Summary
- The ASX 200 dropped as much as 0.8% on Friday as new coronavirus cases in Sydney threatened investor confidence. The Aussie dollar hit a 30-month high of 76.39 US cents overnight
- NSW Premier Gladys Berejiklian says 10 new cases of COVID-19 have been identified, linked with the outbreak in Northern Beaches. It brings the cluster to 28
- Wall Street’s three main indexes each closed at record highs on optimism over a coronavirus stimulus bill. US futures were subdued near 12 noon AEDT
- Shares in insurer QBE were down 8.6% to $9.09 by noon after the company told the market it expects to report a statutory net loss of $1.5b on US write-downs and a higher than expected impact of COVID-19 and extreme weather claims
- Shares in a2 Milk had fallen more than 24 per cent to $10.04 by 1.20pm AEDT after it flagged a near half-a-billion dollar hit to its sales for the current financial year
Latest updates
ASX heading for seventh week of gains despite virus jitters
By Alex Druce
The Australian sharemarket is tracking for a loss on Friday as coronavirus fears in Sydney sap investor appetites.
However - barring a late disaster - the market is still set to record a seventh straight week of gains.
The ASX 200 was down 0.8 per cent at 6700.8 at 2.15pm AEDT as the banks and insurers weighed, tech stocks sunk, and travel-aligned stocks copped a beating.
But if the market manages to avoid a fall of 1.7 per cent it will finish the week higher and extend its streak to seven. This hasn’t happened since April and May in 2016.
Earlier, NSW Premier Gladys Berejiklian said 10 new cases of COVID-19 have been identified, linked with the outbreak in Northern Beaches. It brings the cluster to 28.
Mesoblast and a2 Milk were down a whopping 30 per cent and 20 per cent respectively on negative news updates.
Gold miners were higher and the iron ore giants also rose, while health stocks also eked out gains.
US futures were in the red, pointing to losses on Wall Street tonight, while the Aussie dollar remained above 76 US cents.
Rescue funds keep Geelong refinery afloat as losses spiral to $100m
By Nick Toscano
Viva Energy intends to keep the struggling Geelong oil refinery open beyond mid-2021 with the help of an emergency federal subsidy, offering hope for hundreds of workers as the plant’s losses climb to nearly $100 million.
The fate of the 65-year-old refinery and its 700 workers have been under threat as travel bans to arrest the spread of COVID-19 infections wiped out demand for fuel and gutted the plant’s profit margins.
ASX-listed fuel supplier Viva Energy runs the Geelong oil refinery.
Viva launched a strategic review assessing options including closing the refinery permanently but chief executive Scott Wyatt on Friday confirmed it intended to keep the refinery operating beyond the next six months.
Mr Wyatt said Viva would participate in the Morrison government’s fast-tracked industry subsidy program of an interim 1¢-per-litre payment for locally made fuels, funded until June 30, when a longer-term $2.3 billion subsidy to support Australia’s three remaining oil refineries is expected to take effect for the coming 10 years.
Viva shares were down 6 per cent at $1.89 by 1.35pm AEDT.
Daigou blow for a2 Milk as firm downgrades outlook
By Dominic Powell
Dairy company A2 Milk is set to weather a near half-a-billion dollar hit to its sales for the current financial year due to weaker-than-expected trade through the lucrative Chinese ‘daigou’ reseller market.
The company, which has been in a trading halt since yesterday, told investors its sales into China through the channel had been significantly disrupted due to COVID-19, and the weakness had begun to affect its broader cross-border e-commerce (CBEC) business.
Shares in the firm had fallen more than 24 per cent to $10.04 by 1.20pm AEDT.
A2 Milk is set to weather a near half-a-billion dollar hit to its sales for the current financial year due to weaker-than-expected trade through the lucrative Chinese ‘daigou’ reseller market.Credit:Peter Meecham
A2 has already downgraded its forecast once earlier this year after a drop in sales through the channel due to weaker student and tourist sales due to COVID-19, but on Friday the business warned the impact had been “more significant and protracted than was previously anticipated”.
“We had expected a moderation of the disruption to this important channel during the second quarter,” the company said.
“While there has been some improvement, with infant nutrition sales through this channel expected to be higher in the second quarter than the first quarter, the acceleration of the recovery in recent weeks has been slower than we had previously expected.
