Australian shares surge 5.8pc as BHP, CBA notch double digit gains
European stocks gain and US futures turn positive after the ASX 200 surged 5.8pc, its biggest daily rise since 1997.
- Market rebound best since 1997
- Heavyweight upgrades drive ASX rally
- Social distancing hitting retail: ANZ
- Qantas slashes international capacity by 90pc
- US stocks plummet 13pc
That’s all from Trading Day for Tuesday, March 17 with special extended coverage amid the global market meltdown. The Stoxx Europe 600 started its trading day up 2.7pc after ending Monday with a 4.9pc loss. US stock futures were positive on Tuesday, suggesting US markets could regain some ground after a punishing selloff on Monday. Futures on the Dow Jones Industrial Average were up by more than 500 points.
The local share market notched a 5.8pc lift, its biggest since 1997, with gains across most sectors, despite a horror 13pc plunge on Wall Street overnight - its biggest drop on record.
The tick higher in shares comes after Monday’s 9.7pc drop, the worst on the local market since the 1987 crash. Eyes are on the RBA and government for further stimulus, while airlines are under pressure after Qantas made its most dramatic cuts to capacity and as US peers call for a bailout. The Aussie dollar was trading slightly lower at US61.11c at the local close.
7.48pm: Europe gains, US futures positive
European stocks advanced on Tuesday, aided by hopes the US Senate would pass a significant stimulus package after US equities suffered their worst performance in nearly 30 years.
The Stoxx Europe 600 rose 2.7pc after ending Monday with a 4.9pc loss. US stock futures were positive on Tuesday, suggesting US markets could regain some ground after a punishing selloff on Monday. Futures on the Dow Jones Industrial Average were up by more than 500 points.
At the open, the FTSE 100 gained 2.40pc, while France’s CAC 40 was 1.9pc higher. Germany’s DAX rose 4.5pc in opening trade.
Italy’s FTSE MIB was up by 5.2pc and Spain’s IBEX 35 was 6pc higher.
WTI oil futures were rallying, up 5.2pc to $US30.19 a barrel as Brent gained 3.4pc to $US31.07 a barrel.
The yield on the 10-year US Treasury note rose about 0.04 percentage point to 0.778pc.
Japan’s Nikkei 225 closed 0.1pc higher, after shedding early morning losses. South Korea’s Kospi, which swung from gains to losses, ended the day down 2.5pc. Hong Kong’s Hang Seng was up 0.6pc.
Dow Jones Newswires
James Kirby 6.20pm: Best market advice: ‘Be patient’
As the local share market offered some relief with a 5.8 per cent bounce back – top financial advisers are moving to give practical advice to clients stunned by the volatility across investment markets.
Tim Mackay of Quantum Financial said: “Markets just do not know how to price anything about coronavirus and how it evolves ... so they fluctuate wildly. Over time big moves are a part of investing in markets - we tell clients do your best not to let it dictate your important investment decisions.”
After a whipsaw session which ended with banks and miners making gains of more 10 per cent while property trusts fell further, Stephen Miller at the GSFM group suggested: “If you already have a conservative portfolio, I wouldn’t be changing it any time soon. As for going back into the market, well there is the risk of trying to catch a falling knife…be patient.”
With Tuesday’s wild session representing the best day in about 13 years, advisers continue to suggest investors at all levels refrain from panicking, especially in relation to superannuation.
In practical terms, three near-term strategies which might be useful for superannuation investors have emerged:
Angelica Snowden 6.00pm: Bunnings cancels sausage sizzles
Wesfarmers’ Bunnings has made the “tough” decision to cancel sausage sizzles from Wednesday.
Bunnings managing director Mike Schneider said a shortage of volunteers and supplies lead to their decision.
“We absolutely understand the important role these sausage sizzles play for thousands of local community groups and charities and that finding alternative fundraising opportunities at short notice isn’t easy,” Mr Schneider said in a statement.
“To assist community groups who have sausage sizzles booked over the next month, our store teams will donate $500 gift cards to these local organisations to assist with their fundraising activities,” he said.
“Across Australia and NZ, this represents an investment into local communities of over $1.2m.”
Bunnings will also cancel all other in store activities, including school holiday workshops and Easter and Mother’s Day family nights.
Wesfarmers closed the day’s ASX trading up 5.9pc, at $37.96.
5.00pm: UK, US futures signal positivity ahead
Overseas markets are set to follow the ASX’s positive lead, with futures suggested rebounds across both the FTSE 100 and on Wall street.
In early trade today Wall Street futures trade was halted as shares went “limit up”, and FTSE100 futures are pointing to an early gain of 1.42pc.
Perry Williams 4.48pm: Oil plunge may force equity raises: Bernstein
Santos and Oil Search may be forced to raise equity if oil prices continue to linger at rock bottom levels, Bernstein analysts said.
“The valuation discount on some stocks also implies inherent balance sheet risks. Santos, Oil Search and Inpex are among the higher geared companies in our coverage and if prices stay lower for longer, then an equity raise cannot be ruled out,” Bernstein said. “Moreover, if they want to grow, further fund raising is inevitable.”
While the ASX 200 energy index lifted by a modest 0.43 per cent Tuesday after cratering 13.5 per cent on Monday, Santos bucked the trend after falling a further 5.3 per cent to $3.57 while Oil Search shed 5 per cent to $2.65.
Oil, now trading at $US30 a barrel, could remain under $US40 a barrel for a year, according to Credit Suisse.
“We may see deferral of Woodside’s Scarborough, Santos’ Dorado and onshore drilling, Oil Search’s Alaska and PNG LNG expansion and Beach’s onshore/Waitsia/exploration,” analyst Saul Kavonic said.
4.40pm: Heavyweight upgrades drive ASX rally
To equities, and major brokers highlighted a number of top stocks as oversold in the recent market turmoil.
BHP was called out by Morgan Stanley for its potential at current prices, after a 31 per cent de-rating so far this year. Shares in the miner surged 11.9 per cent to $28.21.
Meanwhile, Rio Tinto put on 6.9 per cent to $83 and Fortescue lifted by 10.7 per cent to $10.69.
In other high profile upgrades, three of the four major banks were upgraded by Jefferies – helping the broader sector higher by 9.2 per cent.
Commonwealth led the charge, adding 13.3 per cent to $67.64 as Westpac gained 7.9 per cent to $17.25, ANZ rose by 11.8 per cent to $18.40 and NAB lifted by 6.7 per cent to $17.21.
As more offices were evacuated to stem the coronavirus spread, mall and office building owners came under pressure.
REITs were the only sector to finish in the red, down 2.4 per cent led by a 9.7 per cent drop in Charter Hall to $7.68 while Unibail Rodamco Westfield lost a further 22.8 per cent to close at $4.60 after flagging weakness in Europe from broad city closures earlier this week.
4.14pm: Market rebound best since 1997
Double digit gains in the major banks and BHP helped the local market to clinch its best daily gain since 1997, despite Wall Street’s biggest drop on record overnight.
Still, considering the market’s 9.7 per cent tumble on Monday, there is still plenty of room to make up.
A slight gain for the ASX200 at the open picked up pace by the afternoon session and helped the market to claw back 291 points or 5.83 per cent to 5293.4.
