Banks boost ASX as Westpac jumps

Major banking stocks pushed the ASX 200 to finish firmly higher, as Westpac clocked its best one-day rise in nearly four months.

Shares in the major banks are surging after Treasurer Josh Frydenberg flagged changes to responsible lending laws.

• Banks rally on lending law changes
• GS, JPM trim US GDP forecasts
• Premier profit lifts 29 per cent

That’s all from Trading Day for Friday 25 September.

A spike in the big four banks added 56 points to the ASX 200 on Friday, prompted by an announcement by the federal government that lending obligations would be eased in a bid to help boost the economy.

That marked the third consecutive daily rise for the banks index – the first three day rise since mid-August – after the sub-index hit a 4-month low on Tuesday.

The lift on the local index in Friday’s trade came after Wall Street clocked a modest gain overnight in choppy trade, while European markets fell on worsening coronavirus trends.

Damon Kitney 5.39pm: Packer considered share sale to Suncity: inquiry

James Packer’s private company considered selling a strategic shareholding in Crown Resorts to one of its high roller junket operators, SunCity, in a deal that would have allowed the controversial Hong Kong group to avoid probity and shareholder approvals.

A public inquiry into Crown was told on Friday that a sale of a 19.9 per cent stake in Crown by Mr Packer’s Consolidated Press Holdings (CPH) to SunCity, which has been shown to have links to organised crime, was considered by CPH executives last year as one of three options for the holding, that also included a full takeover offer for Crown by Lawrence Ho’s Melco Group.

A 19.9 per cent stake was eventually sold to Melco for $1.8bn at the end of May.

Read more

5.02pm: ASX gains with boost from Westpac

A surge in the major banking stocks pushed the local sharemarket to finish Friday’s session firmly higher, as Westpac clocked its best one-day rise in nearly four months.

After a 15-point jump in the closing match, the ASX benchmark S&P/ASX 200 closed 89 points higher, or up 1.51 per cent, at 5964.9 points, rounding out a 1.7 per cent rise for the week. The index peaked at 5973.7 during the session, in what was the highest point in just over 2 weeks.

The broader All Ordinaries index had risen 84 points, or 1.39 per cent, to 6140.5 points.

A spike in the big four banks added 56 points to the ASX 200 on Friday, prompted by an announcement by the federal government that lending obligations would be eased in a bid to help boost the economy.

That marked the third consecutive daily rise for the banks index – the first three day rise since mid-August – after the sub-index hit a 4-month low on Tuesday.

The lift on the local index in Friday’s trade came after Wall Street clocked a modest gain overnight in choppy trade, while European markets fell on worsening coronavirus trends.

“Global share markets fell again over the last week on concerns about rising coronavirus cases, tightening social distancing restrictions in Europe and the lack of progress towards additional fiscal stimulus in the US,” said AMP Capital chief economist Shane Oliver.

“Australian shares managed a decent gain through the week with banks boosted by the Government moving to relax the responsible lending laws and strong gains in health, utility, industrial and consumer shares.”

Westpac closed 7.4 per cent higher at $17.58 on Friday in its best close in two weeks. Shares in the company slumped as much as 2.5 per cent before closing down 0.1 per cent on Thursday, following news the bank had received $1.3bn Austrac fine.

NAB and ANZ both had their best day four months on Friday, with NAB gaining 6.9 per cent to $18.37 while ANZ lifted 6.3 per cent to $17.93. It was the best one day rise in two months for Commonwealth Bank, which lifted 3 per cent to $66.13.

Bendigo grew 4.8 per cent to $6.38 while Bank of Queensland swelled 2.8 per cent to $6.21 and Suncorp put on 1.8 per cent to $8.59.

Meanwhile Macquarie was flat at $121.67 and AMP lost 0.7 per cent to $1.35.

The listed mortgage brokers also made gains with Australian Finance Group up 9.2 per cent to $1.96 while Mortgage Choice stepped up 9 per cent to 91c. Elsewhere mortgage insurer Genworth surged 10.2 per cent to $1.57.

