Thursday , October 29 2020
Breaking News
Home / Business / ASX trims losses to 1%; Afterpay, Newcrest hammered

ASX trims losses to 1%; Afterpay, Newcrest hammered

The Australian sharemarket is down 1 per cent and all sectors are lower as investors hand back a slice of Wednesday’s gains.

The ASX200 was down 61.2 points at 5862.7 in early afternoon trade, with the materials and financial sectors weighing heavily, and tech and telco stocks deep in the red.

Afterpay shed 5.4 per cent to $74.50 after it announced the impending departure of its chief financial officer Luke Bortoli.

Gold miner Newcrest lost 3.6 per cent to $30.75, and was joined in the doldrums by Northern Star, which fell 2.1 per cent, and Evolution, down 5.1 per cent. Gold prices suffered their largest daily fall in five weeks, dropping 2.1 per cent.

Transurban was offering a bit of resistance at the top end of the market, rising 1.2 per cent to $14.61. ANZ bank was also narrowly ahead after plunging in earlier trade.

Wall Street’s selloff resumed overnight on the back of weak economic indicators and continued uncertainty over the nation’s next stimulus deal.

Asian markets are also lower on Thursday, with Singapore’s Straits Times Index and Japan’s Nikkei the better performers. US futures are flat.

Chinese-owned TikTok asked a judge to block the Trump Administration’s attempt to ban its app, suggesting the video-sharing app’s forced deal with Oracle and Walmart remains unsettled.

An app-store ban of TikTok, delayed once by the government, is set to go into effect on Sunday. A more comprehensive ban is scheduled for November, about a week after the presidential election. President Donald Trump set this process in motion with executive orders in August that declared TikTok and another Chinese app threats to US national security. The Trump administration has offered no specifics to substantiate that charge.

TikTok is arguing Trump's executive order is unlawful.

TikTok is arguing Trump’s executive order is unlawful.Credit:Getty

Trump has pushed for a sale of TikTok’s US operations to an American company. The president said this week that he would bless a proposed deal in which Oracle and Walmart take a 20 per cent stake in a new US entity to be called TikTok Global. But he also said he could retract his approval if Oracle doesn’t “have total control.”

The two sides in the TikTok deal appear at odds over the corporate structure of TikTok Global. ByteDance, TikTok’s Chinese parent, said on Monday that it will still own 80 per cent of the US entity after a financing round. Oracle, meanwhile, put out a statement saying that Americans “will be the majority and ByteDance will have no ownership in TikTok Global.”

The full story by AP is here

The Australian sharemarket is down 1 per cent and all sectors are lower as investors hand back a slice of Wednesday’s gains.

The ASX200 was down 61.2 points at 5862.7 in early afternoon trade, with the materials and financial sectors weighing heavily, and tech and telco stocks deep in the red.

Afterpay shed 5.4 per cent to $74.50 after it announced the impending departure of its chief financial officer Luke Bortoli.

Gold miner Newcrest lost 3.6 per cent to $30.75, and was joined in the doldrums by Northern Star, which fell 2.1 per cent, and Evolution, down 5.1 per cent. Gold prices suffered their largest daily fall in five weeks, dropping 2.1 per cent.

Transurban was offering a bit of resistance at the top end of the market, rising 1.2 per cent to $14.61. ANZ bank was also narrowly ahead after plunging in earlier trade.

Wall Street’s selloff resumed overnight on the back of weak economic indicators and continued uncertainty over the nation’s next stimulus deal.

Asian markets are also lower on Thursday, with Singapore’s Straits Times Index and Japan’s Nikkei the better performers. US futures are flat.

Goldman Sachs analysts have sat down with the management of Ramsay Healthcare’s UK business and say while there has been a bounceback in healthcare activity, rising case numbers in Britain present uncertainties.

Ramsay had been able to enter a government deal similar to those in Australia to assist the UK’s public system with the fight against coronavirus. That deal had enabled the company to eke out a small profit, and is expected to end by mid-December.

Ramsay CEO Craig McNally.

Ramsay CEO Craig McNally.Credit: Cole Bennetts

However, analyst Chris Cooper writes given rising case numbers in the UK, “this is far from assured”.

One positive for Ramsay seems to be that UK policymakers do not look likely to impose another blanket lockdown, meaning the company is seeing “negligible impact” from the restrictions that are in place in the region.

Shares in the firm were down 1.2 per cent at $68.58 just before 1pm AEST. The wider ASX 200 was down 1 per cent, and the health sector 0.5 per cent.

Aussie Broadband wouldn’t have been too worried about the Plenti Group IPO wobbles this week.