“This disruption is now affecting A2 Milk’s CBEC channel, which imports and sells products directly into China, due to the daigou channel playing an important role in stimulating demand across the CBEC channel.
The company now expects its revenue for the 2021 financial year to be between $1.4 billion and $1.55 billion, a $250 million to $500 million drop on its September guidance.
Margins are also expected to be between 3 and 5 per cent weaker than prior forecasts.
“We expect that COVID-19 related travel restrictions will continue to negatively impact the reseller channel due to reduced travel between Australia and China through the remainder of FY21, with limited prospect of a return of a significant number of international students and tourists to Australia during the period,” it said.
Victoria urges residents to avoid Sydney travel as new permit system announced
By Matt Dennien and Melissa Cunningham
Victorian Health Minister Martin Foley is urging Victorians not to travel to Sydney.
From midnight tonight, a permit will be required for all NSW residents travelling into Victoria, residents from other states travelling through NSW and Victorians who have visited NSW and who are returning home.
Nobody without a valid permit will be allowed into the state from NSW, with Victorian authorities urging those coming from NSW to avoid travelling to Melbourne if they can.
Anyone trying to enter Victoria from the northern beaches and other NSW exposure sites from midnight tonight will not be permitted to enter Victoria at all.
Anyone travelling from Greater Sydney, which has been deemed an orange zone, is encouraged to get tested on arrival and self quarantine until they receive a negative result.
Those travelling from regional NSW, dubbed a green zone, will be asked to monitor themselves for mild symptoms
Meanwhile, Queensland Chief Health Officer Jeannette Young says a woman who travelled from NSW before testing positive to COVID-19 visited a pub in Brisbane’s south and drove to the Sunshine Coast before heading back to her home state.
Premier Annastacia Palaszczuk said she was closely monitoring the “rapidly growing” situation but announced no further restrictions on travel.
Contact tracing is being carried out to alert anyone on Virgin flight VA925 from Sydney to Brisbane on Wednesday, December 16, and those who visited the Glen Hotel in Eight Mile Plains, in Brisbane’s south, after 11.30am on the same day.
Dr Young said the woman in her 50s then drove in a hire car to the Sunshine Coast but only had contact with a hotel receptionist, before getting tested at the Prince Charles Hospital on the way back through Brisbane to Sydney.
“This is a rapidly evolving situation in the northern beaches and could well expand through other parts of Sydney,” Ms Palaszczuk said.
Queensland recorded two other cases in hotel quarantine on Friday.
‘No different to Juukan Gorge’: Controversial Darwin Dan Murphy’s store approved
By Dominic Powell
Supermarket and drinks giant Woolworths has been given the green light to build the controversial Dan Murphy’s outlet in Darwin despite continued opposition from local Indigenous community groups.
On Friday, the Northern Territory’s Director of Liquor Licensing said it would approve the application from Woolworths’ subsidiary, Endeavour Group, to build the city’s largest Dan Murphy’s store within walking distance of city’s biggest Aboriginal community in Bagot.
Woolworths has been given approval to develop a Dan Murphy’s store in Darwin.Credit:Leanne Pickett
Darwin-based health and Indigenous groups have been fiercely opposed to the company’s plans to build the site given its proximity to communities that have severe restrictions on alcohol consumption, believing it could cause unnecessary harm.
The Independent Liquor Commission had already dismissed Woolworth’s application due to the store’s proposed location. However, the supermarket giant appealed the decision and was granted authorisation following a rule change by the NT government that sidelined the independent body and gave the director of liquor sole authorisation over the process.
The approval is subject to a number of conditions with Woolworths required to verify that every customer has a ‘legitimate address’ at which to consume liquor. The store will also have reduced trading hours, restricted online orders, and CCTV surveillance.
Woolworths will also self-impose a number of restrictions, including limiting the range of available products and a higher minimum unit price, meaning prices on certain items are unlikely to be substantially lower than other liquor outlets.
ASX improves from session low, still down 0.5%
The ASX 200 was 0.5 per cent down at lunchtime, picking up from the session low that arrived shortly after NSW confirmed an additional 10 coronavirus cases in the northern beaches cluster in Sydney.
The market was last 36.3 points behind at 6720.4, backing away from near 10 month highs as the fresh virus outbreak tests investor nerves. Gold stocks and iron ore miners are strong, while health care shares are higher.