Among the major miners, BHP closed 1.9 per cent higher at $37.60, while Rio Tinto edged up 0.8 per cent to $98. Fortescue inched 0.3 per cent lower at $15.91.

Retailer Premier Investments lowered 0.7 per cent to $19 after the company unveiled a slip in revenue. Elsewhere among the discretionary retailers, Harvey Norman lifted 0.9 per cent to $4.58 while JB Hi-Fi put on 0.3 per cent to $47.59 and Myer lost 2 per cent to 23c.

Consumer staples stocks backtracked, with Woolworths down 0.2 per cent at $37.80 as Coles lost 0.2 per cent to $17.48.

The Australian dollar was trading 0.28 per cent higher at US70.65c in late trade.

Ben Wilmot 4pm: Property to benefit from lending law shake-up: analysts

The property sector is in for a boost from federal Treasurer Josh Frydenberg’s easing of responsible lending laws introduced the wake of the global financial crisis with major developers best positioned.

The treasurer on Friday unveiled a move to remove barriers to the flow of credit to households and small businesses and lift the accessibility of credit for borrowers, with less stringent assessment of expenditure information.

Banks would be policed under less prescriptive prudential lending standards currently overseen by APRA, while eliminating the stricter ASIC lending rules.

Penalties for lenders would also be removed if borrowers mislead on loan applications, with income and expense information provided by borrowers a key determinant in credit applications.

Macquarie analyst Stuart McLean said the changes were a positive for the residential markets at time when there is an increase in owner occupier credit availability but a decrease in investor credit availability.“While it is uncertain how the above announced changes from the Treasurer will impact the flow of credit, we believe it would be a marginal positive … particularly around timeliness of approvals,” he said.

But consumer advocates have responded more cautiously to the changes. CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Financial Rights Legal Centre, in a joint statement said it would remove credit protections for borrowers.

Lachlan Moffet Gray 2.44pm: Woolies emissions plan gets a tick

Supermarket giant Woolworths is Australia’s first retailer to have its emission reduction plans verified by a UN-backed body as being in line with the Paris Climate Agreement.

Woolworths has agreed to reduce its scope 1 and scope 2 greenhouse gas emissions produced through its own operations by 63 per cent by 2030 on a 2015 baseline.

Scope 1 emissions would be greenhouse gas produced at a facility level, like the burning of fuel in trucks, while scope 2 emissions include indirect energy usage metrics like electricity consumption.

It has also committed to reduce scope 3 emissions, orwhich includes emissions caused by products and services sold by the company, by 19 per cent by the end of the decade on a 2015 baseline.

This is in addition to the company’s commitment to reduce emissions to net zero by 2050, with overall emissions already down by 24 per cent on 2015 levels.

On Friday, Woolworths joined 990 companies around the world in having their targets verified by the global Science Based Targets initiative (SBTi), a coalition between the World Wildlife Fund, the UN Global Compact, the World Resources Institute and the Carbon Disclosure Project.

The SBTi accreditation means Woolworth’s goals align with a target set by the Paris Agreement on Climate Change: limiting the average increase of global temperatures to 1.5 degrees on 2015 levels.

Woolworths’ group head of sustainability governance, Fiona Walmsley, said the group had made good progress in reducing the carbon footprint of its largest source of emissions: electricity consumption.

“We’ve made good progress in reducing our emissions by almost a quarter over the past five years, with the rollout of solar and energy efficiency programs,” she said.

“We’re clear we have a long way to go and will continue our transition to a less energy intensive operation and cleaner energy mix.

“Reducing our emissions is not just the right thing to do for our environment and local communities, but also good business practice, which more and more of our customers, team members and shareholders want to see.”

Ben Wilmot 2.30pm: Village shareholders to recieve less in takeover deal

Entertainment company Village Roadshow has warned shareholders would receive less than expected in a takeover by private equity company BGH Capital as movies have been slow to hit screens in the wake of the coronavirus pandemic.

Village last month crashed to a heavy loss on its cinema and theme park operations but BGH Capital is still chasing a deal to end its life as a public company.

