|Bid||61.72 x 0|
|Ask||61.71 x 0|
|Day's range||60.50 - 62.08|
|52-week range||53.44 - 91.05|
|Beta (5Y monthly)||0.47|
|PE ratio (TTM)||11.18|
|Earnings date||12 Feb 2020|
|Forward dividend & yield||4.00 (6.65%)|
|Ex-dividend date||19 Feb 2020|
|1y target est||73.17|
(Bloomberg) -- Australia’s budget deficit will blow out to A$155 billion ($94 billion) and outstanding government bonds swell to 40% of gross domestic product in fiscal 2021, according to the nation’s largest lender, as Prime Minister Scott Morrison pumps cash into an economy threatened with recession.The economy will contract by 7.5% and unemployment jump to 7.8% in the current quarter, estimates Gareth Aird, a senior economist at Commonwealth Bank of Australia. The budget shortfall will gape to 8.1% of GDP in the fiscal year starting July 1 and outstanding bonds soar to A$790 billion, he said.“It is clear that a significant proportion of the domestic economy will remain shut in some capacity through the June quarter and most likely the early part of the September quarter,” Aird said. “At the same time, an unprecedented amount of fiscal and monetary stimulus, as well as industry support, has been unleashed.”Australia’s government and central bank have unleashed a fiscal-monetary injection of about A$320 billion -- or 16.4% of GDP -- to try to cushion the blow on businesses and households from deteriorating demand and a collapsing labor market. Bloomberg Economics expects the economy will contract 10% in the first three quarters of 2020 in the deepest downturn in 90 years.Commonwealth Bank forecasts GDP will drop by 3.4% for 2020 as a whole.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Australia’s banking chiefs are braced for a nightmare scenario of a 10% economic contraction, “shockingly high” unemployment and spiraling loan losses as shockwaves from the coronavirus ripple through the economy.As Prime Minister Scott Morrison’s administration follows other countries in shutting down large segments of the economy to try to stem the virus’s spread, signs of individual and business tolls are starting to multiply.Tens of thousands of workers have already been sent home as retailers and airlines all-but close and queues outside job centers lengthen. Australia’s lenders are watching this play out in real time, with hardship telephone numbers ringing off the hook as consumers and businesses try to access relief packages.Banks are the “ICU unit of the economy,” Australia & New Zealand Banking Group Ltd. Chief Executive Officer Shayne Elliott said Monday at an Australian Financial Review event -- conducted online due to the pandemic. “Corporates and households will come into care and we will have this unfortunate role at some point of having to decide who comes out at the end.”A week ago, Commonwealth Bank of Australia Chief Executive Officer Matt Comyn said he would have estimated the economy would shrink by about 5% in the first quarter. Now, a 10% contraction is a “reasonable assumption,” Comyn said at the same event. “No question there are going to be higher loan losses.”The nation’s banks have special dispensation from the competition authority to co-operate throughout the crisis and have banded together to launch a range of hardship measures, including allowing consumers to suspend mortgage payments for up-to six months.National Australia Bank Ltd. Chief Executive Officer Ross McEwan echoed his counterparts on the dire outlook for the economy.“I think you will see very, very large GDP drops,” he told the the same forum. “Unemployment will also go shockingly high for a period of time.”NAB’s economics research team said Friday the jobless rate could soar to 12% and hold there for the remainder of the year.Right now, the three CEOs emphasized that the focus is on getting through the crisis and being prepared to help the economy reboot on the other side. In the medium term, that’s likely to mean tough choices about who gets help.“There is no playbook for this,” McEwan said. “We’ve not seen this sort of health and financial crisis at the same time.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The S&P/ASX 200 index erased an early loss and surged out of bear market territory amid hopes for government measures that will offset the economic impact of the spreading coronavirus.Australia’s benchmark index rose 3.1% to close at 5,939.6, its largest gain since Nov. 2016, after having earlier declined as much as 3.9%. The market flirted with a bear run, briefly falling more than 20% from its Feb. 20 record amid growing concerns over the virus and a sharp plunge in oil prices.The S&P/ASX 200 index followed U.S. stock futures higher after President Donald Trump promised “very substantial relief” for the economy as the coronavirus spreads. Contracts on the S&P 500 E-mini futures erased earlier losses as Trump said he’s considering payroll-tax cuts.Australia’s government is also finalizing a fiscal package aimed at keeping companies in business and protecting jobs, as the outbreak hits an economy already reeling from a prolonged drought and a brutal summer of wildfires.