreak will subside during the second quarter of 2020 and that the economy will bounce back shortly after.
“Further, the country’s [Australia’s] strong fiscal position has provided it with some room to maneuver at the current rating. Nevertheless, tolerance for further weakening at the ‘AAA’ rating level is diminishing, and the rating could come under pressure if weak economic conditions are more prolonged than we currently expect.”
S&P predicts Australia will move into recession by June 2020 - the first since 1991 - before rebounding in the second half of the year. Still, GDP will grow by just 1.2 per cent in 2020 - a full 1 percentage point lower than what S&P had forecast before the coronavirus.
The agency noted that ‘this is the weakest economic outlook in 20 years and means the COVID-19 outbreak would be a greater economic shock to Australia than the global financial crisis, when growth fell to 1.6 per cent in 2008”.
Bridget Carter 3.03pm: Brookfield suspends Dalrymple terminal sale
DataRoom | Brookfield has suspended its sales plans for the $2bn Dalrymple Bay Coal Terminal on the back of international travel restrictions linked to the global coronavirus outbreak.
It comes after travel has been restricted for South Koreans, where there has been a coronavirus outbreak, at the time one of the nation’s major pension funds is believed to be an eager buyer of the Queensland-based terminal.
The company said in a statement that restrictions on domestic and international travel had made it difficult for parties to view the terminal and meet the operational team during due diligence, and similarly difficult for Brookfield to market the asset abroad as the process continued.
Market volatility that would impact the initial public offering was also a factor.
Sources believe that attempts would be made to market the terminal later this year.
3.01pm: ASX sell-off accelerates
Australian shares are plunging on expectations on a severe hit to economic growth from the coronavirus outbreak.
In afternoon trade, the S&P/ASX 200 has dived 2.8pc to 5773.5, putting it on the cusp of a bear market. Major banks are down 5pc-6pc amid downward pressure on interest rates and fees.
The Australian sharemarket market is now falling harder than the US market, with S&P 500 futures down 1.9pc.
It comes as banks announced cuts to fees and payment deferrals for small business customers ahead of a meeting with Treasurer Josh Frydenberg in Sydney on Wednesday.
Sky News has also reported first details of the Australian stimulus package, set to be worth between $15bn and $20bn - that equates to a substantial 1pc of GDP. The package will include one-off cash payments of $500 for some welfare recipients, including pensioners and job-seekers.
But perhaps the market doesn’t think this isn’t enough support for discretionary spending?
Australian 10-year bond yields have dived 10bps to 0.689 today, although they are tracking a 13bps fall in US Treasuries
2.52pm: First local stimulus measures revealed
EXCLUSIVE: Australia’s battlers on Newstart or the pension will each get a one-off $500 payment from the Coalition’s multibillion-dollar coronavirus stimulus package.https://t.co/aP61ssU9CO
— Sky News Australia (@SkyNewsAust) March 11, 2020
2.47pm: ASX sell-off extends to 3pc
The local market sell-off has picked up speed this afternoon as the US reported coronavirus cases had climbed past 1,000.
The director of the US Center for Disease Control and Prevention said some parts of the country were “now beyond containment efforts”.
ASX200 is now down by 173 points or 2.9pc to 5766.
BREAKING: U.S. coronavirus cases climbed past 1,000, according to a Johns Hopkins tally. The director of the Centers for Disease Control and Prevention said some parts of the country are now beyond containment efforts.https://t.co/kkCPcHYmo8 pic.twitter.com/pzFsLNFHS5
— Bloomberg (@business) March 11, 2020
Nick Evans 2.39pm: BHP loses appeal in tax case
BHP has lost its High Court appeal in a $90m tax case over its controversial Singapore marketing hub, with the High Court rejecting the company’s argument its British and Australian arms are not “associates” for the purposes of tax laws.
The decision brings to an end the Australian Taxation Office’s disputes with BHP over the use of its Singapore marketing arm, with BHP shelling out more than $600m in additional tax payments over the last few years.
The latest ATO win was over money earned by the British side of BHP from 2006 for selling commodities mined at operations it owns in Australia – now largely Hunter Valley coal – by the group’s marketing hub in Singapore.
BHP shares last down 2.3pc to $28.58.
Eli Greenblat 2.35pm: Myer chief bolsters holdings amid rout
Myer chief executive John King has again dipped into the market to take advantage of record lows for the share price of the retailer, buying 350,000 shares in Myer for a total of $92,750.
As Myer shares are slammed along with the rest of the market and sit around historic lows, Mr King waded into the market last week after the release of its interim financial result to buy 100,000 shares and has once again picked up more shares.
A statement lodged with the ASX shows on March 11 he bought 350,000 shares for an average price of 26.49 cents each.
Shares in Myer last traded down 5.6pc to 25.5c.
Eli Greenblat 2.20pm: WAM cancels shareholder meetings
Heavyweight investment fund Wilson Asset Management, which has $3bn of funds under management, has cancelled its upcoming major shareholder meeting in May and will instead hold the investor roadshow via video link.
