After a free fall in March 2020, which witnessed one of the steepest falls in history, April 2020 offered the financial markets a little room to breathe. The S&P/ASX 200, Australia’s preeminent benchmark index, ended March 2020 at 5,076.80 points and by April end, the index had risen sharply at 5,522.40 points.
In April, the index was up 8.78%, marking the best month since 1988. In the US, data from a clinical trial conducted by Gilead Sciences indicated favourable results, and markets cheered it.
During the month, the markets were deriving the implications of the significant fiscal as well as the monetary stimulus by the government. Major supermarkets in the country recorded a substantial jump in sales as panic buying intensified.
An intriguing fact about this rally was the deteriorated incoming economic data. Still, the markets continued to reflect positive sentiments, which indicates the very-forward looking behaviour of stock markets while economic data signifies the past.
Unemployment numbers have been blowing out across the world, and Australia’s JobKeeper scheme has provided relief to the employees as well as employers, who have witnessed a sudden stop in cashflows.
May, however, has started on a horrific note, with markets falling off the cliff today. The S&P/ASX 200 was down by around 5% today, shedding 276.5 points to close at 5245.9 points. This reminds the fact that bear markets can exhibit extreme volatility. By looking at the past two days’ movements, the statement fits the context.
PM Scott Morrison and the National Cabinet today declared that the first phase of easing restrictions could start by 8 May 2020, which is likely to send the markets north tomorrow, exhibiting more volatility.
Let us look at some significant news flow from today and the market movers.
BHP Group Limited (ASX:BHP)
In its quarterly update, BHP noted its financial position is robust, supported by low-cost operations, resilient business, and the ability to generate strong cash flows. The production for metallurgical coal, iron ore and petroleum was not changed for 2020.
However, copper and energy coal guidance are under review, and nickel guidance was lowered. BHP also had a small number of COVID-19 cases in its 72k workforce, who were said to be either recovering or had already recovered.
BHP expects that ex-China steel production is likely to contract by double digits in the calendar year 2020. Assuming China evades the second wave of infections, the company expects steel production to rise slightly in 2020.
On 1 May 2020, BHP last traded at $29.840, down by 7.759% from the previous close.
Austal Limited (ASX:ASB)
Austal has reported that Guided-Missile Frigates FFG(X) for the US Navy was awarded to its competitor. It intends to focus on existing construction programs and new opportunities for it Alabama shipyard.
The company also announced that it had been awarded a $324 million contract of six evolved Cape-class Patrol Boats for Royal Australian Navy.
On 1 May 2020, ASB last traded at $2.690, down by 19.94% from the previous close.
Janus Henderson Group PLC (ASX:JHG)
Janus Henderson recently announced its first-quarter results for the period ended 31 March 2020. 1Q operating loss was recorded at US$332.4 million against a US$154.3 million operating income in the pcp.
Janus incurred charges of US$487.3 million related to intangible asset impairment and goodwill. AUM for the period was US$294.4 billion, down 21% sequentially due to COVID-19 and net outflows.
JHG has announced an unfranked dividend of US$0.36 per share payable on 27 May 2020 to the shareholders in records on 11 May 2020.
On 1 May 2020, JHG last traded at $26.600, up by 8.174% from the previous close.
Orora Limited (ASX:ORA)
Orora has completed the sale of Australasian Fibre Business to Nippon Paper Industries. The transaction was completed for an enterprise value of $1.72 billion, and the company would realise $1.55 billion after tax and costs.
On 1 May 2020, ORA last traded at $2.460, down by 4.28% from the previous close.
Reliance Worldwide Corporation Limited (ASX:RWC)
RWC has updated on the impact of COVID-19 on its operations. Manufacturing operations are running four days a week in Australia. Although the business has not seen a significant deterioration in demand, the economic forecast is indicating contraction in new housing construction, which is a substantial part of AU sales.
In EMEA, the company is witnessing aggregate demand below 35% to 40% from the pre-COVID-19 levels. In North America, the manufacturing operations are unscathed presently, and sales in the US have been in line with the expectations. Canadian sales were impacted due to restrictions in some provinces.
RWC remains vigilant on demand to undertake production cuts. It has worked with suppliers to minimise the supply chain disruptions. The company’s executive team members and non-executive directors have agreed to take cuts in remuneration.
On 1 May 2020, RWC last traded at $2.510, down by 8.059% from the previous close.
NEXTDC Limited (ASX:NXT)
NEXTDC has announced a new contract for its Victorian data centre. The contracted commitments were increased by 6MW, taking the total to over 27MW. Its contracted customer commitments and expansion options at the site are now over 60MW.
On 1 May 2020, NXT last traded at $8.950, up by 0.902% from the previous close.
Alliance Aviation Services Limited (ASX:AQZ)
Alliance Aviation announced that it had secured a new airline services contract from a subsidiary of South32 Limited (ASX:S32) for a ten-year term. The company has been providing charter flights to the sites since 2006, and it would be the sole supplier services to the sites.
On 1 May 2020, AQZ last traded at $2.050, down by 3.302% from the previous close.
Ardent Leisure Group Limited (ASX:ALG)
The company has reported that it expects some of its Main Event Entertainment centres to re-open in the US. Some state officials have communicated re-opening plans, including Missouri, Texas, Ohio, Florida, Oklahoma, Georgia.
ALG would be able to re-open 50% of its centres in the country. It has recently terminated its delayed draw term loan facility and is in talks with the lenders to amend the terms of existing debt financing facilities.
On 1 May 2020, ALG last traded at $0.345, down by 5.479% from the previous close.
Redcape Hotel Group (ASX:RDC)
Redcape has reported that its lenders have agreed for temporary changes to its loan agreements, ensuring financial certainty amid shutdowns. The company’s lending syndicate has agreed for a waiver.
Lenders of the company have also agreed to temporarily amend financial covenants that are negatively impacted due to shutdowns. JobKeeper Scheme has enabled the business to reduce operating costs marginally.
On 1 May 2020, RDC last traded at $0.625, up by 0.806% from the previous close.
Helloworld Travel Limited (ASX:HLO)
The company’s TTV for March quarter was $1.28 billion, down 17.6% compared to the same period last year. JobKeeper scheme in Australia and Wage subsidy in New Zealand also helped in reducing cash operating costs.
HLO expects that domestic travel market would be re-opened by September 2020, and trans-Tasman markets by October or November 2020. The company noted that it has the liquidity to maintain operations for 12 months and has no plans to raise capital.
On 1 May 2020, HLO last traded at $1.790, up by 2.579% from the previous close.