The banks, tech, and travel-aligned firms have copped a beating. Here are the biggest lunchtime movers:
Worker injured in Liddell power plant failure, triggering shortages
By Peter Hannam
An employee at AGL’s Liddell power station has been seriously injured following an equipment breakdown that also triggered a warning of electricity shortages.
Unit 3 of the ailing coal-fired plant failed on Thursday afternoon, leaving output from the Hunter Valley power station at just a quarter of its 1680-megawatt capacity.
AGL Energy’s Liddell coal-fired power station (foreground), with the company’s Bayswater plant in the distance.Credit:Dominic Lorrimer
The Australian Energy Market Operator (AEMO) issued a so-called Lack of Reserve level 2 (LOR2) alert soon after the incident, calling for other plants to make up the shortfall.
The Herald understands the Tomago aluminium smelter, which accounts for about one-tenth of NSW power consumption, reduced its demand.
The company was paid for the reduction through AEMO’s Reliability and Emergency Reserve Trader (RERT). The Herald has sought comment from AEMO and Tomago.
AGL told the stockmarket on Friday that the incident involved a transformer at Unit 3.
Shares in the firm were last 0.3 per cent lower at $13.04.
Don’t blame gig economy for job insecurity, that’s only half the story
By Ross Gittins
Opinion
One thing we’ve learnt from the pandemic is that, for those who rely on evidence rather than anecdotes, what we believe to be The Truth keeps changing as we learn more. Take the way the medicos changed their tune on mask-wearing as more evidence came in.
‘For many casual employees there’s no real flexibility, only permanent insecurity,’ says Professor David Peetz, of Griffith University.
It’s the same with the truth about job insecurity. The unions have gone for years claiming that work has become less secure, and in recent years the rise of the “gig economy” – where people get bits of paid work via a digital platform such as Uber or Deliveroo – means many people have found that claim a lot easier to believe.
But the training of economists says you should base conclusions about the economy on statistical evidence, not anecdotes or even personal experience. And the trouble is, a quick look at the Australian Bureau of Statistics’ figures for the labour force shows little sign of growing job insecurity.
The bureau doesn’t measure insecurity as such. Nor, since there’s no legal definition yet, does it even measure casual employment directly. But, since casual workers aren’t paid annual and sick leave, the bureau’s figures for those workers who say they aren’t eligible for paid leave are taken to be a measure of casual employment.
Pharmacy worker at north shore hospitals tests positive
By Mary Ward
One of the people who tested positive for coronavirus on Thursday was a pharmacy worker who was employed at a number of sites on Sydney’s north shore.
The person worked shifts at North Shore Private Hospital, Castlecrag Private Hospital, Hunters Hill Private Hospital, Northside Cremorne Clinic and Ramsay Pharmacy North Shore.
Ramsay Health Care, which operates the sites, said in a statement that it had been supporting NSW Health to identify the worker’s close contacts.
The pharmacy and hospital areas of sites visited by the worker have been deep cleaned.
From Friday, all visitors and staff will be required to wear masks and visitors will be limited to two people per patient at all of Ramsay’s hospitals across NSW.
“To have a number of staff identified as close contacts who require self-isolation over the Christmas period is incredibly disappointing and our thoughts are with them at this stressful time,” said
Ramsay Health’s national manager for clinical quality and patient safety, Dr Bernadette Eather.
Shares in the company were down 0.2 per cent to $64.26.
Northern beaches virus cluster reaches 28 cases
By Mary Ward
The coronavirus cluster on the northern beaches grew to 28 cases on Friday, as NSW Premier Gladys Berejiklian thanked northern beaches residents for following health advice and staying home for the next three days.
“If we get on top of this in the next two or three days, all of us will be able to have a much better Christmas but if we don’t get on top of it in the next few days, it could mean further restrictions down the track,” Ms Berejiklian said.
The coronavirus cluster on the northern beaches grew to 28 cases on FridayCredit:
The Premier said a message of high alert should be in place across Sydney, advising people wear masks in places such as public transport and places of worship.
“A couple of people at those venues weren’t from the Northern Beaches they’ve gone back to their home get back to their other suburbs,” she said.
The Premier said from now on NSW Health would be giving one daily case numbers update, but provide information about venue alerts as they become available.
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