- ASX futures are up 114 points, or 2.2 per cent.
- Oil prices soared overnight on the promise of significant production cuts.
Class action filed against Treasury Wine
Treasury Wine Estates has been served with a class action, with the group proceeding filed in the Supreme Court of Victoria.
“The proceeding has been filed by Slater + Gordon on behalf of the plaintiff, who brings the claim on behalf of shareholders who acquired an interest in TWE shares between 14 February 2019 and 28 January 2020,” the company said.
“The statement of claim includes allegations of contraventions of the Corporations Act in relation to continuous disclosure and the Corporations Act and ASIC Act in relation to misleading or deceptive conduct.”
Treasury has denied any and all allegations of wrongdoing and said it intends to vigorously defend the proceeding.
Oil still weak despite incredible surge
Despite last night’s incredible surge in crude prices, the commodity remains firmly weaker for the year-to-date.
Brent crude rose 19.6 per cent to $US29.58 a barrel in overnight trade however oil remains 55.2 per cent down since January 1.
“President Trump tweeted that he expected Saudi Arabia and Russia to cut oil output by as much as 15 million barrels a day after talks with Mohammed bin Salmon and Vladimir Putin,” said NAB head of commodity research Lachlan Shaw.
“Trump’s inference of an agreement was immediately denied by Saudi Arabia, while the Kremlin denied any discussions taking place between KSA and Russian leaders.
“Saudi Arabia did confirm it has called an urgent meeting of OPEC+Russia as well as other unnamed producers to discuss a ‘fair agreement’ to cut output but only if the broad producer coalition also agreed to all cut output.”
Z Energy narrows guidance range, cancels final dividend
Z Energy narrowed its financial year 2020 guidance to a range of $NZ355 million to $NZ365 million from a prior range of $NZ350 million to $NZ385 million. The guidance includes provisions of $NZ27 million related to COVID-19 costs both incurred and expected.
The firm said it’s been hit by a series of material factors over the past 18 months including heightened retail competition and a challenging refining market.
Historically low refining margins have endured for an exceptional period of time which has resulted in fee floor contributions paid to NZ Refining in the third and fourth quarter of financial year 2020.
The company is cancelling its final dividend and accelerating cost cutting actions, suspending all non-integrity capital expenditure and is in talks to increase its working capital facility.
For 2021, CEO Mike Bennetts said “at this stage of the pandemic it is difficult to forecast sales volumes. The lockdown in NZ will clearly have very significant implications for customer demand.”
Harvey Norman cancels dividend
Harvey Norman has cancelled the 12 cent per share interim dividend due to be paid on May 4 citing the uncertain trading conditions.
The company said all Australian franchisee stores and online channels continue to trade but did not provide an update of its international network.
Harvey Norman’s previous update on March 18 provided details on sales in international markets, including Europe, New Zealand and Malaysia.
These markets have seen containment measures expanded.
No information on trade in these markets was provided in the latest release.
The company said key executives and its non-executive directors will forego 20 per cent of their salaries or directors fees between April and June.
Serko cuts costs to survive travel downturn
Travel software business Serko is looking to reduce costs by $NZ2 million a month in response to the COVID-19 crisis. It also reports that as of today it had no debt and $NZ42 million cash on hand.
On March 16 the group suspended guidance for revenue growth to land at the lower end of a range between 20 to 40 per cent. Its financial year ends March 31 2020.
Shares in the dual NZX/ASX-listed Auckland-based software group are down 62 per cent in 2020.
SkyCity announces cost cutting measures
SkyCity Entertainment has announced a range of cost cutting measures to combat the shutdown of its businesses due to the coronavirus outbreak.
All the company’s casinos, hotels, restaurant,s bars and attractions are closed with the company poised to lose $NZ90 million a month in revenue each month.
“We have conducted an intensive evaluation of our strategic options and will be implementing a wide range of changes across all our businesses to reduce our operating costs and preserve funding liquidity,” said chief executive Graeme Stephens.