WAM chief executive Kate Thorley has written to more than 80,000 shareholders who invest across the collection of funds, including WAM Active, WAM Research and WAM Capital, that the conference for May would be held online in the wake of the coronavirus outbreak.
“The health and wellbeing of our shareholders and our team are our greatest priorities,’’ Ms Thorley said. “This decision will ensure that if the situation escalates we will not place our shareholders in potential danger, as our semi-annual Shareholder Presentations now cover eight cities where we meet more than 10,000 people.”
Listed investment companies such as those in the Wilson stable as well as others like Amcil and Mirrabooka hold shareholder meetings outside of mandated AGMs to provide a more informal meeting where shareholders can discuss investment issues. Amcil and Mirrabooka have also cancelled their shareholder meetings.
Patrick Commins 2.16pm: NAB stops short of calling 1H recession
Economists are continuing to factor in mounting damage from the virus, which has killed three Australians so far.
NAB on Wednesday downgraded its GDP growth forecast for the first quarter of the year, and now expects the economy to contract by 0.3 per cent, against a prior prediction of a 0.1 per cent fall. The economy will grow by 0.3 per cent in the June quarter, the bank’s economists said.
NAB chief economist Alan Oster said the duration of the disruption from the coronavirus will determine whether Australia avoids a technical recession over the first half of the year.
“Our judgment is the risk has to be that the virus will be a problem for longer and hence there are downside risks,” Mr Oster said.
It will be interesting to see whether any of these predictions change following the release of the government’s fiscal stimulus package tomorrow.
Eli Greenblat 1.25pm: Virus threatens ASIC annual conference
The Australian Securities and Investments Commission annual conference, also known as the summer school, is currently under review and is likely to be cancelled, the latest in a slew of events called off amid the widening coronavirus outbreak.
Hundreds of guests from the corporate, regulatory and investment worlds had been slated to meet at the Sydney Hilton on March 25 and 26, but it is now seen as inappropriate given the growing virus tally and quarantine efforts.
The annual event is a key conference for the finance and corporate sector, seen as a crucial forum for engagement between corporations and regulators.
However, that entire forum is now under review by ASIC with a decision set to be made later this afternoon, but it is likely the forum will be cancelled as fears grow about social gatherings in the wake of the coronavirus outbreak.
A spokesman for ASIC told The Australian the regulator was aware of the health issues and considering the matter.
1.15pm: Citi slashes Aussie growth forecast
Citi has slashed its Australian economic growth forecasts to the cusp of recession because of the global spread of coronavirus.
The US investment bank now sees March quarter growth of -0.25pc vs -0.1pc previously forecast. The June quarter is expected to be flat vs 0.4pc previously forecast. 2020 year average GDP is expected to be 1pc vs 1.7pc.
“Other things being equal, our GDP forecasts would require only a small further negative change in Q2 for Australia to enter a technical recession in the first half of the year,” says Citi Australia chief economist, Josh Williamson.
His forecasts assume that the virus wanes in the September quarter, allowing a 0.5pc rise in GDP, but warns it may hit growth for longer “implying downside to the yearly growth forecast”.
Based on his forecasts, the government would need to deliver total new fiscal support in the March quarter equivalent to at least 0.25 percentage points of GDP, or roughly $5bn.
“We doubt that the current government will want to be the first since the Hawke Government in 1991 to experience a recession on its watch,” Mr Williamson says.
“Avoiding this outcome outranks the goal of achieving a budget surplus in FY20. This assumption suggests that the government will deliver a spending package that seeks to offset its estimate of the hit to growth from the virus.”
Will Glasgow 1.08pm: Mask shares soar after Xi visits Wuhan
Call it the Xi Jinping effect.
Shares in American health and industrial safety firm 3M closed up 6.4 per cent to $US153.30 in overnight trading on the New York Stock Exchange.
The big one day climb followed the release of pictures showing China’s President Xi Jinping wearing a 3M N95 facemask during a highly anticipated trip to Wuhan, his first since the coronavirus was first detected in the central Chinese city more than three months ago.
N95 face masks manufactured by the American giant - valued on the NYSE at $US88bn ($136bn) - remain in high demand in China where local suppliers are still struggling to meet the elevated demand in the world’s most populous country.
On a previous hospital visit in Beijing, President Xi wore a surgical mask, the only other time the Chinese leader’s face has been seen covered during the health crisis.
Read more: China’s economy ‘returning to normal’
1.02pm: ASX at risk of freefall as futures sink
Australia’s sharemarket is at risk of freefall this afternoon, as US futures extend their early decline.
The S&P ASX200 dived as much as 2.3 per cent to daily lows of 5801, tracking a 2.5pc drop on S&P 500 futures, and last traded down
Markets were yesterday boosted by the prospects of “major” US stimulus announced by President Donald Trump, but concerns that it could be delayed are now taking over.
Financials are hardest hit, down 3.1pc, as the big four all trade down between 3pc and 4.5pc.
Qantas is lower by 9pc after a downgrade from Macquarie, while Newcrest is lower by 7.6pc after cutting its production guidance.
