ASX closes at 9-mo high, Crown’s Barangaroo casino opening delayed
ASX closes at a 9-month high after banks rally, while trade in Crown Resorts was halted before it was told to delay the opening of its Sydney casino.
That’s all from Trading Day. The S&P/ASX 200 closed at a 9-month high after banks rallied, while trade in Crown Resorts was halted before it was told to delay the opening of its Sydney casino. The Australian is hosting the 2020 Strategic Forum, featuring speakers including Treasurer Josh Frydenberg, BHP’s Mike Henry and RBA governor Philip Lowe.
Robyn Ironside 8.31pm: Hrdlicka back at the controls for Virgin
The year 2020 was supposed to be the year Jayne Hrdlicka spent travelling with her husband, after an intense few decades of corporate life.
Instead, the former Jetstar CEO has found herself back at the helm of an airline, and she is almost at a loss to explain why.
“Obviously the world turned upside down and one thing leads to another and I’m back in aviation,” Ms Hrdlicka told The Australian on her first day as Virgin Australia CEO.
“It was a real drawcard to help make sure Virgin’s hugely successful on the other side of this. It has all the potential to be one of the most significant success stories in the aviation industry globally and it’s a great honour to be part of it.”
With a reputation for discipline, directness and steely resolve, Ms Hrdlicka is aware of the perceived differences between herself and the man she replaced, Paul Scurrah.
But she is adamant having “a good constructive relationship with stakeholders” is more important than popularity, with tough decisions needed to build a resilient airline.
James Kirby 7.15pm: Warren Buffett’s gold dalliance
Warren Buffett’s “conversion” to investing in gold is looking more like an illusion after his Berkshire Hathaway group announced a massive selldown in Barrick Gold, just three months after the high-profile investment had the gold sector buzzing.
After decades of Buffett ridiculing gold as a poor investment choice, Berkshire Hathaway stunned investors in August when it took a stake in the Canadian miner, which is the world’s biggest gold company.
The move was seen by many as confirmation the 90-year-old Buffett had changed his position on the yellow metal, but after selling down 42 per cent of the Berkshire Holding this month, the dalliance looks over.
“I expect it was a way to play an option on gold. If you were looking for a liquid option on gold — as a trade — one of the easiest ways is to buy a listed goldmining stock,” says fund manager Manny Pohl, who is a director of the ASX-listed Global Masters Fund that was created to mirror Berkshire Hathaway’s performance.
Buffett has long berated investors in the “barbarous relic” for putting money into something that does not pay income. “I have no idea where gold will be in the next five years, but one thing I can tell you is it won’t do anything between now and then … except look at you,” he once said.
Buffet’s move into a listed gold miner rather than into bullion was also read as a sign the value investor would take comfort in Barrick’s dividend and cashflows.
6.29pm: Crown delay ‘credit negative’ says Moody’s
Maadhavi Barber, analyst at Moody’s Investors Service says: “The decision by the NSW Independent Liquor and Gaming Authority to postpone the opening of Crown Sydney’s gaming operations is credit negative. Crown had planned for Crown Sydney’s gaming and non-gaming operations to progressively open from December 2020. The decision highlights the potential severity of findings by the Inquiry, and the risk of meaningful sanctions and/or limitations on Crown’s ownership and operations.”
5.26pm: No gaming operations at Crown Sydney this year
Crown Resorts said in a statement after the ASX sharemarket closed on Wednesday that the board “has determined that gaming operations at Crown Sydney will not commence in December 2020. The New South Wales Independent Liquor and Gaming Authority (ILGA) has deferred its consideration of a number of applications required for the commencement of gaming operations at Crown Sydney until February 2021”.
“Crown will continue to focus on opening the non-gaming operations at Crown Sydney, in consultation with ILGA, in the absence of the commencement of gaming operations,” the company said.
Ben Wilmot 5.17pm: Cromwell faces board spill as it earns a second strike
The battle for Cromwell Property Group, which controls a $12bn empire across Australia and Europe, flared at its annual general meeting, with dissident investors voting down three directors and giving the company a second strike over its remuneration report.
The dissidents, led by ARA Asset Management and Singapore’s powerful Tang family, who control about 46 per cent of the company combined, voted alongside some other investors against Cromwell’s chairman Leon Blitz and two other directors, Andrew Fay and John Humphrey.
Cromwell’s second strike sets the scene for an extraordinary meeting to be called within 90 days to vote on a spill of directors who were on the board when the remuneration report was approved.
Although the pair have insisted they operate separately ARA, with a 30 per cent interest, and the Tangs, with about 16 per cent, drove votes of about 60 per cent of proxies against the directors, as well as the granting of performance rights to chief executive Paul Weightman.
The directors that ARA supported when they went on to the board - two independents, corporate raider Dr Gary Weiss and Melbourne businessman and ABC director Joe Gersh - may now be in a more influential position to determine the group’s future direction as they are not subject to the spill.
But independents Tanya Cox, Lisa Scenna and Jane Tongs could face votes at the meeting on their board positions.
ARA has been critical of the way Cromwell has been managed and attacked its expansion into Polish shopping centres ahead of the coronavirus crisis.
Industry sources claimed that earlier this week ARA had made a series of demands of the board which the independent directors rejected. The funds house declined to comment but senior sources characterised its offer to Cromwell as an olive branch after 18 months of conflict.
ARA has yet to reveal its plans or strategy for Cromwell but is likely to pursue board renewal iof the spill comes to pass.
Mr Weightman’s 22 year tenure is also in focus after a period of intense conflict with ARA which first took a stake in Cromwell in early 2018 and has invested more than $800m.
The upheaval has prompted concerns of further shareholder value loss once Cromwell’s shares come out of trading halt on Thursday however the company’s price is being supported by a partial takeover bid by ARA just below its trading price.
5.12pm: Jetstar sells 120,000 seats in 24 hours
More than 120,000 seats have been sold in the first 24-hours of Jetstar’s biggest sale of the year , with Victorians being particularly quick to plan their next holiday.
The ‘Return for Free’ sale, which includes 400,000 return trips available from $65, has seen a booking rate 25 times faster than a typical day.
The three most popular routes so far are all out of Melbourne to destinations including Gold Coast, Sydney and Cairns, highlighting significant pent up travel demand from Victorians.
Other popular routes that have already nearly sold out include Gold Coast to Perth, Ballina to Melbourne, Brisbane to Launceston and Hobart to Gold Coast.
The sale runs until 11.59pm AEDT on Thursday, with travel periods from February through to August 2021. One-way flights start from $65, with the return flight for free.
4.20pm: ASX closes at 9-month high as banks rally
The local sharemarket finished Wednesday’s session at a 9-month high, the S&P/ASX 200 lifting 32.9 points, or 0.51 per cent, at 6531.1.
