ASX surges on trade positivity

19-06-2019 06:06

Samantha Bailey 4.25pm: $22bn added to ASX in booming trade

Investors added $22 billion to the ASX on Tuesday, prompting the local market to hit a fresh 12 year high, as hopes of easing trade tensions helped boost commodity prices.

It comes as yields hit record lows today amid a global bond market rally, fuelled by dovish from European Central Bank president Mario Draghi overnight.

Local gains followed a positive lead from Wall Street overnight with the major US indices all lifting on indications of easing trade tensions between China and the US.

“There are a few things to watch in the days and weeks ahead that could move things about but as far as economic news goes, I think all eyes will be on the Federal Reserve tomorrow morning as they announce their decision on whether or not to cut rates in the US,” CommSec market analyst Steven Daghlian said.

“Also tomorrow there will be a speech by Reserve Bank governor Philip Lowe just before lunch which will be an interesting one to watch.

The major iron ore miners lifted after the iron ore spot price gained 3.5 per cent overnight a 5-year high of $US112 a tonne.

BHP lifted 2 per cent to $40.98 while Rio Tinto rose 1.9 per cent to $105.71. Fortescue gained 2.8 per cent to $8.76.

In financials, NAB edged up 0.4 per cent to $26.83 while Westpac added 0.9 per cent to $28.33. Commonwealth Bank made 1 per cent to $82.30 while ANZ strengthened 1.4 per cent $28.67.

Ahead of the US Fed meeting, the Aussie dollar has edged higher, recovering from overnight lows of 0.6834 to trade flat at 0.6878.

Best and worst – Aus Business blog embed

Zoe Samios 4.19pm: Seven West drops to 18-month low

Seven West Media’s share price has fallen to a historical low, down one per cent to 46 cents in Wednesday’s trade.

The share price, now the lowest since February 2018, comes five days after the media company was removed from the ASX200, due to a sharp fall in market capitalisation.

Late last month, Seven West Media downgraded its profit forecast, citing soft advertising market conditions and uncertainty surrounding the Federal Election.

The media company, controlled by billionaire Kerry Stokes, now expects earnings before interest and tax to be between $210 million and $220 million for the year ending June 30, compared to $235.6 million the year prior.

Since its profit warning, shares have fallen from 50 cents to 46 cents.

Seven West Media’s market capitalisation is $701.24 million.

4.13pm: Stocks at highest since Dec ‘07

The local market has closed out a bumper session at its highest levels since December 2007, as investors cheer likely Federal Reserve easing and positive comments from US and Chinese leaders on the likelihood of a trade deal.

Australian equities were quick off the mark, to follow Wall St higher, adding 0.8 per cent within the first half hour of trade and maintaining those levels for much of the session.

At the close of trade, the benchmark ASX200 had gained 78 points or 1.2 per cent to 6648.1.

Meanwhile, the All Ords gained by 81 points or 1.21pc to 6728.5.

ASX200 daily trading

4.08pm: CYBG to rebrand as Virgin Money

CYBG has set out a plan for growth under a rebranded Virgin Money banner, and set out a plan for more than $365 million (200 pounds) in cost savings in the next three years.

The bank described its ambition to “disrupt the status quo in UK banking” and set out to do so by taking on the Virgin Money brand, a move set to be approved by the end of the year.

“We have a clear ambition to disrupt the status quo with the new Virgin Money. The new Group combines the ethos of Virgin, with its distinctive and brilliant customer experience, with CYBG’s technology, product expertise and know-how. We believe we have the winning formula that will create a new force in consumer and business banking,” CYBG chief David Duffy said.

4.04pm: Whispir debuts flat on ASX

Shares in cloud communications company Whispir have kicked off their first day on the market almost flat despite broad gains in the rest of the market.

Ahead of the final match, shares Whispir (WSP) were trading at $1.58, just shy of the $1.60 a share price offered in its oversubscribed $47 million IPO underwritten by Ord Minnett.

WSP had opened at $1.73 earlier Wednesday.

Founded in 2001, the Melbourne-based company operates a communications software- as-a-service platform for 500 clients including Walt Disney Corp, Virgin Australia, AIAGroup and Foxtel.

The platform offers automated workflows and can integrate with multiple communications channels such as email, SMS and WhatsApp messages.


3.46pm: Link drops to all-time low

Link Administration shares are under pressure in Wednesday’s trade ahead of its annual investor day in Londay today.

The company reaffirmed its previous guidance of full year net profit between $195m and $205m, falling below last year’s $207m profit.

It said full year pro-forma operating earnings would be between $315m to $325m and that earnings from its offloaded Corporate and Private Clients business would be $35m.

Link said Brexit uncertainty was impacting business sentiment and operating performance in Europe, while its Retirement and Superannuation Solutions arm would feel short term pain from known client losses and account consolidation.

LNK shares have dropped 5 per cent, to hit all-time lows of $5.39.

3.35pm: Vale woes prompt fresh iron ore rally

Iron ore futures have started a new rally this week, this time off the back of fresh supply concerns as one of Vale’s mines remains shuttered.

Analysts had been expecting Vale’s Brucutu mine to return to normal production this week, but a spokesman for the public prosecutor in Brazil said Tuesday that no agreement had been reached, according to Bloomberg reports.

The news has pushed iron ore futures in Singapore up 5.9 per cent, the highest since 2014, while the commodity is up by 3.4 per cent on the Chinese Dalian exchange.

