Markets Live, Thursday 26 November, 2020

“It’s a growth day, flipping back the other way away from value,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It’s this ongoing struggle between the virus and the vaccine.”

“There’s a reality setting in that while the vaccine will start being distributed fairly quickly, the virus isn’t going away quickly and therefore the timeline for economic improvement is getting pushed out.”

A wide range of data released in advance of Thursday’s Thanksgiving holiday was dominated by a second consecutive week of unexpected jobless claims increases, suggesting that new restrictions to combat spiking coronavirus cases could hobble the struggling labour market’s recovery.

“The economic data is not good, and we know it won’t be good for some time given this new wave of the virus,” Ghriskey added.

The market appeared to be replaying the previous two weeks, which began with rallies driven by promising vaccine news but pivoted back to stay-at-home plays on near-term pandemic realities and lack of new fiscal stimulus.

Still, the vaccine developments and removal of uncertainties surrounding the US presidential election have driven Wall Street indexes to record closing highs, and put the S&P 500 on course for its best November ever.

The Dow Jones Industrial Average fell 173.77 points, or 0.58 per cent, to 29,872.47; the S&P 500 lost 5.76 points, or 0.16 per cent, to 3,629.65; and the Nasdaq Composite added 57.08 points, or 0.47 per cent, to 12,094.40.


Source link


Top Rio Tinto executive says iron ore boom unravelled Indigenous ties

“Clearly what’s happened here is we have ended up with an issue where we probably became overly transactional and there were clearly breakdowns in communications,” he said.

Mr McIntosh, a 30-year Rio Tinto veteran and one of the company’s most respected executives, added that Rio had lost the trust of traditional owners and must now work to repair those ties.

“Trust is an asset that you work incredibly hard to get but it disappears extraordinarily quickly when you don’t meet the aspirations of all your stakeholders,” he said. “The key is you’ve got to have deep and meaningful dialogue with all of your key stakeholders.”

Rio Tinto’s ill-fated decision to blast two culturally significant rock shelters at WA’s Juukan Gorge, which had evidence of continual human occupation dating back at least 46,000 years, left the land’s traditional owners devastated, prompted a federal parliamentary inquiry and ignited a shareholder revolt that eventually forced the resignation of chief executive Jean-Sebastien Jacques and two of his deputies.

The blast was legally sanctioned, but went against the wishes of the traditional owners – the Puutu Kunti Kurrama and Pinikura (PKKP) people – who said they were not aware of Rio’s intention to destroy the site until it was too late for the explosive charges to be removed.

Rio Tinto has conceded multiple failures in its engagement and heritage-protection processes in the lead-up to the blasting of the gorge. The company has publicly apologised and is seeking to repair its relations with Indigenous stakeholders across its mining operations.


Mr McIntosh said the leadership of Rio Tinto, the world’s second-largest mining company, should not be judged solely from the failings at Juukan Gorge.

“I think it’s important that we don’t define all of the things that go on at Rio Tinto by this one tragic event.”

A federal parliamentary inquiry launched into the Juukan Gorge disaster has questioned executives from Rio Tinto as well as a string of other resources companies, including BHP and Fortescue Metals Group about their approaches to cultural heritage and mining works that impact sacred Indigenous sites.

Source link


Gerry Harvey, inspired by Murdoch, plans to retire at 100

“If there’s a lesson there for people, it’s that you don’t have to retire at 60, you can still be a useful member of the community at 80 or 90.”

Mr Harvey’s comments came after Harvey Norman’s annual general meeting on Wednesday where it revealed a 160 per cent jump in profit before tax for the first quarter of the financial year of $341.1 million.

The 89-year-old Rupert Murdoch is a 'measuring stick' for Mr Harvey.

The 89-year-old Rupert Murdoch is a ‘measuring stick’ for Mr Harvey.Credit:AP

Aggregated revenue rose 28.2 per cent for the 16 weeks leading up to November 21 or 27.5 per cent on a comparable basis. Almost all of Harvey Norman’s international locations grew their sales, with only Malaysia and Singapore reporting slight falls.