It came despite weak leads from Wall Street overnight.
The banks did the majority of the heavy lifting, with CBA up 2.9 per cent while Westpac added 2.3 per cent. Meanwhile BHP lost 0.5 per cent and Rio fell 0.7 per cent.
Poker machine maker Aristocrat Leisure surged 3.8 per cent after the poker machine maker declared a dividend despite unveiling a profit dive of 52.6 per cent while Fintec Plenti grew 9.6 per cent after it announced it had narrowed its full year loss.
A2 Milk was among the worst performers of the session, dropping 4.8 per cent, despite the dairy products company reaffirming its full year guidance.
The Australian dollar was slightly weaker against the US dollar, trading around US72.91c by the close of the ASX session.
Lachlan Moffet Gray 3.30pm: Crown casino opening delayed
In a major loss for Crown Resorts, Sydney’s Barangaroo Casino will not be allowed to open in December following a decision by the NSW Gambling Regulator that its inquiry into the suitability of Crown to operate the casino should conclude first.
At a press conference in Sydney this afternoon, NSW Independent Liquor and Gaming Authority chair Phillip Crawford said the decision was made in light of “extremely concerning ongoing evidence” unearthed at the inquiry.
“We are hopeful that Crown Resorts will agree to our request to postpone opening of all gaming activities, which would be unable to begin without approval of these regulatory matters,” he said.
“The Authority has found ongoing evidence before the Bergin Inquiry to be extremely concerning, that any gaming activity at the casino before the Inquiry’s findings are released in February 2021 and considered by the authority would pose unacceptable risks on the community against the public interest.”
Mr Crawford said the delay is occurring through the deferral of regulatory approvals, without which Crown cannot open.
He said he would consider approving a limited opening of the hotels and bars. This was previously put to Crown, but Mr Crawford said Crown did not take ILGA up on this offer.
Perry Williams 3.21pm: Ryan Stokes urges states to keep borders open
Seven Group chief executive Ryan Stokes said states must endeavour to keep their borders open, allowing the national economy to bounce back from a Covid downturn.
The Morrison government has urged states to keep their borders open after Western Australia’s decision to reinstate a hard border with South Australia following its outbreak while Queensland remains shut to residents of Greater Sydney and Victoria.
“The more we can encourage open borders and moving to a state of normality and managing the virus in low-case places is a better approach as we look to move back to a more open and freer economy,” Mr Stokes told The Australian.
The Sydney resident, son of billionaire Kerry Stokes, said NSW had taken the right approach.
“Credit to how NSW has managed through and got to a successful outcome. The state has tried to minimise the disruption and I think that’s been a good balance here. Other states have managed it differently, but ultimately the more we can open up the country and work collectively I think the better.”
Eli Greenblat 3.16pm: Deloitte to repay slashed wages
Big four accounting firm Deloitte CEO has announced that a better than expected profit performance in the first half would allow the firm to pay back wages to staff who swallowed pay cuts earlier in the year due to the COVID-19 pandemic and impact to the business services company.
Deloitte chief executive Richard Deutsch announced that all staff, who accepted the pay variation proposal in April, will receive a payment equivalent to six weeks of forgone pay.
Mr Deutsch said: “Our half year results are strong and we are optimistic about 2021. I am so proud of the hard work, dedication and focus of our people to help our clients navigate through this crisis.”
The Deloitte boss said the firm’s continued better-than-planned performance was a testament to its market leading skills and capabilities.
“We promised our people that we would continuously review our performance and recognise their hard work and contribution. It is to that end, that we can announce that we will return a payment equivalent to six weeks of forgone pay to our staff who accepted the pay variation proposal.”
Gerard Cockburn 2.54pm: Bomb threat triggers closure of NAB branches
Queensland Police has confirmed a number of NAB branches in the state had reported bomb threats.
NAB said earlier this afternoon that all its branches due to a so-called physical security threat.
“We are working closely with police and will provide an update as soon as we can,” NAB said in a statement.
More to come
Joyce Moullakis 2.43pm: APRA may relax dividend guidance
The banking regulator has hinted it may relax the dividend guidance that caps payments at half of profits, due to increased capital in the sector and a more positive economic climate.
The Australian Prudential Regulation Authority’s chairman Wayne Byres stopped short of saying the 50 per cent dividend guidance would be scrapped, but said the outlook had improved and the cap would be reassessed.
“We have deliberately never put in place (dividend) guidance for a long period of time because we want to stay agile, we want to stay flexible, we want to be able to be conscious of the environment that’s evolving,” he added at an online conference on Wednesday.
“Our first set of guidance only lasted for three months... then we introduced the 50 per cent (of statutory profit) guidance and said that only applied to the end of the year, and in thinking about what we do next obviously we’ll be minded of how the situation has evolved since we put that 50 per cent guidance in place.
“On the whole, I think the outlook has improved, bank capital has certainly increased, the economic situation looks more positive.... We don’t want to be complacent but I think it is time that we look at the issue again.”
APRA’s initial guidance on dividends came as COVID-19 started to hit the economy and advised banks and financial institutions to seriously consider deferring dividend decisions to preserve capital as the pandemic took hold.
That was changed in July to the 50 per cent of profit dividend guidance, as Australia started to emerge from the depths of COVID-19 infections.
2.36pm: Dexus sells stake in Grosvenor Place
Dexus will offload a 50 per cent interest in Grosvenor Place in Sydney for $925m.
The 50 per cent stake in the office tower is half owned by Dexus and half owned by the Dexus Office Partnership, in which Dexus holds a 50 per cent interest.
The sale will generate $694m in proceeds for Dexus, which the company said would be used to pay down debt.
“This transaction continues our asset recycling strategy, realising value for both Dexus and our Dexus Office Partner,” said chief investment officer Ross Du Vernet.
“The sale further strengthens our balance sheet and enables us to organically fund higher return growth initiatives in our funds and development businesses.
“It also provides improved capacity to undertake capital management initiatives should there be a continued disconnect between public and private markets.”
Lachlan Moffet Gray 2.22pm: Crown halted ahead casino decision
Crown Resorts Shares have been placed in a trading halt leading up to an announcement by the NSW gaming regulator on whether the Barangaroo casino in Sydney will be permitted to open on December 14.
When the trading halt hit, Crown was changing hands at $9.62 a share.
Lachlan Moffet Gray 1.32pm: Crown casino decision due this afternoon
The New South Wales Independent Liquor and Gaming Authority will hold a press conference this afternoon on their decision regarding the opening of Crown Sydney’s Barangaroo Casino.
Crown and ILGA met earlier this morning to discuss the issue, with the gaming giant offering to restrict gaming to just one level of the casino until the regulator can be satisfied adequate systems are in place.
ILGA chair Phillip Crawford will front the conference at 3.30pm in Sydney’s CBD.