That’s boosting BHP shares by 1.9 per cent, Rio Tinto by 1.75pc and Fortescue by 3pc.

ASX200 last at 6642.9.

Sarah-Jane Tasker 3.07pm: Aussie junior speeds up dental implants

Regenerative medicine company Orthocell says its CelGro product can half the time of dental implant treatments.

The company told the Australian market today that it had completed a marketing study to assess the effectiveness and predictability in accelerating treatment time frames when using its product CelGro for single-stage dental implants.

CelGro is a collagen medical device which facilitates tissue repair and healing in a variety of orthopaedic, reconstructive and surgical applications.

The 10 patients treated in the marketing study had previously suffered, in some cases for many years, from damaged, missing or diseased teeth.

Orthocell said all patients in the study successfully generated enough new bone to stabilise their implants and complete treatment in approximately four months, almost half the time of the usual two-stage, eight months, dental implant treatment.

The company’s share price is 12.6 per cent higher at 49c on news of the study.

The company said the marketing study followed a successful two stage dental implant trial and market authorisation of CelGro in the EU for dental bone and soft tissue applications

Perry Williams 2.25pm: Narrabri CSG gaining traction: Santos

Energy producer Santos says its controversial Narrabri coal seam gas project is gaining traction with NSW Premier Gladys Berejiklian amid a prolonged energy squeeze in the state.

With NSW importing 95 per cent of its gas needs, momentum appears to be building for the government to ease delays which have hobbled efforts to bring new supplies online, including the $3.6 billion Narrabri project in the state’s northwest.

Santos chief executive Kevin Gallagher said he believed the Narrabri project is gaining traction with Ms Berejiklian as part of a gradual shift in sentiment within the governing Liberal party.

“We see the headwinds are slowly shifting, they’re not quite tailwinds yet but they’re on their way to becoming tailwinds,” Mr Gallagher told the Credit Suisse Australian Energy conference in Sydney today.

STO shares are trading 1.9 per cent higher to $7 in afternoon trade.

Eli Greenblat 2.13pm: Coles extends record run

Shares in Coles have extended its gains by 4 per cent today to hit a fresh record high of $13.79 as the market enthusiastically welcomes the strategy update from chief executive Steven Cain yesterday.

Coles shares spiked more than 7 per cent yesterday after Mr Cain delivered his maiden strategy outlook for Coles which promised $1 billion in cost cuts to 2023 and a return to profit growth.

Shares in Coles were up 4.4 per cent to $13.79 this afternoon, a record high since it demerged from Wesfarmers last year and listed on the ASX.

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1.57pm: Asian markets cheer trade developments

Asian markets are cheering the easing of US-China tensions, with benchmarks across the region clocking more-than-1 per cent gains.

Hopes of an end to long-running trade talks were raised overnight after US President Donald Trump said he had a “good” conversation with China’s Xi Jinping and would hold an “extended meeting” at the upcoming G20 summit in Japan.

Xi added to the positivity, saying the countries “will both gain by co-operating, and lose by fighting”.

That sentiment has spurred regional markets higher – led by a 1.5 per cent boost in the Shanghai Composite to one-month highs.

Meanwhile, the Hang Seng is up by 2.36 per cent as investors wade back in after the city’s protests last week, and Japan’s Nikkei is higher by 1.7 per cent.

ASX200 last at 6636.6.

Hang Seng Graph

Perry Williams 1.42pm: AGL still hunting for data expansion

AGL Energy, fresh from abandoning a $3 billion takeover of telco Vocus, says the nation’s big electricity players need to consider expansion into data and internet services or risk losing a growth opportunity to potential rivals Telstra and energy giant Shell.

Australia’s largest electricity generator signalled it will remain on the hunt for opportunities that allow it to significantly boost its energy and data capabilities and build on investments in connected virtual power plants which links homes to send electrons back to the grid.

“We look at data and how you can use that information to provide support services from a customer back to the marketplace,” AGL’s head of wholesale markets Richard Wrightson told the Credit Suisse Australian Energy conference.

“I’m sure all the players are looking at how to do this. If we get it wrong we won’t be listened to again. If we do it badly Telstra and Shell and the other brands will eat our breakfast. We have to do it well.”

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1.36pm: Elders earnings skewed to H2

Rural services provider Elders has warned of challenging conditions in the sector, likely to skew earnings to the second half, but reiterated its guidance ahead of a presentation to a Macquarie forum today.

Slides from the presentation show the company is confident in delivering underlying earnings of between $72m and $75 million for the full year, with underlying profits between $61m and $64m.

It said reduced summer cropping was impacting retail sales, along with delayed rain for the winter crop, but that conditions were expected to return to average in the second half of the year.

Along with that, its Titan and bolt-on investments were said to have a positive earnings impact for the second half.

ELD shares are trading 2.28 per cent higher in afternoon trade, last at $6.29.

1.31pm: Market steady near 12-year highs

The local market is holding near 12-year highs in lunch trade, with gains across all sectors bar real estate.

Stocks smashed the previous June 12 high in the second hour of trade, setting the new 11.5 year high at 6644.3.

Energy stocks are gaining the most on the market, after a boost in the oil price overnight amid more optimistic sentiment on US-China trade tensions.

The sector is up by 2.2 per cent, led by Woodside’s 2.3pc rise while Santos is 1.96pc higher and Oil Search by 2.8pc.

Meanwhile, a similar boost to iron ore has prompted a 2.15pc lift in BHP and 2.25pc rise in Rio Tinto while Fortescue jumps by 3.64pc.