“Australia is on the front foot with an imminent announcement of sensible pre-budget stimulus,” said AMP Capital Investors Ltd. portfolio manager Dermot Ryan. “It’s always better to move early and keep economic momentum.”Expect erratic swings in the market amid heightened volatility and lower liquidity, said Eleanor Creagh, a strategist at Saxo Capital Markets.“Bear markets witness some of the fiercest upside rallies,” she said. “To have real confidence in buying into any relief rally, volatility needs to reset meaningfully lower -- that sentiment is flowing through to the Aussie market.”A price war for oil sent energy stocks tumbling on Monday, pushing the S&P/ASX 200 to its biggest one-day retreat since 2008. Energy shares were among the biggest gainers Tuesday, helping to offset sharp declines on Monday. Viva Energy Group Ltd. was the top performer on the benchmark with a 14% jump, while Cooper Energy Ltd. closed 12% higher.The nation’s big-four banks also soared on Tuesday. Westpac Banking Corp., National Australia Bank Ltd., Australia & New Zealand Banking Group Ltd. and Commonwealth Bank of Australia all posted their biggest advances since Prime Minister Scott Morrison’s shock election win last year.(Updates with charts, market close)To contact the reporter on this story: Jackie Edwards in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Tim Smith, Kurt SchusslerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Australia’s economy is likely to suffer a quarterly contraction for the first time in nine years, based on an initial estimate of the coronavirus’s impact from the nation’s Treasury and Reserve Bank.Both told a parliamentary panel in separate hearings that they expect half a percentage point cut from gross domestic product in the first three months of the year. Treasury head Steven Kennedy said the effects may spill into the second quarter, but Treasury wasn’t forecasting a recession.“The economic impact of COVID-19 is likely to be deeper, wider and longer when compared to SARS,” Kennedy told lawmakers Thursday, referring to the 2003 epidemic. “It will create more risk of a prolonged downturn and fiscal support will be needed to accelerate the recovery of the economy.”The government is expected to release a fiscal “boost” for the economy in coming days, though it has tempered expectations about its scale. Prime Minister Scott Morrison said the package will be measured and targeted and not in the league of the huge stimulus deployed by the Rudd government in 2008-2009.Josh Williamson, a senior economist for Australia at Citigroup Inc., projects it will be A$3-A$5 billion ($2-$3.3 billion) “at most,” equivalent to about 0.1% of GDP. “Such a package would be designed to offset the expected loss of output, rather than deliver a material boost to activity that closes the negative output gap that existed prior to COVID-19.”Commonwealth Bank of Australia, the nation’s biggest lender, said Thursday that a contraction in the first quarter is “a distinct possibility.” Citi is also seeing a negative result, as are other forecasters.The RBA sees exports of tourism and education -- which account for about 5% of GDP -- falling around 10% this quarter. Deputy Governor Guy Debelle cautioned that the situation is evolving rapidly and the bank’s estimates didn’t include supply chain disruptions.“We are hearing about that in the construction and the retail sector,” he said. “But how long-lasting and how severe that is, we’re just not in a position to tell.”The central bank cut interest rates by a quarter percentage point to 0.5% Tuesday and traders are pricing an 85% chance it will do so again in April. That would take the cash rate to its effective lower bound and open the door to unconventional measures.Kennedy similarly said Treasury’s estimate didn’t include supply chain disruptions or broader sentiment-related impacts.The Treasury secretary said of the budget, which until recently had been forecast to return to surplus, that “allowing fiscal policy to temporarily deteriorate as a result of this shock” was a sensible response.Meantime, PWC released a report looking at worst case scenarios, such as the economic consequences of coronavirus escalating to a global pandemic. In such a scenario, 50% of the global population would be infected with the disease.The economic result would be a 1.3% cut to both global and Australian GDP over the course of a year. At an international level, that’s well below the peak of the financial crisis, when global GDP slumped by 5.2%.To contact the reporter on this story: Michael Heath in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Jackson at email@example.com, Alexandra Veroude, Jason ClenfieldFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The Fed cut interest rates by half a percentage point in an emergency move. Australia’s benchmark stock index has a new leader. And it’s too late to impose travel bans in the U.S. to curb the virus there. Here are some of the things