1.24pm: NAB branches closed due to security threat
NAB has closed all its branches due to a so-called physical security threat.
“Unfortunately we have had to close our branches temporarily due to a physical security threat,” the bank said in a statement.
“As always the safety and security of our customers and colleagues is our priority.
“We are working closely with police and will provide an update as soon as we can.”`
NAB has 859 branches in Australia and New Zealand.
Lachlan Moffet Gray 12.35pm: Crown details ‘limited opening’ for Barangaroo
Crown Resorts will seek to be allowed to open the Sydney Barangaroo Casino on time by limiting gaming to one room and limiting patrons so regulators can inspect gaming activity.
Yesterday The Australian revealed that the gaming company would today propose a limited opening of Barangaroo in a meeting with the NSW Independent Liquor and Gaming Authority set to determine whether the casino should be allowed to open before an inquiry into the company reports next February.
In a hearing of the inquiry today, Crown counsel Robert Craig SC outlined what that “limited opening” would look like.
“Crown has proposed that the restricted opening would involve initially opening one of the four levels of gaming being the Crystal Room on level two, imposing a total patron count initially well below the capacity of the room, with the progressive increase facilitated over a defined period,” he said.
Mr Craig said attendance would be managed on “an invitation only basis” with ILGA authorities and inspectors allowed to “supervise gaming operations in the Crystal Room”.
He also said that Crown would not progress to the next stage of opening “without the approval of the authority.”
If the authority determines Barangaroo can open before the inquiry reports in February, it will most likely be on December 14.
12.21pm: ASX firmly higher at lunch
The Australian sharemarket is firmly higher at lunch as the major banks rally.
The ASX 200 is currently up 0.64 per cent at 6540.
CBA is up 2.2 per cent while Westpac is 1.9 higher. The miners are lower with BHP down 0.5 per cent while energy is the worst performing sector, with Oil Search 2.3 per cent lower but Woodside up 0.8 per cent.
Aristocrat is surging 2.6 per cent after the poker machine maker declared a dividend while Plenti is 5.3 per cent higher after narrowing its first half loss.
12.07pm: Aristocrat shares surge on dividend announcement
Aristocrat shares are gaining ground to their best levels since March, after the gaming group said it would continue to pay dividends despite tapping the government’s JobKeeper payments.
Shares in the group are up 2.9% to $34.27 - the best since March 5, after which the group plummeted to $15.44 at the worst of the coronavirus downturn.
Releasing its annual results this morning, Aristocrat said it would pay a 10c a share dividend next month, despite a profit dive of 52.6% to $357.1m.
12.06pm: Cimic Cooperating with AFP investigations
Cimic said the Australian Federal Police has laid charges and issued arrest warrants against former employees relating to two alleged foreign bribery offences, among others.
The charges relate to conduct that occurred prior to 2012 and Cimic is cooperating with all official investigations, the company said.
Dow Jones
12pm: Super funds ‘on track’ for positive annual returns
Super funds were back in positive territory in October, the median growth fund up 0.5 per cent for the month, according to super research agency Chant West.
Balanced funds returned 0.4 per cent for the month and lifecycle funds set up in the 1980s or 1990s retuned 0.4 per cent for the period.
“The positive return in October was largely due to the performance of Australian shares, which returned 1.9 per cent,” said Chant West research manager Mano Mohankumar.
“International shares, however, headed in the opposite direction due to uncertainty around the US election and surging COVID cases, particularly in the US and Europe.
“On average, funds currently have about 70% of their international shares exposure unhedged, and that foreign currency exposure provides a natural buffer against share market falls, as we saw in October.”
11.34am: Wage price index falls short of estimates
Australia’s wage growth was subdued in the third quarter, as coronavirus restrictions continued to pressure jobs.
Information released by the ABS this morning showed wages had lifted by 0.1% in the third quarter, falling short of estimates of 0.2%. For the year, the index was higher by 1.4%, shy of consensus of 1.5%.
Private sector wages rose 0.5%, while public sector wages grew at a slightly slower 0.4%.
“Contributions to the growth in private sector wages came mostly from full or partial restoration of wages following wage reductions in June quarter 2020,” the ABS said. “However, the wage growth was mixed as specific COVID-19 restrictions impacted states and businesses across Australia differently.”
AU Wages very weak growth as expected, and the weakest quarterly and annual growth in the history of this series (to 1998), no inflationary pressure here and nor driver of sustainable spending growth #ausbiz pic.twitter.com/ez2092qry5
— Alex Joiner (@IFM_Economist) November 18, 2020
Bridget Carter 11.32am: Moelis tapped on Vitalharvest takeover
Costa Group landlord Vitalharvest Freehold Trust has tapped Moelis as a defence adviser after receiving a $300 million takeover offer last week for the business from Macquarie Infrastructure and Real Assets.
Working with MIRA, is advisers from Macquarie Group’s investment banking arm, Macquarie Capital.
It comes as Vitalharvest announced on Tuesday night that its major shareholder, Primewest Group, would support MIRA’s proposal as it also lodged documents for its proposed acquisition.
The target’s board is also backing the MIRA proposal.
MIRA is offering to buy Vitalharvest for $1 per unit by way of a scheme of arrangement and is conditional on 50 per cent of shareholders, excluding Primewest, voting in favour of the proposal.
Primewest will receive a $8m fee for handing over the management agreement for Vitalharvest to MIRA’s Macquarie Agricultural Funds Management.
As well as supporting the deal, Primewest is providing a call option to MAF over its 19.9 per cent interest in Vitalharvest at the offer price.
The call option can only be exercised where a competing proposal to buy more than 20 per cent of the stock has been announced within seven months from the date that the call option was granted.
Primewest, which launched an unlisted agricultural fund in April, said in a statement it will continue to actively seek opportunities in the agricultural space and believed there was significant demand from investors in the space.
Lachlan Moffet Gray 11.27am: Crown backflips on money laundering position
Crown Resorts has admitted to a NSW Inquiry that money laundering likely did take place into two accounts associated with the company, in a last-minute reversal of their position.
Crown’s counsel Robert Craig appeared in front of the inquiry into the company’s suitability to operate the Barangaroo casino today to discuss the issue of money laundering, admitting there were “mistakes and shortcomings” in Crown’s money laundering regime.
But he was promptly interrupted by commissioner Patrica Bergin, who said she received a letter from Crown’s legal team at 11pm last night backtracking on their previous submission that it should not be found that “more probably than not” money laundering occurred through the accounts of two Crown subsidiaries.
The accounts linked to the Crown Shell companies of Southbank and Riverbank investments pty ltd were created ostensibly for VIP customers to repay gambling debts - but the counsel assisting had identified numerous questionable transactions occurring within them.
Crown’s CFO Ken Barton did not review the accounts despite them being closed on several occasions by different banks.