Nanosonics is the benchmark’s best performer, up 6.8pc while Pilbara Minerals is leading losers with a 5 per cent loss.

ASX200 last at 6640.3.

ASX200 daily trading

Sarah-Jane Tasker 1.21pm: Cannabis-on-skin options boost OBJ

Junior biotech OBJ has inked a deal to explore the option of delivering cannabis treatments through the skin, as opposed to inhaling or ingesting the drug.

The company enjoyed a 14.2 per cent share lift to 1.6c on news of the deal before the ASX paused trading in its shares as it sought clarification on some of the details in its announcement.

OBJ revealed that it had signed an agreement with Little Green Pharma, an Australian producer and supplier of medicinal cannabis products, to explore the adaptation of OBJ’s transdermal technology for the delivery of cannabinoid therapy.

“Backed by R&D efforts from Curtin University, this opportunity holds significant potential for all parties involved and could well represent a unique Western Australian solution to be used in one of the biggest growth markets in the world today.” Jeffrey Edwards, OBJ’s founder and managing director, said.

Michael Roddan 1.08pm: Franking boosted dividends ‘substantially’

The amount of profit Australian businesses pay out to shareholders rather than reinvesting in their own operations “increased substantially” after the introduction of franking credits in 1987, according to new Reserve Bank research.

The payout ratio for the largest publicly listed companies, which measures the share of profit paid out in dividends to shareholders, rose from a low of about 40 per cent in the early 1980s, to between 65 and 80 per cent over the next three decades, according to a paper by RBA economist Thomas Mathews examining the history of the Australian share market.

“The share of profits paid out as dividends increased substantially after the introduction of franking credits in the 1980s,” Mr Mathews said.

“On average around 65 per cent of listed company earnings were paid back to investors in the form of dividends from 1917 until the present,” he said. “The introduction of franking credits in the 1980s is widely believed to have boosted dividend payout ratios.”

Prior to the dividend imputation reforms, introduced by the Hawke-Keating government, corporate profits would be taxed, and the distributed profits paid out to shareholders would also attract a tax. The introduction of franking credits ended the process of double-taxation, making it more attractive for investors to own shares and providing companies with an incentive to pay out more profits in the form of franked dividends to shareholders.

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Bridget Carter 12.49pm: GPT raising already covered

Dataroom | The book is understood to already be covered for GPT Group’s $800 million equity raising as yield hungry investors seek further exposure to high quality real estate.

Investment banks UBS and Macquarie Capital are working on the $800 million-plus raise via an institutional placement and a non-underwritten security purchase plan to secure up to $50m.

The equity is being sought for the acquisition of stakes in the Darling Park 1 & 2 office complex and Cockle Bay Wharf commercial office assets worth a combined $531m.

Shares are being sold at $6.07 per share, a 4.1 per cent discount to GPT’s last closing price on June 18.

The country’s oldest listed property trust is the latest to raise equity in the real estate space on the back of buoyant market conditions, fuelled by low interest rates and the re-election of the Morrison government.

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Samantha Bailey 12.35pm: More junk insurance refunds ahead

Nearly half a million customers will now be refunded for worthless “add-on” insurance sold to them by car dealers, after the Australian Securities and Investments Commission announced additional refund programs by six more insurers.

The further refunds will mean that an additional 30,000 consumers will be compensated for the junk car insurance, bringing the overall refunds to customers to more than $130 million.

“Many people who bought a car or motor bike with add-on insurance may be entitled to a refund,” ASIC Commissioner Sean Hughes said.

“ASIC will continue to monitor this sector to make sure the unfair practices of the past do not return; however, the industry has a key role to play in this too.”

12.09pm: Online job ads drop for 5th month

The number of jobs advertised online dipped 0.7 per cent in May, marking a fifth consecutive month of falls recorded by the federal government’s Internet Vacancy Index.

The numbers, released by the Department of Jobs and Small Business on Wednesday, indicated a drop of 1,300 ads from the previous month and a 5.7 per cent slump in listings in the past year.

NSW ads had the biggest fall over the past 12 months, sliding 9.2 per cent, while the figures dropped 8.7 per cent in the Northern Territory and 5.5 per cent in Victoria.

The tally follows Tuesday’s release of the minutes from the Reserve Bank of Australia’s monthly board meeting, which reiterated that members would be closely watching jobs data as they mull the timing of further cuts to the interest rate.


Zoe Samios 12.02pm: News Corp ponders US marketing sale

News Corp could sell off its American marketing operation as part of broader efforts to simplify its business structure.

The media business, which publishes The Australian, announced it is ‘actively evaluating strategic options’ for News America Marketing (NAM), flagging a potential sale of the division.

News Corp said the sale of NAM, which provides in-store marketing and newspaper inserts for brands and retailers, would allow the company to focus on areas such as distribution of premium content, and global digital real estate services.

Allen and Company LLC has been recruited as a financial adviser to assist with the review and potential sale.

Robert Thomson, chief executive of News Corp, said the strategic review would “enhance shareholder value”.

NWS shares are trading 5 per cent higher on Wednesday to 7-month highs of $19.39, extending strong gains for the week.

At these levels, the stock is 10 per cent higher from last Friday’s close.

11.51am: SeaLink warns of tough tourism market

SeaLink Travel, operator of cruises and ferry services on Sydney Harbour, has warned of softer tourism conditions as it set its profit guidance at $22 million for the full year.

