ASX to rise; Wall St gains despite stimulus gridlock

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Relaince sees sales growth through first quarter

William McInnes

Reliance Worldwide has made a strong start to the first quarter, with sales in America remaining strong through the first three months of the financial year.

The company said its sales performance was tracking in line with what was reported at the time of the 2020 financial year results on August 24.

Reliance Worldwide CEO Heath Sharp. Christopher Pearce

Sales in its Americas business were particularly strong although the company cautioned it did not expect the level of demand to remain through the financial year.

“US retail and hardware point of sales growth in September has been relatively consistent with July and August trends,” the company said.

“The increased rate of sales growth in September is primarily explained by the carryover of orders from August as a result of general logistics timing, and one additional trading day in the September 2020 period versus the prior corresponding period.”

Asia-Pacific external sales were up slightly in September although lower housing approvals and new dwelling commencements could weigh on sales growth going forward.

The Europe, the Middle East and Africa business had also seen a recovery in volumes.

“The first quarter of the 2021 financial year has been particularly strong from a sales perspective. Looking ahead, we remain cautious,” said chief executive Heath Sharp.

“Given the continuing uncertainties in all our markets as a result of COVID-19 we would caution against extrapolating the first quarter’s sales performance for the full year.”

Serko to raise $NZ55m

Corporate travel management provider Serko will raise $NZ55 million ($50.8 million) to help fund the development of its travel platform and increase customer support.

The fresh capital will be raised via a $NZ45 million placement and a $NZ10 million share purchase plan.

New shares will be issued at a $NZ4.35, a 3.5 per cent discount to its last closing price.

SeaLink awarded Singapore bus services contract

William McInnes

SeaLink Travel Group’s subsidiary Tower Transit Singapore has been awarded contracts to operate two packages of bus services in the city-state by the Land Transport Authority of Singapore.

Tower Transit has been operating public bus services in Singapore since 2016.

It was awarded the contract to operate the Bulim package, a contract is has retained, and the Sembawang-Yishun Package, a contract it will take off the current private operator.

The contracts are for five-years with two-year extensions, with services commencing from May 30, 2021 for Bulim and September 5, 2021 for Sembawang-Yishun.

SeaLink chief executive Clint Feuerherdt. 

The services will deliver more than $S1 billion ($1.02 billion) in contracted revenues over the first five years.

“This announcement is a milestone for SeaLink’s subsidiary, Tower Transit Singapore, as it means a doubling of the scale of our operations in Singapore in terms of the number of routes, staff, buses, facilities and revenue,” said SeaLink Group CEO Clint Feuerherdt.

“It also reinforces our presence in Singapore, one of the top-ranked cities in the world for public transport. SeaLink remains passionately committed to designing, delivering and operating world class services that reflect the needs of the community and our customers.”

Palantir, Asana surge on debut in Wall St ‘direct listing’ double-header

Robert Guy

Data analytics provider Palantir Technologies and software Asana surged more than 30 per cent in their Wall Street debut using a “direct listing”.

Palantir rallied 31 per cent above its $US7.25 reference price and Asana finished 37 per cent higher than its reference of $21 after both companies listed on the New York Stock Exchange without raising fresh capital.

The double-header was a big test of the “direct listing” model given Slack and Spotify were the only two companies that had previosuly used the method of listing.

The listings of the two stocks comes at a time when investor demand for tech-related stocks is running hot. Cloud-based data warehousing play Snowflake more than doubled on its first day of trading earlier this month.

Federal Reserve extends buyback, dividend limits on US banks

Robert Guy

The Federal Reserve has extended the limits on US banks to pay dividends and prohibiting them from undertaking buybacks until 2021.

The limits were announced in June and are aimed at ensuring the balance sheets of some of the world’s largest banks can withstand the fallout from COVID-19.

The Federal Reserve has extended its limits on US bank dividends and buybacks.  

“The capital positions of large banks have remained strong during the third quarter while such restrictions were in place,” the Federal Reserve said.