The company has been a major beneficiary of the pandemic due to many Australians buying new home office furniture and spending stimulus money on electronics. Mr Harvey maintained his shock at the consistently high profit figures, attributing the surge to a dearth of other spending options for shoppers.

“All that money people were spending on going out or going overseas is being converted into improving their houses or their gardens,” he said. “And people have a lot of money just sitting in the bank.”


Mr Harvey was also bullish on Christmas spending, saying he expects the end of year sales to be “booming” despite previously seeming reluctant to predict how it might play out in light of COVID-19.

“There’s no question, now that I know what’s in the pipeline,” he said. “It’s going to be very, very strong.”

Harvey Norman’s board has faced significant criticism at the company’s annual general meetings in past years and received a rare ‘second strike’ in 2019 over governance concerns.

At this year’s meeting the retailer received a small 11.5 per cent protest vote against its remuneration report. Executive director Chris Mentis received a sizeable 29.5 per cent protest vote with some proxy firms advising against his re-election due to board independence issues.

I look at Rupert Murdoch, and that bugger’s nearly 90, and he’s still mentally and physically ok, so he’s my measuring stick.

Gerry Harvey

However, the appointment of new independent director and former Lynas chief financial officer Luisa Catanzaro was supported by almost 100 per cent of shareholders, a move Mr Harvey said was indicative of the “evolving nature” of the company’s board.

Mr Harvey, who was up for re-election and is the 32 per cent majority shareholder, was comfortably re-elected, with just 5.8 per cent of voters dissenting.

Harvey Norman shares closed down 2.34 per cent to $4.59.

Goldman Sachs analyst Andrew McLennan said the trading update was positive, showing spending trends in Australia and New Zealand had continued largely unabated. “More importantly the group has also been attaining significant operating leverage from the sales growth, impacting profitability to a higher degree than forecast,” he said.

Market Recap

A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business


Source link


ASX at new nine-month high, almost recoups 2020 losses


The switch from COVID-19 losers to winners continued on Wednesday, with the information technology, healthcare and communication sectors underperforming, while the financial, material and energy sectors all outperformed.

“Markets are really just giving us a forward look at what the future is going to look like from here on in,” Bell Direct market analyst Jessica Amir said.

“It is a pretty good day and another nine-month high, there is not much to complain about.”

While some market watchers believe the ASX would end 2020 around current levels, Ms Amir said she thinks it could move even higher.

“The Santa rally traditionally starts this week and goes to the second week after New Year’s Eve. The reason that a lot of people think the rally will continue is because the dust has not even settled after the US election … Every single year after a US election the Australian market has rallied.”

Joe Biden’s appointment of former Federal Board chair Janet Yellen as Treasury Secretary was also well-received by markets because she was likely to stimulate the US economy, Ms Amir added.

The energy sector outperformed after oil prices jumped 4 per cent and appeared on track to return to $US50 per barrel. This helped Woodside Petroleum leap 3 per cent to five-month highs of $23.31 and Santos jump 2.7 per cent to nine-month highs of $6.53.

BHP added 3 per cent to a three-month high of $39.46. Among the banks, National Australia Bank surged 3.1 per cent to $24.05, ANZ gained 3 per cent to $23.66, Westpac rose 2.2 per cent to $20.89, and Commonwealth Bank lifted 1.5 per cent to $82.37, its highest close since February 27.


Chief economist at BetaShares ETFs, David Bassanese, agreed there was more money waiting to be deployed into equities, with investors who missed out this month now looking for a buying opportunity.

“The global economy is almost in the cyclical sweet spot,” he said

“[There is] a lot of spare capacity and low inflation. Things can recover without the fear of interest rates or inflation spoiling the party.”

The best performers on Wednesday were Whitehaven Coal, which shot up 10.7 per cent, and Omni Bidgeway, which surged 9.1 per cent.