Village, which is subject to BGH’s takeover bid worth up to $487.5m, fell to a full-year net loss after tax of $117.4m. The founding Kirby family, which holds about 40 per cent of the register, is backing a cut price takeover by BGH despite dissident shareholder Mittleman Brothers dubbing the bid opportunistic.

BGH has proposed acquiring Village via two alternative but concurrent schemes of arrangement that offer a base price of $2.20 per share under one structure or $2.10 per share under the alternative scheme.

BGH is offering another 12c per share in the event that the Warner Bros. MovieWorld and the Sea World theme parks are open for a period of about a week before proxies for a planned meeting close.

A further 8c per share was in offer in the event that a majority of the cinemas are open to the public for the same time ahead of proxies being cut off and if there are no significant changes to the expected movie slate for the remainder of this financial year.

Village investors could get another 5c if Queensland’s border controls are lifted by mid-October and those applying to Victoria by the end of that month.

But Village said it had been informed that the scheduled release for cinema exhibition in Australia of three films in the list of titles agreed by Village and BGH on August 6 had been deferred into the financial year ending June 30, putting the 8c lift at risk.

“This change to the movie slate for fiscal 2021 currently constitutes a Film Deferral Event under the Implementation Agreement. Under the terms of the Implementation Agreement if a Film Deferral Event continues to subsist the Cinema Uplift of 8c is not payable,” Village said.

The company and BGH are in discussions about the matter.

Village shares last up 0.5 per cent at $2.12.

2.15pm: RBA to cut rates in October: Capital Economics

Capital Economics economist Ben Udy has joined a rapidly growing number of economists predicting further monetary policy stimulus from the RBA at its October 6h board meeting.

While lifting his Q3 GDP forecast since recent data from Victoria show the second lockdown has not curbed activity as much as anticipated, he says the economic outlook “remains pretty bleak so we think the RBA will need to unleash more stimulus before long.”

“We now expect the RBA to cut the cash rate target, the target for three-year bond yields, and the interest rate on the Term Funding Facility to 0.1 per cent at the Bank’s next meeting in October,” he says. “And we still expect the Bank to launch a second round of quantitative easing aimed at lowering longer-dated bond yields.”

Robyn Ironside 1.45pm: Qld could lose Virgin headquarters to NSW, treasurer warns

Queensland’s Treasurer has warned Virgin Australia could be lost to New South Wales after the LNP promised to scrap the $200m deal with the airline that was designed to keep the carrier’s headquarters in Brisbane.

Cameron Dick said the deal with the airline’s new owners Bain Capital was yet to be finalised but the LNP pledge had put it in serious jeopardy.

Queensland Deputy Leader of the Opposition Tim Mander said the LNP would tear up the agreement if the party won government at the October 31 election and redirect a $200m investment into a new promotional fund.

“The LNP has consistently said the $200m should have been invested in a tourism and marketing fighting fund for Queensland,” Mr Mander told The Courier-Mail.

“That’s been vindicated by Virgin’s decision to cut jobs and cut routes.”

Mr Dick said the LNP’s announcement would have made NSW Premier Gladys Berejiklian’s day.

“We know the NSW government spent $1m on consultants to try to get Virgin to go to Western Sydney,” he said.

“(Premier Berejiklian) will be on the phone to Bain today. She will be delighted by the decision.”

He said the deal was taking some time to finalise because the Queensland government was seeking certain commitments around jobs and regional routes.

Eli Greenblat 1.35pm: Gerry Harvey scoops up $1m stake in Harvey Norman

Harvey Norman executive chairman Gerry Harvey has dipped into the market following the retailer’s bumper profit result for 2020 and an upbeat trading update issued this week, scooping up $1 million worth of shares.

A directors interest statement lodged with the ASX showed Mr Harvey bought 225,000 shares for a total cost of $1.04m.

It adds to his current holdings of around 300m shares in the company worth more than $1.3 billion.