“In June, the Board released the results of its annual stress test and additional analysis, which found that all large banks were sufficiently capitalised.”

“Nonetheless, in light of the economic uncertainty, the Board put several restrictions in place to preserve bank capital, which provides a cushion against loan losses and supports lending.”

A second stress test will be conducted later this year and the results will be released by the end of the year. Governor Lael Brainard voted against the extension.

Britain’s economy is a glass nine-tenths full, says Bank of England

Hans van Leeuwen

London | British businesses and consumers are in the grip of an exaggerated pessimism and anxiety that could stall the country’s economic rebound, the Bank of England’s chief economist Andy Haldane has warned.

Even though the British economy has already recovered 90 per cent of its pre-pandemic size, and at a pace faster than the BoE expected, business and consumer confidence remain in the doldrums.

‘Eat Out to Help Out’ buoyed restaurant-going in August. Bloomberg

“The prevailing popular economic narrative, among businesses and households currently, is unduly negative,” Mr Haldane told an economic forum late on Wednesday (AEST).

“It has emphasised recession and risk over recovery and resilience. It has resulted in good economic news – of which there has been plenty – being discounted too readily, and fearfulness about the future being accentuated.”

This bias to anxiety could become “self-fulfilling”, he said – and “now is not the time for the economics of Chicken Licken” (who thought an acorn landing on her head was the sky falling in).

Read more about the UK economic outlook here.

ASX to rise, Wall St pares gains into the close

Timothy Moore

Australian shares are poised to start the final quarter of the calendar year on a positive note, though the failure of Republicans and Democrats to secure a deal on more stimulus measures tempered Wall Street’s advance.

House of Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin met to bridge their differences. While both Pelosi and Mnuchin said “progress” was made, Senate Majority Leader Mitch McConnell told reporters that the two sides were still “very, very far apart”.

That took the wind out of a rally that paced the Dow almost 575 points higher by 2.20pm. The index ended the session up 329 points or 1.2%.

ASX futures were up 13 points or 0.2% to 5815 near 6.40am AEST; paring earlier gains of more than 50 points. The currency was 0.5% higher.

The VIX, or market’s volatility measure, slipped 1.6% to 25.85. The yield on the US 10-year note edged 3 basis points higher to 0.68%. The Bloomberg dollar spot index slipped 0.3% to 1177.57.

While it’s hard to quantify the impact of the first presidential debate on markets, polling in the wake of the debate showed that the odds of Joe Biden winning increased. That could help ease uncertainty of a potential contested election.

Capital Economics’ Jonas Goltermann said the limited market reaction to the debate isn’t a shock. “Biden has led the race for several months, and a Democratic win is probably at least partly discounted at this point.”

Market highlights

ASX futures up 13 points or 0.2% to 5815 near 6.40am AEST

  • AUD +0.5% to 71.64 US cents
  • On Wall St: Dow +1.2% S&P 500 +0.8% Nasdaq +0.7%
  • In New York: BHP +0.2% Rio +0.3% Atlassian -0.3%
  • Tesla +2.4% Nikola +14.5% Microsoft +1.5% Palantir +31%
  • In Europe: Stoxx 50 -0.6% FTSE -0.5% CAC -0.6% DAX -0.5%
  • Spot gold -0.2% to $US1893.43/oz at 2.20pm New York time
  • Brent crude -0.2% to $US40.93 a barrel
  • US oil +2.4% to $US40.25 a barrel
  • Iron ore +5% to $US123.47 a tonne
  • 2-year yield: US 0.13% Australia 0.15%
  • 5-year yield: US 0.28% Australia 0.28%
  • 10-year yield: US 0.68% Australia 0.78% Germany -0.52%
  • US prices as of 4.12pm New York

Read Timothy Moore’s Before the Bell here.

Good morning

Good morning and welcome to Markets Live for Thursday.

This blog is not intended as investment advice.

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