12.46pm: Trump to talk virus with banks, tech
President Donald Trump and other White House officials will meet Wednesday with bankers and the representatives of tech companies to discuss how to deal with the spreading coronavirus outbreak.
Trump will meet at 3pm (that is 6am AEDT) with executives from major banks, including Goldman Sachs, Bank of America, Wells Fargo, JPMorgan Chase and Citigroup, the New York Times reported.
While the agenda is not yet clear, the main topic is expected to be the recent volatility on Wall Street and the outlook for businesses.
Separately, representatives of Facebook, Google, Apple, Microsoft, Twitter and Amazon will meet, either in person or remotely, with US Chief Technology Officer Michael Kratsios, according to Politico. Other White House officials may join in.
The topic is expected to how to better coordinate a response to the outbreak, possibly including how to stop the spread of misinformation.
Dow Jones Newswires
12.37pm: Amcor pushes back on short report
Amcor has pushed back against a short-sell report published by Spruce Point Capital Management, a hedge fund manager focused on short selling in the US market.
In a statement provided to media, an Amcor spokesman notes that “Spruce Point Capital Management has a short position in Amcor and therefore stands to realise significant gains in the event that the price of Amcor stock declines”.
“Amcor does not agree with the conclusions reached in the report which includes inaccurate and intentionally misleading statements designed to negatively impact Amcor’s share price for their own financial benefit,” he says.
“Amcor believes investors should take no action based on this erroneous report.”
AMC shares dropped 6.8pc to a 4-year low of $12.63 before recovering to $12.89.
12.36pm: Home loan growth faster than forecast
Home loans have grown in value by the fastest rate since mid-2019, according to January data.
The value of new loans grew by 4.6 per cent to $20.73bn, according to seasonally adjusted Australian Bureau of Statistics figures. The result beat market consensus of 3.0 per cent.
Owner occupiers were responsible for most of the growth. These buyers took on 5.0 per cent more, which resulted in loans of $15.03bn. The bureau’s chief economist, Bruce Hockman, said this category had its eighth consecutive month of uninterrupted growth.
The investor category rose by 3.6 per cent to $5.70bn. Personal fixed term loans increased by 2.0 per cent to $1.83bn. The housing sector has proven immune to the economic consequences of the coronavirus, which is placing strain on many businesses.
AAP
Perry Williams 12.08pm: Energy delays ahead amid oil plunge: Citi
Oil Search could consider raising equity with the plunging oil price putting pressure on spending plans while Origin Energy may delay significant investment until 2022, Citi said.
Crude prices are now down 40 per cent since the start of the year following Monday’s savage sell-off and Citi says oil and gas companies can protect their balance sheets by delaying projects, cutting exploration and reducing payout ratios to shareholders.
Some may still need to look at tapping investors to fund their growth plans.
Oil Search - in the midst of a $20bn plan to double LNG volumes from Papua New Guinea - will likely pursue a $500m equity raising if the expansion project is sanctioned in 2022 even after slashing its discretionary spending.
Oil Search’s PNG LNG project finance debt covenants are also flagged as an issue. However, Citi says they would only potentially be triggered if oil was weak for the entire 2020 calendar year given they are calculated on a 12 month look back basis.
Origin Energy may hold off any significant capital spending in its Energy Markets division and could be limited in its ability to pursue M&A - such as distressed renewables - given oil market pressures.
While Citi forecasts Origin will temporarily breach its 3.0x ND/EBITDA required for the company’s credit rating, it’s likely to focus on trimming capex and weighing its 30 per cent payout ratio and a DRP rather than an equity raising.
Oil Search down 1.8 per cent to $3.30 and Origin up 2.1 per cent to $6.06.
Gerard Cockburn 12.04pm: CBA reduces savings rates
Commonwealth Bank has today reduced rates on savings deposit accounts more than the Reserve Bank’s recent cash rate cut.
The bank reduced the introductory five month rate on its NetBank Saver by 0.35 percentage points, to now offer a rate of 1.3 per cent. That’s compared to a 0.25pc rate cut by the RBA.
The ongoing rate for the savings product has also been slashed by five basis points to 0.05 per cent.
On Monday, CBA cut rates to its Goal Saver and pension savings products by 25 basis points, while slugging youth deposit accounts with a cut of 0.3 percentage points.
RateCity research director Sally Tindall previously said CBA had likely cut youth savings accounts because it was one of the few accounts with something left to cut.
Gerard Cockburn 11.44am: QBE still a buy even as BP cuts target
Bell Potter says the coronavirus could impact QBE Insurance’s global risk-pooling efforts, which in a worst case scenario may result in lower gross written premium growth and investment returns.
The brokerage noted QBE is likely to not be directly impacted by COVID-19, but markets were pricing in the worst case scenario, with shares dropping over 20pc in the last month.
Analyst TS Lim notes the fallout was likely due to softer global gross written premium prospects and risk free rates in QBE’s main currencies heading lower.
But he adds that the negative view hasn’t considered the possibility that QBE may push through rate rises to offset lower volume growth, the potential for a turnaround in reserve releases or that higher net claims ratio could be offset by mark-to-market gains.