Flight Centre closed 8.9 per cent higher, Webjet was up 7.1 per cent and airport and shopping centre owner Unibail-Rodamco-Westfield gained 7.3 per cent. The biggest decline was a 7.2 per cent fall for Mesoblast.

Among the technology stocks, NextDC slid 5.9 per cent, Afterpay fell 5.6 per cent and Appen dropped 5.4 per cent.

The S&P/ASX 200 has gained 12.9 per cent so far in November, eclipsing the 8.8 per cent gains of April.

However, State Street Global Advisors’ head of portfolio management in Australia, Bruce Apted, warned the current “vaccine rally has many similarities to a classic junk rally”.

Companies with the highest performance so far this year have dropped, while companies with lower growth, lower earnings revisions or higher debt were suddenly outperforming.

“The junk rally describes the average characteristics of the companies as they have been this year,” he told The Age and The Sydney Morning Herald.

“If the vaccine returns us to the old world, then many of these companies will likely enjoy real benefits and will likely see aspects of quality and risk improve. Of course, it is still unclear just what the ‘new normal’ will look like and precisely how much many of these businesses will actually benefit.”

He added there were two risks in the vaccine rotation – that high quality companies would underperform and that “beaten up and riskier parts of the market” would rally.

Market Recap

A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business


Source link


SEC move threatens Chinese companies’ access to US capital

Chinese companies have been listing in the US since the early 1990s, but in 2009 its authorities issued a directive restricting the ability of overseas regulators to supervise auditors based in China. Any foreign regulator wanting to inspect the accounts of a Chinese company has to obtain the approval of the Chinese authorities. The reason given for the directive was “national security”.

There has been a lot of to-ing and fro-ing between the US and China over the issue since then, but two developments breathed new life and urgency into the US position.

One was the increasingly hostile attitude and actions of the Trump administration towards China, with its trade war and financial sanctions, but the other was the collapse of China’s home-version of Starbucks, the Nasdaq-listed Luckin Coffee, earlier this year amid massive accounting frauds that were exposed by short-seller Muddy Waters. Luckin admitted the fraud in April.

In May, the US Senate passed legislation banning companies from listing on US exchanges if the PCAOB wasn’t able to inspect the working papers of their auditor for three years in a row. The legislation had bi-partisan support.

In August, the US “President’s Working Group on Financial Markets”, which includes SEC chairman Jay Clayton and Treasury Secretary Steve Mnuchin, is reported to have urged the SEC to take action. A few days ago it did.

Last week’s SEC proposal, if implemented, would force the New York Stock Exchange and Nasdaq to require compliance with audit inspections. Failure to do so would see the non-compliant companies’ shares delisted. Companies would have until 2022 to follow the directive.

Bipartisan agreement

China, while seeking more talks and promoting a “co-audit” approach where there would be joint inspections by Chinese authorities and PCAOB-approved firms, nevertheless wants to protect its national security and the commercial confidentiality and strategic information of its companies, some of which are state-owned or controlled. The US wants unlimited and unfettered access to audits, while China wants to limit it.

The SEC proposals won’t be in place, assuming they are adopted after public exposure, before the Biden administration takes office in January. In the meantime Clayton, a Trump appointee, has announced he will relinquish his role at the end of the year.

A Biden appointee to the SEC chair will decide the ultimate fate of the proposal, but that shouldn’t be comforting for the Chinese – the Democrats might approach China differently to the Trump administration but they are just as invested in the tussle for geopolitical supremacy between the world’s two largest economies and most powerful nations as the Republicans.

On the audit issue, there has been bipartisan agreement. In most major economies, access to financial markets and the capital they provide does come with local regulatory and disclosure requirements.

China’s companies, particularly its technology companies, have flocked to the US market in recent years because it provides access to a much deeper pool of capital, on more attractive terms and within far shorter time frames, than is available in China.

Money vs national security

Very recently, some changes to Hong Kong’s listing rules have made that market another viable option – that’s where the world’s largest initial public offering, the $US34 billion ($46 billion) raising by Jack Ma’s Ant Group that would have valued it at more than $US300 billion was supposed to take place before the Chinese authorities pulled the rug from under it.

