ASX lifts on COVID-19 vaccine hope, Macquarie first-half earnings to fall 35pc

Australian shares have recovered some of last week’s heavy losses, led by a rebound in mining and energy stocks.

The ASX 200 added 40 points (or 0.7 per cent) to close at 5,890.

Investor sentiment was helped by Victoria (which accounts for a quarter of Australia’s economic output) recording just 35 new coronavirus infections — its lowest number since late June.

Locally, one of the best-performing stocks was Starpharma (+8.2pc), after it announced its nasal spray showed “potent” results against COVID-19.

In a statement to the ASX, Starpharma said “additional testing” in the laboratory produced “potent virucidal activity, inactivating more than 99.9 per cent of SARS-CoV-2, the virus that causes COVID-19.”

Renewed hope for a COVID-19 vaccine also provided a boost to Asia-Pacific markets as Oxford University and AstraZeneca resumed their late-stage trials on the weekend.

The trials of the experimental vaccine were briefly suspended last week following a reported side-effect in a British patient.

By 4:30pm AEST, modest gains were seen in New Zealand’s NZX 50 (+0.4pc), the Shanghai Composite (+0.1pc), Japan’s Nikkei (+0.7pc) and Hong Kong’s Hang Seng index (+0.7pc).

The Australian dollar was steady at 72.8 US cents.

Energy sector driven by Morrison stimulus

The best performing stocks were coal miners Whitehaven Coal (+7.3pc) and New Hope Corporation (+8.5pc).

Shares in Viva Energy Group, the company which owns the Geelong Refinery and is the exclusive licensee of the Shell brand in Australia, surged 5.6 per cent.

This was after the Federal Government offered to use taxpayer funds to help Australia’s four remaining fuel refineries “stay open wherever commercially possible” to boost Australia’s long-term fuel supply.

The nation’s refiners (owned by BP, Viva Energy, Ampol and Exxon Mobil) have suffered from a coronavirus-driven collapse in petrol demand, while also having to compete against bigger refineries in Asia.

In a statement on Monday, Prime Minister Scott Morrison said: “The Government is committed to a sovereign onshore refinery capacity despite the threat to the viability of the industry.”

The Government will include $211 million in its upcoming Federal Budget to increase the nation’s fuel storage to bolster fuel security and “create over 1,000 new jobs”.

“The events of 2020 have reminded us that we cannot be complacent,” Mr Morrison added.

“We need a sovereign fuel supply to shield us from potential shocks in the future.”

The Prime Minister said petrol prices could rise about 1 cent per litre if all of Australia’s refiners closed down — hence the Government’s plan to “design a market system for a production payment” as an incentive for them to stay open and “keep prices low”.

NAB subsidiaries pay $57.5 million penalty

Among the major banks, National Australia Bank jumped 1.5 per cent, while smaller gains were recorded by Commonwealth Bank (+0.6pc), Westpac (+1pc) and ANZ (+0.9pc).

Two subsidiaries of NAB have been fined $57.5 million by the Federal Court, in the wake of the bank admitting to misleading and deceptive conduct for charging its customers “fees for no service” over several years.

The case was brought by the Australian Securities and Investments Commission (ASIC) in 2018, against NULUS Nominees and MLC Nominees, in the wake of the banking royal commission.

Iron ore mining giants BHP (+1.9pc) and Fortescue Metals (+2.1pc) also rose sharply.

Rio Tinto shares jumped (+3.9pc) after the company dumped its chief executive Jean-Sebastien Jacques and two senior executives on Friday.

An internal review found those executives were partially responsible for the mining company’s decision to destroy an ancient Aboriginal site, the Juukan Gorge, earlier this year.

The mining giant cut their bonuses, worth millions of dollars, but that was widely seen outside the company as an inadequate penalty.

On the flip side, the worst performers include Cleanaway Waste Management (-7.1pc), Macquarie Group (-4.7pc), Breville Group (-3.3pc) and financial services company IOOF (-4.9pc).

Cleanaway CEO investigated, as Macquarie slips

Macquarie Group dropped after it provided a disappointing update on its profitability.

The investment bank expects its first-half earnings to have dropped by around 35 per cent (compared with the first half of the 2019-2020 financial year).

It also said market conditions were likely to remain challenging, “especially given the significant and unprecedented uncertainty caused by the worldwide impact of COVID-19 and the uncertain speed of the global economic recovery”.

“The extent to which these conditions will adversely impact Macquarie’s overall FY21 profitability is uncertain, making short-term forecasting extremely difficult.”

Cleanaway Waste Management shares plunged after its chief executive Vik Bansal was accused of misconduct.

In a statement to the ASX, Cleanaway said Mr Bansal’s “behaviour should have been better” and that it had been working closely with him, following an internal investigation, to ensure his workplace conduct meets the board’s expectations.

The company was responding to a report in the Australian Financial Review, which said Mr Bansal had led a “culture of bullying and harassment”.

It also reported he created an environment in which “senior managers couldn’t escalate bad news for fear of reprisal”, leading to the “high turnover in senior management and lower-level staff”.

Last week, the ASX dropped 1.1 per cent, with energy (-5.7pc) and technology (-3.6pc) shares enduring the brunt of the selling.

Today’s strong performance also comes after a Wall Street sell-off, sparked by fears of a “tech bubble”.

Shares in Amazon, Apple, Microsoft, which had been some of the best performing stocks since the pandemic began, have been sold off recently.

Last week, there were heavy losses for the Dow Jones (-1.7pc), S&P 500 (-2.5pc) and Nasdaq indices (-4.1pc).

Spot gold was flat at $US1942.16 an ounce, while Brent crude oil was steady at $US39.81 a barrel.

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