QBE is retained at a Buy, with a price target of $12.90 from $16 as Bell Potter takes an “ultra-conservative” approach to its FY20 projections.
QBE last traded at 11.28, up 0.54pc.
11.28am: Qantas at 3yr low on Macq downgrade
Qantas shares are trading at three year lows this morning, down 8.1 per cent after Macquarie downgraded its rating on the stock and slashed its target by 39pc amid the coronavirus uncertainty.
Macquarie analysts forecast a 41 per cent slide in profit for the full year to $774m, weighed down by a break-even result in the second half.
The downgrade comes a day after Qantas unveiled deeper capacity cuts across its network, and chief Alan Joyce pledged to go without pay for the rest of the financial year.
Macquarie notes that the airline’s balance sheet was resilient, but that the share buyback had been cancelled.
“With the prolonged impact of COVID-19 unclear and the high level of operating leverage, we have taken a more cautious view given timing stabilisation or a recovery is unclear,” the broker says.
“As such, we cut our rating to Neutral. That said, we remain comfortable with Qanats’ balance sheet position and potentially see an improved market structure in domestic/international in the medium term, which would support longer-term share price upside.”
QAN last down 8.1 per cent at $4.08, after touching a low of $3.85 early in the session.
11.14am: Banks lead decline as yields fall
The local sharemarket has dropped as much as 2 per cent this morning, on disappointment at the lack of a US fiscal stimulus announcement today.
That’s tracking a 1.5pc fall in S&P 500 futures.
Banks were pummeled with the majors down 2.5pc to 3.9pc amid renewed downward pressure on interest rates. Australian and US 10-year bond yields have fallen 5bps - likely because if fiscal stimulus is lacking the Fed will need to do the heavy lifting.
The local market had been expected to open up 1pc after the S&P 500 rose 4.9pc overnight. But hope evaporated after Trump failed to announce a “major” fiscal package as promised yesterday.
The S&P/ASX 200 has no technical support until Tuesday’s low of 5538.9.
It could fall all the way to the December 2018 low at 5410 - 7.4pc below the current level.
That’s equivalent to the 5335 level on the SPI which held on Monday night.
11.03am: Helloworld withdraws guidance, pay cut
Helloworld Travel is the latest to suspend its guidance as the coronavirus outbreak worsens, pledging salary cuts from its senior management to stem the damage.
After similar moves from Webjet this morning, Helloworld said its chief Andrew Burnes would take a 30pc salary cut for hte rest of the financial year, while its board will take no fees and executive salaries will be trimmed by 25pc.
In addition, its employees are being asked to take paid or unpaid leave, and all non-essential recruitment has been halted.
The group reassured the market its was in a strong position, with low debt levels, an extended debt maturity profile, significant cash reserves and undrawn facilities.
“Over the last two weeks we’ve seen a steady decline in bookings in some parts of our business, particularly cruise, inbound to Australia, wholesale to Asia and Europe and in corporate international travel,” Mr Burnes said.
“We’ve seen cancellations increase in these areas and we anticipate lower demand to continue in to Q1 and possibly Q2 FY21 so we are taking action now to reduce our costs to sustainable levels based upon what we are seeing in the market in Australia and New Zealand at present.”
Read more: Webjet pulls guidance, CEO takes pay cut
Eli Greenblat 10.53am: EG Group courts Oliver’s Real Food
Struggling healthy food retailer Oliver’s Real Food, which has suffered a string of profit warnings and a collapsing share price in the last few years, has received a non-binding, conditional and incomplete takeover proposal from UK investor EG Group.
The offer is to acquire 100 per cent of the shares in Oliver’s via a Scheme of Arrangement for total cash consideration of 10 cents per share, valuing the company at around $20m.
Shares in the chain last traded at 6.5 cents.
“After careful assessment, the board of Oliver’s has determined that engaging further with EG Group is in the best interests of shareholders,’’ the company said in an ASX statement this morning.
The proposal is subject to conditions including, but not limited to mutually agreeable transaction documents, court and shareholder approvals, regulatory approvals, unanimous support of the Oliver’s board, a call option over 19.9 per cent of the company’s at the proposal value and other customary deal protection mechanisms.
Remember, EG Group was in the hot seat to buy Caltex just last month, but had its offer rejected by the service station operator at the start of the month.
10.41am: Consumer sentiment falls to 5yr low
The worsening coronavirus outbreak, along with haemorrhaging financial markets have served a blow to consumer sentiment, sendign it to its lowest levels in five years.
The Westpac index of sentiment fell 3.8pc to 91.9 in March, from 95.5 in February.
Chief economist Bill Evans notes that it is the second lowest level of the index since the GFC, when the index bottomed out at 79.
“The survey detail shows consumers are rightly concerned about the near term outlook for the economy but are less perturbed about their finances or the longer term outlook for the economy,” he notes.
“That is consistent with the notion that virus-related disruptions will be large but temporary.”
Richard Ferguson 10.37am: Travel ban extended to Italy
Scott Morrison is implementing a travel ban on foreign nationals leaving from Italy.