This week Harvey Norman said sales surged 30 per cent for the eleven weeks to mid-September, as Australian consumers splashed out on white goods, TVs and even bedding — while many had little chance of spending their spare cash at restaurants or on quick interstate getaways.

Perry Williams 1pm: Govt’s power threat justified: AEMO

The operator of Australia’s electricity grid, AEMO, said the Morrison government was justified in making an interventionist threat in the power sector as it has given investors the chance to respond before making any move of its own in the market.

The federal government has given companies until April to commit building 1000MW of new power capacity to ensure there was a like-for-like replacement for AGL Energy’s Liddell coal plant, or it will build its own gas plant through Snowy Hydro, which it owns.

The move was slammed by the Australian Energy Council - which represents power giants AGL Energy, EnergyAustralia and Origin Energy - who warned government interventions or even discussions and ‘threats’ of intervention act as an investment deterrent.

Canberra is also prioritising emerging technologies such as hydrogen and carbon capture in a bid to cut emissions and considering methods to lower gas prices and free up supplies.

The Australian Energy Market Operator said intervention was always a part of running an essential service like the power grid and could trigger investment by laying out a clear vision.

“We should always expect that there is going to be government intervention in the these types of essential services - but the question is it good intervention or bad intervention,” AEMO chief executive Audrey Zibelman told a business forum on Friday.

12.05pm: ASX200 strong as banks surge

Australia’s share market remained strong after surging 1.7c to a more than 2-week high of 5973.7. The index was up 1.5pc at 5959 at lunch, with the break above the 100-day moving average at 5920 giving scope to test the 200-day average near 6060 next week.

Banks shares generated about half of the rise after the federal government flagged an easing of lending laws and CLSA upgraded Westpac to Outperform after it settled with AUSTRAC over money laundering.

US index futures were also giving a solid lead for Wall Street with S&P 500 futures up 0.5pc amid hopes of a last minute fiscal deal before the election.

Westpac and NAB rose more than 7pc, while ANZ and Bendigo rose more than 5pc and CBA rose 4pc.

The Materials and Energy sectors were also strong after commodity prices stabilized, with BHP, Newcrest and Evolution up at least 2pc and Whitehaven up 4pc.

Defensive and growth stocks in the Consumer Staples, Industrials and Health Care sectors lagged as investors switched to value.

Woolworths and Coles both fell 0.5pc, while Brambles, CSL and ResMed were flat.

11.55am: Brokers gain on lending law ease

Like banks, mortgage brokers are also surging on the back of responsible lending shake-up. The new rules are seen to benefit the sector to provide a rush of applications.

The surprise plan outlined overnight by Treasurer Frydenberg to ease lending laws to make it easier for banks to lend to small business and home buyers has given the Australian share market a major shot in the arm.

At 11.55 AEST Australian Financial Group shares are up 6.7 per cent at $1.92 while Mortgage Choice is up 3 per cent at 86c. Elsewhere mortgage insurer Genworth is up 4.9 per cent at $1.49.

11.20am: ASX200 surging toward 200DMA

Australia’s S&P/ASX 200 share index is surging toward its 200-day moving average at 6058 after breaking its 100-day moving average at 5920 today. The index has surged 1.6pc surge to a more than 2-week high of 5971, with major bank shares generating about half of the rise.

While the 50-day moving average at 6016 offers minor resistance, the strong momentum behind the rally today suggests the 200-DMA will be tested soon.

While the 200-DMA effectively capped the index in August and early September, easing lending rules for banks as well as expected fiscal and monetary policy stimulus at the October 6th RBA board meeting and federal budget could generate a retest of the top of the 5720-6200 trading range in coming weeks, assuming no slump in the US market.

S&P 500 futures have extended their gain to 0.6pc on renewed hope of US fiscal stimulus.

11.05am: Easier lending rules boost shares

The surprise plan by Treasurer Frydenberg to ease lending laws to make it easier for banks to lend to small business and home buyers has given the Australian share market a major shot in the arm.

Banks are the main beneficiary with the sector generating almost half of the 1.5pc surge in the S&P/ASX 200 to a 5962.3, its highest point in more than 2 weeks.