The NBN announcement that it would be allowed to gold plate its broadband network after all would have been good news for Aussie, which resells NBN services and opened the broker offer on its public float on Tuesday.

Aussie Broadband co-founder and managing director Phillip Britt said revenue has nearly doubled year-on-year.

Aussie Broadband co-founder and managing director Phillip Britt said revenue has nearly doubled year-on-year.

“With millions of people working and studying from home as a result of COVID, this is the perfect time for a network upgrade. This will mean more customers could upgrade to higher speeds, should they choose to,” says managing director Phillip Britt.

Priced at $1 a share, Aussie plans to raise up to $40 million giving it an enterprise value of $150 million (which excludes the cash it is planning to raise.

Aussie’s prospectus is forecasting revenue of $338 million for the 2021 financial year and earnings before interest, tax depreciation and amortisation totalling $12.6 million on a residential customer base expected to hit 368,000.

If all goes to plan, Aussie shares will commence trading by October 30.

The NSW government are announcing a number of eased restrictions at its coronavirus press conference this morning.

Among the eased restrictions are larger dance floors at weddings, as well as removing a number of restrictions on schools and community sport.

NSW Premier Gladys Berejiklian has eased a number of virus restrictions, including larger dance floors at weddings.

NSW Premier Gladys Berejiklian has eased a number of virus restrictions, including larger dance floors at weddings.Credit:Rhett Wyman

Follow our live and free coronavirus blog here

The news comes after the state recorded zero new local cases during the latest 24-hour reporting period, although an additional case was recorded after that period.

Premier Gladys Berejiklian said the 20 people allowed at a gathering would need to be the same 20 people, flagging weddings and other family gatherings were “where the virus is most contagious and spreads most readily”.

“It is still a high-risk environment and we will ask both the patrons but also the function organisers to make sure that the bridal party, up to 20, is clearly identified and is not different multiples of 20,” she said.

Children playing school sport will now be allowed to have two spectators, Sports Minister Geoff Lee announced.

A number of eased restrictions will be in place at schools from term four, including:

  • Restarting of music and choir programs
  • Kindergarten students able to attend orientation events
  • Parents able to attend schools for educational purposes (i.e. reading groups)
  • The return of school sport “as it was before the pandemic”, although Education Minister Sarah Mitchell said parents will still not be allowed to attend schools to watch or assist with sports events.

Treasurer Josh Frydenberg has revealed the coronavirus recession will shrink the national economy by 6 per cent and leave a permanent scar on the federal budget.

Speaking in Canberra, Mr Frydenberg said while near-term economic growth was likely to be strong, it would be off a lower base.

Treasurer Josh Frydenberg.

Treasurer Josh Frydenberg.Credit:Alex Ellinghausen

Mr Frydenberg will hand down the 2020-21 budget on October 6 with analysts tipping a record deficit of at least $200 billion.

The Treasurer said by the end of the current financial year, the economy would be around 6 per cent smaller than had been anticipated in the 2019-20 mid-year budget update.

This would put pressure on all key aspects of the budget.

“The recession places pressure on all three elements of potential growth in the economy — population, participation and productivity,” he said.

“Australia’s future population will be smaller, and older, than we previously assumed because of the sharp drop we are seeing in net overseas migration.

“This economic scarring, together with lower levels of business investment, is likely to dampen participation and productivity — the other two key elements of potential growth.”

Mr Frydenberg said wages growth was likely to remain subdued “for at least the next few years” while it would take some time before inflation returned to the middle of the Reserve Bank’s 2-3 per cent target band.

All of this will mean less revenue for the government.

“A smaller economy, with lower price and wage growth, will generate less income for the government over the medium-term,” he said.

“Income taxes will grow more slowly, reflecting a smaller wages bill. Corporate taxes will also grow more slowly, reflecting lower profits and economic activity.

“And consistent with previous downturns, corporate tax receipts will recover more slowly than the broader economy.”

The government had, before the pandemic, focused on keeping a lid on payments as a share of GDP as a way of bringing the budget under control.

Payments were forecast to reach almost 34 per cent of GDP in the government’s July budget update, an indication of spending programs such as JobKeeper. It had been at 24.8 per cent before the recession.

Mr Frydenberg said by the end of the medium term, payments would still be “materially higher” than what they had been before the pandemic.

“The changes to our economy that flow from this COVID recession will have a lasting impact on our budget position, even as our targeted policy support is unwound,” he said.

“Lower tax receipts and higher spending as a share of the economy will impact our fiscal position for many years to come. Even as the economy recovers.”

The chief investment officer of Australia’s newest biotech fund says capital is flowing into healthcare sector in the face of the pandemic and investors are keen to buy in despite the current recession.

