As it happened: ASX recovers ground to close 0.1% higher

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As it happened: ASX recovers ground to close 0.1% higher

Summary

  • The ASX200 dropped as much as 0.5% at Wednesday's open but recovered to close 0.1% higher at 6057.7
  • Inflation grew in line with expectations with quarterly growth of 1.6% and annual growth of 0.7%. The Aussie later edged higher to US71.43 cents
  • Afterpay shares finished 7.3% ahead at $102.97 on a quarterly underlying sales record of $4.1 billion and increased customer numbers
  • US futures were down by between 0.4% and 0.6% at 4pm and hint at losses on Wall Street tonight

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That's all folks

We'll call that a wrap I reckon.

Thanks for reading along with us today on Markets Live, and for keeping the discussion going in the comments.

Your editors Lucy Battersby and Alex Druce are knocking off for the evening. See you tomorrow!

Get our wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for The Sydney Morning Herald's here and The Age's here.

Markets wrap: ASX breaks four-day losing streak with afternoon rise

By Lucy Battersby

The ASX overcame a negative start on Wednesday to break a four-session losing streak and close 0.1 per cent higher. Trader sentiment was boosted by a string of positive quarterly updates and inflation data that met market expectations.

The ASX gained 6.7 points to finish at 6020.20, the first time it has closed ahead in a week.

The ASX 200 finished higher for the first time in a week on Wednesday.

The ASX 200 finished higher for the first time in a week on Wednesday. Credit: Jim Rice

Information technology made the biggest gains, up 3 per cent, but the heavier health and consumer sectors added the most points. The materials sector gained 0.2 per cent, but financials dragged with a 0.9 per cent decline.

"Today is the day investors decided is the time to look forwards," portfolio manager at Tribeca Investment Partners, Jun Bei Liu, said.

"And there is a lot of bottom picking happening, and we are seeing quite a bit of strength coming into the technology names. There was a couple of good updates today and I think that brought back a bit more confidence into that space.''

Ms Liu said markets would keep gyrating ahead of the US election and warned the result might not be known for two to six weeks given the volume of postal votes.

Meanwhile, markets could also be getting some positive momentum from the enormous $48.3 billion Ant Group initial public offering in China.

"We heard they are closing the books early because they have received an incredible amount of demand. It is highly sought after," Ms Liu said.

"Demand is so huge that most (investors) will get very little of what they wanted.”

On the local market, Afterpay gained 7.3 per cent to close at $102.97 after a strong quarterly update.
BHP and Rio Tinto both fell about half a per cent, but Fortescue gained 1.7 per cent to $16.48.

Westpac declined 1.4 per cent to $18.31, NAB dropped 1.1 per cent to $18.88, Commonwealth Bank declined 0.4 per cent to $68.45, and ANZ Bank fell 1.7 per cent to $19.16.

The consumer staples sector was boosted by a quarterly update from Coles showing strong sales growth continued despite panic buying subsiding. Coles shares gained 2.7 per cent to $17.68 while Woolworths shares gained 1.9 per cent to $39.07.

In the healthcare sector CSL gained 0.8 per cent to $294.43.

Moody's questions government's economic forecasts

By Shane Wright

Rating's agency Moody's believes the Morrison government's monster $213.7 billion deficit is manageable but raised questions over key economic forecasts underpinning the nation's finances.

In a note released this afternoon, the agency said this month's budget - which also projects total gross debt to hit $1.7 trillion early next decade - reflected the challenges facing all countries because of the coronavirus pandemic.

Prime Minister Scott Morrison

Prime Minister Scott Morrison Credit: Alex Ellinghausen

It said going into the current recession, the budget was in a relatively good shape which gave the Morrison government to expand spending to mitigate the pandemic's impact.

"Australia has the capacity for a large increase in borrowing, given its small deficit and a relatively low debt burden going into the pandemic, strong access to international capital markets, and the ability to borrow exclusively in local currency at very low cost," it said.

"These factors demonstrate the sovereign's considerable fiscal strength, and underscore its credit quality."
Moody's said Australia's economic outlook was stronger than most of its triple-A rated peers, in part due to effectively controlling the pandemic and the recovery going on in key export markets such as China.