The company said Sydney and Perth markets, to which it is mostly exposed, had been worse than expected thanks to slower inbound international tourism and uncertainty ahead of the federal election.

SeaLink set its profit expectations at between $20m to $24m for the year, flat on $22.1m last year, despite expectations of a beat on the first half profit of $13.1m.

Alongside its forecasts, the company announced the sale of two Capricornian vessels to a New Zealand operator for $9.9 million, above the book value of the assets, to be used to pay down debt and position the company for tourism sector acquisitions.

SLK shares are lower by 4.6 per cent to $3.55 after equalling three-year lows of $3.50.

Cameron Stewart 11.37am: Trump launches re-election campaign

Amid a surging red sea of supporters chanting ‘Four More Years,’ Donald Trump has launched his 2020 election campaign declaring ‘the American dream is back’.

At a mega-rally of 20,000 fans in Orlando Florida attended by First Lady Melania Trump, Trump’s four adult children and Vice President Mike Pence, the president said he had given power back to the American people.

“Tonight I stand before you to officially launch my campaign for a second term,’ he said to raucous cheers.

“We have probably the greatest economy in the history of this country. Our future has never looked brighter or sharper,’ he said.

“The American dream is back, and it’s bigger and stronger than ever before.”

In front of the carnival crowd Trump revelled in his role as lead showman, grinning, waving and pumping his fists as he alternated between boasting of his achievements and goading his opponents.

11.24am: Pilbara trades lower for third day

Lithium producer Pilbara Minerals is trading lower for a third day, after cutting production from its Pilgangoora plant.

On Monday, the company said its offtake partners were held up by delays in construction, commissioning and ramp-up of chemical conversion facilities and it would have to temper production until the end of July.

Pilbara Minerals said it was still confident in the medium to long-term outlook for the broader lithium market, and underlying demand, but investors aren’t convinced.

Shares in the company are down by 3 per cent in Wednesday’s trade, and are 19 per cent lower from last Friday’s close.

PLS last at 57.5c after touching 2-year lows of 56c early in the session.

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Eli Greenblat 10.52am: Solomon Lew lures former DJs chief

The former chief executive of department store David Jones, David Thomas, who quit the retailer in February has been appointed to run some of the private fashion companies owned by Solomon Lew’s family.

The hire gives the billionaire retail mogul a second ex-David Jones boss in his camp as he prepares for possibly one day making a bid for Myer or David Jones.

Mr Thomas will be the chief executive of Brandbank, the private Lew family business connected to his eldest son, Peter Lew, and whose well known fashion brands and chains include Seed and Thurley, as well as the local licence for French Connection.

The department store bench strength of the Lew camp now includes Mr Thomas as well as ex-David Jones boss Mark McInnes who runs his $2.56 billion publicly fashion investment vehicle Premier Investments and whose brands include Portmans, Smiggle, Just Jeans, Dotti as well as a 10.8 per cent stake in Myer.

Mr Thomas walked out of David Jones earlier this year after being appointed in 2018 and was the fourth CEO in five years at the department store.

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10.49am: ‘Melt-up’ pushes ASX to 12-yr high

The “melt-up” in the Australian sharemarket continues.

The ASX200 has surged 1 per cent to a 12-year high of 6633.7 after strong offshore gains.

It’s now up 17.5pc for the year to date.

Looking at the longstanding All Ordinaries index, this is the strongest year-to-date rise since 1991.

It comes amid an aggressive pivot from a tighter to easier monetary policy outlooks from central banks in Australia and globally this year.

If it holds this level the Australian sharemarket will have added $20 billion to the value of the index today.

Re-positioning in futures is likely to be accentuating this move before tomorrow’s expiry of June SPI futures.

Joyce Moullakis 10.41am: Johnson defects from CLSA to Jefferies

CLSA banking analyst Brian Johnson has resigned from the firm, joining the 26 others that have defected to Jefferies.

Last week 26 other staff resigned from the outfit, in one of the biggest ever employee raids in Australian banking.

Mr Johnson was CLSA’s marquee hire in Australia in 2009 as it ramped up operations here.

Prior to CLSA he was a top rated analyst at JPMorgan.

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Bridget Carter 10.37am: Syrah taps Credit Suisse for raise

Syrah Resources has hired Credit Suisse for its equity raising and convertible bond deal with Australian Super to secure $111.6 million.

The graphite miner will raise $55.8 million in a 1 for 5 accelerated pro-rata non-renounceable entitlement offer, fully underwritten by Credit Suisse.

Shares are being offered at 81c each, which is a 15.3 per cent discount to the theoretical ex-rights price of 95.6c per security.

Australian Super will also be issued with the 5-year unsecured convertible note to secure $55.8m as part of a move to diversify funding sources where it can defer the drawdown of the convertible note for up to 120 days.

10.31am: Bravura boosted on higher bid

Bravura shareholders have been encouraged by the company’s move to increase its takeover bid for rival GBST, pushing shares higher in opening trade.

The fintech company this morning raised its takeover bid to $2.72, from initial bid of $2.50, saying initial due diligence had been encouraging.

The offer now is for cash and a special dividend, a move away from the cash and scrip option put forward in the first instance.

Early trade pushed the stock higher by 2.85 per cent to $5.42 while the target gained 5.45 per cent to $2.71.

10.17am: Stocks surge to new 11.5yr highs

The local market has notched larger-than-anticipated gains of as much as 0.86 per cent at the open, hitting fresh 11.5 year highs of 6627.5 after upbeat comments from the US and China on trade, and hints the ECB could cut rates.