Meanwhile, the All Ords added 275 points or 5.43 per cent to 5332.8.
Richard Gluyas 3.48pm: NAB vacates Melbourne office for virus
National Australia Bank has vacated one of its office towers in central Melbourne after a worker tested positive for the coronavirus.
In a note to staff, chief executive Ross McEwan said the building would be “pandemically cleansed” as all staff worked from home in the next couple of days.
“We plan to have 700 Bourke Street ready for colleagues to return to work later this week,” Mr McEwan said.
“We will advise you as the situation becomes clearer.”
The NAB chief said the Department of Health was working through a contact-tracing exercise to determine who might be at risk of contracting the virus, and would speak with those people directly.
Anyone considered to be a close contact would be advised to remain at home for the required isolation period.
Stephen Lunn 3.43pm: Regis aged care goes into lockdown
One of Australia’s biggest residential aged care providers has gone into lockdown from Tuesday for two weeks.
Regis Aged Care, which has 63 nursing homes and 7000 beds across the country, announced a “no visitors” policy from 5pm Tuesday. But loved ones of the very frail may be granted access in special cases, the company said.
“We understand that there will be some exceptional circumstances where visitors can still arrange to attend the home with our Facility Managers (for example end of life care) as long as they can demonstrate that they are well, haven’t been overseas in the previous 14 days and haven’t been in direct contact with a person diagnosed with COVID-19.”
“After this period we will reassess the situation taking into account the best medical and public health advice available,” it said. “This is a proactive step to protect the health and safety of our residents and staff.”
REG shares last down 15.2pc to 89c.
Read more: Why we won’t go into lockdown - Hunt
3.39pm: Freedom Foods cheers demand surge
Freedom Foods says demand for its longlife milk, cereals and snack ranges are strong as consumers empty shelves to stock up amid the coroanvirus panic.
The company said its working closely with key retailers, other customers in Australia and export markets to “prioritise supply within our operational capabilities”, especially the supply of its UHT dairy milk.
“The Company does not see any current constraints for supply of key raw materials or packaging inputs,” it said.
“The Company has instituted upgraded internal protocols, including protection of its key operational processes and employees required to maintain food and beverage processing.”
FNP last traded up 11.4 per cent to $4.60.
Bridget Carter 3.14pm: Virgin drafts in legal restructuring experts
DataRoom | Virgin Australia is understood to be working closely with legal restructuring experts from the law firm Clayton Utz, as the airline industry awaits news as to whether it will receive government support.
It comes as Virgin Australia on Tuesday told the market that the ratings agency S&P Global downgraded Virgin Australia’s credit rating to B- on deteriorating domestic market conditions and placed the airline on Credit Watch Negative.
Virgin Australia’s shares are now at 6c and its market value at $583m.
The company said on Tuesday that it counted Clayton Utz as its long term legal advisers.
On March 13, Virgin Australia told the market it would reduce capacity by 6 per cent for the second half of the financial year and cut costs while rival Qantas today cut 90 per cent of international flights and 60 per cent of domestic capacity until the end of May.
While Virgin Australia is yet to call in any restructuring experts, many believe it faces an uphill battle in the coming months and may ultimately wind up subject to a bail out by its major shareholders, including Singapore Airlines, if the Australian Government does not first provide assistance.
3.11pm: Three of big four banks upgraded by Jefferies
Jefferies’ top-rated banks analyst Brian Johnson has upgraded three of the four major banks.
NAB goes to Buy from Sell, while Westpac and ANZ go to Hold from Sell. Commonwealth Bank remains at Sell.
Mr Johnson has been on the money so far, he’s had Sell ratings on the banks since around October.
Of course these upgrades aren’t going unnoticed by the market, with NAB up 6.3pc, Westpac up 7pc, ANZ up 6.9pc.
Commonwealth Bank has gone along for the ride, surging a cool 11 per cent amid a 3.5pc rise in the broader market.
The S&P/ASX 200 Banks sector dived 11pc yesterday to be down 37pc in 4 weeks.
2.45pm: W ill the RBA buy semi-gov’t bonds?
Credit Suisse macro strategist Damien Boey suggests the RBA could be poised to fund the NSW government’s $2.3bn stimulus package.
“State governments don’t have the authority to print money and while legally, the RBA can buy semi-government bonds, it needs to make this arrangement far more explicit, to clarify that there is no funding risk for state governments and boost inflation expectations at a time when people are pricing in debt-deflation, thereby lowering real interest rates,” Mr Boey says.
But he warns that the reality is that sovereign bond yields everywhere are at risk of increasing – not because the growth outlook is dramatically improving, and not because stimulus will be effective. Rather, the underlying issue is that the risk profile of bonds has increasing, while liquidity is dramatically falling.
“These two developments are fatal to risk parity investors invested in the fixed income space,” he says. “We think that central banks have some awareness of the risks, and hence have been launching, and re-launching bond purchasing programs. But their purchase programs to not address the root-cause of forced selling in the bond market, and success could be their own worst enemy.”
He questions whether central bank bond purchase programs are of sufficient size, consistency and timeliness to be able to withstand a stampede to the exits.
“Indeed, the very acts of easing and excessively intervening in the rates space could prove counterproductive, if all they do is increase the volatility profile of bonds.”
Michael Roddan 2.39pm: Resimac negotiates capital amid volatility
Leading Australian non-bank Resimac is negotiating with major lenders to extend its warehouse facilities in a bid for extra headroom and has deferred a securitisation transaction as the lender stares down the possibility of “restrictive or unduly expensive” capital markets.
The move comes as the Australian capital markets freeze up in the wake of the market turmoil, with analysts predicting lenders will not raise debt from securitisation markets until calm is returned and warning that the government’s bond manager may have to step in to the market to keep it functioning.
Until the recent market panic, Resimac was seeking out investors on a roadshow gauging interest on a $750m to $1bn securitisation issuance of prime home loans over the coming quarter.
“That transaction has been deferred,” Resimac general manager of securitisation and treasury Andrew Marsden told The Australian on Tuesday.
“It hasn’t been pulled. We’re playing it by ear. We’re in constant contact with investors,” Mr Marsden said.
In securitisation markets — where lenders package up tranches of loans and sell securities to investors — issuers are revisiting pricing expectations and industry participants are keeping close tabs on global developments as markets whipsaw.
1.59pm: Banks can absorb virus shock: S&P
Australian banks can absorb the shock of COVID-19, without losing any of their creditworthiness, according to ratings agency S&P.
In a note this afternoon, the group estimates local banks’ credit losses will nearly double this year, to about 30 basis points of gross loans and advances, from historic lows in 2019.
“Nevertheless, in our view the credit losses should remain low compared with international peers as well as our expected long-term averages,” it says.
Business loans are likely to contribute most of the initial increase in losses, especially travel, hospitality, retail-services and transport related sectors.
“The coronavirus outbreak follows several major natural disasters in Australia, such as bushfires and storms, the combined effect of which will further curb already subdued consumer sentiment and business confidence, with likely second-order effects on the economy and the banking system--for example, due to job losses and underemployment.”