Nevertheless, the US market remains compelling for foreign companies seeking to raise capital, particularly the tech companies which benefit from the halo effect of the big US tech groups, and the Chinese firms listed in the US have had considerable success.

Nasdaq’s Golden Dragon China Index tracks those Chinese companies listed in the US. This year it is up almost 40 per cent against Nasdaq’s 32 per cent and the S&P 500’s 12.5 per cent.

The problem for China in agreeing to the SEC’s proposal is that, apart from its tech companies and their potentially valuable commercial secrets, a number of the Chinese companies on the US lists are state-owned or controlled and are central to its longer-range national strategic plans and interests.

While Alibaba, with a market cap of about $US730 billion ($992 billion) is the largest Chinese company with a US listing, among the others are state-owned China Life ($202 billion), China Mobile ($171 billion) and PetroChina ($153 billion).

There are many others that are either controlled by China or where the state has a major shareholding but, in any event, China reserves the right to direct even privately-owned companies on national security grounds.

The recent spate of corporate bond defaults, including some deemed AAA-rated by domestic Chinese credit ratings agencies, will only encourage US regulators and legislators to take a hard line on the audit issue to protect US investors.


It would also follow other actions that have impacted Chinese companies.

Apart from the high-profile efforts to force the sale of Tik Tok’s US business, the Trump administration has banned US investment in Chinese companies with links to the military and imposed sanctions on individuals and companies for their roles in the treatment of the Uighurs and China’s actions in Hong Kong.

It also pressured the pension fund for US federal government employees against investing in an international index that included shares in Chinese companies.

The SEC action isn’t the only iron in the fire when it comes to US actions against Chinese companies. But it is consistent with the Trump administration’s efforts to remove economic links it believes are beneficial to China – cutting off trade and investment flows and revoking visas for Chinese students and researchers among them – in order to weaken its challenges to US economic and geopolitical supremacy.

Market Recap

A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business


Source link


Tesla’s market value crosses $US500 billion as meteoric rally continues

Tesla blew past $US500 billion ($680 billion) in market value on Tuesday (US time) as investors snapped up its shares in the run-up to its debut in the S&P 500, extending a meteoric rally that has seen it surge over 500 per cent this year.

The California electric carmaker’s stock rose more than 7 per cent, putting its market capitalisation at $US529 billion in late trade on Wall Street.

Tesla shares have soared by more than 500 per cent this year.

Tesla shares have soared by more than 500 per cent this year.Credit:Bloomberg

Tesla is Wall Street’s seventh most valuable company, just behind Berkshire Hathaway, and its shares have rallied over 30 per cent since November 16, when it was announced Tesla would join the S&P 500 benchmark.

The share surge has vaulted founder Elon Musk past Bill Gates to become the world’s second-richest person. The 49-year-old entrepreneur’s has added more than $US100.3 billion to his net worth this year, the most of anyone on the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people. In January he ranked 35th. Amazon’s Jeff Bezos remains on top of the list.

Source link


HomeCo REIT looks to expand as retail market recovers

The newly-listed $900 million HomeCo Daily Needs REIT will use the firepower of its balance sheet to expand the portfolio across regional Australia which is experiencing strong growth as the population moves away from city areas.

The REIT, which made its ASX debut on Monday, is a spin-off from the HomeCo retail fund, which itself floated in October 2019. It has a portfolio of 18 assets, anchored by food, health and medical and large format retailers.

The David Di Pilla backed HomeCo, whose hyper-convenience retail model grew out of Woolworths’ failed Masters hardware sites, has grown its funds under management to $1.2 billion and has seen an increase in asset value, despite the global pandemic.

Woolworths and Coles were expected to be the new HomeCo Daily Needs REIT's two biggest tenants.

Woolworths and Coles were expected to be the new HomeCo Daily Needs REIT’s two biggest tenants.

