ASB sees 6 percent GDP fall in 2020; Chorus, King Salmon and Stride reassure their profits are still on track; Augusta withdraws fund on rent relief fears; US stocks slide again; US jobs data looms
Markets: The NZX50 will start the week at 9,557 after closing on Friday near its lows for the session, having gained almost 4 percent for the week. On Wall Street, stocks ended the week around three percent lower, though the S&P500 chalked up a gain of 10.3 percent for the week, its best performance since March 2009, when the market began its rebound at the end of the GFC.
GDP shock: ASB is forecasting a deep but short-lived contraction that would see New Zealand GDP decline 6 percent this year, almost twice the contraction during the GFC. It also expects unemployment to peak at around 7 percent and for house prices to decline between 5-6 percent from their peak at the start of the month. ANZ had earlier forecast a 3-4 percent contraction in GDP, but has since increased that to between 5-6 percent.
On track: While many companies have in recent weeks withdrawn their guidance for the current financial year, Chorus, King Salmon and Stride Properties are all sticking to their guns, reaffirming their earnings forecasts for 2020.
Chorus said its EBITDA would be between $640 – $640 million for the year ending 30 June, but the company said it would postpone $50 of capital expenditure
King Salmon is forecasting its EBITDA to be between $25-$28.5 million for the current financial year. The company said it can continue to deliver to supermarkets despite the impact of COVID-19.
Stride Properties said it expected its earnings to be materially inline with previous guidance. However, it said its activity-based fees such as leasing, development and performance fees may be impacted by the current lockdown, though it expected the majority of these fees to be ‘delayed’ rather than lost.
Withdrawn: Augusta Capital said it would withdraw the initial offering of the Augusta Property Fund due to the COVID-19 lockdown. The company said it expected a number of tenants in the Augusta Property Fund’s initial properties to seek rental relief, which made the fund’s product disclosure statement incorrect. All money raised would be returned to registered investors in the next week, Augusta said.
Not enough: Aviation analysts in the U.S. are already warning the US$50 billion support package pledged by the Federal Government to support the industry would keep airlines flying, but may not be enough to save many of them. US airlines’ revenue totalled $US65 billion in the June quarter last year, but passenger traffic has fallen 92 percent since then. It is expected to take between 6-8 months for the industry to recover from the current crisis.
Tech Support? Google said it would donate more than US$800 million in free advertising to support businesses, organizations and healthcare workers as part of its coronavirus response. The tech giant will give the World Health Organization and global government agencies a total of US$250 million in ad grants — up from the US$25 million it announced a few weeks ago — to share information on how to battle the spread of the virus.
Just what they need: free ads: Another US$340 million in Google ad credits will be available to small and medium–sized businesses whose accounts have been active over the past year, with an additional US$20 million earmarked for announcements on relief funds and support for small businesses.
It will live: Google is sitting on US$130 billion.
Self-screening: Apple released a website and an iOS app that allowed users to screen themselves for coronavirus symptoms. Both tools were developed in partnership with the Centers for Disease Control and Prevention, as well as the White House’s Coronavirus Task Force and the Federal Emergency Management Agency.
Big data week: All eyes will be on Wall Street this week as key economic data will reveal the true extent of how COVID-19 has hit the U.S. economy. Markets are expected to overlook more backward-looking data, including pending home sales for February on Monday, Tuesday’s Case-Shiller home price index for January and February construction spending and factory orders on Wednesday and Thursday, respectively.
Confident? More pertinent will be The Conference Board’s consumer confidence index onTuesday and IHS Markit’s and ISM’s manufacturing purchasing managers indexes for March on Wednesday. Thursday will bring an estimate of new applications for jobless benefits for the week ended March 28, while Friday will be the big data point, the closely watched non-farm payrolls report, which will give markets the first inkling of the true extent of the damage.