1.38pm: Is now the time to buy BHP?
BHP shares have de-rated by 31 per cent year to date, thanks in part to its exposure in oil, but Morgan Stanley analysts say it could provide the prime buying opportunity.
Equity analyst Rahul Anand notes that BHP’s drop is more than both Rio Tinto and the broader ASX200.
“Although we acknowledge that the oil price moves and industry structure are the key drivers here, we think that the markets have over-reacted, providing a good opportunity to gain exposure,” Mr Anand says.
His base case is for enterprise value to earnings for FY21 is 5.2x, below its 3-year and 5-year averages of 5.9x adn 6.2x respectively.
“Gearing at the bottom end of target range $US12bn to $US17bn affords BHP significant protection and flexibility for growth in a stressed commodity price environment. We also favour BHP’s commodity mix relative to RIO, given its diversification and higher exposure to copper (versus aluminium),” he said.
BHP shares last up 9 per cent to $27.47.
1.29pm: Banks better prepared now than GFC: JPM
Australian banks are more prepared for a recession now than they were before the global financial crisis, according to JP Morgan.
Analyst Andrew Triggs points out that our banks are better funded, more liquid, better capitalised, less capital hungry, less profitable and less powerful from a pricing perspective than back in 2008.
“Reliance on offshore wholesale funding remains a key pressure point (albeit a reduced one), but the federal government and the RBA have several tools in their toolkit to stem these risks,” he adds.
“We conclude that risks remain primarily in the domain of asset quality, and the downside for the banks is dependent on the length of the downturn and how meaningfully it feeds into the unemployment rate.”
The financials index is bouncing by 4pc in Tuesday’s trade.
Joyce Moullakis 1.22pm: All Macquarie staff to work from home
Macquarie Group has become the latest large company to advise staff to work from home, in light of the COVID-19 pandemic.
Macquarie told its 15,760 staff around the world in a memo that it would require most of them to work from home starting Wednesday, given the growing outbreak. The asset manager and investment bank’s offices will remain open, however, manned by a small number of required staff.
Macquarie has 6,635 employees in Australia. The latest directive extends the group’s existing flexible working policy.
The Australian banking sector has already been hit with several confirmed cases of COVID-19. Investment bank Goldman Sachs on Monday confirmed one of its local staff had contracted the virus, prompting the 48th floor of its Sydney office to undergo a deep clean. Westpac has one confirmed case and a member of Bank of Queensland’s board has also tested positive to COVID-19.
1.10pm: REITs trim ASX rally
The local market is trimming its midday rally, holding higher by 2.5 per cent as real estate stocks serve a blow to broad gains across the rest of the market.
At 1pm, the benchmark ASX200 is higher by 124 points or 2.5 per cent to 5125.9.
Here’s the biggest movers at 1pm:
1.04pm: Volatility a ‘revenge of machines’: Morgans
Morgans chief economist Michael Knox described the volatility across global markets in recent weeks as “the revenge of the machines” with the rise of high-frequency trading.
“When we look at trading in the US, it’s not done by individual people anymore. It’s done by powerful programs which are run by large investment funds,” Mr Knox says.
“If you look at how those programs are set up, some of the components are very similar to the components in our stock market model,” he says.
“You have things like earnings, you have things like the yield on comparative investments. In addition to that, what you have is the stochastic (what’s left over). How the stochastic is modelled within these trading programs is by momentum. These machines are designed to make that momentum trade first”.
Eli Greenblat 12.56pm: Premier chief calls for rent consessions
The chief executive of billionaire Solomon Lew’s Premier Retail, Mark McInnes, whose retail stores include Smiggle, Portmans, Just Jeans and Peter Alexander, has again called on landlords to consider improved rental conditions in the wake of the coronavirus pandemic.
Premier Investments owns some of the biggest fashion retail brands in Australia and has a burgeoning global presence with its Smiggle brand opening in Asia and Europe.
“Landlords have a major role to play to ensure retailers can operate in the short term for the long-term benefit of all stakeholders,” Mr McInnes said.
Premier Investments will release its half-year profit results on Friday and has revealed this afternoon some store closures already and more to possibly follow.
“Since the outbreak of COVID-19, we have closed two stores in Hong Kong and we are prepared to close many more stores globally if landlords do not respond to the current crisis,” he said.
Gerard Cockburn 12.49pm: Ardent halted after trade swings
Theme park owner Ardent Leisure (ALG) is expected to make an update on its response to the coronavirus, after it shares surged more than 40pc in morning trade.
The company requested a pause in trade at 11am this morning, after a rally as much as 42pc to 25c apiece, saying its upcoming announcement related to government responses to COVID-19 which will impact its leisure and entertainment divisions.
Last Friday, ALG withdrew its earnings guidance for both its Main Event and theme parks businesses.
The announcement prompted a 52 per cent drop on the market yesterday, wiping $91.14 million off its market capitalisation.
ALG last traded at 22.5 cents per share.
12.34pm: US futures turn “limit up”
US markets are poised for a sharp rebound in Tuesday’ session, with futures markets turning “limit up” in midday trading.
The exchanges have a built in circuit breaker - with moves capped at 5 per cent in each direction.
Over the past week, trade in futures had been limited twice for downside moves, but the latest development markets the first “limit up” move.
Of course this volatility isn’t healthy and such sharp gains in recent days have preceded new lows.
That’s helping the Australian market push higher by 4.8pc to 5240.
Limit up pic.twitter.com/tTqNEs5NWe
— Carl Quintanilla (@carlquintanilla) March 17, 2020
12.20pm: ASX surges as US futures rebound
Australia’s S&P/ASX 200 index surged 3.2pc to 5162 amid a surge in US stock index futures.
S&P 500 futures have surged 3.6pc to 2492.88.
Could the US be about to follow the Philippines and shut its markets? That possibility may be causing some short covering today.
If the US were to shut its markets for a week and the virus were to peak, US equities would gap higher on reopen.
Of course markets that remain open would bear the brunt of any additional bad news in the coming days.
Eli Greenblat 12.17pm: Panic puts rocket under supermarket sales: UBS
The panic buying at Australian supermarkets in the wake of the coronavirus pandemic, that has seen toilet paper, pasta, rice, meat and other staples stripped from the shelves as queues of shoppers linger out the front of stores, could have sent sales at chains such as Woolworths and Coles skyrocketing more than 25 per cent.
It could also lead to a long lasting change to consumer behaviour, once the pandemic has passed, with the crisis potentially driving a greater take up of online shopping and a return to cooking at home rather than dining out.
A new report from UBS analyst Ben Gilbert says sales in supermarkets have spiked materially, with his channel checks suggesting sales up more than 25 per cent year on year across stores in recent weeks.
“This is consistent with global trends where the UK has seen categories such as tissues & pasta up over 50 per cent for the week commencing 1 March (source: Nielsen),” Mr Gilbert said in a report to UBS clients.
That said, increased sales have come with increased costs through the supply chain, which limits the level of operating leverage UBS might normally expect.
WOW shares last up 6.7pc, while Coles adds 3.8pc.