But the agency noted the assumptions underpinning the budget's forecasts were "far from guaranteed".
It said its forecasts around growth and unemployment were predicated on a nation-wide vaccination program by late next year and the absence of another outbreak of coronavirus.

"Our more cautious outlook takes into account the potential for further large-scale outbreaks given the experiences of other advanced economies, and recognises that even minor outbreaks could delay the relaxation of some intrastate border restrictions," it said.

"Furthermore, we expect the impact of the coronavirus pandemic on immigration and Australia's population growth to constrain short-term economic expansion."

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ASX closes 0.1% higher following afternoon recovery

By Alex Druce

The Australian sharemarket improved after a soft start to break a four-session losing streak and close 0.1 per cent higher at 6057.7 on Wednesday.

Biotech CSL, Wesfarmers, Fortescue Metals, Woolworths, and Coles were among the blue-chip gainers, while Afterpay added 7.3 per cent to close at $102.97. The banking giants, Rio Tinto, and BHP were all in the red.

Here are the biggest movers for the day.

Tassal expands prawn operations

By Lucy Battersby

Tassal shares dropped today after the company announced the purchase of a 1,300 hectare property next to its prawn farm at Proserpine, in north-east Queensland, and outlined a very challenging environment for food producers during the COVID-19 pandemic. Shares are down 1.3 per cent to $3.71 in afternoon trading.

“The result of COVID-19 has been that globally market segments, and in some instances, markets themselves have been displaced and sometimes closed for a period of time - and this has placed significant strain on existing supply chains and created significant competition,” the prawn and salmon supplier told shareholders today.

It is currently targeting 39,000 hog tonnes of salmon and 4,000 tonnes of prawn production in 2020-21. Tassal wants annual prawn production to reach 20,000 tonnes by 2030. The new property at Billy Creek costs $7 million and will give the company the space for an extra 350 hectares of ponds on top of 350 hectares at Proserpine.

Tassal wants to be producing 20,000 tonnes of prawns a year within ten years.

Tassal wants to be producing 20,000 tonnes of prawns a year within ten years. Credit: Ben Rushton

“Subject to receipt of regulatory approvals and development, Tassal intends to create an enlarged Proserpine prawn “farming precinct” with the addition of Billy Creek,” the company told shareholders.

Billy Creek comes with $700,000 worth of cattle and cane assets, but Tassal has not said what it plans to do with these. However, it did outline plans to sell 6,000 hectares of land at Exmoor Station, located on the Queensland coast between Mackay and Bowen, while holding onto 1,000 hectares at that property.

ASX now up by 20.6 points

By Lucy Battersby

After dropping as low as 6020 in the first hour of trading, the ASX200 has climbed steadily throughout the day to be 0.3 per cent higher at 6071 at 3pm, a gain of 20.6 points.

The most points are being added by healthcare, consumer staples, information technology, and consumer discretionary. Materials are now positive, up 0.3 per cent, but financials, energy, and real estate continue to drag.

"Today is the day investors decided is the time to look forwards," portfolio manager at Tribeca Investment Partners, Jun Bei Liu, said.

"And there is a lot of bottom picking happening, and we are seeing quite a bit of strength coming into the technology names. There was a couple of good updates today and I think that brought back a bit more confidence into that space.''

Ms Liu said markets would keep gyrating ahead of the US election and warned the result might not be known for two to six weeks given the volume of postal votes.

Meanwhile, markets could be getting some positive momentum from the enormous $48.3 billion Ant Group initial public offering.

"We heard they are closing the books early because they have received an incredible amount of demand. It is highly sought after," she said.

"Demand is so huge that most (investors) will get very little of what they wanted.''

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Bega Cheese gets boost from strong milk supply

By Darren Gray

Goldman Sachs analysts have issued a positive assessment of ASX-listed dairy and food business Bega Cheese, lifting their price target on the stock 3.6 per cent to $4.90.

In a new note on the $1.1 billion company the analysts said Bega is benefitting from improved seasonal conditions that are delivering a more stable milk supply and procurement environment, a modest improvement in global dairy prices and business cost-saving measures.

