- ASX futures up 0.9%
- On Friday the Nasdaq fell 2.5%, Dow Jones dropped 0.6%, and the S&P 500 dropped 1.2%
- Aussie Dollar is flat at US70.28 cents
- Gold up 0.6% to $US1878.81 per ounce, WTI crude down 1.1% to $US35.79 a barrel, iron ore +1.3% to $US117.49 a tonne
Westpac has reported a 62 per cent fall in cash earnings for the year and will pay shareholders a sharply reduced dividend of 31 cents in what chief executive Peter King has described as disappointing results in a challenging year.
The big four bank made $2.6 billion compared to $6.8 billion the same time last year and its statutory net profit was also down to $2.3 million, down 66 per cent over the year.
Westpac’s dividend is the maximum payment that could be made under the prudential regulator’s guidance, but comes in 61 per cent lower than last year’s second-half dividend of 80 cents per share. The country’s second largest bank announced it would not pay a dividend in June, due to the uncertain economic outlook.
Mr King said in a statement filed to the ASX on Monday morning Westpac’s full-year earnings had been impacted by higher impairment charges, increased notable items and the sharp decline in economic activity brought on by the pandemic.
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The US election and second wave of coronavirus in Europe are set to dominate the week ahead for investors.
Overwhelmingly, pollsters, pundits and market participants are preparing for a Joe Biden victory, with polling website FiveThirtyEight.com putting the odds of a Biden win at 89 per cent. Markets remain positioned for a tumultuous ride in the week ahead, however.
With the election outcome expected not to be known for several days after election-day, the market-pricing in a high chance of a contested election result, and the crucial race for control of the US Senate on a knife’s edge, a rise in volatility would not be surprising.
The pandemic returned to the top of the list of risks for the market last week. Stocks suffered deep declines right across global markets, as a steep climb in COVID-19 infections in Europe and across the US mid-west prompted fears of tighter restriction measures in some of the world’s largest economies. France announced a one month total lockdown, and Germany has rolled out restriction measures in a bid to flatten its infection curve. While over the weekend, UK Prime Minister Boris Johnson announced the UK will enter a one month total lockdown, as the countries infection climbed above 1 million.
This RBA meets on Tuesday afternoon, in what will be the biggest local event of the trading week. Traders and economists are widely expecting the RBA to lower rates at this meeting, with the central bank tipped to cut the cash-rate, along with the yield target on 3-year government bonds, and the rate on its Term Funding Facility to 0.1 per cent. The major focus for the market at this RBA meeting, however, might be what it says about a potential QE program: the market is pricing in the RBA will launch a QE program in the near future, as the central bank looks for new ways to support the Australian economy.
Against the backdrop of the US election, it will also be a big week of US macroeconomic event risk for the market. The US Federal Reserve will meet on Friday morning (AEDT), and although the central bank isn’t expected adjust policy settings, the market will be closely following what the Fed says about risks to the economic outlook, and its desire for greater fiscal stimulus from the US Government. The latest US Non-Farm Payrolls figures will also be closely watched by market participants. It’s expected to reveal that the US economy added 600k jobs last month, and that the unemployment rate declined to 7.7 per cent.
Company profits both domestically and abroad will continue to roll-in throughout the week. The big focus will remain on Wall Street, with US earnings season continuing to deliver better than expected numbers. Of the 64 per cent of companies that have reported earnings for the quarter, 86 per cent have delivered upside surprises, taking the blend earnings forecast for 3Q, according to FactSet, to -9.8 per cent. It will also be a bumper week for earnings across the ASX this week, with the likes of Westpac and NAB handing down results.
And welcome to today’s Markets Live blog.
Today Alex Druce and Lucy Battersby are your editors. It’s an eventful week with the Melbourne Cup, RBA rates decision, and US election.
This blog is not intended as financial advice.
A Global Asset Management Seoul Korea Magazine