Read more: Unshackled banks told - go for loans

10.55am: ASX surges 1.3 per cent as rally broadens

Australia’s S&P/ASX 200 share index has surged 1.3pc to a 6-day high of 5963.6 as the initial surge in banks broadened to include gains in all sectors bar the defensive Health Care sector.

With S&P 500 futures up 0.5pc, it looks like both US and Australian markets are set to climb the proverbial “wall of worry” amid suspicions the major new fiscal stimulus could be looming and that the RBA will also come to the party with rate cuts and broader bond buying next month.

10.30am: Big four rally in early trade

The big four banks are adding 44 points of 67 points rise in the index, after the federal government unveiled plans to ease responsible lending laws.

At 10.30am (AEST), Westpac had surged 6 per cent to $17.36, partly on a ratings upgrade by CLSA analysts. Westpac shares dipped as much as 2.4 per cent yesterday on news of a $1.3bn Austrac fine, but closed done just 0.1 per cent.

Commonwealth Bank was trading up 2.6 per cent at $65.89 while ANZ lifted 4.8 per cent to $17.68 and NAB had added 5.6 per cent to $18.16.

10.25am: ASX lifts in early trading

A surge in banks and gains in US futures boosted the ASX 200 1 per cent to a 6-day high of 5945.7 in early trading. Westpac rose 7 per cent after CLSA upgraded to Outperform after it agreed to pay a $1.3bn fine to AUSTRAC for laundering. Other banks have piggybacked on Westpac with NAB up 5.4 per cent, ANZ up 4.7 per cent and CBA up 1.9 per cent, Bank of QLD up 3.5 per cent and Bendigo Bank up 2.5 per cent. Gold miners rose as the spot price stabilised with Evolution up 2 per cent. Other standouts include property trusts with Stockland up 2.3 per cent.

10.20am: Banking association welcomes lending law changes

The Australian Banking Association has welcomed the decision by the federal government to ease lending laws after in a move aiming to help boost the national economy.

“It is important to ensure that these changes strike the right balance between maintaining strong consumer protections while providing credit into the economy at a critical time,” said Australian Banking Association chief executive Anna Bligh.

“Banks look forward to working with the Government to ensure the legislation works for both customers and the broader economy.

“Australian banks understand their role in supporting customers and rebuilding the economy.

“Ensuring the flow of credit to families and businesses, with the right customer protections, is paramount.”

9.45am: US futures suggest ASX lift

US stock index futures are up about 0.5 per cent in early APAC trading suggesting Australia’s share market will rise despite the overnight SPI 200 futures projection of a flat open.

Despite a lack of fresh news this morning, investors may be hedging bearish bets just in case US lawmakers come together on a fiscal stimulus package soon.

House Democrats have started drafting a stimulus proposal of roughly $US2.4 trillion ($3.4tn) that they can take into possible negotiations with the White House and Senate Republicans, Bloomberg said according to House Democratic officials.

Overnight the US market posted slight gains on reports that US Treasury Secretary Steven Mnuchin and Democrat Democratic House leader Nancy Pelosi were open to fresh talks.

But the above report that Speaker Nancy Pelosi’s new draft proposal remained much higher than president Donald Trump’s upper limit of $US1.5tn saw the US market fade intraday.

Still, commodity prices stabilised, albeit with some further weakness in base metals. BHP ADRs equivalent close at $37.32 implies a 1.1 per cent rise.

The local market may also continue its recent outperformance and gains in domestic economy stocks on improving coronavirus trends and hopes of earlier than planned reopening in Victoria. The local market could also outperform amid expectations of fiscal and monetary stimulus after October 6th RBA board meeting and federal budget.