Mr Craig said that Crown’s position was now that it was open that it could be that money laundering occurred based on reports by Initialism and Grant Thorton.
“Having regards to the finding in the Initialism report, Crown accepts that there were funds deposited into the Riverbank and Southbank accounts that Initialism had found to be indicative of cuckoo smurfing,” he said, referring to a form of money laundering.
Lachlan Moffet Gray 11.26am: Crown director steps down
Crown Resorts non-independent director Michael Johnston will step back from all non-board activities at the company aside from his role as the audit and governance committee.
The announcement came amid a NSW Independent Liquor and Gaming Authority inquiry into Crown’s suitability to operate the Sydney Barangaroo Casino.
Mr Johnston, who is a nominee director and executive of James Packer’s CPH company has faced criticism from the inquiry’s commissioner and counsel assisting for the extent of his involvement in the management of the company.
Crown’s counsel Neil Young QC said that as a result it had been decided he would take a step back.
In relation to Mr Johnston’s role in regard to what committees and workload he has, Mr Johnston will step back … from every committee other than the audit committee,” he said.
Mr Young said the relationship between Mr Packer’s CPH and Crown would in the future not involve directors becoming managers in the company.
“Going forward the relationship between Crown and its major shareholder will be the stock standard relationship between the company and its major shareholder,” he said.
11.21am: ASX continues to rally
Shares continue to rally into the second hour, now up 33 points or 0.51% to 6531.5.
It comes as all sectors bar tech and materials trade in the green, led by a 1.2 per cent lift in financials.
Today’s moves push the month-to-date lift to roughly 9.8 per cent - already the best month since March 1988, according to CommSec.
Joyce Moullakis 11.04am: CBA optimistic on housing market
Commonwealth Bank chief executive Matt Comyn has declared a sharp decline in the housing market is no longer a near-term risk to the domestic economy, given the sector is holding up well and loan applications are strong.
The nation’s biggest home lender has become more positive on the residential housing sector, despite the impact of COVID-19 pushing the economy into its first recession in almost three decades.
Mr Comyn said his optimism was due to rebounding consumer and business confidence and about $100bn in “surplus savings” across the economy.
“If the borders can stay open I think there is a lot of pent up demand for big expansion around sort of domestic tourism, which will clearly be a positive,” Mr Comyn told a virtual conference on Wednesday
. “I don’t think the housing market is a risk anymore, we have substantially upgraded our forecasts in and around housing versus were we were in May and even in August.
“The applications that we are seeing, and I saw the ABS data recently, they are extremely strong.”
CBA sees the potential for the housing market to accelerate into 2021 and 2022, with its base case now for 5 per cent growth in the next calendar year which would vary across cities and houses and apartments.
Mr Comyn also said the huge amount that Australians had amassed in savings would provide the economy a “quite a significant tailwind” when consumers started to step up their spending.
“The economic trajectory looks reasonable,” he added.
Mr Comyn’s comments follow those of two of the nation’s largest mortgage brokers - including CBA owned Aussie - which reported a surge in loan applications and rebounding confidence buoying the housing market.
Adeshola Ore 11am: India, Indonesia ‘good opportunities’ for trade
Reserve Bank of Australia governor Philip Lowe has told The Strategic Forum that Australia must focus on broadening its trade markets.
“It’s not a question of diversifying away from China. it’s incredibly mutually advantageous for both countries to keep that relationship,” he said.
“We have good relationships with India and Indonesia with incredible opportunity for growth over the next two decades.”
Capital Group International Vice Chairman Michael Thawley said it is in the economic interests of both China and Australia for the relationship to be maintained.
“Australia has been very good historically at diversifying its exports,” he said.
“It’s a reality we have to face that people will look to build their national resilience, meaning paying attention to supply chains of national importance.”
Turning to a domestic outlook, Dr Lowe said the digitisation of the economy will help drive higher living standards in Australia.
“We will overtime see a dividend in that. We have over the time of the pandemic seen an increased spending on infrastructure which is welcome,” he said.
Dr Lowe said borrowing against future income is the correct solution during a pandemic.
“The cost of doing that at the moment is very low. Global interests rates are historically low and will stay that way for some time,” he said.
But he said structural reforms are critical to increase Australia’s future income and repay debt.
Strategic Forum live updates: What Biden’s presidency will mean for Australia
Perry Williams 10.51am: Seven Group’s update mixed ahead of AGM
Seven Group gave a mixed trading update with strength in its WesTrac mining unit offset by falling demand at its Coates hire business following Victoria’s lockdowns, with the conglomerate describing the TV advertising market as volatile.
The Sydney-based company - controlled by its billionaire chairman Kerry Stokes - said October year to date revenue at mining machinery supplier WesTrac was up 11 per cent on the same period a year ago.
The booming West Australian resources sector has provided strong demand for the business including growth from delivering fleets for iron ore giants Rio Tinto and BHP, outweighing subdued coal activity in NSW.
WesTrac will deliver high single digit growth for underlying earnings before interest and tax in the 2021 financial year, Seven said.
Still, its Coates hire business has endured a tougher trading period with October year to date revenue down 7 per cent from a year ago with costs being cut to boost margins and maintain profits. Coates will likely record low single digit growth on an EBIT basis in 2021.
“Coates revenue has been impacted by the lockdown in Victoria and the slower project commencement in NSW,” Seven Group chief executive Ryan Stokes said ahead of its annual general meeting. “This has been partially offset by strong growth in WA. However, management having anticipated this have ensured the cost base is adjusted to preserve profitability.”
Covid also hit its events hire business with Seven noting a knock to Supercars and AFL events.
Seven West Media, 40 per cent owned by Seven Group, has seen an improved television advertising market since its August results though conditions remain “short and volatile”.
Forward bookings indicated Seven West Media’s first half advertising revenue could be down 5 per cent though year to date cost savings have more than offset that decline in income.
Seven chairman Kerry Stokes defended its decision not to boost a shareholder payout in the 2020 financial year and instead plough funds into its 20 per cent stake in Boral.
“Reflecting on shareholders questions at last year’s AGM, the board gave due consideration to increasing the dividend but elected to use increased free cash flow to support the group’s investment in Boral. In this regard, we are confident that this strategic investment will represent further value to you Seven Group shareholders.”
Seven remains hopeful both Boral and Coates can tap an expected “acceleration of projects” due to the federal government’s infrastructure investments focused on shovel ready projects.
Seven Group shares last up 1.5 per cent at $22.38.
Eli Greenblat 10.49am: Pental touts uptick in cleaning product demand
Pental, whose popular grocery brands across cleaning products, soaps and laundry powders include White King bleach, Velvet, Pears, Country Life as well as Jiffy Firelighters, said it has kept a healthy momentum going into fiscal 2021 after experiencing a surge in demand for its strong germ-killing products during the first wave of COVID-19 pandemic.