The index had been expected to rise 0.7pc to 6615 based on overnight futures after strong offshore gains.

Major miners and energy stocks are doing most of the heavy lifting as the ones most likely to win out of a trade resolution.

BHP shares are 2.3pc higher, Rio Tinto by 2.76pc and Fortescue by 4.46pc while Woodside is up by 2.28pc and Santos by 2.11pc.

The big four banks are up by between 0.64pc and 1.06pc.

Chart support is now potentially as high as the recent peak of 6587.3.

ASX200 last at 6622.

10.06am: Trade war impact underestimated: MS

Markets are underestimating the impact of trade tensions on business confidence and the attendant risk to the cycle, according to Morgan Stanley chief economist Chetan Ahya.

“Global investment growth has slowed sharply since mid-2018,” he notes. “Persistent uncertainty will bring further downside and knock-on effects, and could end the business cycle.”

“The transmission channels are pervasive, the impact is nonlinear and any policy response will be reactive, with lagged effects.”

Mr Ahya warns that trade tensions have already pushed global investment growth – a key to sustaining this late-cycle expansion – to a three-year low.

“Persistence in trade tensions will bring US corporate credit risks to the fore, increasing the risk of a nonlinear negative impact,” he says.

“Hence, if trade tensions escalate, we see the global economy entering recession in three quarters.”

It comes as US President Trump said last night that he will meet China’s President Xi at the G-20 next week, boosting hopes of a trade deal.

10.01am: AusSuper backs Syrah raise

Australian Super has backed Syrah Resources in a $56 million convertible note, alongside a further $56 million entitlement offer announced to the market today.

Syrah said its Balama Graphite Project was nearing production volumes expected to generate positive cash flows, but needed the funds to ramp up production.

It said calendar year production was expected to be between 205kt and 245kt, revised lower from 250kt, but that it was balancing the unit cash operating costs benefits against the pricing impact of more supply.

The entitlement offers new shares at 81c, at a 15.3 per cent discount to the last closing price of 98.5.

9.50am: ‘Pain trade’ favours stocks, not bonds

The “pain trade” in global markets favours stocks over bonds, according to Bank of America Merrill Lynch.

The US investment bank’s global fund manager survey for June found investor confidence was the most bearish since the global financial crisis of 2008.

Pessimism was driven by concerns over trade war and recession risks, monetary policy impotence, “low strike prices for policy puts”, in other words the Fed won’t cut rates unless the stock market falls sharply.

“The tactical ‘pain trade’ is higher yields and higher stocks, particularly if the Fed cuts rates on Wednesday,” BAML chief investment strategist Michael Harnett said.

Global sharemarkets jumped on dovish comments from ECB’s Mario Draghi and conciliatory comments from US President Trump on the US-China trade war, with the S&P 500 now less than 1pc from a record high close.

Bridget Carter 9.48am: GPT taps UBS, Macquarie

Dataroom | Investment banks UBS and Macquarie Capital have been hired for the $800 million-plus equity raising by the GPT Group.

The investment banks are helping the company raise the funds via an institutional placement and a non-underwritten security purchase plan to secure up to $50m.

The equity is being sought for the acquisition of stakes in the Darling Park 1 & 2 office complex and Cockle Bay Wharf commercial office assets worth $531m.

Shares are being sold at $6.07 per share, a 4.1 per cent discount to GPT’s last closing price on June 18.

The country’s oldest listed property trust is the latest to raise equity in the real estate space on the back of buoyant market conditions, fuelled by low interest rates and the re-election of the Morrison-led government.

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9.36am: What’s impressing analysts, what’s not

  • Afterpay Touch started at Add; $23.43 target price – CIMB
  • Asaleo Care price target cut 12pc to $1.10 – Credit Suisse
  • BlueScope price target cut 9.4pc to $9.20 – Macquarie
  • BlueScope price target cut 29pc to $12 – Morgan Stanley
  • Charter Hall Education started at Neutral, $3.65 target price – JPMorgan
  • Duxton Water started at Hold; $1.50 target price – Bell Potter
  • Emeco Holdings started at Buy; $2.63 target price – Bell Potter
  • Mount Gibson raised to Outperform – Macquarie
  • PWR Holdings cut to Hold; $4.85 target price – Bell Potter
  • Transurban price target raised 17pc to $15.48 – Macquarie
  • 3P Learning cut to Equal-weight – Morgan Stanley

9.30am: Crombie retires from AACo board

Australian Agricultural Company has this morning announced the retirement of board member David Crombie, after eight years as a director.

Mr Crombie, immediate past President of the National Farmers Federation and former chairman of MLA, was appointed in the role in October 2011 and served on a number of committees in his time.

“He’s been instrumental in helping to develop the branded beef strategy that AACo is pursuing with its unrivalled ability to produce the highest quality beef at scale,” chairman Donal McGauchie said.

“AACo will continue to benefit from David’s expertise and experience, as he takes on an advisory role in the pastoral area of the business.”

9.21am: Stocks set to hit new 12-yr highs

Australia’s sharemarket is set to hit a new 12-year high above the June 12 peak of 6587.3 after strong gains on Wall Street.

Overnight futures relative to estimated fair value imply the index will rise 0.6 per cent to 6615, the highest since December 2007 and less than 4pc from the record high of 6851.

That follows gains of more than 1pc in the major US indexes after President Trump hinted that the US and China want to de-escalate the trade war,

“Had a very good telephone conversation with President Xi of China,” Trump tweeted. “We will be having an extended meeting next week at the G-20 in Japan.”

