Victoria is now on its way to being fully open. Add that to a return to international flights and Sydney’s freedom and it’s the panacea travel and airline stocks have been craving for almost two years now.
However, while some commentators are calling a big comeback in the travel and leisure sectors, the ASX is likely to start in the red this morning.
ASX futures were down 0.1%t at 7,386 at around 6.45am AEDT.
The US markets closed mixed and iron ore fell again, this time by 5.6% to $US117.5.
Here’s what we saw:
- The Aussie dollar eased from highs near US75.10 cents to lows near US74.57 cents and was near US74.65 cents at the US close.
- Global oil prices dipped over 1% on Thursday. Commsec analysts say “a forecast for a warm US winter put the brakes on a rally that drove prices to multi-year highs on tight supply and a global energy crunch”.
- The Brent crude price fell by US$1.21 or 1.4% to US$84.61 a barrel.
- The US Nymex crude price lost US92 cents or 1.1% to US$82.50 a barrel.
- Base metal prices dropped on Thursday as higher energy costs and headwinds in China threaten the global recovery.
- Aluminium fell 5.2% - the most since April 2018.
- Nickel dropped 4.9% - the most since March.
- Copper fell 3.8%.
- The gold futures price fell by US$3.00 or 0.2% to U$1,781.90 an ounce.
- Spot gold was trading near US$1,783 an ounce at the US close.
- Iron ore slid US$6.95 or 5.6% to US$117.50 a tonne.
Australian market
The Australian share market closed flat on Thursday, dominated by AGM and quarterly reports, which lifted the lid on post-COVID outlooks for corporate Australia.
One of the better quarters was delivered by Santos Ltd (ASX:STO), which reported $1.5 billion in revenues for the three months to September off the back of soaring commodity prices.
Santos’ quarterly report didn’t help it on market, with the stock finishing down 1.1% to $7.20.
It was a good day yesterday until the ASX200 took a dive toward the end of trading closing just 1.7 points higher to 7,415.4.
The market was dragged down by energy, health and consumer staples.
The downward trend is expected to continue today, with the ASX set to open lower in morning trade.
However, as noted at the top, travel stocks could get a boost.
This comes not only on the back of the two largest economic states reopening but also because Prime Minister Scott Morrison is close to opening up to Singapore.
"I was in a position, as you know, some months ago when I met with the Prime Minister of Singapore, to set up a new arrangement which will see our borders open more quickly to Singapore," Morrison said.
"We anticipate that being able to be achieved within the next week or so, as we would open up to more visa class holders coming out of Singapore."
Qantas Airways (ASX:QAN) Limited is also forging ahead with its international flight plans, confirming several international flights would be brought forward.
"The national plan was all about opening up Australia safely so we can remain safely open, and that's what we are seeing here today. And that means planes get back in the sky," Morrison said.
"This is a wonderful day, Australia is ready for take-off."
Qantas will launch a new route from Sydney to Delhi before Christmas.
Flights from Sydney to Singapore, Bangkok, Phuket, Johannesburg and Fiji are also set to be brought forward.
In what will be a major milestone for Qantas, regular flights to Delhi are in the mix, with the first commercial flights for Qantas between Australia and India in almost a decade.
Students and skilled migrants on way back
Plans to bring back international students and skilled migrant workers are also being accelerated.
Federal Treasurer Josh Frydenberg told breakfast program Sunrise on Friday, "We are working on the details of bringing back international students and bringing in skilled workers who are really important to our economic recovery, whether it's in construction, whether it's in the resources sector, whether it's in the agriculture sector.
"The first step is to bring Australians home without quarantine and that's why we welcome the announcement in NSW and what looks to be an announcement coming in Victoria, where Australians coming home from November will not need to go through a quarantine process if they are double dosed vaccinated and test negative."
How quickly the economic recovery happens remains to be seen, but there’s a palpable excitement in Australia that a new normal is now not far away.
Australian indices
- ASX 200 rose 0.023%% to 7,415.40.
- ASX24 futures was flat at 7,389.
- S&P/ASX Small Ordinaries rose 0.0085% to 3,550.50.
- All Ordinaries rose 0.017%% to 7,728.50.
US markets
While strong earnings pushed many stocks to record highs, Wall St finished the day flat.
The Dow eased from record highs after IBM fell 9.6%, missing quarterly revenue estimates.
As we reported yesterday, shares of Tesla surged, with the stock gaining 3.3% by the end of the day as it raced towards a record high after a ninth straight quarter of profits.
American Airlines shares rose 1.9% after posting a smaller-than-expected quarterly loss.
HP shares gained 6.9% after the personal computer and printer maker forecast upbeat fiscal 2022 earnings.
It was Snap that took the headlines though.
Snap plunged in late trading, following disappointing revenue growth in Q3.
Snap has blamed its bad quarter on Apple Inc (NASDAQ:AAPL)., which changed its advertising rules making it difficult to track consumer behaviour across apps and websites.
“Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July,” the company said.
“While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”
Snap was the first of the social media group to report its earnings and this is expected to weigh heavily on Facebook and Twitter.
Snap plunged 23% to $58.29. On the news, Facebook and Twitter both fell 5%.
Snap posted revenue of $1.067 billion, up 57% from a year ago. This was below the guidance range of $1.07 billion to $1.085 billion.
Adjusted Ebitda was $118 million, toward the top end of its guidance range of $117 million to $120 million.
For the December quarter, Snap projects revenue of $1.165 billion to $1.205 billion – short of analyst expectations.
US indices
- Dow Jones was flat at 35,603.08.
- S&P 500 rose 0.3% to 4,449.78.
- Nasdaq rose 0.6% to 15,215.70.
European markets
Europe was down.
Shares of China-exposed European miners dropped 3% after the collapse of a US$2.6 billion asset sale at indebted developer China Evergrande Group.
Evergrande is the story that keeps on giving and is affecting all markets, including Europe’s.
The troubled Chinese giant hit the boards on Thursday after a shortish layoff.
It plunged immediately after the failure of a unit sale deal that deepened fears the indebted firm will collapse.
Those fears rattled buyers and markets, however, Beijing has insisted any fallout would be containable.
In London trade shares in Rio Tinto dropped 4.8%, while BHP lost 3.7%.
European indices
- STOXX 600 fell 0.077% to 469.71.
- German Dax fell 0.3% to 15,472.56.
- UK FTSE fell 0.5% to 7,190.30.