Aus shares to rise: Westpac post 66% fall in net profit

Market Reports

by Anna Napoli

Local shares are set to rise this morning despite a tech rout on Wall Street last Friday. In the US stocks fell on Friday putting the lid on a difficult week in which Covid-19 cases rose, US fiscal stimulus talks broke down and investors nervously awaited this week’s Presidential election. The Dow and S&P 500 fell 6.5 per cent and 5.6 per cent, respectively over the 5 day period, and posted their biggest weekly losses since March. The weekly falls came as the seven-day average of new coronavirus cases in the U.S. hit an all-time high last week, according to data from Johns Hopkins University. While across the water in Europe Germany and France announced new lockdown. Restrictions. Traders are preparing for more volatility this week as Americans go to the polls for the US election Tuesday US time. Data compiled by RealClearPolitics showed former Vice President Joe Biden holding an average lead of 7.8 percentage points over President Donald Trump. However, that lead has narrowed since early October.

Markets

Wall Street closed lower on Friday: The Dow Jones Industrial Average lost 0.6 per cent to close at 26,502, the S&P 500 dropped 1.2 per cent to close at 3270 and the NASDAQ closed 2.5 per cent lower at 10,912.

European markets closed mixed on Friday: London’s FTSE lost 0.1 per cent, Paris added 0.5 per cent and Frankfurt closed 0.4 per cent lower.

Asian markets closed lower on Friday: Tokyo’s Nikkei fell 1.5 per cent, Hong Kong’s Hang Seng lost almost 2 per cent and China’s Shanghai Composite dropped 1.5 per cent.

Back home, the SPI futures are pointing to 0.9 per cent gain. On Friday, the Australian share market closed 0.6 per cent lower at 5928.
The local bourse edged higher over the course of October as a number of deals helped to offset rising COVID-19 infection rates in Europe and the US as well as increasing anxiousness around the US election. The S&PASX 200 rose 1.9 per cent in October notching up the market’s best monthly gain since August. Some of the worst performers over the month included travel stocks with Flight Centre down 18.2 per cent and Corporate Travel Management shedding 15.3 per cent Takeover bids helped to boost the likes of Coca Cola Amatil which surged over 30 per cent to $12.43 while Link Administration gained over 27 per cent and AMP rallied 19.5 per cent on Friday after confirming it had received an indicative bid from Ares Management Corporation.

Economic news

The week kicks off today when IHS-Markit and AiGroup both issue manufacturing purchasing manager indexes. The Melbourne Institute inflation gauge is also due as well as ANZ job ads for October
We can also expect key housing market data from CoreLogic and the ABS building approvals and home lending for September.
But the main event this week will be the Reserve Bank Board meeting on Tuesday afternoon economists are expecting policymakers to lower the cash rate to 0.1 per cent from 0.25 per cent. It’s also expected the Board will announce a quantity based asset purchase (QE) program buying a mix of Commonwealth Government and state government bonds. On Wednesday, the ABS releases the final reading on retail trade for September. Also on Wednesday the AiGroup Performance of Construction index, IHS-Markit final reading on services activity. On Thursday, ‘final’ September international trade data is due and on Friday The AiGroup Performance of Services index is also released.

Company news

Westpac’s annual net profit has tumbled 66 per cent to $2.29 billion. its revenue fell 2 per cent to $20.18 billion and its cash earnings dipped 62 per cent to $2.61 billion.The company says 2020 net profit included a significant increase in impairment charges due to the economic impact of the COVID-19 pandemic, costs associated with the AUSTRAC proceedings, asset impairments and revaluations, and estimated customer refunds, payments, associated costs and litigation.) Westpac will pay a 31¢ final dividend, down 61.3 per cent on its previous final dividendShares in Westpac (ASX:WBC) closed 0.22 per cent lower at $17.91 on Friday.


Ex-Dividends

NB Global Corporate Income Trust (ASX:NBI) is paying 0.6963 cents unfranked

Currencies

One Australian Dollar at 7:45 AM was buying 70.29 US cents, 54.40 Pence Sterling, 73.46 Yen and 60.36 Euro cents.

Commodities

Iron Ore has added 1.3 per cent to US$117.49.
Iron Ore futures suggest a 0.8 per cent gain.
Gold was up $11.90 to US$1880 an ounce.
Silver has added $0.29 to US$23.65 an ounce.
Oil was down $0.38 to US$35.79 a barrel.