“The company is seeing good seasonal conditions, with more positive farming circumstances for all dairy farmers. This creates a more stable milk procurement environment, and the company expects milk supply across the industry will grow this year,” they wrote.

But they also cited headwinds, such as the rising Australian dollar relative to the US currency, which they said was having a greater impact “than the slight improvement in demand”.

Shortly after 2pm today on the Australian market Bega shares were up 0.2 per cent to $5.13.

Rising anger at plan to abolish physical AGM requirement

By Charlotte Grieve

Australia's largest superannuation funds and one of the country's highest profile fund managers have criticised the government's plan to make virtual annual general meetings permanent, claiming it would erode corporate accountability and transparency.

The Australian Council of Superannuation Investors (ACSI) which represents funds managing $1.5 trillion of investment including AustralianSuper, Cbus and Hostplus, said the proposal to make virtual AGMs permanent could have "unintended consequences".

And prominent Sydney fund manager Geoff Wilson, who led the campaign against Labor's proposed changes to franking credits during the last federal election, has called on his 90,000 retail shareholders to oppose the push. "An AGM is a dialogue between the company’s board and it’s owners," he said. "It’s going to shift the balance of power significantly away from retail investors."

ACSI chief executive Louise Davidson said the super fund members she had consulted with also opposed the idea. "We see AGMs as being a really critical accountability measure, there's no other time that directors have to face up to their shareholders," she said. "It's not something that should be messed with lightly."

Emergency legislation was passed in May to allow companies to host online AGMs in order to comply with social distancing rules. Now, the government wants to make these rules permanent, abolishing the legal requirement for companies to host physical meetings each year.

Treasury has launched a two-week consultation period, with submissions closing this week.

Proxy firms, including ACSI and ISS, and shareholder groups, including the Australian Shareholders Association and Australasian Centre for Corporate Responsibility, plan to make submissions outlining concerns in the coming days.

Read the full story here

The US election could shake up currencies and pressure the RBA

By Stephen Bartholomeuz

There’s a perverse aspect to valuations of the US dollar that is showing up in the final days of the US election campaign. The messier the outcome, the stronger the US currency.

The confirmation of Amy Coney Barrett to the US Supreme Court is one of the ingredients in the appreciation of the dollar this week, with traders seeing that decisive tilt towards a conservative majority in the court as adding to the uncertainty amid fears of a contested outcome from the election.

As a safe haven currency, uncertainty is bolstering the US dollar.

As a safe haven currency, uncertainty is bolstering the US dollar.Credit: Phil Carrick

Uncertainty equals risk for financial markets and, with the perceived risk of weeks, if not months, of uncertainty in the event of a close and contested result - and potentially litigation that would end up before the court - the degree of uncertainty is seen to be increasing.

The dollar’s status as a safe haven means that even where the risks are self-inflicted the currency strengthens.

It also means that if those risks subside the dollar is likely to weaken.

Read Bartho's full column here

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Virus spread front of mind for CSL analysts

By Emma Koehn

The continued rise of coronavirus cases across the United States is front of mind for analysts watching CSL.

The biotech giant has said it’s confident its plasma collection volumes will bounce back as COVID-19 restrictions ease, though the team at Macquarie point out that their analysis of “live visit” data about collection centres show “overall foot traffic has remained largely unchanged since August”.

CSL relies heavily on its collection centres across the US to harness the volumes of blood plasma needed to make its flagship therapies.

CSL relies heavily on its collection centres across the US to harness the volumes of blood plasma needed to make its flagship therapies. Credit: AP

CSL relies heavily on its collection centres across the US to harness the volumes of blood plasma needed to make its flagship therapies.

The number of COVID cases in the country had risen to a 7-day average of more than 67,000 last week, which Macquarie notes is a worry because a rise in cases has been correlated to fewer people showing up to donate.

Morgans agrees, observing in a note: “With plasma collection not back to pre-COVID levels and infections increasing, the supply/demand imbalance is likely to widen further with downside risk increasing.”

Macquarie rates the stock as Neutral, Morgans as hold. CSL shares were up one per cent to $294.82 in afternoon trading.

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