Read more: Empty shelves greet elderly shoppers
12.10pm: NZ unveils $12bn phase one stimulus
The New Zealand government said it will spend billions of dollars to limit job losses and cushion the country from an economic downturn triggered by the coronavirus pandemic.
The government said Tuesday that it will spend $NZ12.1bn ($12bn) - equal to about 4pc of the country’s gross domestic product - in “phase one” of its response to the pandemic.
Prime Minister Jacinda Ardern said that the spending is the most significant economic plan in New Zealand since World War II.
“The government is pulling out all the stops to protect the health of New Zealanders and the health of our economy,” Ms Ardern said.
International responses to the pandemic have dramatically escalated in the past week, with countries locking down cities and effectively closing their borders. New Zealand is requiring anyone arriving in the country to self-quarantine for two weeks.
The spending includes $NZ5.1bn in immediately available wage subsidies for any businesses affected by the pandemic and $NZ2.8bn in tax relief for businesses.
Welfare payments will be increased by $NZ2.8bn, with a significant portion of the increases to be made permanent, and health spending will be boosted by $NZ500m.
Dow Jones Newswires
Gerard Cockburn 12.07pm: Amex clears Sydney office
American Express has told its Sydney employees to work from home as uncertainty surrounding the coronavirus heightens.
The financial services provider said the voluntary clear out of its Barangaroo office falls in line with the company’s global response to the virus.
“For our offices in Australia and New Zealand specifically, we have asked all colleagues who are able, to work from home,” a spokeswoman said.
American Express is implementing a rotating schedule for staff choosing to work from the office, in an attempt to limit interactions.
The card provider is located on Shelley Street, near Barangaroo’s International Towers, where one Westpac employee tested positive for COVID-19 last Wednesday.
Westpac conducted deep cleans on two levels of its Barangaroo office and one level of its Kent street site, after it sent three workers home who were showing flu-like symptoms.
The two other employees tested negative for the virus.
Read more: Sydney’s financial hubs deserted as workers sent home
Bridget Carter 12.00pm: Carbon Revolution reprices equity raise
DataRoom | Carbon Revolution has repriced its equity raising
Shares will now be sold at $1.50 each to raise $25m through a placement.
The revised price equates to a 40.2 per cent discount to the last closing share price of $2.51.
On Monday, Carbon Revolution revealed it was braving the difficult market conditions and raising $30m via a placement and share purchase plan at $2.10 per share.
Bell Potter and E&P Corporate Advisory are working on the transaction.
11.54am: Estia suspends guidance
Aged care provider Estia has suspended its full year guidance amid the heightened uncertainty environment, saying it is too early to say what impact the virus could have on its future occupancy, revenue and costs across its 69 homes.
It said none of its homes had experienced cases of coronavirus, and that as at March 15 its occupancy within its mature home portfolio was 93.8pc.
“Given the dynamic and uncertain nature of this situation, it is not possible to provide meaningful guidance at this time on the size of the projected impact on earnings for the remainder of FY20,” it said.
At March 13, the group’s net debt was $106m, while it had $216m in undrawn and committed facilities under its syndicated financing facility.
EHE shares last down 5.1pc to $1.22.
11.51am: Nikkei opens down 3pc
Tokyo’s key Nikkei index opened down three per cent on Tuesday, extending global plunges as interest rate cuts and fresh stimulus by central banks failed to dampen fears over the coronavirus pandemic.
The benchmark Nikkei 225 index was down 3.02 percent or 513.88 points at 16,528.11, minutes after the open, while the broader Topix index was down 2.66 percent or 32.94 points at 1,203.40.
“Japanese shares are seen dominated by sell orders as investors were discouraged by losses in world bourses, including plunges in the US,” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.
“Even as each country has provided policy measures to tackle the virus, many think that preventing the further spread of the virus is the only measure that can stop a recession and falls in shares,” he said.
AFP
Perry Williams 11.30am: Victoria lifts onshore gas ban
The Victorian government has lifted a ban on onshore gas exploration from July 2021, paving the way for the state to boost production as supplies decline from the offshore Bass Strait fields.
Following a three-year investigation, Premier Daniel Andrews said there will be an “orderly restart” of onshore conventional gas exploration and development from July 1 next year while a temporary ban on fracking and coal seam gas exploration will be made permanent.
The state has faced significant pressure to ease the gas ban amid forecasts of gas supply shortages looming by 2022 partly due to production drying up from the once prolific Bass Strait.
Big industrial users have been among vocal critics of the government’s move saying it had pushed up the price of locally priced gas and made it more difficult to compete with their inter-state and international rivals.
Potentially significant onshore gas resources could be extracted from the state’s Otway Basin which stretches into South Australia where an industry already operates.
Companies including Lakes Oil, backed by billionaire Gina Rinehart, have been preparing for the ban to be lifted with plans for drilling already in place.
11.23am: ASX trims gain as US futures slip
The S&P/ASX 200 has erased some of its early 2.1pc intraday rise as S&P 500 futures briefly turned negative.
Traders are wondering why it rallied at all this morning, but it was clearly led by US futures after the 12pc plunge overnight.
S&P/ASX 200 last up 0.6pc at 5530 as South Korea’s KOSPI opened down 4.3pc.
Michael Roddan 11.10am: Philippines shuts its financial markets
The Philippines has become the first country to shut financial markets in response to the coronavirus pandemic, halting trade on its stock, bond and currency markets until further notice.
The Philippine Stock Exchange chief executive Ramon Monzon said the offices will be closed from Monday “until further notice, consistent with the enhanced community quarantine that is implemented by the government”.
“We continue to enjoin everyone to take the necessary precautionary measures to help
stem the spread of COVID-19,” Mr Monzon said.
Phillippine stock market suspended from trading. pic.twitter.com/pasldeJMbb
— Joe McCann (@joemccann) March 16, 2020
11.05am: Gold miners back in favour
The flight to safe haven gold stocks is back on this morning, with gold stocks again in high demand.
In the first hour of trade, Northern Star is in the top spot - higher by 14.5 per cent even as gold prices edged lower in the overnight session.
Investors unloaded precious metals, most notably gold and platinum, amid the US sell-off overnight to move their assets to cash after the second emergency US rate cut.
Still, Gold Road Resources is higher by 13.7pc, Saracen Minerals by 12.7pc and Evolution Mining adding a more moderate 2.4pc.
Ben Wilmot 10.59am: Unibail plunges 20pc as REITs weigh
Property stocks are the biggest drag on the market in morning trade, with the big mall owners and funds management stocks taking the biggest hit.
Unibail-Rodamco-Westfield, that bought the international Westfield empire in 2018, is down 21 per cent to $4.71 as it warned its operations would be hit by closures across Europe.
After the close yesterday, the group warned that the latest measures to contain the spread of the virus were presenting “unprecedented challenges” to its operations.
Meanwhile, investors are driving Scentre, owner of the local Westfield empire, down by 6 per cent to just $2.19 as fears spread about the local restrictions on movement.
The already beaten down Vicinity Centres was only off by 1.5 per cent to $1.497.
Property funds manager Charter Hall was slugged and it and fallen by 9.4 per cent to $7.70 as concerns deepen that commercial property deal making will drop off over the next period.