The demand for its products had helped boost December half earnings by 87 per cent.
Pental’s Australian made heritage brands continue to see a healthy level of demand in the marketplace despite supply chains of its international competitors returning to normal, the company said.
In a trading update Pental said it was expecting half-year sales to December to be around $66 million, up 18 per cent on the December half of 2019. The company is forecast to hit December half EBIT of $4m, up 83 per cent, and net profit for the half is expected to be $2.8m, up 87 per cent.
Pental said its distributed battery products under the Duracell brand have been performing strongly compared to last year after Pental successfully increased Duracell’s footprint by securing ranging in new channels spanning department stores and e-commerce.
“Pental continues to invest heavily in supporting its two big powerhouse Australian made brands White King and Country Life through both social media and outdoor advertising,’’ it said in the trading update.
“As a result, sales of White King bleach, household cleaners and Country Life bar soaps are expected to grow compared to the prior year, even though the competition continues to influence consumer purchasing with heavy price discounting.”
Pental last down 6 per cent at 39c.
Ben Wilmot 10.47am: MIRA wins Primewest backing for $300m trust takeover
Macquarie Infrastructure and Real Assets’ $300m offer for the listed horticultural land owner Vitalharvest Freehold Trust has won the backing of the listed trust’s manager.
The deal, which has already been given the green light by its key tenant, the Costa Group, will now see MIRA’s offer of $1 per unit by way of a scheme of arrangement for Vitalharvest go to a vote.
Even if the scheme is not voted up, MIRA is offering to buy all of the Vitalharvest assets for $300m.
Costa leases seven farms from Vitalharvest, including three citrus farms in South Australia and four berry farms, two of which are in NSW and another two in Tasmania.
Demand for citrus is booming due to the export market, as is demand for berries.
Primewest this year bought the Vitalharvest management rights for about $10m and controls a stake of 19.9 per cent.
Primewest has just entered into a facilitation deed with a Macquarie entity in support of the MIRA proposal.
The deed is conditional on the MIRA proposal completing and at least 50 per cent of unit holders not associated with Primewest voting in favour of the trust scheme.
Primewest will receive a fee of $8m if the conditions are satisfied and will also back the MIRA plan in the absence of a superior proposal. It has also provided a call option to Macquarie over its 19.9 per cent interest at an exercise price of $1 per unit if a rival bid emerges.
Bridget Carter 10.45am: HWL Ebsworth to raise at least $230m in IPO
HWL Ebsworth - soon to be called Alarcon - will raise between $232m and $255m for its initial public offering.
In a term sheet sent to investors, fund managers were told the company’s market value will be between $471m and $519m.
The IPO will consist of a $20m primary raise and a secondary selldown by existing investors of between $212m and $235m.
New shareholders will own 49.5 per cent of the business and existing owners will enter into escrow arrangements for their stock.
Working on the float is Macquarie Capital and Bell Potter.
The law firm, which is moving to be a public company from a partnership model, launched its management roadshow this week.
Its book build will open on Monday with the prospectus to be lodged on Tuesday.
Shares are expected to start trading on December 16.
10.40am: Plenti narrows first-half loss
Freshly listed fintec Plenti has posted a headline loss of $3.4m, which has narrowed from a loss of $7.9m a year earlier.
Plenti, which specialises in personal and auto loans, saw loan originations of $167m for the half, 33 per cent above the first half of financial 2020 and 7 per cent ahead of prospectus forecast. Revenue came in 2 per cent ahead of prospectus forecasts.
In total Plenti’s lending book increased to $435m from $306m over the year, while loan losses fell 31 per cent despite the sharp downturn in the economy as a result of the Covid pandemic. “The favourable credit result reflected the strong underlying borrower characteristics of the loan portfolio, government support measures through the COVID-19 period, including the superannuation access scheme,” Plenti said.
The company said it has seen a “robust origination” of loans across all its lending areas in the first half of November.
Plenti last up 8 per cent at $1.23.
10.28am: ASX edges higher
The local sharemarket is edging mildly higher in opening trade, adding to yesterday’s modest gains.
At the open, the benchmark ASX200 is up by 20 points or 0.31% at 6518.1 - continuing to push higher from yesterday’s 8.5 month high.
It comes despite weakness on Wall Street, where the Dow slipped by 0.56%, and S&P 500 gave up 0.5%. US futures however are edging ever so slightly higher.
In the local market, the major banks are doing most of the heavy lifting - Westpac leading with a 1.3% lift as Commonwealth Bank adds 0.6%, ANZ gains 0.7% and NAB rises by 1%.
Afterpay continues lower after yesterday’s slip, down by 1.6% while oil names are modestly higher after yesterday’s surge.
Aristocrat is up by 2.9% after it declared a dividend despite reporting a slump in its net profit after tax. Cromwell shares are paused pending a further announcement.
Bridget Carter 10.27am: Silk Laser readies IPO
The initial public offering of Silk Laser Australia is believed to be gaining support across its price range of $156.4m to $170.8m.
The company, owned by Advent Partners, is heading to the boards for a listing through Wilsons Corporate Finance and Ord Minnett.
It is understood that so far, the expectation is that the business will price at the top of its range of between $3.30 and $3.65 per share, with demand from investors right across the board.
The company plans to raise between $80.9m and $87.3m, with the value including debt at between $150.4m and $164.8m.
It equates to between 10.8 times and 11.8 times its earnings before interest, tax, depreciation and amortisation.
Bids for the company are due by 3pm Thursday, with the prospectus lodged on November 24 and the company to start trading on December 16.
Nick Evans 10.24am: ALS declares interim dividend, lower profit
Testing giant ALS says it believes it has seen off the worst of the impacts of the coronavirus pandemic, declaring an interim 8.5c a share dividend after booking a half-year profit of $70.3m.
ALS said its underlying net profit of $80.6m, excluding government subsidies and related direct costs, was only down 17.9 per cent for the half-year ending September, with its businesses recovering somewhat in its second fiscal quarter.
The company said it booked revenue of $838.8m for the half, down 8.7 per cent, with its industrial testing division the worst hit as manufacturing centres closed down to limit the spread of the virus, and companies delayed new projects and maintenance spending to preserve cash.
ALS said its commodities and assaying business recovered strongly in the September quarter, after a grim start to the year as the coronavirus pandemic hit mining majors and junior explorers alike, as the resources sector returned to work.
It’s commodities division booked a 13 per cent decline in revenue in the first half of the year, to $278.4m, with its life sciences business holding up well, down only 3.5 per cent to $452.1m for the half.
ALS managing director Raj Naran said the company believed the first quarter of its fiscal year would be its most challenging for the financial year, with the September quarter having delivered a significant improvement across its operations.