9.35am: What’s impressing analysts

Westpac raised to Outperform: CLSA

Newcrest raised to Hold: Morningstar

Brickworks cut to Neutral: Macquarie

Brickworks raised to Add: Morgans Financial

De Grey Mining cut to Speculative Hold: Bell Potter

Service Stream raised to Buy: Bell Potter

Index raised to Buy: Canaccord

Murray cod Australia started at Buy: Ord Minnett

Next Science started at Speculative Buy: Bell Potter

PolyNovo started at New Hold: Bell Potter

United Malt started at Neutral: Credit Suisse

9.30am: Lending obligation ease a win: Suncorp

Suncorp chief executive Clive van Horen has described the government’s decision to wind back lending laws as win for Australians, after treasurer Josh Frydenberg announced yesterday that lending obligation laws imposed on the bank would be abolished to help boost the economy.

“These changes are a win for Australian consumers and businesses, who will benefit from greater competition between lenders and stronger protections from poor outcomes and predatory lenders,” Mr van Horen said.

“The Treasurer’s reforms to level the regulatory playing field will also stimulate Australia’s recovery from COVID-19 and will lift confidence. These welcome changes will help Australian households and businesses get access to finance, enabling them to grow their businesses and create new jobs.”

9.15am: GS, JPM trim US GDP forecasts

Goldman Sachs and JPMorgan have trimmed their US GDP forecasts because of the current hiatus on additional fiscal support.

GS halved its cut its annualised Q4 GDP forecast to 3 per cent.

“It is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution,” wrote GS chief economist Jan Hatzius after a stopgap funding bill was passed this week to keep the government operating past September.

“This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021.”

JPM cut its Q4 forecast to 2.5 per cent annualised from 3.5 per cent, and also lowered its 1Q forecast to 2 per cent from 2.5 per cent.

“We are further lowering odds of getting the $US1-1.5 trillion in additional stimulus that had seemed quite likely as recently as July,” wrote JPMorgan chief US economist Michael Feroli.

“The numbers being discussed today indicate that the two sides remain quite far apart,” albeit an agreement may be “snatched from the jaws of defeat.”

Goldman Sachs now sees the economy growing 5.8 per cent in 2021 after a 3.5 per cent decline this year.

JPMorgan sees 2.3 per cent year-on-year growth in 2021, after a 4.2 per cent fall this year.

But a “blue wave” of Democratic wins in presidency, House and Senate would see a larger fiscal impulse to demand in 2021, Mr Feroli said.

9.10am: Nick Scali boss takes a pay cut

Anthony Scali, the long-serving chief executive of furniture retailer Nick Scali, was paid less in the 2020 financial year compared to the prior period after his take home pay was reduced by about 5 per cent to $692,833 and he forewent a cash bonus, after he was awarded a $438,000 the prior year.

Last month, the retailer booked a flat profit and a 2.1 per cent slide in revenue for the full-year through June 30 and flagged significant profit growth for the first half as sales for the month of July had been ‘buoyant’, up 75 per cent year on year.

The company received more than $3.9m in COVID-related wage subsidies in Australia and New Zealand for the full year, and secured rent concessions from over 85 per cent of its landlords.

9am: China WGBI inclusion lifts CNH

China’s World Government Bond Index inclusion announced by FTSE Russell was widely as expected and subject to final affirmation in March 2021. But USD/CNH has fallen 0.3 per cent to 6.8087, helping support AUD/USD above 0.7050 as AUD/CNH fell 0.2 per cent to 4.8015, near a 4-month low of 4.8011 reached on Thursday. The increased prospect of greater passive demand for Chinese government bonds may help extend the USD/CNH downtrend since May, limiting USD upside against AUD and helping Chinese buying power for Australian exports.

Eli Greenblat 8.27am: Premier profit up 29%

Premier Investments has posted a 28.97 per cent lift in full-year profit to $137.75m despite the disruption of the COVID-19 pandemic forcing it temporary close its stores and sending thousands of its workers home, with its 165 Melbourne stores shut since July as the state goes through Stage 4 restrictions.

Premier, which is controlled by billionaire Solomon Lew and owns a stable of fashion chains including Portmans, Just Jeans, Peter Alexander, Dotti and stationery retailer Smiggle, said revenue for the 12 months to July 25 fell 2.08 per cent to $1.248bn.