Eli Greenblat 10.55am: DJs takes new measures to combat virus
David Jones has announced new measures in the wake of the coronavirus pandemic including increasing the frequency of cleaning and sanitisation in all stores, including high-touch areas such as handrails and counters, and providing complimentary hand sanitiser instore.
David Jones will also be suspending all instore beauty room treatments and on-counter services until further notice for the safety and protection of customers and team members.
Robyn Ironside 10.47am: ‘Biggest aviation shock’ rattles Qantas
Qantas shares are lower by 5 per cent on Tuesday, after making its most dramatic cuts to capcity so far in the wake of “the single biggest shock that global aviation has ever experienced” according to chief Alan Joyce.
Shares are lower by 4.8 per cent at $2.87, after testing its November 2016 low of $2.83.
It comes as Mr Joyce issued an email to staff, assuring workers it was his goal to protect as many of the airline’s 30,000 jobs as possible.
“It’s now fair to call this the single biggest shock that global aviation has ever experienced,” Mr Joyce wrote on Tuesday. “Both Qantas and Jetstar are faced with the need to radically increase the cuts already made to flying schedules.”
He said the new deeper cuts were a sign of how quickly the market had deteriorated.
“All these numbers are confronting and the reality behind them is just as stark,” said Mr Joyce.
10.32am: Hopes of stimulus lift ASX
Australia’s sharemarket has risen in anticipation of a bounce on Wall Street and Australian stimulus measures expected tomorrow.
The S&P/ASX 200 rose 2.1pc to 5106.2 in early trading after diving 9.7pc to 5002 yesterday, marking its worst day for Australian shares since the 1987 crash and the lowest daily close in 4 years.
S&P 500 futures rose as much as 1.2pc in early Asian trading after the S&P 500 plunged 12pc overnight, its biggest third-biggest fall since the 1929 crash.
Also on a slightly positive note, WTI crude oil futures rose 2.1pc to $US29.29 a barrel after plunging 10pc overnight.
The Materials, Consumer Staples and Health Care sectors are outperforming in the early bounce today.
Large cap standouts include a 5.9pc rise in BHP, a 5.8pc rise in Rio Tinto, and a 6.8pc jump in Newcrest.
The four major banks are up more than 2pc.
Index last up 1.2pc at 5060.9.
10.26am: Social distancing hitting retail: ANZ
Social distancing and travel bans is already weighing on retail spending and consumption, according to ANZ.
Spending by ANZ cardholders and using its point-of-sale terminals shows dining out is the hardest hit, with growth in annual terms down from 6 per cent for the week to February 26, to -1pc for the week to March 4.
Supermarket sales are a key outlier, with asles “skyrocketing” from 8pc growth year-on-year for the week ending February 26, to 17pc year-on-year for the week to March 4.
Travel related and entertainment spend were both down sharply - by 7pc and 20pc respectively.
“We expect March to be a transition period for retail spending, as social distancing becomes more widespread. After this, spending is expected to stabilise at much lower levels than usual,” the bank said.
10.16am: ASX surprises to the upside
The local market has take a surprise 1.5 per cent jump at the open, defying expecations of an early 3pc fall as indicated by futures.
In early trade, the benchmark ASX is higher by 74 points or 1.49 per cent at 5076.3.
10.09am: Almond demand strong: Select Harvest
Almond grower Select Harvest says demand remains strong from its major importers and domestic customers, with China customers now recommencing production after the extended closure for Lunar New Year and the coroanvirus outbreak.
In an update to the market, manaing director Paul Thompson said its 2020 harvest was progressing very well, with approximately 40pc of the orchards harvested and completion expected by the end of April.
“10pc of the crop has been processed with the yield and quality profile similar to last year. While it is too early to provide an accurate forecast SHV management is currently optimistic about crop size and quality,” Mr Thompson said.
He added that Australian shipments of almosts were up 26 per cent year to date, while the California Almond Board year-to-date shipments were up 5pc and both domestic and export shipments for February were records.
Robyn Ironside 10.01am: Qantas slashes int. capacity 90pc
Qantas will cut 90 per cent of international flights and capacity and 60 per cent of domestic until the end of May, in response to massive declines in travel demand due to the coronavirus.
In its most dramatic changes to network since the outbreak was confirmed in China, the national carrier will ground the equivalent of 150 aircraft, including almost all of its widebody fleet, made up of Boeing 747s, Airbus A380s, A330s and 787-9s.
A statement to the ASX on Tuesday said the 90 per cent cut to international capacity “reflected the demand impact of severequarantine requirements on people’s ability to travel overseas”.
The 60 per cent cut to domestic capacity reflected the rapid decline in forward travel demand due to government containmentmeasures, corporate travel bans and a general pullback from everyday activities across the community.
QAN last traded at $3.02 - marking a 57 per cent year-to-date decline.
Elias Visontay 9.56am: Airlines are critical: Birmingham
Tourism Minister Simon Birmingham has sought assurances from Australia’s airlines that “a critical piece of our national infrastructure” is not at risk of collapsing, as he warns of “a critical requirement to make sure that we maintain connectivity between key cities”.
He said Australia’s two airline carriers, Qantas and Virgin, had assured him of their viability and of “significant cash reserves”.
Asked by Sky News if the government would bailout airlines if required, Senator Birmingham said “not having airlines in Australia is not negotiable for a country like us and would cripple our recovery. So of course we have to be ready to respond as and when necessary”.
“We do need to note that when it comes to that recovery stage, airlines are a critical piece of our national infrastructure as well. And so of course, we will continue to engage closely with the airlines to ensure that we have them for that recovery.
“There is also a critical requirement to make sure that we maintain connectivity between key cities and key regional centres around Australia. Airlines aren’t just important in terms of the tourism and travel sector. They’re also important in terms of the provision of critical social services into particularly remote communities.
“We need to have and it is essential that we have effective carriers able to service Australia through these tough times in terms of keeping key routes open, but crucially then able to scale up again when it comes to the other side,” Mr Birmingham said.
9.48am: Shares brace for latest blow
Australia’s sharemarket is set for another sharp fall at the open after the S&P 500 fell 12pc in its third-worst day in history due to the worsening spread of coronavirus and associated lockdowns.
Based on overnight SPI futures relative to fair value, Australia’s S&P/ASX 200 is expected to open down 3.3pc at 4835.
However, Australian shares may pare some of their early declines before a potential bounce on Wall Street as well as RBA and likely Federal government stimulus measures on Thursday.
Last Friday’s 4-year low of 4873.7 is a potential support level on the chart, although there’s no strong chart support until the Feb 2016 low at 4710.
The energy sector will be hit after Brent crude plunged 11pc to $US30.05 a barrel. Real Estate, Financials, Tech and Energy underperformed on Wall Street.
Coca-Cola may be hard hit after withdrawing profit guidance, while Qantas and Santos may be applauded for slashing capacity, though this was rumored yesterday.
The S&P/ASX 200 fell 9.7pc to 5002 on Monday.
9.40am: Santos to review capital spend
Santos is reviewing all its capital spending plans in light of the collapse in oil prices and will stop all new hiring, chief executive Kevin Gallagher says. “Santos is currently reviewing all discretionary capex activities and will be freezing new external hiring for now but there are no plans for mass job cuts because we have focused over the last few years on being right-sized to remain resilient at low oil prices,” Mr Gallagher said in emailed comments to Reuters.
