ASX drops 07 despite Macquarie boost Bitcoin tumbles
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Rating changes, courtesy of Bloomberg:
RATINGS CHANGES:
* Hansen Tech: Raised to Buy at Shaw and Partners; price target of $6.20, last traded at $5.82
* NobleOak Life: Rated New Overweight at Barrenjoey; price target of $3, last traded at $2.33
COMPANIES GOING EX-DIVIDEND TODAY:
Blackmores dividend is 42¢. Shares last traded at $94.19
AUB dividend is 39¢. Shares last traded at $23.19
SEEK dividend is 20¢. Shares last traded at $33.98
Brambles dividend is 10.5¢. Shares last traded at $12.49
Medibank Private dividend is 6.9¢. Shares last traded at $3.62
St Barbara dividend is 2¢. Shares last traded at $1.56
Macquarie says its profit for the first half is likely to be less than the $2.03 billion it made in the six months to March, as it highlighted strong market conditions and lucrative fees.
The investment banking group on Wednesday provided an investor presentation that included guidance for its first half results, which will be released later this year.
Shares of the $63 billion Macquarie Group have been setting record highs in recent days and last traded at $171.10.
The Shemara Wikramanayake-led Macquarie Group says its first half earnings are expected to be below the $2 billion it made in the six months to March this year.Credit:Lisa Thompson
The guidance said Macquarie expected the first-half results for the current 2022 financial year to be “slightly down†on the six months to March. Previously it had indicated a strong start to the year through the June quarter.
While it is expecting profits to dip slightly, the March half was a strong period for Macquarie, with the $2.03 billion in earnings accounting for two thirds of its annual profits last year.
Macquarie’s guidance on Wednesday said its first half profits had benefited from favourable market conditions, which drove a stronger result than it had expected in the commodities and global markets division.
The result is also set to be buoyed by the sale of Macquarie’s UK smart meter portfolio, it said, and fees from Macquarie Infrastructure Corporation flowing to its asset management arm.
New Zealand-based milk powder processor Synlait will slash 15 per cent of its workforce in a “complete reset†of the business as the crunch on Chinese demand for infant formula continues to impact the industry.
In a statement to investors on Wednesday, chief executive John Penno said the business would look to remove “unhelpful hierarchy†to better focus the company on its three main divisions: nutritionals, ingredients and liquids.
The business is expected to announce a loss for the financial year when it reports later this month. The company received a waiver on its debt covenants from its financiers earlier this year.
Synlait Milk guided to a full-year loss of up to $NZ30 million before today’s announcement. Credit:Bloomberg
Mr Penno said the business had undergone significant change in the last 12 months.
“This means some areas are now over-resourced, and some areas are under-resourced,†he said. “We need to review and reset the structure of our business to match our current goals to be successful.
“Synlait has been heavily affected by the current lack of demand for infant formula in key markets such as China. The business is a key supplier to milk company A2 Milk, which recently announced it would review its China business due to the persistent issues caused by the virus,†he said.
Synlait’s move will save the business between $10 to $12 million a year in costs, but Mr Penno said the move was not a cost-cutting exercise.
“We need to build teams that are working together with clear roles and responsibilities, and the systems needed to chase the growth we are looking to achieve,†he said.
“This is not just a cost out exercise, it is a complete reset of how we operate as a business.“
A consultation process with affected staff will proceed over the next two weeks.
Synlait shares last traded at $3.03, down from $12 just three years ago.
El Salvador’s experiment using bitcoin had a rocky start as its price crashed on its first day as legal tender, while the rollout was hampered by technical glitches.
The cryptocurrency plunged as much as 17 per cent to its lowest level in a month amid news that the government disconnected its bitcoin wallet early on Tuesday to fix problems.
El Salvador president Nayib Bukele’s bitcoin experiment is being keenly watched to see if a significant number of people want to transact with bitcoin when it circulates alongside the US dollar.Credit:AP
By late morning, the issues appeared to have been overcome, and President Nayib Bukele tweeted that the app was again available for download.
The largest cryptocurrency fell as low as $US43,050 ($58,303) in New York on Tuesday, before paring losses. Bukele said his country had taken advantage of the crash to “buy the dipâ€, adding 150 coins to take its total holding to 550, worth about $US26 million.
The Bloomberg Galaxy Crypto Index, which tracks some of the largest cryptos, lost as much as 19 per cent, while other smaller digital assets also sold off.
El Salvador’s plan represents the biggest test for bitcoin in its 12-year history. Both enthusiasts and detractors of cryptocurrencies are monitoring the experiment to see if a significant number of people want to transact with bitcoin when it circulates alongside the US dollar, and whether it brings any benefits to the violent, impoverished Central American nation.
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Afterpay says cryptocurrencies could slash retailers’ payment costs by wiping out various fees charged by banks and card schemes, as it urges the federal government to develop a regulatory framework for digital assets.
In a submission to a Senate inquiry investigating the regulation of cryptocurrencies, Afterpay says the underlying technology, known as blockchain, could remove a range of costs baked into the debit and credit card system.