Dovish comments from ECB President Draghi also helped stocks with the Euro Stoxx 50 index up 2.1pc.

Draghi said that if the outlook doesn’t improve, further policy stimulus would be needed, potentially via interest rate cuts, forward guidance, and more QE, where the ECB “still has considerable headroom”.

Draghi also said eurozone governments will have to do their share by providing fiscal stimulus if the economic climate doesn’t improve.

It came as the German ZEW survey of financial analysts for June showed expectations fell to 21.1 from 2.1 points in May.

Trump later issued multiple tweets complaining that Draghi’s stimulus comments unfairly weakened the EUR/USD rate, what could indicate ongoing risks of auto tariffs against Europe.

US housing starts for May fell 0.9pc vs a 0.3pc rise expected, but April was revised up.

AUD/USD bounced from 0.6832 to 0.6882 as the risk appetite improved on Trump’s China tweet.

ASX200 daily trading

9.15am: Final hurdles left for Navitas takeover

Navitas shareholders will today meet to vote on the company’s $2.1 billion takeover by BGH Consortium, one of the last hurdles for the deal to go ahead.

The education company this morning told the market it had satisfied the US regulatory and specified contracts conditions, with only the shareholder vote and Supreme Court approval left to check off.

If successful, shareholders will receive $5.825 cash for each share held.

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Samantha Bailey 9.11am: Westpac hires business boss from HSBC

HSBC executive Guilherme Lima has been appointed incoming chief executive of Westpac’s newly created business division.

The announcement comes after Westpac said in March it would realigning the private wealth, platforms & investments, and superannuation businesses into a new business division.

Mr Lima, who will join Westpac later this year subject to the required regulatory and visa approvals, is currently based in Hong Kong heading up HSBC’s wealth management arm.

He previously led the HSBC retail and wealth management business for the Latin American region.

8.59am: Bravura raises GBST offer

Fintech Bravura has raised its takeover offer for rival GBST by $15 million to $185 million after reviewing initial due diligence materials.

The tie-up was first announced in April, at an initial offer price of $2.50 per share, and now has been raised to $2.72 per share, with up to 35c offered in the form of a special dividend.

Bravura is no longer proposing a cash and scrip alternative as in its first proposal.

“These Initial Due Diligence Materials have helped Bravura to better understand and confirm some key assumptions underpinning its strategic rationale of a potential acquisition of GBST and availability of potential synergies from combining the two businesses,” Bravura said in a statement to the market.

It says based on its early calculations, and consensus expectations for Bravura, the revised proposal is expected to be EPS accretive in the first full year of ownership.

8.45am: GPT kicks off $800m raise

Real estate group GPT has this morning launched an $800 million capital raise to fund its acquisition of two Darling Park office complexes and Cockle Bay Wharf in Sydney.

The acquisition is for a 25 per cent interest in the three buildings, for total consideration of $531 million, with the balance of the funds to be used for the rest of the group’s development pipeline.

New shares will be issued at $6.07, representing a 4.1 per cent discount to GPT’s last closing price.

Alongside the capital raise, GPT has updated its full year guidance – forecasting funds from operations per security growth of 2.5 per cent on FY18.

It said revaluations undertaken over the six months to June 30 were expected to result in a gain of $102 million, or 0.7 per cent.

8.00am: ASX set to open firmly higher

The Australian share market is expected to open higher after a positive lead from overseas following indications of easing Chinese-US trade tensions.

At 8am (AEST) the SPI200 futures contract was up 39 points, or 0.59 per cent, at 6,614.0, suggesting an early surge for the benchmark S&P/ASX200 after yesterday’s gains.

Wall Street finished higher overnight after US President Donald Trump said he would meet with Chinese President Xi Jinping at the G20 summit this month, with the Dow Jones Industrial Average up 1.35 per cent, the S&P 500 up 0.97 per cent and the tech-heavy Nasdaq Composite up 1.39 per cent.

The Aussie dollar is buying US68.76 cents from US68.39 cents yesterday.


7.50am: Copper rises on trade talk

Copper jumped to a three-week high overnight after US President Donald Trump said talks with China would resume ahead of a meeting at the G20 summit, raising hopes for a resolution to trade tensions between the two countries.

The tit-for-tat trade conflict between the world’s top two economies has sapped demand for metals and overshadowed strong fundamentals in markets such as copper, analysts say.

“The metals group had been oversold over the last few days and the trade war news may have prompted some short covering after the two presidents agreed to meet at the G20 Summit,” said INTL FCStone analyst Edward Meir. “Fundamentals of the metals are constructive but people are concerned about the demand side.”

Benchmark copper on the London Metal Exchange (LME) ended 1.7 per cent higher at $US5,945 per tonne after touching its highest since in May 28 at $US5,974. Prices were also supported by supply disruptions at one of the world’s largest mines in Chile and Glencore’s Zambian smelter.


7.25am: Oil climbs

Oil prices rose more than $US1 a barrel overnight after news that China and the United States were resuming trade talks ahead of a meeting at the G20 summit later this month, spurring hopes that the two countries would resolve an ongoing trade conflict.

Rising tensions in the Middle East after last week’s tanker attacks, with the US planning to send more troops to the Middle East, also lent support. US West Texas Intermediate crude futures rose $US1.97, or 3.8 per cent, to settle at $US53.90 a barrel.

Brent crude futures gained $US1.20, or two per cent, to settle at $US62.14 a barrel.