Bridget Carter 10.22am: Brokers drum up support for DBCT IPO
Brokers working on the $1.3 billion float of the Dalrymple Bay Coal Terminal were trying to ring fence a group of investors ahead of broker bids due on Wednesday for its initial public offering.
The book build will be launched on Thursday for the float of the Queensland-based coal export facility ahead of the prospectus being lodged on Friday.
It is understood that advisers to the terminal’s owner, Brookfield, have spoken to 30 institutional investors in recent days ahead of the listing in an effort to gain their support.
The DBCT is one of Queensland’s major metallurgical coal export facilities and handles about 20 per cent of the world’s seaborne metallurgical coal trade.
It was earlier expected that institutional investors would side step the float due to the exposure of the asset to coal, which is out of favour due to concerns about the impact of the commodity on the environment.
10.19am: What’s impressing analysts?
OZ Minerals Cut to Sell - Goldman Sachs
John Stensholt 10.16am: Waislitz ‘considering takeover bids’
Billionaire investor Alex Waislitz has revealed he will consider a takeover bid for a listed or unlisted company to close the gap between the slumping share price and net tangible asset value for his listed investment company Thorney Opportunities (TOP).
Speaking at TOP’s annual general meeting on Wednesday, Mr Waislitz said he remained “disappointed” that the company had not been able to close that gap, and that TOP was working on a number of strategies to remedy the situation.
Among those would be TOP introducing more unlisted or pre-IPO stocks to its portfolio and perhaps even acquiring outright an listed or unlisted company.
“This would allow TOP to have full access to the acquired company’s cash flows and so enable us to pay out even higher dividends to our shareholders. This will also differentiate TOP further by allowing TOP shareholders access to otherwise unavailable unlisted and proprietary deals,” Mr Waislitz said.
TOP fell to a $46m annual loss for the 2020 financial year, as shareholdings held by the LIC were hit hard by COVID-19 and media assets were written down.
Among those is its 25% shareholding in Australian Community Media, which owns regional newspapers such as The Canberra Times and the Illawarra Mercury. Mr Waislitz personally owns another 25% and the other half is held by his friend and media executive Antony Catalano.
TOP and Mr Waislitz combined to pay $57.5m for a 50 per cent share in ACM when the business was sold for $125m by Nine Entertainment last year, but TOP wrote down the value of its stake by 15% in August.
Mr Waislitz said he was now considering another, more positive valuation, of the shareholding given the performance of the business in recent months.
“I am extremely optimistic that ACM will prove to be a very successful and profitable investment for TOP and its shareholders. As a result, we will be reviewing the holding value of our ACM stake in due course.”
Otherwise, Mr Waislitz said he had noted signs of markets beginning to rotate back to value stocks and away from some of the “so called ‘stay at home’ tech stocks that have boomed this year.
”
10.01am: Bank loan deferrals down 70pc
The number of deferred bank loans has fallen almost 70 per cent since its peak earlier this year, in a sign that economic recovery is gathering pace, according to the Australian Banking Association.
At the peak of the pandemic, more than 900,000 loans were deferred by Australian banks. That number had dropped below 300,000 by November 4.
“This is an encouraging sign that most Australians are through the worst,” said Australian Banking Association chief executive Anna Bligh.
“Australian banks have played a major role in carrying the economic burden of the pandemic for their customers. The good news is that the majority are now bouncing back as they restart their loan repayments.”
The number of deferred loans has fallen below 300,000 – a reduction of almost 70% since the peak earlier this year.
— Australian Banking (@ausbanking) November 17, 2020
“This is an encouraging sign that most Australians are through the worstâ€, said Australian Banking Association CEO, Anna Bligh. https://t.co/qzOjYceicg #ausbiz pic.twitter.com/sypu2w8ZM2
Perry Williams 9.36am: Minister criticises NSW govt on energy blueprint
Federal energy minister Angus Taylor has criticised the NSW government for a lack of consultation over its energy blueprint, noting AGL Energy’s decision to pause development of major investments due to uncertainty over the policy.
AGL Energy pointed to the NSW government‘s controversial energy blueprint for a decision to delay its Newcastle gas plant and review a giant battery investment at Liddell, in a move that may also nix Scott Morrison’s hopes for 1000 megawatts of new power capacity to be committed in the state by April.
A spokesman for Mr Taylor expressed frustration over the NSW government’s move.
“It is disappointing that there wasn’t greater consultation on the NSW Government Energy Roadmap. As AGL has stated, that has directly impacted final investment decisions on the reliable generation that NSW needs when Liddell
closes.”
Critics of the NSW policy are concerned it includes little transparency or cap on the costs that could be passed through to consumers.
Clean energy investors, however, have backed the blueprint for fast tracking firmed renewables into the state‘s power grid.
9.35am: Ardent flags subdued theme park attendance
Ardent Leisure has flagged subdued trading at its Dreamworld and WhiteWater World theme parks for November, as pent-up demand from locals subsides, after the parks reopened last month.
In a statement released to the market ahead of the company’s annual general meeting today, theme parks and attractions chief executive John Osborne said attendance had fallen well below the prior corresponding period.
That highlighted the importance of the Queensland border reopening to Sydney and Melbourne in time for the Christmas holiday period, he said.
“At the date of this presentation, the Queensland border remains closed to the important markets of Sydney and Melbourne,” Mr Osborne will tell shareholders at today’s AGM.
“November trading has shown that without access to these markets, FY21 will be challenging, especially if the Queensland border remains closed for the Christmas holiday period.”
Jared Lynch 9.21am: Aristocrat posts profit jump on deferred tax asset
Poker machine maker Aristocrat Leisure will continue to pay shareholders a dividend, despite accessing JobKeeper and suffering a halving of full year net profit.
The company, backed by billionaire Len Ainsworth, accessed $13.3m from the federal government’s JobKeeper wage subsidy scheme in the year to September 30.
It will pay shareholders a dividend of 10c a share, fully franked, on December 18 - a decrease of 82 per cent on the prior year.
The company’s full-year net profit dived 52.6 per cent to $357.1m. Meanwhile, revenue eased 5.9 per cent $4.1bn.
The company’s normalised full-year net profit dived 46.7 per cent to $476.6m. Meanwhile, revenue eased 5.9 per cent $4.1bn.
On a statutory basis, profit surged 97.2 per cent to $1.38bn, thanks to a $1.1bn deferred tax asset.
Revenue in its digital gaming business surged 29 per cent, largely offsetting a 32 per cent decline in its ‘land based’ revenue.
“In May, we said that Aristocrat entered the COVID-19 challenge in good shape. Six months on, and notwithstanding the uncertainties that remain, we believe we’re well placed to emerge from this period in even better shape,” chief executive Trevor Croker said.
“Our results for the full year to September 30 demonstrate that we have enhanced our financial fundamentals and further accelerated our underlying operational momentum, despite the exceptional challenges and volatility generated by COVID-19 on our business, customers, players and people across the majority of the period.