Reuters
9.30am: Cochlear loses US court appeal
Cochlear has been ordered to pay $US268m to non-profit US group Mann Foundation as damages for a long-running patent infringement case.
A US court ruled against Cochlear in its appeal of the November 2018 decision, relating to an initial case in 2014.
Cochlear this morning said it would seek an en banc review by the full court of appeals in a petition for a rehearing but that it had committed bank loan facilities available to fund the judgement.
“We believe the amount of damages awarded is out of proportion with the limited application of the patented feature. We are very disappointed with this decision, but inflated damages awards are a risk of patent disputes in the US,” chief Dig Howitt said.
He reassured shareholders that as the patent at the centre of the issue had expired, it would not disrupt the company’s business or customers in the US.
9.28am: Afterpay settles over ‘illegal’ US loans
Afterpay will refund late fees paid by customers in California for loans that were deemed “illegal” by the US state’s financial regulator, the two sides say as part of a settlement.
The buy-now pay-later company will pay $1.5m ($US916,350), of which $US905,000 will go to about 640,000 consumers in California who paid late fees and the rest will be administrative fees.
The settlement is for loans issued without a California financing law licence. It was granted to Afterpay in November last year.
The increasingly popular buy-now pay-later space has been facing increased regulatory scrutiny and Afterpay, considered by many as the sector’s bellwether, has faced the brunt of it back home in Australia, too.
APT last traded at $19.92.
AAP
9.16am: US airlines seek billions in aid
US airlines are asking the federal government for grants, loans and tax relief that could easily top $US50bn to help them recover from a sharp downturn in travel due to the new coronavirus.
Airlines for America, the trade group representing the carriers, disclosed its request for financial help on Monday, just as more airlines around the world were announcing ever-deeper cuts in service and, in some cases, layoffs.
President Donald Trump pledged to help the airlines, although he did not say what the assistance might look like.
The trade group is asking for $29bn in federal grants, with $25bn for passenger airlines and $4bn for cargo carriers. The airlines are also seeking up to $29bn in low-interest loans or loan guarantees, and they want federal excise taxes on fuel, cargo and airline tickets to be suspended through the end of next year.
That package would easily surpass the $5bn in grants and up to $10bn in loan guarantees that Congress approved after the terror attacks of September 2001, which temporarily grounded all US flights and led to a long slump in domestic travel.
AAP
9.07am: What’s on the broker radar?
- Australis Oil and Gas cut to Sector Perform - RBC
- BHP raised to Overweight - Morgan Stanley
- BHP raised to Buy - Citi
- Cochlear raised to Neutral - Citi
- Beach Energy raised to Buy - Shaw and Partners
- Flight Centre raised to Buy - Shaw and Partners
- Harvey Norman cut to Hold - Jefferies
- Metcash raised to Buy - Jefferies
- PWR Holdings raised to Buy - Bell Potter
- Sydney Airport raised to Outperform - RBC
- Woodside raised to Sector Perform - RBC
9.02am: Ventilator maker upgrades earnings outlook
A manufacturer of ventilators used to treat patients with coronavirus, Fisher and Paykel Healthcare, has stepped up production and upgraded its earnings expectations.
Chief executive Lewis Gradon said there was an increase in demand globally for its respiratory humidifiers and consumables, and manufacturing had been ramped up.
Hospitals across many western nations, particularly those in Europe and the US, are treating increasing numbers of patients as the virus spreads. COVID-19, which originated in China last year, has been declared a pandemic and has killed 6,606 people, according to the World Health Organisation.
The weakening of the New Zealand dollar, and stronger sales in homecare, have also prompted the earnings update to the Australian and New Zealand share markets.
Fisher and Paykel’s full-year operating revenue has been upgraded from $NZ1.2 billion as flagged in February, to $NZ1.24 billion.
FPH shares were among the only to notch gains in yesterday’s session - last at $25.06.
AAP
8.35am: CC Amatil abandons guidance
Coca-Cola Amatil says it has withdrawn its earnings guidance as a result of the coronavirus crisis.
In February, the soft drinks maker forecast mid-single digit earnings per share growth in 2020 and the medium term.
Today it told the ASX: “Given the significant uncertainty in relation to the duration and impact of the COVID-19 pandemic, we no longer feel it is appropriate to continue to provide earnings guidance.”
Coca-Cola Amatil boss Alison Watkins said: “As the situation continues to unfold, Amatil’s
overriding priority is the safety and wellbeing of our people. We will continue to support our
customers and our local communities, and at this stage we expect we can continue to operate
our business and avoid significant supply chain disruption, while maintaining our workforce
during this challenging time.”
7.58am: Copper hits 40-month low
Copper prices have slid to the lowest since November 2016 on worries that lockdowns in Europe and the United States to tackle the coronavirus would further erode metals demand.
But the falls in industrial metals of about one per cent to four per cent were more measured than in equities and oil markets, which saw plunges of 10 per cent or more.
About half of metals demand comes from China, where new virus cases have fallen sharply and the government is expected to roll out major stimulus spending. “Despite the very, very negative numbers for China over the weekend in terms of industrial production and fixed asset investment, I would still say that the general view is that China should recover from here,” analyst Carsten Menke at Julius Baer in Zurich said.
Industrial output in China, the world’s biggest copper user, contracted at the sharpest pace in 30 years in the first two months of the year, data showed on Monday.
Three-month copper on the London Metal Exchange (LME) fell 3.1 per cent to $US5,290.50 ($A8,668.97) a tonne in final open-outcry trading, the weakest since November 2016.
Copper, often used as a gauge of global economic health, has shed 17 per cent since touching an eight-month high of $US6,343 in mid-January.
Reuters
7.50am: Carnival Cruises flags loss
Carnival said it expects to turn a loss for fiscal 2020 as the coronavirus pandemic has led it to suspend global fleet cruise operations.
The pandemic’s effect on Carnival’s global bookings will hurt its liquidity, on top of weighing on its financial results, the company said.
Carnival said it is taking actions to boost its liquidity, including capital expenditure and operating expense reductions, and seeking additional financing. Earlier in the day, the company said it was borrowing $US3 billion to cover its needs for six months, drawing down all of its credit lines.
“Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions,” the company said.
Dow Jones Newswires
7.45am: Wall St ‘fear index’ peaks
A measure of implied volatility on Wall Street touched its highest level in history as all three stock benchmarks plunged by at least 12pc, marking one of the worst declines for equities in a generation, as fears about a long, hard slog with COVID-19, the infectious disease that originated in China last year, slammed assets considered risky.
The CBOE Volatility Index jumped by about 44pc in a single session, to close above 82, marking its highest finish in history, surpassing two readings of 80 that it registered during the 2008 financial crisis, if the index holds at that level.
The index, also known as the VIX, for its ticker symbol, has become well known as Wall Street’s “fear gauge,” since it was created in the early 1990s. The VIX is a gauge of investor expectations for stockmarket turbulence in the coming 30-day period, tracking S&P 500 index options contracts and had traded at a historic average between 19 and 20. Because the index often rises as stocks fall, it is viewed as a hedge against market turbulence.
