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ASX jumps 1pc as risk appetite returns

Domino’s Australia has defended its strategy of opening new stores in already successful high-sales areas despite concerns it could cannibalise the sales of existing franchises.

At an investor day briefing on Thursday, Domino’s executives “debunked the myths” of the company’s ‘fortressing’ strategy, which will see it open another 1200 stores in the next 5 to 8 years in an effort to boost the company’s overall sales.

Speaking to The Age and The Sydney Morning Herald, Domino’s Australia chief executive Don Meij defended the company’s store rollout plans, saying cannibalisation was not a concern.

“It’s a thematic on the Domino’s business globally that people think maybe there could be cannibalisation here,” he said. “So we’ve gone at lengths to illustrate how that’s not the case.”

Domino’s shares have jumped 2.4 per cent to $48.82 on Friday, recovering after siding to a one-week low on Thursday. 

You can read more here.

Helped by strong fund inflows through its platform, shares in financial services provider HUB24 have jumped in early trade on Friday.

In a filing to the ASX, the company said that it received record net inflows and growth in funds under administration (FUA) during the September quarter this year.

“HUB24 is experiencing strong growth posting a record September quarter with Net Inflows of $1,238 million,” the company said, noting the total was up 94 per cent on the previous corresponding period. “This is a solid start to FY20 with average monthly inflows of $413 million already ahead of the FY19 average of $324 million per month which included a significant client transition.”

The company said that growth in FUA was a result of “inflows from a combination of existing and new adviser relationships, whilst structural change across the industry is continuing to provide opportunities for assisted transitions of FUA from competitor platforms”.

It added that it has commenced recruitment to further expand its distribution team.

HUB24 shares have jumped 5.5 per cent to $12.43 on the news.

Helped by a rebound in iron ore prices and news that its buy-back program will be extended for another year, shares in Fortescue Metals Group have surged on Friday.

They currently sit at $8.77, up 3.7 per cent for the session.

The miner announced to the ASX this morning that it’s on-market buy-back program will be extended for a further 12 months as part of its ongoing capital management strategy.

“The buy-back period will continue for a further 12 months, until 10 October 2020, and re-establishes the total amount of the buy-back program at $500 million,” the company said in a filing to the ASX. “The number of shares purchased and timing of the buy-back will depend on Fortescue’s share price and market conditions. Fortescue reserves the right to vary, suspend or terminate the buy-back at any time.”

Shares in the company were also provided a tailwind overnight with all major iron ore grades, including lower grades, surging by more than 2 per cent.

Wealth manager IOOF Holdings Ltd will sell its stake in Perennial Value Management Limited, telling the ASX that despite the expected minor loss on the investment, it will not materially impact the company.

“The divestment of our investment in PVM allows us to focus on our core wealth management capabilities,” IOOF CEO Renato Mota told the ASX. “We are committed to our advice – led strategy and to delivering better outcomes for our clients and members.”

John Murray, Managing Director of Perennial, said separately that he was “delighted” to acquire the remaining IOOF interest in our business, if approved.

“This represents a further significant alignment of interests between our staff and our clients, and is a strong vote of confidence in our continuing commitment to delivering investment excellence, fostering a specialist investment management culture, and building a successful and sustainable funds management business,” Mr Murray said.

Shares in IOOF have risen 1.2 per cent to $6.11 in early trade.

The benchmark ASX 200 index has surged out of the blocks in early trade, jumping 1 per cent to 6614.3.

Resources is leading the charge, soaring 1.8 per cent. Energy, healthcare, information technology, materials and financials have also posted gains in excess of 1 per cent.

Utilities and utilities have added more than 0.8 per cent, telecommunications and consumer discretionary 0.7 per cent while consumer staples are up 0.5 per cent.

REITs, weighed down by the bounce in bond yields, have fallen 0.1 per cent. The All Ords gold index is also softer by 0.5 per cent following a steep fall in bullion prices overnight.

In the ordinary course of events, central bankers are meant to be bland and boring.

To his credit, our Reserve Bank governor Phil Lowe usually does a pretty good job of delivering on both accounts, at least in his public persona.

But these are no ordinary times.

As the central bank he helms prepares to take Australian interest rates boldly where they’ve never gone before – to the zero lower bound and, perhaps, beyond – Lowe is fast approaching a level of exoticism that would make previous governors blush.

You can read more of Jessica’s opinion piece here. 

Buy-now, pay-later group Afterpay Touch has refused to reveal how much it will pay former US Treasury Secretary Larry Summers and other members of its newly-formed US advisory board.

It remained unclear on Thursday whether Mr Summers and his new colleagues would receive cash payments or cash and share-based payments including exercisable options.

Afterpay announced the appointment of Mr Summers late on Wednesday night after fielding questions during the day about the resignation of director and one of the group’s founders, David Hancock.

Former Reebok boss Uli Becker and the former president of US online fashion retailer ModCloth, Matthew Kaness, have also been appointed to the advisory board, the company said.

You can read more here. 

Air New Zealand has appointed the boss of retail giant Walmart’s American business to replace Christopher Luxon in running the airline.

The carrier said Kiwi-raised executive Greg Foran would start early in 2020 following a five-year stint as CEO of Walmat US, which saw him run more than 4600 stores and manage more than a million staff members.

Mr Foran worked at Australian supermarket giant Woolworths prior to joining Walmart in 2011.

“We are thrilled to have attracted a world class Kiwi back home,” said Air New Zealand chairman Therese Walsh.

Air New Zealand’s Australian-listed shares closed at $2.66 on Thursday. 

There’s more here. 

Helped by an improvement in investor risk appetite, government bonds sold off aggressively on Thursday sending yields sharply higher.

“The risk-on mood saw US rates higher across the curve in an almost parallel fashion with the 2-year tenor up 5.1 basis points to 1.518 per cent and the 10-year note up 6.7 basis points to 1.6646 per cent,” National Australian Bank senior FX strategist Rodrigo Catril told clients.

Mr Catril said the spike in yields came despite a soft US inflation report for September that did little to deter speculation that the Federal Reserve would cut official interest rates again when it meets at the end of the month.

“The rise in yields occurred despite US CPI data coming in softer than expected. The core rate rose by just 0.1 per cent after three consecutive monthly increases of 0.3 per cent,” he said.

“The soft CPI alongside underwhelming ISM prints suggest hawks within the FOMC are losing important ammunition in order to push back at the prospect of further Fed easing. The market now prices a 78 per cent chance for a 25 basis point Fed funds rate cut at the end of the month.”

In early trade on Friday, Australian benchmark 10-year yields have followed the lead from US treasury markets, jumping to 0.975 per cent, according to Refinitiv data, up from Thursday’s session low of 0.87 per cent.

Australian cash rate futures currently put the odds of another 25 basis point rate cut from the RBA in November at just under 50 per cent.

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