Matt McNamara, who spent 14 years managing $200 million at Melbourne’s Bioscience Managers, is now heading up Horizon 3 Biotech, a fund aiming to launch with up to $80 million to invest in a broad range of local and international life sciences businesses.

The race for a successful coronavirus vaccine has put biotech investing front and centre, but concerns about access to capital remain.

The race for a successful coronavirus vaccine has put biotech investing front and centre, but concerns about access to capital remain. Credit:AAP

The operation has a $10 million cornerstone investment from Chinese biotech investor Jian Sun, who also sits on the Horizon 3’s board. Its team will spend the rest of the year raising additional cash from sophisticated investors, family offices and superannuation.

Local investors have warned Australia’s biotechnology sector could face a serious crunch in the coming months as the recession makes private investors rethink their asset allocations towards less risky pursuits.

Full story here

The Australian sharemarket has clawed back a bit of ground but remains about 1 per cent lower on Thursday after a fresh Wall Street selloff overnight.

The benchmark index was down 56.7 points at 5867.2 by 11.30am AEST and earlier slumped by 99.1 points – or 1.7 per cent – in a $30 billion opening dive.

All sectors were still depressed with the banks, miners, tech, and energy firms hit hard.

Biotech CSL was down 1.1 per cent and joined in the red by sector stablemate ResMed, which fell 2 per cent. Fisher and Paykel was a rare gainer, up 0.5 per cent at $30.44.

BHP slipped 0.9 per cent, Rio Tinto 0.8 per cent and Fortescue Metals 0.3 per cent. Gold miner Newcrest was 3.4 per cent lower as precious metals prices continue to fall.

All major banks were lower, with Commonwealth Bank down 1.2 per cent, NAB 0.7 per cent, and ANZ 1.3 per cent. Westpac slipped 0.9 per cent to $16.24 after agreeing to pay a $1.3 billion fine for breaches of money laundering laws – the biggest penalty in Australian corporate history.

The energy sector drooped by a collective 1.3 per cent and tech stocks were 1.7 per cent lower.

Cleanaway Waste Management has withdrawn motions from its annual general meeting to grant its under-fire chief executive Vik Bansal about $2.3 million in performance rights.

Mr Bansal has faced scrutiny in recent weeks after the Australian Financial Review revealed he was investigated this year over claims he led a culture of “bullying and harassment”. Mr Bansal has since vowed to do better.

Cleanaway chief executive Vik Bansal.

Cleanaway chief executive Vik Bansal. Credit:Eamon Gallagher

Cleanaway on Thursday said Mr Bansal had volunteered to forgo the granting of about 1.08 million shares as performance rights in a “further act of contrition”, following a 25 per cent reduction of his short-term incentives as outlined in Cleanaway’s Remuneration Report.

The company said that reduction was linked to the damage done by the coronavirus pandemic, as well as Mr Bansal’s behaviour.

“Cleanaway is committed to doing better as an organisation. While we are disappointed in the events that have led us here, Mr Bansal continues to demonstrate a strong commitment to making necessary change that will be sustainable over the long term,” the firm said in a note.

“This further act of contrition from the CEO is welcomed by the Board. Mr Bansal leads Cleanaway with a passion and dedication that has driven exceptional shareholder returns. Learning from this experience will allow him to take Cleanaway forward in its journey and deliver on its full potential.”

Shares in Cleanaway were last 0.5 per cent higher at $2.14 against a 1.1 per cent decline for the wider ASX 200.

Tesla’s highly anticipated “Battery Day” fell short of expectations that helped fuel its $US320 billion ($452 billion) surge in market value this year, with Elon Musk outlining grandiose goals that will take time to pull off.

The chief executive officer laid out a plan Tuesday (US time) to build a $US25,000 car and cut battery costs in half over the next three years. While the technology and manufacturing breakthroughs outlined were impressive, Robert W. Baird’s Ben Kallo wrote, Tesla’s valuation already reflected its ability to disrupt.

Elon Musk had been hyping 'Battery Day' for months, but investors were underwhelmed.

Elon Musk had been hyping ‘Battery Day’ for months, but investors were underwhelmed.Credit:Bloomberg

“With the Battery Day in the rearview, we think there is a lack of upcoming catalysts and are cautious about demand given the recessionary environment,” Kallo wrote in a report naming Tesla a bearish “fresh pick.”

Tesla shares slumped around 10 per cent on Wednesday. The stock has soared more than 400 per cent this year.

Read Bloomberg’s full analysis here

About admin

Check Also

Lew tells Myer board to resign or face dismissal after chairman’s shock departure

The move was a significant victory for Mr Lew, who has been campaigning against Mr …