6.55am: Trump considers Powell demotion

President Donald Trump, asked by reporters if he still wants to demote Federal Reserve Chairman Jerome Powell, replied: “Let’s see what he does.”

Trump said he was not getting a “level playing field” with other countries, noting that the European Central Bank has a “much different stance” than the Fed.

The questions were prompted by a Bloomberg News report that the White House counsel explored the legality of stripping Powell of his chairmanship and leaving him on the board as a governor.

The review came after Trump spoke of firing Powell, the report said. Bloomberg said it didn’t know the result of the administration’s review.

Dow Jones

6.50am: US stocks gain on trade hopes

Wall Street stocks rallied on upbeat comments on trade by the US and China ahead and as the ECB signalled it could cut interest rates.

US President Donald Trump said he had a “good” conversation with China’s Xi Jinping and would hold an “extended meeting” at the Group of 20 summit in Japan later this month.

Xi said the two sides “will both gain by co-operating, and lose by fighting,” according to a readout by Chinese state broadcaster CCTV.

The remarks raised hopes the two sides may finally strike a trade deal after multiple tariff actions on both sides.

The Dow Jones Industrial Average finished at 26,465.81, a gain of 1.4 per cent. The broadbased S&P 500 rose 1.0 per cent to end the day at 2,917.75, while the tech-rich Nasdaq Composite Index advanced 1.4 per cent to 7,953.88.

Australian stocks are set to open firmly higher. At 6.45am (AEST) the SPI futures index was up 43 points.

Trump’s comments on the G-20 came after European Central Bank chief Mario Draghi said further interest rates cuts “remain part of our tools” in response to weakening growth.

Draghi’s comments — which lifted stocks early in the day — came as the US Federal Reserve kicked off a two-day policy meeting.

Although the Fed is not expected to cut interest rates, investors have been heartened by more dovish comments lately from central bankers and will be analysing Fed Chair Jerome Powell’s statements for clues on future steps, which they hope will signal a clear willingness to boost the economy.

Trump has repeatedly criticised the Fed and pressured Powell to cut rates, and on Tuesday lashed out at Draghi’s statements, saying an ECB cut would “unfairly” harm US goods competing with a cheaper euro.

Among individual companies, embattled aerospace giant Boeing shot up 5.4 per cent after it announced the sale of 200 of the737 MAX planes to International Airlines Group.

The announcement at the Paris Air Show comes as Boeing’s global fleet of 737 MAX planes remains grounded following two crashes that killed 346 people. Boeing has said it is making progress with regulators on having an upgraded plane recertified.

Chip companies were among the biggest beneficiaries of increased hopes over US-China trade talks. Broadcom jumped 4.5 per cent, Micron Technology 5.7 per cent and Nvidia 5.4 per cent.


6.44am: Europe wary of Facebook cryptocurrency

European financial leaders vowed vigilance after Facebook announced it was diving into the cryptocurrency market, as analysts warned the social media giant could face major regulatory questions.

French Finance Minister Bruno Le Maire, whose government initiated a new tax on digital giants like Facebook that has angered the United States, said such digital money could never replace sovereign currencies of governments and insisted Facebook’s plan required guarantees.

Bank of England Governor Mark Carney said Facebook’s new currency would have to withstand scrutiny of its operational resilience and not allow itself to be used for money laundering or terror financing.

Facebook and some two dozen partners on Tuesday released a prototype of a cryptocurrency called Libra, whose rollout as global digital money is expected next year.


6.42am: Boost for Boeing

US aircraft giant Boeing got a welcome vote of confidence in its beleaguered 737 MAX plane on Tuesday when International Airlines Group, owner of British Airways, said it wanted to by 200 of the planes.

The companies said they had signed a letter of intent for the purchase, the first since the 737 MAXs were grounded in March after two of them crashed within six months of each other, killing 346 people.

At list prices the order would be worth $US24 billion, but IAG, whose airlines also include Iberia, Vueling and Aer Lingus, noted that it had negotiated “a substantial discount.” It was a coup for Boeing since up to now IAG has been a long time client of Airbus for its single-aisle jets, used on some of its most popular routes.


6.40am: ‘Super Mario’ lifts markets

European Central Bank Mario Draghi sent Europe’s stock and bond markets surging by hinting at further eurozone interest rate cuts, while the euro fell sharply on the news.

Draghi’s dovish comments even sparked the fury of US President Donald Trump, who accused the ECB chief of sending the euro down against the dollar to make it “unfairly easier for them to compete against the USA”.

Draghi retorted that “we are ready to use all the instruments that are necessary” to fulfil the ECB’s price stability mandate and insisted “we don’t target the exchange rate”.

Equity investors meanwhile rejoiced, with Paris and Frankfurt stocks up more than two per cent at the close.

“Super Mario is back!” said IG analyst Chris Beauchamp in summary at the market action.

“Despite only having a few months left to his tenure, the head of the ECB has handed his successor a firmly dovish bias, as he leaves the door open to more QE (quantitative easing stimulus) and renewed negative rates at the ECB in order to try once again to kickstart the eurozone economy.”

Ahead of a key US monetary policy decision, Draghi renewed openness to lowering eurozone interest rates still further, as well as other steps to boost the bloc’s anaemic growth and inflation.

“Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools,” Draghi told the ECB’s annual economics gathering in Sintra, Portugal.

Central bank governors had already discussed potential rate cuts at a regular meeting of the ECB’s governing council in early June, faced with an economy weighed down by trade conflicts making for sluggish price growth.

