Thanks for tuning in today everyone – we’ve finished 0.8 per cent higher for the day, 1.3 per cent higher for the month, and 3.1 per cent higher for the quarter.
Alex Druce will be back tomorrow, the final session before we take an Easter break.
The ASX put in a strong performance on Wednesday, boosted by strong Chinese manufacturing data and better than expected local building approvals, as well as end-of-the-quarter momentum.
The market sailed past mass lay-offs by Virgin Australia due to JobKeeper expiring and the ongoing fears of market contagion from a $21.4 billion margin call on a private investment fund earlier this week.
The S&P/ASX 200 touched a five-week high during Wednesday’s session before dipping in the final moments to close 0.8 per cent higher at 6790 points.
It finished March 1.8 per cent higher, the best monthly performance since a 10 per cent gain in November, and ended the quarter 3.1 per cent higher.
Volumes were above average. At the end of the day, 148 companies were higher, while gold miners, AGL Energy, Telstra, and high flying technology stocks like Appen and Afterpay were found in negative territory.
Gains were strong among blue-chip stocks with mining giant BHP up 0.9 per cent and Rio Tinto up 1.1 per cent, and the big four banks finished higher.
Sydney Airport gained 3.9 per cent and Qantas gained 1.8 per cent despite two new COVID-19 cases reported at the start of a three-day lockdown in Queensland, travel advice against hot spots, and the nation’s vaccination program running severely behind schedule.
China’s manufacturing data came in higher than expected while Australia’s building approvals was surprisingly strong at 21.6 per cent monthly growth compared to expectations of 5 per cent growth. Both data points were good news for resources companies that supply the raw materials used in China’s manufacturing processes and local building projects, according to Shaw and Partners senior investment advisor Adam Dawes.
Many investors were still re-weighting their portfolios towards what he called ‘value trades’, or stocks that were not overpriced. He cited Woodside Petroleum as an example, which was up only 37.5 per cent in the past year compared to a 42.4 per cent rise in the energy sub-index over the same period.
Mr Dawes said his order book still held more ‘buy’ than ‘sell’ orders.
Meanwhile, portfolio manager at Tribeca Investment Partners Jun Bei Liu, said Wednesday’s ‘gravity defying’ performance could be due to the calendar rather than the outlook.
“It is quarter-end and month-end, generally you see a fair bit of window dressing because fund manager performance is measured quarterly,” she explained.
“We are just seeing a lot more optimism for today. Tomorrow might reverse,” she said, adding Wall Street was is likely to see similar gains overnight.
Meanwhile, markets seemed to be comfortable so far with losses from the Archegos fund margin call earlier in the week, despite JP Morgan reporting potential losses of up to $US10 billion.
“Previously the biggest risk (of a collapse) was counter-party risk. All these banks are very well capitalised so there is no risk of counter-party failure. The market is weathering it quite well,” she said.
The ASX 200 faded from session highs to close the month with a 0.8 per cent gain.
The benchmark index had been up by as much as 1.8 per cent on Wednesday, touching a five-week high of 6862.6. It closed 52.3 points higher at 6790.7
Australia’s bourse added 1.8 per cent for the month of March – the best monthly gain since November – and finished 3.1 per cent up for the quarter.
A British multinational catering company received $32 million in JobKeeper funds while growing its profits and winning a major NSW government contract to feed hotel quarantine guests, prompting fresh criticism of the federal government’s stimulus program.
Financial records filed to the corporate regulator earlier this year reveal that Compass Group, one of the world’s largest foodservice companies, was eligible for $32.3 million in JobKeeper payments after revenue at its education, business and venue-focused subsidiaries dropped due to COVID. A total of 1671 workers were supported through the scheme.
Compass is a British business and is listed on the London Stock Exchange with a market capitalisation of £26 billion ($47 billion). Last financial year, the company reported a profit of £561 million, down nearly 70 per cent on the prior year due to the impact of COVID-19.
However, the company’s Australian subsidiary reported a 28 per cent jump in profits for the 12 months to the end of September, coming in at $57.2 million. Revenue also rose 4 per cent to $1.29 billion.
Major Australian companies have been under increasing pressure in recent months to repay the amount they claimed through the JobKeeper scheme, which ended on Sunday after the federal government spent $90 billion keeping workers in jobs during the pandemic.
Qantas boss Alan Joyce would have been looking for a piece of wood to touch when he declared last month that we should have seen the last of the snap border closures now that frontline quarantine and health workers were getting the jab.
He spoke too soon. Confident is too strong a word to capture Joyce’s mood. Optimistic is a better descriptor.
But disappointed and frustrated is certainly what Joyce and his Virgin Australia counterpart Jayne Hrdlicka have felt since Queensland’s snap lockdown has led to various state governments pulling down the shutters on either Queensland or Brisbane, and the imposition of some restrictions for travellers coming from the NSW coastal holiday mecca of Byron Bay.
Qantas, its budget brand Jetstar and Virgin have cancelled at least 75 flights between them into and out of Brisbane since the weekend. It is a clear reminder that the path to pandemic recovery will likely be bumpy for tourism and the broader economy.
This particular low-pressure system affecting aviation has coincided with the broader end of JobKeeper and with the beginning of a targeted $1.2 billion government support package aimed at helping the aviation and tourism sectors.