The company declared a final dividend of 36c per share, against 37c per share paid in the final dividend last year.

Premier’s results for fiscal 2020 were impacted by the decision to temporarily shut down its global operations on March 26 and stand down over 9,000 employees.

“At that time, there was no certainty of when global stores would be able to reopen, and no wage subsidy scheme was in existence in Australia,’’ the company said on Friday.

Premier said the financial impact of COVID-19 was most severe for the period March 11 to May 15, when global sales were down $131.1m on the prior year comparable period, with retail store sales down 78.4 per cent.

Due to the devastating impact on group sales resulting from the COVID-19 health crisis, the Premier became eligible for $68.7m of global wage subsidies across seven countries (of which $49 million was received as at July 25).

Of the total amount, $35.5m was passed directly through to eligible employees unable to work.

7.31am: BMW fined over sales fudge

The US Securities and Exchange Commission has slapped Germany’s BMW and two of the company’s U.S. subsidiaries with a $US18 million penalty for allegedly fudging US sales numbers to mislead bond investors. The SEC said late Thursday it has settled charges against the auto maker for disclosing “inaccurate and misleading information” about retail sales volume in the U.S. while raising about $US18 billion from investors in several corporate bond offerings. BMW “inflated” its U.S. retail sales from 2015 to 2019, helping to close the gap between actual retail sales volume and internal targets “and publicly maintain a leading retail sales position relative to other premium automotive companies,” the SEC alleged. BMW of North America LLC kept a reserve of unreported retail vehicle sales it internally referred to as the “bank,” the SEC said in a press release. That was used to meet internal monthly sales targets “without regard to when the underlying sales occurred,” the SEC said. BMW North America also paid dealers to designate vehicles as test-driving vehicles or loaners so that the company could count them as having been sold to customers. Additionally, BMW North America “improperly” adjusted its retail sales reporting in 2015 and in 2017 to meet internal sales targets or bank excess retail sales for future use, the SEC said.

Dow Jones

David Ross 7.20am: Relaxed bank laws ‘absolutely critical’

Treasurer Josh Frydenberg has called the government’s moves today to relax credit and lending rules as “absolutely critical” to Australia’s economic recovery.

“Right now, we have a regulatory approach that is too costly, that is overly prescriptive, that is one size fits all model,” he said on Seven’s Sunrise program.

“We are going to move that culture from the lender being that culture from the lender beware to a borrower responsibility.”

“Now, a lender will only want to lend money where it is going to be profitable to do so and the hope is that then the client will pay that money back.”

Mr Frydenberg said current lending laws were such that banks were “so concerned about getting on the wrong side of these regulations” and were not lending as a result.

“The system and the pendulum has swung too far one way and is not in the interest of the consumer services, it’s a really significant change and will make it easier to get credit which is going to be critical to our COVID recovery,” he said.

6.35am: Wall Street posts modest gain

Wall Street stocks finished modestly higher Thursday following a choppy session as investors weighed mixed economic data with an effort on Capitol Hill to revive stimulus talks.

The Dow Jones Industrial Average edged up 0.2 per cent to 26,815.44. The broad-based S&P 500 gained 0.3 per cent to 3,246.59, while the tech-rich Nasdaq Composite Index advanced 0.4 per cent to 10,672.27.

Markets got a lift midday on news that House Speaker Nancy Pelosi moved to assemble a new spending bill to boost the US economy. Reports said Pelosi is eyeing a $US2.4 trillion bill, still much bigger than the package that Republicans have favoured.

Earlier, the Labor Department said US jobless claims last week rose slightly to 870,000 as the world’s biggest economy continues to face headwinds following the upheaval of the coronavirus pandemic.

On the positive side, new US home sales came in well above forecasts in August with a 4.8 per cent gain, as the housing market continues to recover.

Markets are also eyeing the latest on the coronavirus following case spikes in France and some other European countries that have revived fears of broader restrictions on economic activity.

“As long as cases keep growing, there’s no reason to think this won’t keep being a choppy market,” said a note from TD Ameritrade’s JJ Kinahan.