Mr Di Pilla told The Sydney Morning Herald and The Age, the HomeCo group, which combined own 40 assets, was pleased with the debut of the new REIT and the business was in the market for assets where value can be added through development. The list price was $1.33 and the REIT was trading at $1.36 on Tuesday.

Source link


Investors bank on vaccine as ASX recoups COVID losses

“I think this could be our Santa Rally,” Mr Dawes said.

“We are doing it now and we will end the year flat, I think we will pretty much end the year between 6600 points and 6700 points.”

The S&P/ASX 200 has, according to Refinitiv data, added more than $200 billion to its market cap so far in November and is on track for its best month since it launched in 2000.

It is now just 40 points shy off where it started the year. After a strong start to 2020, the index was hit hard as the pandemic hit Australian shores, falling more than 30 per cent in March. While it remains below the February 20 record high close of 7162.5, the ASX 200 is now out of correction territory.

The banking and mining titans dominated gains in the market on Tuesday, while energy companies soared as the Oxford University/Astra Zeneca vaccine trials further lifted hopes for global travel, sending oil prices surging to their highest in months. All sectors closed higher.

The trials showed the vaccine had an average 70 per cent success rate in preventing the coronavirus, with efficacy rising to as high as 90 per cent in some tests. Further sweetening the result was the fact that the vaccine does not need to be kept at extremely cold temperatures like the recent candidates developed by Pfizer and Moderna.

“Vaccine news over the last few weeks has given markets renewed confidence that there is light at the end of the tunnel,” Nomura Australia investment strategist Andrew Ticehurst said.

”Global activity could pick up and global travel could pick up.”

Energy firms – among the most beaten-down sectors in 2020 – rose on Tuesday, easily outpacing the wider index as oil prices jumped on a buoyant outlook for fuel demand.

Beach Energy was the market’s best performer, up 8.2 per cent to $1.86, while Origin Energy rose 5.2 per cent to $5.05, Santos climbed 3.9 per cent to $6.36, and Woodside Petroleum climbed 3 per cent to $22.64.

Westpac’s chief economist Bill Evans said the banks and travel sectors have boosted the ASX in recent weeks as the economic recovery and vaccine timetable appears to be better than expected.

The economic and jobs data has been encouraging, he said, which was making economists optimistic the economy could avoid a ‘fiscal cliff’ as government and debt support winds back.

“There is optimism about the positive flow of data that we have seen, particularly around labour and spending,” Mr Evans said.

“The cliff is a December quarter effect rather than September quarter. We are now starting to see December quarter data look quite strong as well. Banks were the ones that suffered the most when the economy (went down) and if the economy is going to recover more quickly, that would support banks.”

The big four lenders each hit eight-month highs, with ANZ leading the pack.

It rose 3.1 per cent to $22.97, followed by a 2.6 per cent gain for both Westpac and NAB, and a 2 per cent leap for Commonwealth Bank to $81.16.

Gold miners suffered as soaring risk appetite whacked precious metals prices, but iron ore giant BHP climbed 3.4 per cent to a near three-month high of $38.30. Rio Tinto added 2.2 per cent to $103.13 and Fortescue Metals rose 2.7 per cent to $18.09.

Additional risk was removed from the table on Tuesday when Donald Trump took to Twitter to all but concede defeat in the US presidential election, backing the transition of power to the incoming Biden regime despite his recent efforts to overturn the result.

“It is hardly a surprise,” Mr Ticehurst said, “but if market participants sense that this transition will be smoother, that is positive for sentiment.”

Markets also applauded news that President-elect Biden plans to name former Federal Board chair Janet Yellen as his Treasury Secretary.

The cherry on top came in the local news that the border restrictions between NSW and Queensland would be lifted on December 1, pushing Qantas stocks up 3.9 per cent to $5.57.

Business Briefing

Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald‘s here and The Age‘s here.

Most Viewed in Business


Source link


Tablet interactive: State budget 2020

The pandemic punched a massive hole in the economy and, subsequently, the budget.

Source link


Tablet interactive: Markets live

Queensland will open its borders to Victorians if the state does not record a new case tomorrow.

Source link