Aussie shares slip early after Wall St stumble

29 May 2020, 00:14 by Alex Druce

Summary

ASX 200 has slipped at the open, down by as much as 0.8 per cent after 15 minutes
The fall comes after rising US-China trade tensions sapped Wall Street overnight.
The heavyweight financials pulled back 1.9pc after a stellar run this week

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8.14am

Austal leaps 10pc on FY guidance upgrade

By Darren Gray

ASX-listed shipbuilder Austal has lifted its earnings guidance, saying it is now forecasting full-year revenue of about $2 billion and EBIT (earnings before interest and tax) of no less than $110 million.

Both are noticeable improvements on previous guidance, which had forecast revenue of no less than $1.9 billion and EBIT of no less than $110 million.

The Perth-headquartered shipbuilder, which has operations around the globe, attributed the improved financial performance to a number of factors including the awarding of a $324 million contract at the beginning of May, recognition of US research and development tax credits, sustained strength of the $US delivering benefits when funds were exchanged into $A and a more limited impact of COVID-19 on the business than had been anticipated.

“Austal’s continued strong performance across our shipyards in the USA, Australia, Philippines and Vietnam during the COVID-19 pandemic has provided confidence to increase the company’s financial year 2020 earnings guidance at this time,” said Austal chief executive David Singleton.

The company, which went into a trading halt on Thursday afternoon ahead of this morning’s announcement, also requested that the trading halt in its shares be lifted.

Shares rose 9.9 per cent in early trade to $3.33.

With the announcement Austal bucks the trend seen across the market over the past three months, where dozens of ASX-listed firms have either scrapped their guidance completely or cut it.

7.49am

Radio Rentals owner Thorn increases FY loss five-fold

By Dominic Powell

Troubled financier Thorn Group has assured investors of its ability to continue as a going concern after posting a full-year loss of $81 million at its full-year results released today, a more than five-fold per cent increase on the $14.9 million loss it reported last year. Revenue also fell 7.9 per cent to $221.9 million.

The company operates appliance lender Radio Rentals alongside a business finance arm. It announced in April it would shut its 62 Radio Rentals stores across the country and focus instead on its financing operations following a severe downturn due to the coronavirus.

As part of shutting the Radio Rentals stores, Thorn will also run down the company’s $146 million receivables book, which management believes will be enough to keep the business operating.

“The cost reductions underway, the tightening of business finance originations and the collecting on the Radio Rentals receivables book will all be cash positive for the group,” they said.

“The continuing viability of the group as a going concern beyond that point is dependent upon the group returning to profitability, resolving present financing difficulties so as to be able to revitalise business finance, and successfully progressing the Radio Rentals digital strategy.”

However, the company noted there was still a “material uncertainty” over if the business would be able to continue as a going concern. Thorn Group shares last traded at 13 cents and have been in a trading halt since Tuesday.

7.31am

Top Westpac exec to retire

By Alex Druce

Westpac has announced the retirement of Lyn Cobley, head of the company's institutional bank.

Ms Cobley said after more than 30 years in banking it was the right time to retire from
executive life.

“I have thoroughly enjoyed a long and varied banking career. However, having held
executive positions through a number of significant events, including the GFC and this year
the COVID-19 pandemic, it is now time to step back and develop a portfolio career,
including board positions,” Ms Cobley said on Friday.

Curt Zuber, group treasurer, will act as chief executive of Westpac's institutional bank from 1
July, while an international search is undertaken.

Joanne Dawson, chief financial officer of the institutional bank and treasury, will act as group treasurer.

7.18am

Market watch

IG MARKETS SPONSORED POST

ASX futures down 20 points or 0.3% to 5836 near 9am AEST

AUD +0.5% to 66.57 US cents
On Wall St near 4pm: Dow -0.6% S&P 500 -0.2% Nasdaq -0.5%
In Europe: Stoxx 50 +1.4% FTSE +1.2% CAC +1.8% DAX +1.1%
Spot gold +0.2% to $US1713.17 an ounce at 2.18pm New York time
Brent crude +2.5% to $US35.60 a barrel
US oil +3.6% to $US34.00 a barrel
Iron ore +1.8% to $US97.09 a tonne
Dalian iron ore +1.9% to 720 yuan
LME aluminium -0.8% to $US1537 a tonne
LME copper +1.6% to $US5345.50 a tonne
2-year yield: US 0.17% Australia 0.25%
5-year yield: US 0.34% Australia 0.39%
10-year yield: US 0.69% Australia 0.87% Germany -0.42%
US prices as of 5pm New York

7.14am

Eight@8

IG MARKETS SPONSORED POST

Wall Street fell late after President Trump announced a Friday (US time) media conference to discuss China developments. It led to a swoon in the last hour which sets up the ASX for losses this morning. Shortly before 9am AEST, futures were pointing to a loss of 20 points, or 0.3 per cent at the open.

All in all, it’s been a very positive week for risk assets. Stockmarkets are firmly higher, with tangible evidence in price action right now that market participants are positioning for a quicker recovery in the global economy than previously thought.

However, last night’s session found traders navigating a few bumps in the road, setting-up perhaps slightly risk-off day’s trade today.

US-China trade tensions is moving to the centre of market focus. As anticipated, China’s National People’s Congress voted to pass the new Hong Kong Security bill, setting the foundations in place for a global retaliation against China for what many see as a major violation of the once country, two systems policy. Volatility lifted late in Wall Street trade, as the White House flagged it would be articulating its position on China’s actions at a press conference.

In news that bolstered market bullishness overnight, traders welcomed a spate US economic data. GDP data came-in weaker than expected, falling 5 per cent; and US unemployment claims came-in roughly in line with estimates at 2.1 million. But durable goods orders proved much stronger than expected at -7.4 per cent, with the market latching onto that news as a firmer signal that the US economy is in a stronger place than previously assumed.

7.06am

Good morning

Good morning, and welcome to today's Market Live blog.

Your editor today is Alex Druce.

Trade tensions are a-bubbling, with Wall Street slipping in late trade.

This blog is not intended as financial advice.