The prospect of falling interest rates tends to push share prices higher because they cut company borrowing costs and also boost consumers’ disposable incomes.

It also tends to buoy bond markets, which reacted strongly, with the yield on the French government’s benchmark 10-year bond turning negative for the first time.

London closed up 1.2 per cent, Frankfurt ended 2.0 per cent higher and Paris was up 2.2 per cent.


6.35am: Siemens to cut 2700 jobs worldwide

Industrial conglomerate Siemens said it would slash 2700 jobs worldwide at its gas and power unit, including 1400 in its home country Germany, “over several years”.

The division — set for a stock market flotation in 2020 — “will … require further savings of 500 million euros” ($US560million) on top of 7000 jobs cuts and site closures already announced, the group said in a statement.


6.32am: Jamaican bank sells recovery with songs

Jamaica’s central bank thinks the country’s economy is doing very well and it is using an instantly recognisable symbol of the island to get this message to the people: reggae music.

In the bank’s latest video, reggae artist Tarrus Riley uses his throaty vocals to praise low, stable and predictable inflation as being what the bassline is to reggae music.

“Gimme little one drop, let the bassline roll and kotch, reggae music run the country,” Riley sings.


6.30am: Trump says he’ll talk trade with Xi

President Donald Trump says he’ll hold trade talks with Chinese President Xi Jinping next week at a summit of nations in Japan.

In an escalating trade dispute with Beijing, Trump has already imposed 25 per cent tariffs on $US250 billion in Chinese imports. The goal is to pressure Beijing to stop stealing American technology, forcing US businesses to hand overtrade secrets and unfairly subsidising Chinese tech companies.

Trump tweeted on Tuesday that US and China negotiating teams will meet prior to his meeting with the Chinese leader at the Group of 20 nations in Osaka, Japan.

US businesses are imploring Trump not to expand his tariffs to $US300 billion in goods from China or at least spare those imports that are of key importance to their customers.


6.25am: US home construction dips

Construction of new US homes dipped in May, with declines across much of the country, according to new data.

The report showed home building was still struggling to break out of a recent soft trend, a concern for the economy since it is closely tied to GDP growth, consumer spending, wages and unemployment.

But there were signs of more construction in the pipeline in the sector that is a closely-watched economic barometer, but has been beset by a shortage of workers.

Total home construction started fell 0.9 per cent from April to an annual rate of 1.27 million, seasonally adjusted, the Commerce Department said. That is 4.7 per cent below May 2018.


6.20am: French bond yield turns negative

The yield on the French government’s benchmark 10-year bond turned negative for the first time after ECB chief Mario Draghi hinted at rate cuts.

In midafternoon European bond trading, the issue yielded 0.01 per cent, having briefly dipped into negative territory, to -0.0012 per cent, earlier in reaction to Draghi saying rate cuts and other steps to boost growth were on the table.

Any further lowering of rates in the eurozone would be a step further into the unknown for the ECB, which has since 2014 charged banks to park cash with it, using a negative deposit rate now at -0.4 per cent.

This means that lending money to a high-quality borrower like the German government has become a loss-making endeavour, but still less so than depositing funds with the ECB instead.

The prospect of still lower ECB rates could take more government bond yields into negative territory.


6.15am: ECB ready to use more stimulus

The European Central Bank stands ready to cut interest rates and could restart its bond purchase stimulus program if needed to help the economy, President Mario Draghi said.

Markets read the comments as a step toward more stimulus in coming months, sending the euro lower against the dollar.

Draghi said in a speech at an ECB conference in Sintra, Portugal, that “further cuts in policy rates … remain part of our tools.”

He added that there was “considerable headroom” to restart bond purchases, which inject newly created money into the financial system in the hope of boosting lending and economic activity.

Rate cuts and monetary stimulus aimed at loosening credit for businesses and consumers can send a currency’s exchange rate lower. And a weaker euro can give European exporters a price advantage over US businesses.


6.10am: Trump laments Euro stimulus talk

President Donald Trump complained that possible euro stimulus measures floated by the head of the European Central Bank make it “unfairly easier” for the EU to compete against the United States.

Comparing EU policies to those of China, which Trump has engaged in a major trade war, the US president criticised ECB chief Mario Draghi.

“Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others,” Trump tweeted.

Markets reacted positively to Draghi’s comments in which he said that further interest rate cuts “remain part of our tools.”

The euro was down 0.3 per cent against the dollar, at $US1.12.

Trump pounced on this, adding in a later tweet: “European Markets rose on comments (unfair to U.S.) made today by Mario D!”

Aside from rate cuts, other EU stimulus moves could include restarting so-called quantitative easing purchases of government and corporate debt, which amounted to 2.6 trillion euros ($2.9 trillion) between 2015 and 2018.


6.05am: Facebook plans its own currency

Facebook is launching a new digital currency to make e-commerce accessible to more people around the world.

The social media giant is announcing Libra, a cryptocurrency it is creating with more than two dozen partners including Uber, PayPal, Visa and Spotify.

The digital currency will be backed by a reserve of existing currencies from around the world likely including the US dollar, the euro and the yen.

Facebook’s long rumoured currency will launch to the public early next year. It is likely to spark privacy concerns with people who are wary about giving Facebook more information about themselves.

But Facebook says it will keep financial data secure and separate from its social media sites.

Libra will be governed by a non-profit made up of the founding companies and non- governmental organisations.


The Australian