The same travel restrictions in place for China, Iran and North Korea will be put in place for Italy from 6pm on Wednesday.
“Italy itself has effectively put itself into lockdown with travel now, and this largely closes that loop. We already had the enhanced screening measures that are in place,” the Prime Minister said.
Follow the coronavirus live blog here
Richard Ferguson 10.35am: PM to unveil stimulus package tomorrow
Scott Morrison confirms that he will unveil his coronavirus economic stimulus package on Thursday.
“It’s a health crisis. It’s a health contagion,” he said in Canberra.
“There are many other implications of this and the economic consequences of this are very serious, as I’ve already outlined on numerous occasions. And tomorrow, the Treasurer and I will be making announcements in relation to that response.”
The Prime Minister is currently outlining his $2.4bn health response to the rolling virus epidemic.
The health package includes more than 100 fever clinics rolled out across the country and allow people experiencing symptoms to stay home and charge GP audio and video calls to Medicare.
Read more: PM’s clinical reaction to virus outbreak
10.31am: ASX decline picking up speed
The drop in Aussie shares is picking up speed, tracking a similar decline in US futures, as investors were disappointed US President Trump didn’t announce a “major” fiscal package today as promised.
The S&P/ASX 200 index is down by 1.7pc to 5835 in early trading after surging 3.1pc on Tuesday, its best day in 3.5 years. S&P 500 futures are currently down about 1.2pc.
Expectations of imminent US fiscal stimulus will linger after White House economic adviser Larry Kudlow said he’s working on the details “right now” and will outline those details “in the near future”.
But after such strong gains in Australian and US shares yesterday, the risk is for a renewed slide in the meantime, particularly given the worsening coronavirus outbreak and credit risks from the the price war in crude oil.
10.28am: Trump’s tax cuts face Democratic resistance
President Donald Trump’s proposed payroll tax break met with bipartisan resistance Tuesday on Capitol Hill as pressure mounts on the administration and Congress to work more vigorously to contain the coronavirus outbreak and respond to the financial fallout.
Flanked by his economic team, Trump pitched his economic stimulus ideas privately to wary Senate Republicans on another grueling day in the struggle against expanding infections. Fluctuating stock markets rebounded but communities discovered new cases and the two top Democratic presidential candidates, Bernie Sanders and Joe Biden, canceled Tuesday primary night rallies in Ohio.
The president’s GOP allies have been cool to additional spending at this stage, especially for cutting taxes that would have to be reimposed later - presumably after the November election. Democrats prefer their own package of low- or no-cost virus testing, unemployment insurance and sick pay for workers struggling to keep paychecks coming as the outbreak disrupts workplaces.
“We’re taking this unbelievably seriously,” Trump said after his meeting at the Capitol. “It will go away, just stay calm.”
Dow Jones Newswires
10.17am: Shares dismiss Wall St recovery
The local market has shrugged off the strong Wall Street lead, pulling lower by 0.6 per cent early after US authorities said plans for its stimulus were still being made.
Early estimates were for a 1.6 per cent gain on the ASX200 but shares opened down 0.6pc or 35 points to 5904.4.
Banks are in focus after comments from the RBA’s Guy Debelle that they were “well capitalised” but the prospect of quantitative easing by the bank is dominating, sending shares down by around 0.9pc.
Eli Greenblat 10.01am: Amcil, Mirabooka cut meetings amid outbreak
The coronavirus outbreak is starting to disrupt shareholder and company meetings, with the $250m listed investment company Amcil one of the first publicly listed companies to put off a meeting on health concerns.
Amcil, which is part of the multibillion dollar stable of listed investment companies that includes the nation’s biggest LIC, Australian Foundation Investment Co, was to hold a regular shareholders meeting on March 17 in Melbourne. But now Amcil has taken the decision to cancel that meeting, alerting its shareholders this morning that the meeting had been cancelled.
“The Board is conscious shareholders like to hear from the company as part of its communications program during March, particularly in these volatile market conditions,’’ it said in an ASX statement.
“Given the current health and safety concerns with the Coronavirus, it has been decided to cancel the Melbourne Shareholder meeting.”
Mirrabooka, which is another LIC and a stablemate to Amcil, has also this morning alerted investors that its round of shareholder meetings across the country to be held later this month will also be cancelled.
BREAKING NEWS ... it has begun. ASX companies are starting to cancel shareholder meetings due to coronavirus fears. This morning Amcil and Mirrabooka among the first @aus_business @australian pic.twitter.com/JrMYemqNP9
— Eli Greenblat (@EliGreenblat) March 10, 2020
9.58am: ASX futures suggest reversal
S&P/ASX 200 futures have reopened 1.4pc down at 5490.
This follows a similar fall in US futures after the US didn’t announce the mooted fiscal package today. This means the Australian share market won’t rise as expected today.
Michael Roddan 9.51am: RBA poised to launch QE
The Reserve Bank is poised to launch a program of unconventional monetary policy, with the central bank’s deputy governor Guy Debelle pledging to “act in the government bond market as necessary” to keep yields on government bonds low.