people in markets are talking about today. EmergencyThe Federal Reserve slashed interest rates by half a percentage point in the first such emergency move since the 2008 financial crisis, amid mounting concern that the coronavirus outbreak threatens to stall the record U.S. economic expansion. The rate cut, which came between the central bank’s regularly scheduled meetings, was announced hours after Group of Seven finance chiefs held a rare teleconference to pledge they’d do all they can to combat the fast-moving health crisis. “My colleagues and I took this action to help the U.S. economy keep strong in the face of new risks to the economic outlook,” Fed Chairman Jerome Powell told a hastily convened press conference in Washington on Tuesday. “The spread of the coronavirus has brought new challenges and risks.” Investors weren’t impressed by either the G-7 promise or the Fed’s move. After rallying earlier in the week on anticipation of action, the S&P 500 index fell more than 3% while the 10-year Treasury yield plunged below 1%. Traders are betting that the Fed will have to do more, with the futures markets pricing additional easing later this year. Here’s what the market didn’t like about Powell’s scant tools.Markets DownStocks in Asia are set to resume declines after the emergency Federal Reserve rate cut sent Treasuries surging and U.S. shares slumping on concern it won’t be enough to cushion the economic hit from the spreading coronavirus. The yen and gold surged. Futures pointed lower in Japan, Hong Kong and Australia, with regional shares poised to snuff out two days of gains. The S&P 500 Index fell almost 3% following the Fed’s 50 basis-point rate cut and comments from Chairman Jerome Powell that the virus outbreak will weigh on activity “for some time.” The two-year Treasury yield sank below 0.65%, while the 10-year plunged below 1% for the first time and the dollar retreated, while Australian bonds opened higher. Elsewhere, oil advanced for a second day after an OPEC+ committee recommended a larger supply cut to offset lost demand from the spread of the virus.It’s Too LateOver in the U.S., the coronavirus has already spread so far that experts say draconian limits on domestic travel probably wouldn’t be effective. But the outbreak could still have widespread effects on transportation as people opt to stay home and transit workers call in sick, and could end up doing more harm than good. In fact, some studies have shown that travel restrictions have limited effect. “When you’re dealing with an influenza virus-like transmissions, it’s like trying to control the wind,” said Michael Osterholm, director of the Center for Infectious Disease Research and Policy at University of Minnesota. “People may want to try to limit their time in large crowds, but I don’t think that a domestic limitation on travel is going to help at all.” At least 100 coronavirus cases have been confirmed in the U.S. Six deaths linked to the virus have been confirmed in Washington state, most clustered around a nursing home. Meanwhile, Apple has now restricted employee travel to Italy and South Korea as the virus continues to spread. The number of global cases reached 90,441, and the death toll has risen to 3,123.Blood Beats BankingAustralia’s benchmark stock index has a new leader: A biotechnology firm that makes therapeutic products from human blood. With a market value of A$142 billion ($93 billion), CSL Ltd. now accounts for 8.2% of the S&P/ASX 200 Index, compared with 8.1% for Commonwealth Bank of Australia. The Melbourne-based firm charged ahead of CBA after Australia’s central bank cut its benchmark rate, which sent bank shares lower. The unseating of CBA is notable in a market that’s dominated by banks. The nation’s big four lenders — CBA, Westpac, Australia & New Zealand Bank and National Australia Bank — make up about a fifth of the S&P/ASX 200 Index. CSL collects blood plasma from donors and turns it into therapies to help patients who have autoimmune disorders or problems with blood clotting. It also manufactures flu vaccines.Super TuesdayAmerica’s Democratic presidential hopefuls face a key test on Tuesday local time: Contests across 14 states, plus American Samoa, that will award more than a third of all delegates to the Democratic convention in July. This week, former U.S. Vice President Joe Biden has coalesced the Democratic Party’s establishment around him as he tries to thwart self-described democratic socialist Bernie Sanders. And it still might not be enough. Sanders holds the advantage in key contests — including delegate-rich states like Texas and California — and former New York Mayor Michael Bloomberg threatens to play spoiler. So the risk for moderate Democrats is that the exit of Pete Buttigieg and Amy Klobuchar is too little, too late. (Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)What We’ve Been ReadingThis is what’s caught our eye over the past 24 hours.Two Hong Kong brothers are taking on Tesla with an $195,000 electric supercar. Emission curbs are helping