“Aristocrat continued to take share and maintained its leadership of key gaming markets and segments over the full year, with an increased focus on customer service and engagement. Continued investment in new hardware and games delivered superior operational performance and supported resilient demand.”
9.13am: Isentia services fully restored
Isentia says its Mediaportal services are available again after a cyber security incident prompted a major outage last month.
The media monitoring company said the incident would cost between $7m and $8.5m in net profit before tax, after credits and discounts had been applied to affected customers.
Isentia told the market this morning that it had finalised a new debt facility with CBA, consisting of a $33.5m term loan with a $12m revolving tranche as well as a $1m bank guarantee and transactional bank tranche.
“This new debt facility provides us with cost effective funding and improved flexibility to drive future growth and invest in product and technology in line with our strategic plan,” chief executive Ed Harrison said.
9.05am: Downer sells its blasting business
Downer EDI has offloaded its blasting services business for $62m to a subsidiary of Chilean company Sigdo Koppers Group, the largest producer of explosive-grade ammonium nitrate in Latin America.
“The sale of Downer Blasting Services follows the sale of the Snowden consulting business and also our share in the RTL Mining and Earthworks joint venture,” chief executive Grant Fenn said.
“We are in active discussions with a number of interested parties in relation to the rest of the mining portfolio.”
The transaction remains subject to regulatory approvals and is expected to be completed by the end of March.
9.01am: US stocks retreat from records amid Covid gloom
US equities had another bumpy ride Tuesday, pulling back from new records to close lower as the spike in coronavirus infections undermined tentative optimism about the economic recovery.
The bellwether Dow Jones Industrial Average fell 0.6 per cent to end at 29,783.35, after finishing at an all-time high on Monday.
The S&P 500, which also closed at a record Monday, lost 0.5 per cent to 3,609.53, while the tech-rich Nasdaq Composite Index dipped 0.2 per cent to 11,899.34.
Wall Street has lurched up and down in recent weeks, with changing economic fortunes. The recent rally has been propelled by optimism over news of two successful coronavirus vaccines.
But sentiment has been blunted by worries over skyrocketing COVID-19 cases that are leading to new restrictions and undermining hopes economic activity can return to normal soon.
Federal Reserve Chair Jerome Powell highlighted the need for caution, noting “significant challenges and uncertainties” about the timing, production, distribution and efficacy of the vaccines.
“With the virus now spreading at a fast rate, the next few months may be very challenging,” Powell said in a discussion. “So it’s probably too soon to say with any confidence what the impact on the path of the economy will be from the vaccines.” Commerce Department data showed retail sales in October increasing by a disappointing 0.3 per cent from September.
The data indicated slowing growth in a sector that bounced back from the pandemic downturn faster than most others thanks to massive government assistance that kept consumers flush.
Tesla surged 8.2 per cent in the first trading session since S&P Dow Jones Indices said the electric car company officially qualified to join the prestigious S&P 500.
AFP
8.54am: United Malt unveils profit slump
Recently listed United Malt group reports a full year underlying net profit after tax of $57.4m, down 34 per cent on the prior year.
Revenue fell by 2 per cent to $1.3bn, as the malting business was impacted by COVID-related volume declines as demand for beer in pubs and clubs fell during the second half of the year.
“Following a solid first half, our financial performance was impacted in the second half by COVID restrictions which adversely impacted on-premise alcohol consumption, particularly for small craft beer brands,” said United Malt’s managing director Mark Palmquist.
“While off-premise consumption increased, this was not sufficient to mitigate the decline in on-premise consumption,” Mr Palmquist said.
Underlying pre-tax earnings was $156.2 million, down 11 per cent on the prior year. United Malt, which was spun out from GrainCorp in March this year, said earnings in the second half were impacted by COVID-related declines in volumes and a change in product mix, together with an increase in corporate costs and insurance premiums as the business transitioned to a stand-alone listed entity on the ASX.
United Malt will pay a final dividend of 3.9 cents per share, with scheduled payment on 30 December 2020. United Malt closed Tuesday at $4.60bn, giving it a market capitalisation of $1.4bn.
Angelica Snowden 8.48am: Planning impossible says AIG’s Willox
Australia’s federation is “falling apart” amid border wars over COVID-19 outbreaks, the Australian Industry Group CEO Innes Willox says.
“We used to be one country but now it seems like we are eight states and territories before we’re Australian,” Mr Willox told the Today show.
“We agreed to be open for Christmas … those seem like pretty hollow words now,” he said.
“So the idea of being one country trying to deal with this virus and work our way through seems to be a bit of a joke sadly.”
After a coronavirus outbreak in South Australia which reached 20 cases on Tuesday, Western Australia, Queensland, the Northern Territory and Tasmania announced they would close their borders to the sudden state.
Australia's states and territories are at odds this morning, with only some restricting access to people coming from Adelaide. #9Today pic.twitter.com/F492A4m0LL
— The Today Show (@TheTodayShow) November 17, 2020
“It makes it really, really difficult for business to plan. We are already seeing concerns and reports around shortages of fruit and vegetables and other supplies for Christmas,” he said.
“So business thinking about planning ahead, they really can’t. It’s a day-by-day, almost hour by hour situation now. Because they don’t know what a state government will do next. That gives no certainty for business.
“I mean, realistically, who is going to invest in Queensland or WA at the moment when you’re thinking that you could just be turned around at the border at the drop of a hat.”
7.37am: Virus jump a major risk, says Fed’s Powell
US Federal Reserve Chairman Jerome Powell says the increased spread of the coronavirus poses an important risk to the economy in the months ahead and said it was too soon to say how a potential vaccine would change the outlook.
“With the virus now spreading at a fast rate, the next few months may be very challenging,” Mr. Powell said during a virtual question-and-answer session Tuesday. “We’ve got a long way to go.” While recent news about successful vaccine trials was “certainly good news, particularly in the medium term, in the near term there are significant challenges and uncertainties,” Mr. Powell added. “Even in the best case, widespread vaccination is months into the future.” Promising reports about the efficacy of new vaccines have propelled stocks to records this week. But the pace of improvement in the labour market has slowed in recent months and a report on October sales at U.S. retailers showed growth posted the smallest monthly rise since May, when spending rebounded from sharp declines in the initial phase of the pandemic.
The spread of the coronavirus is “the near-term risk that we’re most focused on,” Mr. Powell said. As case counts climb and hospitalisation rise, more states are beginning to impose restrictions on commercial activity. “The concern is that people will lose confidence in efforts to control the pandemic, and … we’re seeing signs of that already,” he said.
Separately, Mr. Powell obliquely addressed the fate of a suite of emergency lending programs established jointly with the Treasury Department after the pandemic convulsed financial markets this spring. The Treasury hasn’t indicated whether it supports renewing the programs, which are set to expire on Dec. 31.