Appearing at a business forum on Wednesday, Dr Debelle said “there are scenarios where we are certainly going to have to consider” a quantitative easing-style program of government bond buying as the RBA’s official interest rate careened towards zero.
“We need interest rates to be low for a sufficiently long period of time,” Dr Debelle said.
“We would talk about the likely future path of interest rates ...to validate that we’d be operating in the government bond market as necessary,” he said.
It is likely the RBA would adopt a program where it would buy enough government bonds to maintain yields at a desired level, which would encourage investors to pour money into more productive assets.
9.40am: Amcor targeted in short attack
Amcor shares are set to come under pressure in today’s session, after a US short seller tipped as much as 60pc downside for the packaging company and likely credit downgrade.
The dual-listed company fell to a record low of $US8.49 in US trade, after touching 12-month lows of $13.15 on the local market yesterday.
Spruce Point Management was behind the short sell, tipping a 40pc to 60pc downside for the company, saying it was “able to disprove or question a majority of its promotional selling points”.
“We also believe Amcor is obscuring significant financial strain (organic revenue decline 3.0pc – 4.0pc, cash overdrafts and cash flow contraction) that will place its dividend and BBB investment grade credit rating at risk.”
AMC last traded at $13.53.
People should look at the Westrock $WRK / Kapstone deal as a case study how $AMCR will play out. Comparable size, leverage, dividend, credit rating. Once revenue strain became obvious, Westrock's multiple contracted to 1x. We think $AMCR is declining faster and will be re-rated pic.twitter.com/GXeTMI127W
— Spruce Point Capital (@sprucepointcap) March 10, 2020
9.33am: Lack of US stimulus to restrain lift
Australia’s share market is set to regain 6000 points today amid a growing fiscal response to the coronavirus outbreak, but could fall short as US stimulus hopes fade.
Overnight futures relative to fair value suggested the S&P/ASX 200 will open up 1pc at 6000 points after bigger-than-expected gains on Wall Street. But that’s before US stock index futures turned down after comments from the White House showed it didn’t have a fiscal package worked out yet.
Overnight, European sharemarkets lost ground with Spain and Italy down more than 3pc amid the worsening spread of the virus in those countries. But the S&P 500 rose 4.9pc to 2822.2, exceeding a rise of just over 3pc that was priced in by the Australian market yesterday.
Crude oil was a positive for equities as Brent and WTI rose 10pc on cost cuts by US producers which may lessen supply. But that doesn’t help the risk of default on US energy sector junk bonds.
Bloomberg says oil lobbyists have called on Trump to buy crude oil for the US oil reserve. But the main concern is that Saudi Arabia confirmed a price war last night by announcing a 27pc lift in supply to 12.3mbd and Russia said it can boost production by 500mbd.
There’s also a risk of renewed selling of risk assets today as it looks like the US will not announce a “major” economic package today as promised by President Trump. White House economic adviser Larry Kudlow said he’s working on the details of an economic package “right now”.
This news has triggered a renewed selloff in US stock index futures with S&P 500 futures turning down 1.1pc this morning.
Michael Roddan 9.28am: Banks are ‘well capitalised’: Debelle
Australia’s banks are “well capitalised”, in a “strong liquidity position” and will be “resilient to a period of market disruption”, according to Reserve Bank deputy governor Guy Debelle.
Speaking to a business forum on Wednesday morning Dr Debelle said the Australian banks had raised a significant amount of wholesale funding before the disruption to financial markets and deposits flowing into bank accounts were “robust”.
“Spreads on Australian bank bonds have widened, although yields remain at levels that are still very low historically. We have not seen any particular sign of pressure in our daily market operations to date,” Dr Debelle said.
“The spread between the bank bill swap rate and the expected policy rate (OIS) has risen in recent days but remains low, nothing at all like what occurred in GFC,” he said.
Dr Guy Debelle, Deputy Governor, Reserve Bank. Too uncertain to assess the impact of the virus beyond the quarter. Tourism and education taking a hit.
— Michelle Anderson (@interface2learn) March 10, 2020
Positive sign is traffic congestion rising again in China. #AFRsummit2020 pic.twitter.com/KBbF7WNUHG
9.24am: Newcrest trims production guidance
Gold miner Newcrest has trimmed its production guidance fro the year full year, citing disappointing performance at its Lihir and Telfer mines.
The updated guidance for FY20 is now for 2100koz to 2200koz, also weighed by the divestment of the groups Gosowong operation.
“Lihir has been challenged by difficult mining and geothermal conditions, leading to a sub-optimal blend of ore feed to the plant. Operating improvements planned at Lihir for the remainder of FY20 will be insufficient to address its shortfall in production,” chief Sandeep Biswas told the market.
That’s as the company confirmed high grade mineralisation at its Red Chris site, with studies now underway to investigate the potential of starting exploration decline by the end of the calendar year.
9.12am: Virus unlikely to hit PolyNovo
Biotech PolyNovo has moved to reassure investors amid the widening coronavirus panic, tipping little impact from the virus on its business or sales.