Dow Jones
7.35am: Oil price slumps 11pc
Oil prices fell below $US30 a barrel overnight as the worldwide coronavirus outbreak worsened over the weekend, exacerbating fears that government lockdowns to contain the spread of the disease would spark a global recession.
Top global oil producers Saudi Arabia and Russia, having failed to agree on a plan to curb supply as the fall in global economic activity destroys oil demand, and have turned on each other to start a price war.
Saudi Aramco reiterated its plans to boost output to record levels to take a bigger share of the global market.
Brent crude settled down $US3.80, or 11.2 per cent, to $US30.05 a barrel. The international benchmark earlier fell to $US29.52 a barrel, its lowest since January 2016.
US West Texas Intermediate (WTI) crude fell $US3.03, or 9.6 per cent, to end at $US28.70 a barrel, its lowest since February 2016.
Reuters
7.25am: US stocks plummet
US stocks dropped sharply even after the Federal Reserve slashed its benchmark interest rate to near zero, reflecting investors’ concerns that the emergency measures may not be enough to ward off a coronavirus-induced recession.
The Dow Jones Industrial Average slid 12.9pc, or 2,999 points, as of the 4pm close, dropping further during an afternoon news conference by President Trump.
The S&P 500 plummeted 12pc, and the tech-heavy Nasdaq Composite also lost 12.3pc.
All three major indexes have plunged into bear-market territory, with the S&P 500 off 27pc from its mid-February high.
The declines underscore the level of panic among investors since the coronavirus pandemic began escalating, while disrupting supply chains, sidelining workers and infecting tens of thousands of people. To combat the potential economic fallout, central banks and governments have put in place various stimulus measures. Those efforts, so far, have yet to stem the stockmarket sell-off.
“This is what panic looks like,” said Patrick Healey, president and founder of Caliber Financial Partners. “It doesn’t matter what the Fed did over the weekend or what they could have done, the trading activity in the market is reflective of fear and uncertainty.”
“The only thing that is going to calm markets is seeing the number of (coronavirus) cases go down,” he said.
The Fed unveiled a series of measures on Sunday evening to stabilise the economy, including slashing its benchmark interest rate to near zero — the second emergency rate cut this month. Additionally, the central bank said it would buy $US700 billion in Treasurys and mortgage-backed securities, cut the rate charged to banks for short-term emergency loans from its discount window and activate swap lines with five other central banks.
The announcement sent stock futures and global stocks sliding, with some investors viewing the move as too much stimulus, too soon.
“It’s basically using up all their ammunition within a three-week span,” said Terence Wong, chief executive of Azure Capital, a Singapore-based fund management firm. “There’s nothing left. They can’t use monetary loosening as part of their arsenal anymore.”
US stock trading was halted for 15 minutes shortly after Monday’s opening bell when the S&P 500 tumbled more than 7pc, triggering a market-wide circuit breaker. The automatic curb on trading marked the third time in six sessions that US stocks have been halted intraday. If the index were to fall 13pc, another 15-minute halt would begin.
Dow Jones Newswires
7.20am: ASX faces another wild day
Investors are bracing for another wild day on the share market after US equities tanked overnight following the worst loss in history for Australian stocks.
AT 7am (AEDT) the SPI200 futures contract was down 209 points, or 4.14 per cent, at 4839 points, suggesting Australia’s volatile market will plunge at 10am (AEDT).
NAB’s morning call note says global markets were far from impressed with measures to counteract the economic impacts of the coronavirus on Monday – despite the Fed Reserve cutting interest rates by a full one per cent, and the return of quantitative easing.
Global markets plunged overnight with the Dow Jones closing down 13 per cent.
Australia’s benchmark S&P/ASX200 finished down 537.3 points, or 9.7 per cent, at 5,002 on Monday, eclipsing an 8.3 per cent drop back on October 10, 2008, during the height of the global financial crisis.
The dive put the index back to levels last seen in April 2016. The ASX200 has lost 30.5 per cent of its value in three and a half weeks of tumultuous trading since February 20.
The Aussie dollar was buying US61.24 cents at 7am (AEDT), up from Monday’s US60.96 cents, which was its lowest level against its US counterpart since 2003.
AAP
7.10am: Wall St dives on recession fears
The Dow industrials took a 2,999-point nosedive as fears deepen that the coronavirus outbreak will throw global economy into recession.
Even for a market beset by volatility in recent weeks, the losses were staggering.
The 12.9pc drop in the Dow was its worst since 1987.
The S&P500 closed down 12 per cent and the Nasdaq plunged 12.3 per cent.
The losses accelerated in the last hour of trading as President Donald Trump advised Americans to avoid large gatherings. He also said he sees a chance of recession and promised help to the struggling airline industry. The losses came as huge swathes of the economy come closer to a standstill due to the outbreak as businesses and travel shut down.
The ASX is facing another bad day, with futures down 209 points, pointing to fall of 4 per cent.
7.05am: France orders nationwide quarantine
French President Emmanuel Macron ordered a nationwide quarantine, barring people from leaving their homes as part of France’s fight against the new coronavirus.
Mr Macron said the lockdown would take effect at noon Tuesday. Under the new rules, people can only leave their houses to shop for groceries and medicine or to exercise. Anyone who breaks the rules will be punished, Mr. Macron said.
“We are at war,” Mr. Macron repeated several times during an address to the nation, his second in less than a week “All government action must turn towards fighting this epidemic.”
Dow Jones
6.55am: Wall St losses accelerate
The US stock market’s losses accelerated past 10pc in late trading as the US government advised people to avoid large gatherings.
President Donald Trump told reporters he sees a chance of recession and promised help to the struggling airline industry. The losses came as huge swathes of the economy come closer to a standstill due to the coronavirus outbreak as businesses and travel shut down.
Losses were widespread in markets around the world despite emergency actions taken by the Federal Reserve late Sunday to prop up the economy and get financial markets running smoothly again. Bond prices soared as investors sought safety.
AP
6.40am: ASX facing further losses
Australian stocks face another bad day, with futures pointing to a fall of over 3 per cent at the open.
At 6.35am (AEDT) the SPI futures index was down 165 points.
On Wall Street the Dow Jones was down 11.5 pc in late trade, with the S&P500 plunging 10.5pc and the Nasdaq falling 10.6pc.
It comes after Australian shares dived almost 10 per cent yesterday – its biggest sell off since the 1987 crash – as panic overwhelmed co-ordinated efforts from central banks around the world to sandbag equity markets.
The Australian dollar fell again, to US61.21.
6.30am: Leaders step up virus fight
The Trump administration scaled up its recommendations to stop the spread of the novel coronavirus, encouraging the public to end discretionary travel and to avoid restaurants and gatherings of more than 10 people.
“Each and every one of us has a critical role to play in stopping the spread and transmission of the virus,” President Trump told reporters at the White House.
The administration’s new guidelines also encourage home schooling, in addition to avoiding bars, restaurants and food courts. The president and his senior advisers stressed that young people can spread the virus even if they have only mild symptoms.