“Our objective is to right-size and refocus the business now so that it is sustainable through the crisis.”
The company will reduce stay-in-business capital expenditure for the remainder of the financial year by $NZ15 million and hall capital development projects, except for the NZICC and Horizon Hotel project, have been put on hold, although no work is currently possible for those two projects.
Executive salaries will be cut by between 20 and 40 per cent with the chief executive, financial officer and operating officers all cutting their salaries by 40 per cent for the remainder of the financial year. The board of directors will cut their fees by 50 per cent for the remainder of the financial year.
Additionally, Peter Alexander will step down from the role of chief property officer and leave the company on July 2, 2020.
Its waged employees are being asked to cut to 80 per cent of normal wages, which it says it can carry. Any employees not wishing to reduce wages have been offered the option of voluntary redundancy. It’s likely the business will need to make 200 positions redundant regardless.
Around 90 per cent of the company’s Australian staff have been stood down however the company intends to access the JobKeeper payment scheme to support those staff.
The cost reduction plan for staff will generate savings of close to $NZ50 million annually while redundancies are likely to cost $NZ11 million.
Crown delays dividend, scraps franking
Crown Resorts has delayed the payment of its interim dividend and has warned it could delay further has it finalises a number of new financing arrangements.
The board had announced on February 19 it would pay an interim dividend of 30¢ per share, to be franked ato 25 per cent.
The board has determined to delay the payment of the dividend from April 3 to April 17 but said that it could defer further if necessary while the new financing arrangements were finalised. The board also said the dividend would no longer be franked.
Trump says Saudis, Russia will cut output
President Donald Trump said he expects Saudi Arabia and Russia to cut oil production by about 10 million barrels after he spoke by phone with Crown Prince Mohammed Bin Salman on Thursday.
Trump didn’t specify in a tweet whether the production cut would be per day. He said Prince Mohammed had spoken to Russian President Vladimir Putin about their oil price war. “Could be as high as 15 Million Barrels,” Trump added in a subsequent tweet.
“Good (GREAT) news for everyone!” he said.
The White House declined to comment on the tweets.
But a Putin spokesman, Dmitry Peskov, said the Russian president had not spoken to the crown prince. And Saudi Arabia didn’t confirm a production cut, instead calling for an “urgent meeting” of the Organisation of Petroleum Exporting Countries plus Russia and other unnamed countries, according to state-run media.
Crude oil futures in New York surged as much as 35 per cent on Trump’s tweet. Near 11.30am in New York, brent crude was up 15.1 per cent to $US28.48 a barrel, while US oil was 20.5 per cent higher at $US24.47.
If Trump meant 10 million barrels per day, that would equal both Moscow and Riyadh curbing nearly 45 per cent of their production — an unprecedented move that triggered scepticism in markets.
Oil prices soar; US stocks firm
Here are the overnight market highlights:
- AUD -0.3% to 60.54 US cents
- On Wall St near 4pm: Dow +2.2% S&P 500 +2.2% Nasdaq +1.7%
- In Europe: Stoxx 50 +0.3% FTSE +0.5% CAC +0.3% DAX +0.3%
- Spot gold +1.3% to $US1612.80 an ounce at 1.14pm New York time
- Brent crude +21.8% to $US30.13 a barrel
- US oil +24.1% to $US25.21 a barrel
- Iron ore +1.5% to $US83.72 a tonne
- Dalian iron ore +2.9% to 577.5 yuan
- LME aluminium -0.7% to $US1489 a tonne
- LME copper +2% to $US4900 a tonne
- 2-year yield: US 0.22% Australia 0.20%
- 5-year yield: US 0.39% Australia 0.39%
- 10-year yield: US 0.62% Australia 0.75% Germany -0.44%
- US yields as of 4.11pm New York time
Good morning and welcome to Markets Live for Friday.
This blog is not intended as investment advice.