The company, which develops a burns treatment used to treat victims of this summer’s bushfire crisis, said it did not source raw materials from China or anticipate any significant supply chain disruption.
It said it had sufficient inventory of its products on shelf in the Melbourne, New Zealand and the US, and adequate stocks in the UK and EU to meet anticipated sales “for a significant period”.
“We are taking a disciplined approach to the virus and we are careful to be realistic and not have undue optimism. We are vigilant about our business and will adapt to any changes at short notice and as they arise, taking decisive action if require,” chief Paul Brennan said.
PNV shares last traded at $2.06, down from recent highs of $3.28.
9.01am: What’s on the broker radar?
- AGL Energy raised to equal-weight - Morgan Stanley
- Alumina price target cut 17pc to $1.90 - Goldman Sachs
- Bendigo and Adelaide Bank raised to Neutral - JP Morgan
- Blackmores cut to Hold - Morningstar
- Coca-Cola Amatil raised to Neutral - Credit Suisse
- Dexus raised to Overweight - Morgan Stanley
- Fortescue raised to Overweight - Morgan Stanley
- IDP Education raised to Buy - Blue Ocean
- Insurance Australia raised to Buy - Bell Potter
- Nanosonics raised to Hold - Bell Potter
- QBE Insurance price target cut 19pc to $12.90 - Bell Potter
- South32 raised to Buy - Goldman Sachs
- Sydney Airport raised to Neutral - JP Morgan
- Tabcorp raised to Outperform - Credit Suisse
8.53am: Computershare forecasts hit as rates cut
Computershare has cut its earnings per share guidance by 15 per cent, citing a hit from larger-than-expected rate cuts in the US and Canada.
The company which generates income from the funds sitting in its trust accounts, said its margin income revenue for the financial year would be around $185m, down from $245m last year.
As such, it said it was revising its FY20 management EPS to be down around 15pc.
”Recently, interest rates in the US and Canada have been cut by 50bps. Interest rate expectations for the remainder of FY20 have also fallen in the markets where our balances are material,” chief Stuart Irving said.
In its interim results last month the Computershare re-iterated guidance for EPS to be down around 5 per cent for the full year.
8.45am: Webjet boss takes 20pc pay cut
Webjet managing director John Guscic and the board of directors of the company will take a 20 per cent pay cut with immediate effect, in a bid to shore up the travel companies balance sheet amid the spread of coronavirus.
Just a day after Qantas chief Alan Joyce announced he would forfeit three months of his salary, Webjet said Mr Guscic would forgo any bonus for the financial year and voluntarily reduce his salary by 20pc.
That’s as the company withdrew its full year earnings guidance
“Webjet is taking careful steps to mitigate the impact of Covid-19 including the implementation of a company-wide cost reduction programme to minimise operating expenditure, which is expected to result in $10m in savings for the remainder of FY20,” the company said.
“Other initiatives are being implemented to ensure the company retains its strategic and competitive advantage when conditions normalise.”
7.40am: Gold falls back
Gold slid over 1.5 per cent on Tuesday, backing off the $US1,700 ceiling hit in the previous session, as expectations of global policy measures to alleviate the economic impact from the coronavirus eased some investors’ concerns and lifted share markets.
Spot gold lost 1.6 per cent to $US1,653.33 an ounce. US gold futures settled down 0.9 per cent at $US1,660.30.
“With the volatility that we had in the US equity markets in the past few days, we are seeing some people lightening up on gold a little bit,” said Michael Matousek, head trader at US Global Investors.
“When you are trying to keep a proper allocation across your investments, you need to sell a little bit of gold and buy a little bit of S&P and that’s what you’re seeing right now. People are rebalancing portfolios.” Bullion rose as much as 1.7 per cent on Monday to its highest since December 2012 at $US1,702.56 after a rout in global equity markets and crashing crude oil prices.
Reuters
7.39am: Oil jumps 8 per cent
Oil prices jumped more than 8 per cent overnight, bouncing from the biggest rout in nearly 30 years as the possibility of economic stimulus encouraged buying and US producers slashed spending in a move that could cut output.
US shale producers, including Occidental Petroleum Corp, deepened spending cuts that could reduce production.
“There was almost an immediate response from US producers to cut spending that will likely result in diminished US oil output in the months ahead,” said John Kilduff, partner at Again Capital LLC in New York, noting “The rapidity of that response helped buoy the market after Monday’s collapse.” Oil plunged about 25 per cent on Monday. It rebounded on Tuesday along with equities and other financial markets.
Brent futures rose $US2.86, or 8.3 per cent, to settle at $US37.22 a barrel. US West Texas Intermediate (WTI) crude rose $US3.23, or 10.4 per cent, to settle at $US34.36.
Reuters
7.20am: US airlines cut capacity
US Airlines detailed the growing impact of the coronavirus by cutting more flights in domestic and international markets, parking planes, freezing hiring and reducing executive pay.
American Airlines Group and Delta Air Lines joined United Airlines Holdings on Tuesday in slashing the number of flights across their networks, with some cuts extending through the summer, as cancellations overtake new bookings in some markets because of passenger fears about travelling.
