Westpac to divest Pendal: Aus shares to open lower

The ASX is set to drop at the open after the Dow and the S&P 500 unwound some of the gains they managed to rack up over the last 3 sessions. The turn is causing analysts to ponder whether this might be a dose of reality and an inflection point for financial markets which have been largely uncorrelated with economic data and projections of late. Iron ore, gold and oil are trading lower. 

US economic news

In the US, homebuilding data missed the mark. After hitting a five-year low in April, homebuilding increased 4.3 per cent in May, falling well short of the projected 17.8 per cent rise. It’s not all bad news though. Building permits for future home construction jumped 14.4 percent month on month, suggesting the housing market is starting to emerge from its covid-induced slump.

Local economic news

We are expecting the Australian Bureau of Statistics to release population data for the December quarter and employment statistics for the month of May.

Markets

Wall Street closed mixed yesterday: The Dow Jones Industrial Average lost 0.7 per cent, the S&P 500 lost 0.4 per cent and the NASDAQ added 0.2 per cent to close at 9,911.

European markets closed up: London’s FTSE added 0.2 per cent, Paris gained 0.9 per cent and Frankfurt added 0.5 per cent.

Asian markets closed mixed: Tokyo’s Nikkei lost 0.6 per cent, Hong Kong’s Hang Seng added 0.6 per cent, and China’s Shanghai Composite gained 0.1 per cent.

Taking all of this into equation, the ASX futures are pointing to a dip of 33 points at the open. Yesterday the S&P/ASX 200 Index closed 0.8 per cent higher at 5,992.

Company news 

Westpac Banking Corporation (ASX:WBC) is selling its remaining holding in Pendal Group (ASX:PDL) via an underwritten institutional offer. The banking giant sold down its holding in Pendal in 2007, 2015 and then again in 2017 and has previously signalled its intention to completely divest from the company and now intends to make that a reality. The company expects the divestment to add around 2 basis points to its common equity tier 1 capital ratio, and to result in a post-tax accounting gain for the second half of approximately $32 million. Settlement of the transaction is expected to occur on 22 June 2020 but this won’t be the end of the ongoing business relationship between the companies. After the divestment Pendal will continue to manage a number of Westpac assets. Pendal currently manages approximately $14 billion (as at 31 March 2020) for the Westpac Group.Shares in Westpac Banking Corporation (ASX:WBC) closed 0.3 per cent higher at $18.15.

Ex-dividend

Two companies going ex-dividend today.
Pengana Private (ASX:PE1) is paying a dividend of 1.25 cents unfranked.
Select Harvest (ASX:SHV) is paying a dividend of 9 cents fully franked.

Currencies

One Australian Dollar at 7:00AM was buying 68.85 US cents, 54.85 Pence Sterling, 73.68 Yen and 61.25 Euro cents.

Commodities

Iron ore futures suggest a fall of 0.5 per cent.
Gold has lost 70 cents to US$1,736 an ounce.
Silver has gained 5 cents to US$17.70 an ounce.
Oil has lost 65 cents to US $38.22 a barrel.