The Australian share market is down 0.4 per cent this morning after the RBA downgraded its forecasts for global GDP and Australian employment.
The S&P/ASX 200 index is 26 points down at 6,017. On the futures market the SPI is 15 points lower.
Local economic news
The RBA now expects the economy to take longer to recover from the pandemic than originally forecast. It says that “taking 2020 as a whole, global GDP is expected to contract by more than 4 per cent, before rising by nearly 6 per cent in 2021”. This 4 per cent is a downgrade from a previous RBA forecast of 7 per cent. The RBA warns that unemployment could rise to 10.25 per cent if the virus forces other states outside Victoria into Stage 3 and 4 lockdowns. RBA assistant governor Ellis outlined 3 scenarios which the economy could experience depending on the speed at which the virus is contained - a baseline scenario, an upside and a downside. All 3 scenarios include higher rates of unemployment and lower GDP. Each scenario assumed international borders will remain closed to most travellers until at least the middle of next year.
AiGroup has released the Performance of Services Index for July. This index rose 12.5 points in seasonally adjusted terms up to 44 indicating another contraction in activity in July but at a slower pace than in June.
Credit Suisse rates Centuria Office REIT (ASX:COF) as an Outperform, with a 12-month price target of $2.14. The company’s 2020 financial year results were ahead of Credit Suisse estimates mainly because of the broker's overly conservative rent relief assumptions. The broker believes the business remains well within debt covenants. Credit Suisse suggests Centuria Office is likely to be suffering from negative investor sentiment because of its office exposure, and possibly the relatively higher gearing. Shares in Centuria Office REIT (ASX:COF) are trading 0.3 per cent higher at $1.95 at noon.
Check out our exclusive interview on their full year 2020 results here.
Worley (ASX:WOR) has been awarded a master construction services agreement by Corpus Christi Liquefaction LLC. Under the agreement Worley will provide services at Cheniere’s Corpus Christi LNG liquefaction facility in the US. Once complete, the facility will include three liquefaction trains with an expected export capacity of up to 13.5 million tonnes per annum of LNG. The company says “the award of this agreement has long term strategic relevance as it reflects the acceleration of an emerging business in liquified natural gas maintenance, modification and operations”. The company controversially argues that liquified natural gas is an important component of the world’s energy transition journey. Shares in Worley (ASX:WOR) are trading 0.8 per cent higher at $8.71 at noon.
4DMedical (ASX:4DX) started trading today. It issued shares at $0.73 and started trading on the ASX at $1.47 and is currently trading at $1.25. The listing was oversubscribed and no investor received the full allocation they had requested. This prompted the company to increase the size of its capital raise to $55.8 million from its target in June of $45 million, to account for the interest. The company’s technology converts sequences of X-ray images into four-dimensional quantitative data, allowing physicians to better diagnose and treat patients with respiratory diseases
Best and worst performers
The best-performing sector is Consumer Discretionary, adding 0.6 per cent, while the worst performing sector is Materials, shedding 1.1 per cent.
The best performing stock in the S&P/ASX 200 is News Corporation (ASX:NWS), rising 5.8 per cent to $19.57, followed by shares in Corporate Travel Management (ASX:CTD) and Domain Holdings Australia (ASX:DHG).
The worst performing stock in the S&P/ASX 200 is Virgin Money UK (ASX:VUK), dropping 3.98 per cent to $1.57, followed by shares in Janus Henderson Group (ASX:JHG) and Unibail-Romdamco-Westfield (ASX:URW).
Commodities and the dollar
Gold is trading at US$2,068 an ounce.
Iron ore price rose 2.7 per cent to US$121.27.
Iron ore futures are pointing to a fall of 0.3 per cent.
One Australian dollar is buying 72.29 US cents.