Trade deal terms to weigh on ASX

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New Century divests interest in cattle business

William McInnes

New Century Resources has divested its 49 per cent interest in the Lawn Hill & Riversleigh Pastoral Holding Company to Waanyi SPC for a total sale consideration of $9.8 million.

The deal preserves rights of New Century to access the pastoral properties for the purpose of exploration, with the properties surrounding its Century Mine in Mount Isa.

The company acquired the Century Mine in 2017 after it was mothballed in the prior year by previous owners MMG. Tony Walters

“It has been a long-held ambition of the Waanyi People to achieve full ownership of the Lawn Hill and Riversleigh Pastoral Holding Company, whose properties are of significant cultural value,” said New Century managing director Patrick Walta.

“New Century is pleased to have helped facilitate this outcome and wishes them success for ongoing operation of the properties.”

Westpac writes its first ‘sustainability-linked’ loan in NZ

Luke Housego

Westpac has written its first ‘sustainability-linked’ loan in New Zealand, with a $NZ50 million ($47.9 million) facility provided to energy supplier Contact Energy.

Under the terms of the deal, Contact Energy will receive a discounted interest rate depending on whether certain environmental, social and governance (ESG) hurdles are met, as verified by an independent third party.

“The incentive targets align with continual improvement in Contact Energy’s ESG performance, including assessment of its climate strategy, electricity generation mix, corporate governance and stakeholder engagement,” Westpac and Contact Energy said in a joint statement.

The companies added that data from Environmental Finance shows the global sustainability-linked loan market grew from $US5 billion ($7.24 billion) in 2017 to $36 billion ($52 billion) in 2018, and continues to expand.

Gentrack set to revise outlook in difficult markets

Sarah Turner

Difficult conditions are continuing in Gentrack’s key utility markets, hitting its sales pipeline by more than previously expected, the firm said.

It is assessing the financial implications of the changed market conditions as well as a decision by major customer E.on to suspend the introduction of its new Gentrack billing platform to focus on business integration.

Gentrack has started a detailed forecasting exercise and expects to release an updated financial year 2020 outlook within a week.

Citi, JPMorgan firm while Wells Fargo slides

William McInnes

JPMorgan and Citigroup have delivered strong fourth quarter results, with trading revenue soaring in the final three months of the year for both major banks.

JPMorgan Chase & Co posted its biggest ever annual profit, with its bond trading business bouncing back in the fourth quarter of the year and revenue in the final three months of 2019 rising in all but one of JPMorgan’s four main businesses.

The banks results marked the start of the February earning season in the US. Reuters

Full-year net income rose 12 per cent to $US36.4 billion ($53 billion) or $US10.72 a share from $US32.5 billion, or $US9.00 a share, in 2018, the firm said.

Citigroup beat analyst forecasts, with its credit card business delivering strong growth for the bank.

Trading revenue rose nearly 31 per cent as markets steadied during the last three months of 2019, with the gains driven by a 49 per cent surge in fixed-income trading. Equities trading fell 23 per cent due to weak performance in derivatives.

Wells Fargo didn’t fare as well however, with its final quarter profit slumping 55 per cent as the bank deals with the fall out of its sales scandal.

The bank racked up operational losses of $US1.9 billion ($2.75 billion) in the final quarter of the year as it set aside more cash to deal with pending litigation related to its fake-account scandal that erupted more than three years ago.

US to keep tariffs on Chinese goods post-trade deal

William McInnes

The US will keep existing tariffs on Chinese goods coming into the country as part of the ‘phase one’ trade deal according to Bloomberg, with a reduction on duties dependent on Beijing’s compliance with the new trade accord.

Quoting people familiar with the matter, Bloomberg said the two sides are in agreement that the US will review progress and potentially trim its tariffs on $US360 billion worth of Chinese goods no sooner than 10 months after the signing of the new deal.

The move will give the Trump administration time to review China’s adherence to its commitments outlined in the new ‘phase one’ deal.

The full text of the 86-page agreement will be released in conjunction with the signing which is scheduled to take place later today in Washington.

ASX to rise, JPMorgan boosts the Dow

Australian shares are set to open modestly higher, on a positive start to the US earnings season, anticipation of the signing of the US-China phase one trade deal and iron ore’s continuing rebound.

ASX futures were up 3 points to 6912 near 7.45am AEDT. The local currency was little changed.

Shares on Wall Street were modestly higher, until turning negative late, on reports – not unexpected – that the US is expected to retain most of the tariffs it imposed on Chinese good during the trade war for now.

The Dow was holding in positive territory in late trade in the wake of JPMorgan reporting record annual profit for a US bank.

The US listed shares of both BHP and Rio were higher, bolstered in part by further gains in the price of iron ore.

Read Before the Bell in full here.

Overnight market highlights

  • ASX futures up 3 points to 6912 near 7.45am AEDT
  • AUD flat at 69.04 US cents
  • On Wall St near 3.45pm: Dow +0.1% S&P 500 -0.2% Nasdaq -0.1%
  • In New York: BHP +0.7% Rio +0.2% Atlassian -0.9% JPMorgan +1.4%
  • In Europe: Stoxx 50 -0.1% FTSE +0.1% CAC +0.1% DAX flat
  • Nikkei 225 futures flat
  • Spot gold -0.3% to $US1543.57 /oz at 1.16pm New York
  • Brent crude +0.8% to $US64.72 a barrel
  • US oil +0.4% to $US58.31 a barrel
  • Iron ore +1.1% to $US97.03 a tonne
  • Dalian iron ore -0.1% to 665.5 yuan
  • LME aluminium +0.6% to $US1809 a tonne
  • LME copper +0.2% to $US6302 a tonne
  • 2-year yield: US 1.57% Australia 0.82%
  • 5-year yield: US 1.62% Australia 0.87%
  • 10-year yield: US 1.81% Australia 1.25% Germany -0.17%
  • 10-year US/Australia yield gap near 7.45am AEDT: 56 basis points

Good morning

Good morning and welcome to Markets Live for Wednesday.

This blog is not intended as investment advice.

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