“Coronavirus overshadows everything right now. There’s no end date for that.”

6.22am: Outlook improving, says IMF

The global economic outlook is less bleak than projected in June, an IMF spokesman said Thursday, hinting that the organisation’s forecasts for growth will be raised next month.

“Recent incoming data suggests that the outlook may be somewhat less dire” than projected in the Washington-based crisis lender’s World Economic Outlook published in June, spokesman Gerry Rice told reporters, nothing that “parts of the global economy (are) beginning to turn the corner.” As the coronavirus has moved through the world, economists have been forced to constantly revise their forecasts for growth.

The International Monetary Fund is set to update its global outlook on October 13, though Rice did not reveal details about the new projection.

In its June forecast, the fund said world GDP would drop by 4.9 per cent and the virus would wipe out $US12 trillion over two years, However China and some other advanced economies performed better than expected in the second quarter of 2020, Rice said, partly due to the easing of lockdown measures after the near total shutdowns earlier in the year.

“We’re also seeing signs of global trade slowly beginning to recover,” Rice said.

“I would emphasise we are not out of the woods,” Rice said, calling the outlook “very challenging” with emerging markets facing a “precarious” situation due to the coronavirus.

Economists also fear that a second wave of infections could damage growth. Governments including Britain and France have reinstituted some restrictions in recent days, although on a much more limited scale than earlier in the year.

Rice said households and businesses in the United States continue to face challenges and signalled that the fund supports more fiscal support for the economy.

Talks on another round of stimulus are deadlocked in Washington weeks before President Donald Trump stands for a second term in the November polls.

6.17am: US jobless claims rise

The United States saw a small but worrying rise in unemployment claims last week, underscoring its continued struggles to recover from the mass lay-offs caused by the coronavirus pandemic.

The Labor Department reported new filings for unemployment benefits had ticked up by 4,000 to 870,000 in the week ended September 19, only a slight increase from the week prior but still a massive number above the single worst week of the 2008-2010 global financial crisis.

Another 630,080 people filed new claims under a special program for those not normally eligible, only about 45,000 less than the previous week.

The data comes as Congress remains deadlocked on passing more stimulus to prop up consumers and businesses and other data showing key sectors struggling to regain ground lost when businesses closed in March to stop COVID-19.

Treasury Secretary Steven Mnuchin told the Senate Banking Committee the White House had “agreed to continue to have discussions” with Democrats on a new stimulus bill as economists warn the state of the world’s largest economy could deteriorate.

The rise in claims is “further evidence of the slowing pace of economic recovery,” Mohamed A. El-Erian of Allianz said on Twitter, noting the latest data went against analysts’ expectation of a continued week-on-week fall.

But the Commerce Department separately released data showing the housing market continuing its recovery unabated, with new home sales in August growing above expectations to an annualised rate of just over one million.

6.12am: Harley exits India

US motorcycle manufacturer Harley-Davidson said Thursday it will exit its India operations, the latest foreign automaker to pull out of the South Asian nation.

Wisconsin-based Harley-Davidson will shut down its manufacturing plant in the northern Indian state of Haryana and significantly reduce its sales office, the company said in a statement.

The firm said the move “discontinuing its sales and manufacturing operations in India” was part of a global overhaul of its operating model and market structure.

Harley-Davidson – which opened a plant in the world’s largest motorcycle market in 2011 – struggled with India’s 100 per cent import tariffs and cheaper local brand Hero MotoCorp as well as Honda Motorcycle, owned by Japan’s Honda Motor.

India, Asia’s third-largest economy, had also been experiencing slower consumer demand even before the crushing economic impact of the coronavirus pandemic.

US President Donald Trump had called India “tariff king” and complained of the country’s high-tariffs for imports of the iconic motorcycle.

India later slashed the tariffs by 50 per cent but the brand was unable to get traction in the notoriously challenging market.

The withdrawal from India is a blow to Indian Prime Minister Narendra Modi’s “Make in India” strategy, where he has urged foreign businesses to manufacture goods locally.