Mr. Trump said he wasn’t considering a nationwide lockdown. “At this moment, no we’re not,” he said.
Leaders around the world took more drastic measures to contain the spread of the new coronavirus Monday, closing borders, schools and businesses as the centre of the pandemic shifts to Europe and the US.
San Francisco became the first major US city to order residents to stay at home except for essential needs.
After initially being caught off guard by the virus’s rapid spread, countries have enacted blanket bans or severe restrictions on visitors, and reordered local life with limits on movement.
The European Commission proposed an unprecedented 30-day restriction on non-essential travel to the European Union. The World Health Organisation has called Europe the new epicentre of the pandemic, as the continent experiences a surge in new cases and deaths.
The US had already imposed travel bans on foreigners coming from much of Europe, the UK and Ireland. Germany partially shut its borders and announced new wide-raging restrictions on public life including the closure of all non-essential businesses and a ban of religious services. Spain and Italy, home to the continent’s biggest outbreaks, have both imposed nationwide lockdowns. France has closed down restaurants, bars and all non-essential shops.
Canada said it was closing its borders to most nonresidents, though visitors from the U.S. would be exempted. The ban wouldn’t apply to trade and commerce.
Dow Jones Newswires
5.55am: Global shares tumble
Stocks fell sharply around the world Monday as the coronavirus forced huge swathes of the economy to the edge of a standstill, from parked aeroplanes to the nearly empty restaurant around the corner.
The US Federal Reserve announced a new round of emergency actions late Sunday to prop up the economy and get financial markets running smoothly again, but the moves may have raised fears even further. Investors are also waiting for the White House and Congress to offer more aid to an economy that’s increasingly shutting down by the hour.
The selling began immediately on Wall Street, sharp enough to trigger a temporary trading halt for the third time in the last two weeks, and the S&P 500 was down more than 9% shortly after 2pm ET.
Losses had been even sharper in Europe before paring, and major indexes there fell between 4pc and 6pc. Oil lost about 9.4pc and has more than halved this year. The world’s brightest spot may have been Japan, where the central bank announced more stimulus for the economy, and stocks still lost 2.5pc.
“It’s impossible to say when and how we’re going to reach bottom,” said Danielle DiMartino Booth, chief executive officer of Quill Intelligence. The spreading coronavirus is causing businesses around the world to shut their doors. While that can slow the spread of the virus, it’s also taking cash out of the pockets of businesses and workers. That has economists slashing their expectations for upcoming months. Wells Fargo Securities said Monday it now projects the U.S. economy will fall into a recession in the April-through-June quarter. Joel Prakken, chief U.S. economist at IHS Markit, projects that GDP will contract at a 5.4% annualised rate in the second quarter. The best-case scenario for many investors is that the economic shock will be steep but short, with growth recovering later this year after businesses reopen. Pessimists, though, are preparing for a longer haul.
5.45am: US airlines seek bailout
With no end in sight to a travel industry crisis caused by the coronavirus pandemic, US airlines on Monday requested $US50 billion government bailout.
Airlines for America, an industry trade group, released the wish list including grants, loans and tax relief as governments around the world redoubled efforts to prop up the economy amid a massive slowdown caused by the outbreak.
Trump administration officials have highlighted airlines as a major worry point and signalled support for a federal plan to fortify the industry.
AFP
5.42am: Business appeal to Trump
America’s largest business organisation asked the Trump administration and Congress to act rapidly to help companies have access to cash and avert a “potentially devastating” hit to the economy as the coronavirus pandemic forced closures and quarantines that threatened to choke off commerce worldwide.
In a letter to President Donald Trump and congressional leaders, the U.S. Chamber of Commerce called for legislation including a three-month cancellation of the taxes companies pay to support Social Security, Medicare and unemployment insurance.
They also recommended an easing of restrictions on loans for businesses that employ less than 500 workers and an expanded system of loans and loan guarantees for larger companies.
The chamber said in a statement accompanying the letter that acting quickly could “mitigate the potentially devastating economic effects” of the virus’ spread.
AP
5.40am: NY Fed in cash injection
The New York Federal Reserve announced another step Monday to ease growing concerns over financial strain caused by the coronavirus pandemic, injecting an additional $US500 billion in liquidity virtually interest-free.
The new offer of overnight funds comes with an interest rate of just 0.1 per cent, and is the latest in a series of debt purchases and cash infusions, including a $US1.5 trillion injection last week, to stem the economic fallout and prevent financial markets from seizing up.
AFP
5.35am: Italy plans economic punch
Italy’s economy minister said Monday that the government intended to deliver a “very strong injection of liquidity” into the financial system to generate 340 billion euros ($US380 billion) in cash flows.
Roberto Gualtieri announcement came as the government unveiled the details of a 25-billion-euro rescue designed to shield families and businesses from the fallout of the coronavirus pandemic.
COVID-19 has killed more than 1,800 people in the Mediterranean country and has forced Prime Minister Giuseppe Conte to close most businesses for at least two weeks.
AFP
5.30am: Aramco to raise output
Oil giant Saudi Aramco will siphon 300,000 barrels of crude per day from its vast stocks as it boosts output, its chief said Monday amid an escalating price war with Russia.
“Our maximum sustained output capacity is 12 million bpd,” CEO Amin Nasser said. In April that will rise to 12.3 million bpd, he said, adding: “The 300,000 will be coming from our inventories.” Speaking via webcast, he said the firm had significant stocks of crude stored both inside and outside Saudi Arabia.
The kingdom and other major producers, including Russia, failed to reach a deal earlier this month to slash output and shore up prices.
Riyadh said last week it would increase its production from 9.7 million bpd to 12.3 million bpd from April.
It had already slashed its price for April delivery after Russia rejected a proposal for a co-ordinated cut of 1.5 million barrels per day among members of producer cartel OPEC+.
Global oil prices have gone into meltdown as the novel coronavirus hits the global economy, slashing demand even as producers boost their output after the talks collapsed.
AFP
5.25am: European automakers idle plants
European automakers began shutting down factories Monday as governments impose confinement and other measures to curtail the coronavirus outbreak, which is expected to take a heavy toll on national economies.
Italian-American automaker Fiat Chrysler said it was halting production at most of its European plants until March 27 because of the coronavirus pandemic.
“The temporary suspension … enables (Fiat Chrysler) to effectively respond to the interruption in market demand by ensuring the optimisation of supply,” the company said in a statement.
Fiat Chrysler agreed in December on a merger with France’s PSA Group, whose brands include Peugeot, Citroen and Opal, to create the world’s fourth-largest automaker.
The company listed six plants in Italy and one each in Serbia and Poland set for closure.
AFP
5.20am: Lufthansa slashes capacity 90pc
German airline group Lufthansa said it was slashing its long-haul capacity by 90 per cent as the industry grapples with the devastating fallout from the coronavirus pandemic.
Lufthansa said seating capacity on long-haul flights would be reduced “by up to 90 per cent” from Tuesday, affecting mainly routes to Africa, the Middle East and South America.
Within Europe, the group is cutting 80 per cent of its short-haul capacity, it added. It had originally planned some 11,700 weekly short-haul connections this summer.
AFP
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