The virus’s rapid impact on demand has sent airlines reeling. Most carriers in the U.S. have withdrawn their financial guidance for the year and suspended share buyback programs, among other measures. Airlines are now preparing for the prospect that recovery could take months, rather than the quick bounceback many had initially anticipated.
“This is a fear event,” Delta CEO Ed Bastian said Tuesday at an industry conference that was webcast, rather than being held live. He said he expects demand will continue to erode in the near term.
To cope, Delta will park some planes, cut international capacity as much as 25 per cent and domestic capacity as much as 15 per cent, and also defer $US500 m in capital expenditures. It may consider retiring some planes early.
American said it plans to cut domestic flying by 7.5 per cent by decreasing frequencies in markets where it operates many flights. It will reduce international flying by 10 per cent for the summer peak travel season.
Airline shares have fallen more than 30 per cent in the past two weeks, but they rose sharply Tuesday afternoon after carriers outlined planned cuts and cash-raising options. American shares gained 16 per cent, United’s rose 15 per cent and Delta shares were up 4 per cent.
7.05am: Wall Street bounces back
US stocks rose in frenetic trading Tuesday after a stunning sell-off at the start of the week hit major indexes with their biggest one-day declines since the financial crisis.
Tuesday’s session was a volatile one. The market opened sharply higher, with the Dow Jones Industrial Average soaring nearly 1000 points within the first few minutes of the opening bell. Stocks then erased the entirety of their gains before midday, only to charge higher again in the final hours of trading.
The S&P as of 4pm. Eastern time was up 4.9 per cent. At its lowest point Tuesday, the index was just 0.9 per cent away from ending an 11-year bull market run that overcame issues ranging from a global trade war to the first-ever downgrade of the US credit rating.
The Dow industrials, which came as close as 0.2 per cent away from a bear market – or a 20 per cent drop from a recent high – wrapped up the trading day 1165 points, or 4.9 per cent, higher to 25016. The Nasdaq Composite Index rose 5 per cent.
To many analysts, the back-and-forth playing out across markets suggested riskier assets are still in the midst of a tenuous recovery that may take days or weeks to fully unfold.
Many took some comfort from government officials’ plans to help offset an anticipated slowdown in economic activity due to the coronavirus epidemic: White House officials are considering potential measures including a payroll-tax cut and help for hourly wage earners, while Japan’s government unveiled a multibillion-dollar plan to help businesses that have been affected by the coronavirus. But analysts warn those measures may not be enough to ease investors’ anxieties, especially with health officials suggesting the number of coronavirus cases is likely to continue rising around the world.
Dow Jones Newswires
6.45am: Insurers pledge help
Major insurers pledged to cover coronavirus tests at no cost to patients at the White House Tuesday, but those assurances – while welcome – may not resolve public concerns about testing.
For one, insurers can’t control the availability of the tests themselves. While the capacity for labs to test more patients is growing daily, the U.S. still has nowhere near the capacity for millions of tests that public health officials say are needed.
What’s more, a test for the virus is only part of diagnosing and treating a patient. Other tests and scans may be needed, not just the coronavirus test. And if a patient requires treatment for viral illness, that would involve additional costs.
CEOs of major health insurance companies such as UnitedHealth, Anthem, and Humana, along with the leaders of industry trade groups like the Blue Cross Blue Shield Association, met with President Donald Trump and Vice President Mike Pence to underscore commitments that the companies have been announcing individually in recent days.
Pence said the industry representatives agreed that coronavirus tests would be covered at no cost to patients, and to cover telemedicine related to the outbreak.
AP
6.44am: Hydrogen power plan
The federal government is taking steps toward a new hydrogen power source in central Queensland as part of its ongoing goal to shore up energy supplies and investment in renewable sources.
A $1.25m feasibility study will be announced by the federal government on Wednesday for a small-scale test station, alongside the Stanwell power plant near Rockhampton.
Australian Renewable Energy Agency CEO Darren Miller told The Courier Mail on Wednesday the decision could help pave the way for Australia to become a leader in renewable energy exports.
AAP
6.35am: Trump pitches payroll relief
President Donald Trump pitched his proposed payroll tax break Tuesday on Capitol Hill as pressure mounts on the administration and Congress to work more vigorously to contain the coronavirus outbreak and respond to the financial fallout.
Trump’s economic team joined in presenting the economic stimulus package privately to wary Senate Republicans, who have been cool to additional spending at this stage. Democrats are preparing their own package of low-cost virus testing, unemployment insurance and sick pay for workers struggling to keep paychecks coming as the outbreak disrupts workplaces.
“We’re taking this unbelievably seriously,” Trump said after his meeting at the Capitol. “It will go away, just stay calm.” Asked why he has not yet been tested for the virus, after having been in close contact with several advisers and members of Congress who are now self- quarantined after exposure, Trump said: “I don’t think it’s a big deal” and “I feel very good.” White House officials have been blindsided by the president’s sudden moves. As Trump headed to Capitol Hill, two administration officials said the proposals he was putting in play had not been completed. They were unauthorised to discuss the planning and requested anonymity.
AP
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