On Wednesday, Virgin partially stood down a third of its ground workforce as a mechanism to reduce their hours – a move it said was not a direct response to the cancellation of flights to Queensland but it was COVID related.
The ASX 200 is enjoying a tremendous end to the month and quarter – rising by as much as 1.8 per cent during Wednesday’s session to a five-week high 6862.6.
And it has done so without any lustre from the local gold miners, which have slipped on duller precious metal prices.
Reuters reports spot gold prices slipped to a near nine-month low $US1678.24 an ounce as a firmer US dollar, higher bond yields and hopes for a faster US economic recovery dampened demand for safe-haven bullion.
The result has been a decline across the local gold contingent.
The $20.1 billion Newcrest dropped 0.5 per cent to $24.53, with losses perhaps limited by the release of initial mineral resource estimates for its Red Chris Mine in Canada.
Northern Star was 2.6 per cent down at $9.495, and Evolution was 2.2 per cent lower at $4.09. Regis dropped 1.9 per cent to $2.895, and Perseus was 0.5 per cent down at $1.075.
Volkswagen of America issued false statements this week saying it would change its brand name to “Voltswagen,” to stress its commitment to electric vehicles, only to reverse course on Tuesday (US time) and admit that the supposed name change was a joke.
Mark Gillies, a company spokesman, confirmed on Tuesday that the statement had been a pre-April Fool’s Day joke after having insisted Monday that the release was legitimate and the name change accurate. The company’s false statement was distributed again on Tuesday, saying the brand-name change reflected a shift to more battery-electric vehicles.
Volkswagen’s intentionally fake news release, highly unusual for a major public company, coincides with its efforts to repair its image as it tries to recover from a 2015 scandal in which it cheated on government emissions tests and allowed diesel-powered vehicles to illegally pollute the air.
In that scandal, Volkswagen admitted that about 11 million diesel vehicles worldwide were fitted with the deceptive software. The software reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving. The scandal cost Volkswagen €30 billion ($46.2 billion) in fines and civil settlements and led to the recall of millions of vehicles.
The company’s fake news release, leaked on Monday and then repeated in a mass email to reporters Tuesday, resulted in articles about the name change in multiple media outlets.
Spirit Technology Solutions says a successful $23.8 million raising and increased debt facility has allowed it to purchase fellow telco Nexgen, doubling its business-to-business customers to more than 10,500.
The deal is the latest – and biggest – of the dozen or so acquisitions made by the ASX-listed Spirit in the last 18 to 24 months, including cloud, cybersecurity, voice and data providers.
The $200 million company – formerly Spirit Telecom – says the $50 million capture of Nexgen brings over five thousand new business-to-business clients, and one hundred new salespeople to drive organic growth, complementary products and scale.
Nexgen is expected to generate $36 million in revenue for Spirit, with 80 per cent of this recurring.
Spirit was trading 8.6 per cent higher this afternoon and earlier hit a four-week high of 39.5 cents.
Australian offroad parts specialist ARB Corp is motoring higher today after teaming up with Ford Motors to provide products for the re-launch of the iconic Ford Bronco.
The $2.7 billion 4WD accessory firm – which has more than doubled in value over the past year – this morning told the ASX it was developing a full suite of premium, aftermarket products for the New Ford Bronco, which is due to begin rolling out later this year.
Shares in ARB rose by as much 3.6 per cent to $34.90 amid a wider ASX rally, and were last 3 per cent higher at $33.70.
ARB said it had been working hand-in-hand with Ford designers and engineers to ensure each ARB accessory not only complements the Bronco’s heritage and performance, but is fully integrated into the original vehicle design.
ARB shares are up 12.6 per cent for the year so far and hit a record high of $41 In February.
The company’s value soared in 2020 as international travel restrictions forced holidaymakers to consider heading off road to domestic locations instead.
In February it reported first-half profit had grown 113 per cent to $54 million, while also lifting its final dividend to 29¢, up from the 18¢ paid a year ago.
But the company also attracted criticism, given that its bottom line benefitted from $9.8 million in JobKeeper payments during the period.
Openpay shares fell by as much as 9.1 per cent today after the firm emerged from a trading halt to announce a funding package that supports its expansion both home and abroad.
The $200 million payment processor this morning said it would be raising $42.5 million via an institutional placement and share purchase plan, and that it would also take out a new $25 million corporate debt facility as it eyes development in both the US and UK.
About 18.5 million new fully paid Openpay shares will be issued at $2.03, a 15.8 per cent discount to the last close price of $2.41 on Friday.
The firm said 2.6 million of those new shares will be issued to offshore investors and directors of the company, including Patrick Tuttle, Yaniv Meydan, and Michael Eidel.
Shares in the company slipped to a low of $2.19 today, and were last down 4.5 per cent at $2.30.
The total $67.5 million funding will go towards scaling and launching new products in Australia through partnerships with one-to-many aggregator partners, while also targeting the healthcare vertical in the UK by integrating into ezyVet’s software.
Today’s announcement follows Monday’s news Openpay will integrate into the payment gateway operated by Worldpay from FIS, enabling over one million US merchants to offer Openpay as alternative payment option to their customers.