this Thai jet-fuel firm cushion the blow from the virus. YouTube has become a refuge for Pakistan journalists battling censors. Easter is shaping up to be air travel’s next test of the virus impact. The World Bank is offering $12 billion in virus aid to developing nations. Satellite pollution data is showing that China is getting back to work.To contact the author of this story: Sybilla Gross in Sydney at firstname.lastname@example.orgTo contact the editor responsible for this story: Alyssa McDonald at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Australia kicked off an expected worldwide policy response to China’s slowdown and fallout from the coronavirus with an interest-rate cut that’s set to operate in tandem with fiscal measures to cushion the economic blow.Reserve Bank chief Philip Lowe reduced the cash rate by a quarter percentage point to 0.5%, a new record low, as expected by traders and half of economists surveyed. The governor said he’s prepared to ease further as the virus outbreak is having “a significant effect” on Australia’s economy.“The uncertainty that it is creating is also likely to affect domestic spending,” Lowe said in a statement Tuesday announcing the decision. “The board is prepared to ease monetary policy further to support the Australian economy.”The Australian dollar jumped as much as 0.5% immediately after the decision and traded at 65.43 U.S. cents at 4:56 p.m. in Sydney. An expected narrowing of the rate differential between the RBA and the Federal Reserve, where markets expect three cuts this year, was a likely driver of the bounce.Lowe is a reluctant cutter. As recently as last month he said that balancing all the risks in the economy favored staying still. This stance was jettisoned following the shutdown in China that’s hit Australia’s tourism and education industries and other exporters. The virus’s spread now poses a worldwide risk.“Policy measures have been announced in several countries, including China, which will help support growth,” Lowe said in the statement. “In most economies, including the United States, there is an expectation of further monetary stimulus over coming months.”Global policy makers have sought to reassure markets they are ready to respond to the epidemic as fears mount that the world economy is heading toward recession. The leaders of the International Monetary Fund and World Bank said they stood ready to help member nations, while Group of Seven finance ministers and monetary officials will speak by teleconference Tuesday.“The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower,” Lowe said. “It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”In this case, though, Australia’s central bank isn’t going to have to face the downturn alone, with fiscal support in prospect.“The Australian government has also indicated that it will assist areas of the economy most affected by the coronavirus,” Lowe said. Before the RBA meeting, Prime Minister Scott Morrison said the Treasury is working closely together with the other agencies “to address the boost that we believe will be necessary.”Morrison urged major banks to pass on any RBA cut. The four top lenders have all since confirmed that mortgage rates will be reduced by the full amount.The RBA now has only one 25 basis-point cut left in the locker before it reaches its effective lower bound of 0.25%. Lowe will find himself dragged toward quantitative easing, should the economy need further monetary stimulus.What Bloomberg’s Economists Say“The Reserve Bank has fired the starter’s gun on a widely-anticipated round of coordinated central bank easing. Further cuts were flagged, alongside a package of fiscal support. Risks now lie with the RBA utilizing unconventional monetary policy tools, particularly if there are dislocations in domestic credit markets.”James McIntyre, economistLowe said the RBA will ensure that the Australian financial system has sufficient liquidity.Yet even before wildfires and the virus, Australia’s economy wasn’t particularly strong. Gross domestic product probably rose 0.4% in the final three months of 2019 from the prior quarter, and 2% from a year earlier, economists estimated ahead of data Wednesday.“GDP growth in the March quarter is likely to be noticeably weaker than earlier expected,” Lowe said, having removed any 2020 forecast from the statement. “Once the coronavirus is contained, the Australian economy is expected to return to an improving trend.”One area helping Lowe is the currency, the economy’s traditional shock absorber that has depreciated almost 7% since the start of the year. China’s fiscal and monetary stimulus will also assist in time.(Updates with comment from Bloomberg economist in 13th paragraph.)\--With assistance from Tomoko Sato.To contact the reporter on this story: Michael Heath in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Jackson at email@example.com, Alexandra Veroude, Victoria BatchelorFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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