Cryptocurrencies could help cut transactions costs says Afterpay. Credit:Louie Douvis
Currently, card payments come with costs including “interchange†fees â€" which are paid between banks â€" alongside fees paid to the schemes such as Visa or Mastercard, and other processing costs. Interchange fees are also a substantial cost for Afterpay, which relies on debit cards for its buy now, pay later (BNPL) product.
Afterpay said a payments chain built on cryptocurrencies would potentially deliver big savings to merchants by removing card networks, banks and infrastructure providers from the picture.
“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs,†Afterpay said in a submission to the Senate inquiry into Australia as a technology and financial centre.
Instead, it said under a cryptocurrency model the customer would bear the transaction costs, which would be a single fee for validating the payment on a digital ledger, known as the blockchain.
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AGL, the nation’s heaviest greenhouse gas emitter, is set to face pressure from shareholders to commit to stronger decarbonisation targets and detail how its demerged businesses will match their spending plans with the goals of the Paris climate agreement.
As investors prepare to cast their votes ahead of AGL’s annual general meeting, prominent proxy advisor Institutional Shareholder Services has recommended backing an activist-led push for stronger climate action because it would allow shareholders to make an informed decision about the looming demerger.
With its fleet of power plants across the country, AGL is Australia’s top carbon emitter, accounting for 8 per cent of national emissions.Credit:Bloomberg
“Additional disclosure is needed regarding the expected assumptions on future power prices and maintenance and fuel cost and demand for fossil fuel power generation,†said the firm, which advises large investors on how to vote on board appointments, executive pay and other corporate matters.
AGL last month reported a $2.06 billion full-year loss, largely driven by the continued influx of new wind and solar power driving down wholesale power prices across to levels where coal is increasingly unable to compete, and warned of further profit pain to come.
Responding to the pressures of the clean-energy transition, AGL is proposing to split itself into two companies: AGL Australia, to hold its power, gas and telecommunications retailing divisions as well as some cleaner generation assets; and Accel Energy, which will own its carbon-heavy coal and gas-fired power stations.
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Stocks indexes on Wall Street closed mostly lower overnight, though solid gains by Apple, Facebook and other tech heavyweights helped nudged the Nasdaq to another all-time high.
The S&P 500 slipped 0.3 per cent, losing some ground after two straight weekly gains as traders return from the Labor Day weekend and face a relatively light week of economic data.
It sets up the Australian sharemarket for a negative start, with futures at 5.08am AEST pointing to a fall of 22 points or 0.3 per cent, at the open.
Bitcoin plunged as much as 17 per cent to its lowest level in a month as El Salvador’s crypto rollout appeared to be faltering. The largest cryptocurrency fell as low as $US43,050 ($58,281) in New York on Tuesday, tumbling more than 10 per cent in the course of an hour, before recouping about half the losses.
The US markets returned from a break for the Labour Day holiday on Monday. Credit:AP
The last big US economic snapshot, the August jobs report, came in weaker than expected last Friday, but stocks only slipped modestly on the news.
“We’re still kind of digesting Friday’s weak job number and the potential impact that might have with the economy,†said Ryan Detrick, chief market strategist for LPL Financial.
The S&P 500 fell 15.40 points to 4,520.03. The index remains within 0.4 per cent of the all-time high it set last Thursday. The Dow Jones Industrial Average dropped 269.09 points, or 0.8 per cent, to 35,100, while the technology-heavy Nasdaq composite rose 10.81 points, or 0.1 per cent, to 15,374.33 it’s fourth consecutive record high.
Small company stocks declined. The Russell 2000 index lost 16.44 points, or 0.7 per cent, to 2,275.61.
A rise in bond yields helped out bank stocks. The yield on the 10-year Treasury note rose to 1.37 per cent from 1.32 per cent on Friday. Bank of America rose 0.7 per cent.
Traders are back from their summer holidays, and volatility is expected to pick up in the coming days and weeks. Stocks churned higher throughout the summer, helped by stronger-than-expected earnings from big companies as well as guidance from the Federal Reserve that the central bank plans to keep interest rates low.
The market had only a mild negative reaction to the August jobs report, which showed employers hired fewer workers than expected. The report came out Friday, just ahead of the Monday expiration of extended unemployment benefits, which had been in place since March 2020, when the pandemic started.
“The economy has been showing signs of weakening and we’re seeing a clear impact from the delta variant seeping into economic data,†Detrick said.
That same weakness could also have an upside for investors who are hoping the Federal Reserve maintains its support for low interest rates while the jobs market and broader economy continue recovering.
“You have to wonder whether we are in a bad news is good news scenario regarding the Fed,†Detrick said.
ASX futures down 29 points or 0.4% to 7507 at 6.53am AEST
Hello and welcome to today’s Markets Live!
After a day off to celebrate Labour Day, Wall Street delivered us a mixed session where the Nasdaq reached new highs while the S&P500 and Dow Jones industrial average declined.
Your editors today are Colin Kruger and Lucy Battersby.
This blog is not intended as financial advice.
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