“The Fed will be strongly committed to using all of our tools to support the economy for as long as it takes until the job is well and truly done, ” Mr. Powell said. He hinted it would be premature to wind down the lending programs. “When the right time comes, and I don’t think that time is yet or very soon, we will put those tools away,” he said.
Dow Jones
7.33am: Germans buy ISS
German stock market operator Deutsche Boerse said Tuesday it had bought around 80 per cent of US investor advice firm Institutional Shareholder Services (ISS), valued at $2.3 billion.
The Frankfurt company will take over ISS in partnership with its current management and private equity firm Genstar capital, it said in a statement.
ISS offers institutional investors recommendations on how to vote at annual general meetings of the companies whose shares they hold.
It has a growing focus on companies’ adherence to so-called environmental, social and corporate governance (ESG) criteria.
AFP
7.11am: A2 Milk maintains guidance
Dairy products group A2 Milk is sticking by guidance released in September. In material for investors released on New Zealand’s NZX to accompany its annual general meeting the company said it expected first half group revenue of between $NZ725 million to $NZ775 million.
Full year revenue for 2021 would be in the range of $NZ1.8bn to $NZ1.9bn, with an EBITDA margin around 31 per cent, the company said.
“However, due to the volatility arising from COVID-19, and the difficulties this presents with forecasting, naturally there is uncertainty to this forecast,” the company said. “We also acknowledge the outlook provides for a significant increase in revenue in the second half, dependent on a number of key assumptions, including an improvement in the daigou channel and continued growth in our China label business.”
But the company said its brand remained healthy, especially in China. “This gives us confidence that, notwithstanding the current headwinds, the fundamentals of the business over the medium term remain sound.”
5.29am: Social media chiefs grilled again
Facebook and Twitter defended their handling of US election misinformation at a heated congressional hearing Tuesday where one key senator assailed the platforms for being the “ultimate editor” of political news.
The hearing, the second in less than a month, came with social media under increasing fire from both the left and the right for their handling of political content during a bitter US presidential campaign.
Facebook chief Mark Zuckerberg and Twitter CEO Jack Dorsey testified remotely to the session, called to discuss “censorship and suppression of news articles” and the “handling of the 2020 election” by the platforms.
Senator Lindsey Graham, chairing the Judiciary Committee hearing, warned the CEOs that new regulations are needed to ensure that major platforms are held responsible for decisions on removing, filtering or allowing content to remain.
“It seems like you’re the ultimate editor,” the Republican senator said at the opening as he took aim at decisions by both platforms to limit the distribution of a New York Post article claiming to expose malfeasance involving the son of President-elect Joe Biden during the campaign.
“When you have companies that have the power of governments (and) have far more power than traditional media outlets, something has to give.” Graham said the law known as Section 230 that gives immunity to online services for content posted by others “needs to be changed.”
Read more: Facebook, Twitter take hits from all sides
5.26am: US retailers struggling
Walmart earnings are surging, Amazon is expanding into pharmacies and Wall Street indices are hitting record highs, but data released Tuesday shows traditional retailers struggling to keep up as the COVID-19 pandemic disrupts the US economy.
Nationwide retail sales grew by only 0.3 per cent last month, the Commerce Department reported, much slower than in September and before the nationwide surge in coronavirus cases seen in recent weeks that has some states reimposing business restrictions.
It also augurs poorly for the overall economy, which seems bound to endure months of widespread COVID-19 infections without renewed aid from Congress, since politicians have not managed to bridge the months-long impasse over how much more to spend to help the country recover from the pandemic damage.
“This is consistent with a recovery that’s positive but losing momentum and at risk of being knocked off track in the winter,” Ernie Tedeschi of Evercore ISI said of the data on Twitter.
Yet even amid the retail sales slowdown some businesses are still making money in the world’s largest economy.
Walmart’s profits came in well above forecasts, surging to $5.1 billion, an increase of 56.2 per cent from the year-ago period, largely on the strength of its push towards online sales.
And Amazon unveiled plans to expand in to the pharmacy business with an online service for US consumers who will be able to order prescription medications directly from its website or mobile app, an announcement that swamped the shares of existing pharmacy chains.
Wall Street has been happy place during the gloom of the pandemic. Both the Dow Jones Industrial Average and the S&P 500 ended at record highs on Monday after the announcement of another successful coronavirus vaccine candidate.
But that is a world apart from the job losses and business shutdowns of the real economy.
“The surging stock market is great, but it doesn’t add to the disposable income of a huge segment of the population. Wall Street is not Main Street,” economist Joel Naroff said.
AFP
5.20am: Bitcoin rallies
Bitcoin rallied Tuesday for the second consecutive day, gaining $1,500 to approach an all-time high in a market that is now ready to take on risk.
In late European trading, the virtual currency was worth $17,502 and was headed towards its record of $19,041 reached in late 2017.
Forex.com analyst Fawad Razaqzada said “There has been strong appetite for all risk assets, including cryptos, in the wake of extraordinary government and central bank stimulus measures to combat the negative impact of the pandemic.” The coronavirus has forced officials to support financial markets with cash and loan guarantees to ward off an economic collapse, attenuating the level of risk and helping stock markets in the United States to set new records on Monday.
Bitcoin was created in 2008 by the pseudonymous Satoshi Nakamoto, and marketed as an alternative to traditional currencies.
Unregulated by any central bank, it was sold as an attractive option for investors with an appetite for the exotic – and criminals also appreciate its under-the-radar appeal.
AFP
5.18am: France economy retracts
France’s economic output will contract by 2.5-6 per cent in the last quarter of 2020 depending on the length of the current partial lockdown, national statistics service Insee said Tuesday.
It now forecasts that the French economy will contract by 9-10 per cent overall this year.
The government reimposed a lockdown at the end of October as the number of coronavirus infections and hospitalisations surged higher.
The conditions are not as strict as those imposed in March, however, and Insee expects the impact on the economy to be considerably weaker.
If French economic activity plunged by 30 per cent in April from pre-crisis levels, Insee expects the drop in November to be 13 per cent.
AFP
Add your comment to this story
ASX 200 gains on US-EU tariff deal; Boss Energy tanks 40pc
US-EU tariff deal lifts Wall Street, Euro futures, signalling strong start to trading week. Boss Energy guidance weighs as share price hits 2022 lows. WiseTech shares up on internal pick for top job. Tamboran's sudden CEO exit.
Miners, banks a drag; Newmont, ResMed hit records
Newmont hauls higher gold grades at Cadia mine in NSW. Whitehaven beats coal guidance as sales jump. Analysts note Macquarie's 'deja vu' on earnings miss. Rich-lister's latest buy-in caught up in ICAC NSW probe.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout