Global markets slump as COVID cases surge

it's Tuesday the 22nd of September 2020 welcome to fear and greed the business podcast that sets you up for a successful day I'm Shan Elmer share markets Tumble from Wall Street to Europe in Australia as investors fear that covid-19 will continue long into 2021 that's our main story also coming up in today's podcast infection numbers in Australia fall to 3mon lows but borders remain closed the federal government set to announce its favored green technologies and Commonwealth Bank upgrades its forecast for the local economy later in the podcast I talked to KL simm chief executive of sandfire resources about the mining sector but first here's a brief look at markets financial markets are the main story today more on Wall Street and the local boss shortly but first a quick look at commodity prices oil prices fell by close to 5% as fears the global economy would slow hit markets gold a safe haven for investors Well normally it is was also lower us treasuries which are a good proxy of fear in the market rose that means people want more of them because they're safe pushing down returns for investors and the Aussie dollar is down it's trading at 72.1 us cents as Traders pushed the green back higher the total number of Corona virus cases worldwide is now 31 million with 961 th000 debts the reemergence of Corona virus cases around the globe has triggered a sell off in global equities with fears that more lockdowns will cut economic activity overnight the S&P 500 on Wall Street fell by as much as 2.7% pushing the Index close to what is considered a market correction commodity industrial and financial shares led the drop and the US market close to the end of trading was set to record its fourth successive fall it's the first time that's happened since February the number of deaths in the US is now close to 200,000 and the 7-Day moving average of new cases has risen for eight straight days there are 87,000 new cases in the US over the weekend hardest hit on the market were the big stocks with the Dow Jones Industrial Average down 3% the tech stocks which have outperformed throughout the pandemic were down more than 1% European markets tumbled an opening and kept going Airlines and travel companies and Banks led the losses on the Europe stock 600 index it finished 3.7% lower the German French British and Italian Markets all ended sharply down chief medical officer in the United Kingdom Chris witty said the country was at a critical point while the German Health Minister said the trend of cases in that country was worrying France has now recorded almost 500,000 cases of covid-19 the UK's recorded nearly 400,000 cases Italy's at 300,000 cases and Germany at 275,000 cases the UK and Italy in particular have high mortality rates back home the S&P asx200 ended yesterday down 0.7% to 5,823 points and it's set to fall again it's closed just seven points off a 3mon low the banks all fell sharply National Australia Bank was 1.5% Commonwealth Bank and westpack were both down 1.4% and AZ for 1.3% Quantas closed down 32% while was off nearly 3% these pullbacks in markets aren't surprising given how far Equity markets particularly Wall Street had become misaligned with what was going on in the real economy it's bad news for president Donald Trump as he faces voters in 6 weeks in a stark reminder to everyone that the Corona virus still has a long way to run and only a vaccine can fully end the volatility in a moment the rest of the news you need to know this morning Have you listened to fear and greed's afternoon market report yet from 5:30 every weekday afternoon I take you through everything that's happened on the markets and the latest economic news it's short sharp and to the point and if you hit the Subscribe or follow button it'll be ready and waiting for you in your playlist the moment it's released overseas news first up plans are underway for prime minister Scott Morrison to be the first Global leader to visit Japan's new PM Yoshi sugga the trip could occur in early November and underlines the importance of the relationship between the two countries and one of the greatest salesmen of the postwar era has died Donald M Kendall built PepsiCo into a global snack and beverage Behemoth managing to introduce soft drink to Russia in the middle of the Cold War he took over Pepsi in 1963 at age of 42 and he ran the group for more than 20 years establishing a second major player to Coca-Cola he was 99 years old locally yesterday was a good day on the Corona virus front at least in Australia Victoria reported just 11 cases New South Wales reported four and Queensland reported one there were two deaths the good numbers UPS the pressure on Queensland Premier and Asia palag and Western Australia's Mark McGaw to move quicker on reopening borders Mr McGaw is sticking by his view that his border won't reopen until sometime next year Miss palache said Queensland will be open by Christmas but New South Wales Premier Gladis Bary Jan said apart from Victoria there was no reason for borders to be closed Health experts agreed with several noting that keeping borders shut only makes sense if trying to achieve eradication of the disease which is not a realistic goal Victorian Premier Daniel Andrews is also Under Pressure given the good numbers in his state to relax restrictions he said it was too early to do that but he would use a common sense approach the next major relaxation of lockdowns is due on 26 October and would include reopening of some retail outdoor hospitality and haircuts certainly business once borders reopened the tourism and travel property retail and Hospitality sectors are among the hardest hit the head of acor hotels yesterday estimated that 21,000 hotel rooms in Queensland could go vacant this summer the federal government will today announce that hydrogen batteries Green steel carbon capture and storage and soil carbon are the low emission Technologies it aims to develop over the next decade the government's road map says it will invest $8 billion in the five priority Technologies it also hes to streamline regulation to encourage up to $50 billion of private sector investment the technology road map pushes nuclear power to a watching brief priority while mature Technologies including coal gas wind and solar aren't being prioritized according to Media reports retailer Harvey Norman provided an update yesterday saying pre-tax earnings were up nearly 200% for July and August a surge in sales of furniture appliances electronics and home wees meant pre-tax profit was $178 Million for the two months chairman Jerry Harvey said it was an interesting human behavior story whereby people have money but are restricted from going to restaurants and traveling overseas so they spend it on gardening painting and doing things for their home Harvey Norman's share price Rose almost 3% and it's now trading at almost double its level back in late March the news came as Investment Bank UBS released analysis that said Australians pre-co spent around $63 billion annually on International and domestic travel a large chunk of that is now being diverted elsewhere and UBS expects around 85% of those funds to be spent in the local Economy ubs's Preferred picks in the retail sector Ares Harvey Norman Premier Investments met cash and Woolworths it's been a rough week for the property groups uni Bale rempco Westfield which owns the overseas malls of Westfield is in the process of raising three a half billion e as part of a rejig of its finances mqu group analysts yesterday warned the plan was highly delusive to earnings and net tangible assets unibell redemp C's share price fell close to 8% dex's property was downgraded by Morgan Stanley over concerns about how it will perform in a high unemployment low occupancy environment its share price fell 3% incenter Group which owns the Westville malls in Australia was down 4% Commonwealth Bank has upgraded it its economic Outlook saying the September quarter growth rate will now be plus 2% versus a flat outcome previously forecast based on strong spending in Commonwealth Bank issued cards the bank's economists have upped their forecasts and it expects the final quarter of this calendar year to expand by 1.8% the other three major banks have also forecast an end to the recession it's always worth watching what the major Bank economists do they have access to all sorts of data including credit and debit cut information later today Reserve Bank Deputy Governor gu deell will provide his assessment on the national economy and Market economists are hoping for some insights into the central bank's medium-term plans for monetary policy The Fallout from the Yukan Gorge explosion that destroyed 46,000 year old rock ledges continues Rio Tinto has offered to rewrite mining agreements with traditional owners that underpin its operations in Western Australia traditional owners are likely to want greater fights over the lands which will in turn create uncertainty around what Rio can and can't do in the future Rio's share price fell more than 1% yesterday Star Entertainment Group has proposed two new towers at its current site in inner Sydney at a cost of $1 billion as the group attempts to revitalize its Precinct ahead of the opening of crown casino next year it's the second time star has provided a blueprint for the area the first didn't pass must with residents and it demonstrat its commitment to Sydney within 2 years that city is likely to be home to two very large casinos BHP has been accused of racism and agism for stopping indigenous and older employees from working in its Minds due to health concerns over covid-19 the workers lost months of pay the construction forestry Maritime Mining and energy union says BHP had a policy of requiring older workers and Indigenous workers over 50 years of age to stay at home as a covid-19 precaution until July those workers received their wages but they have received nothing since then a report from the Australian National Audit office has been very critical of the federal government's ethical standards for overpaying nearly $27 million to a billionaire property owner for land earmarked for Sydney's second airport the audit office said the department of infrastructure didn't exercise appropriate due diligence in making the purchase of the land and FOC F on incentivizing an unwilling seller a fair bit of bureaucrat ease there but basically the government paid a really rich bloke too much money for a parcel of land near Sydney's second airport the latest entrance into the asx200 is by now pay later group zip it CEO was speaking to Bloomberg yesterday and said he was targeting Australia's 16 million credit card account holders he said the switch to online buying which has accelerated over the past 6 months helped the group gain new new clients Zip's share price has risen nearly five-fold over the same period and finally V2 food the plant-based meat company will begin selling its product in Woolworth supermarkets in New South Wales Victoria Queensland and South Australia the company's a joint venture between csro and Rich Lister Jack Cowen Mr Cowen is the owner of Hungry Jacks in Australia and a major shareholder in Domino's Pizza V2 food produces plant-based Goods used used as meat substitutes the V2 food patties have already been used in some Hungry Jacks Outlets mining is a large part of Australia's economic success we often hear about the largest companies such as BHP Rio or foru medals there are also many other companies in the mining industry and we thought we would get the view from the middle today we're talking to KL simit Chief Executive Officer of sandfire resources based in Western Australia australa with gold and copper operations in Australia Botswana Namibia and Montana USA sandfire resources listed on the ASX back in 2004 and has become a mid-tier mining and exploration company with a strong track record of safe consistent and profitable production KL welcome to fear and greed thanks very much Sean thanks for having me on the program and a delight to be here today and so sfire resources itself copper and gold copper is your main commodity is that right yes that is correct sandfire is an Australian stock exchange change 200 uh Resources company it is the second largest copper producer in Australia it is the largest copper producer in Western Australia um it employs globally now some 600 people directly and indirectly probably about 450 to 500 uh West Australian based and are employed either directly or indirectly at our two mines um up north here in Western Australia the degasa copper mine and the Monte copper mine and we do have gold as a as a byproduct it's just a little bit under at the moment but you know order of magnitude you know very small company that then became you know a billion dollar market capitalized company over its Journey so now I can ask any question I want you know because resources has never been my strong suit firstly how the hell do you manage the cyclical nature of prices and copper is a great example in the last little bit with weak prices whereas it wasn't that many years ago where copper prices was through through the roof people were stripping buildings for copper how do you manage that sort of cyclicality it is a challenge um you know there are things that you can do in in a number of the commodity sectors there are instruments where you can if need be you know hedge certain production profiles and prices um the biggest thing in the industry is being able to deliver on your products and if you can deliver on your products you can put in certain insurance policies to deal with that cyclical nature of the industry and and look in every industry whether it be the cattle industry the wheat industry any industry certainly the commodity sector oil and gas you know we saw the oil price go negative temporarily there um you know through covid and so it was interesting look with regard to that you know the number one I suppose uh support structure for managing the cyclist is trying to have an efficient effective well-run operation and build a little bit of buffer into your system whether it be cash on your balance sheet or access to you know good customers that you may deal with in times when it may get difficult the number one calling card in this industry is grade is king So if you have a high quality grade product you seem to be able to you know generally survive through all the Bleak times and the tough times is the issue with Chinese in other areas it doesn't seem to be in mining has that affected your business at this point there certainly not I think at a at a very commercial Enterprise level we have not seen one instant of any delay or concerns or any adjustments in any Factor whatsoever so I think there's a very transparent there a very open there's a very honest transaction it really is commercial Enterprise at its greatest where you know what we try and do is is find develop and produce product at the most efficient level possible and we sell to our customers on a true arms length basis through much in the way of negotiation and arms length and essentially come to a resting point where the buyers and sellers meet essentially in a forum and go right I'm prepared to buy it and so we don't overlap in any way and and then they buy that product in that way are you rethinking how you use energy BP's come out recently and and forecast the end of the era of big oil and BHP is going to spend a lot of money on on becoming cleaner have you rethought your environmental impact in recent times in terms of energy and you know how one might undertake extractive Industries you know we for example at degasa we had we may still have the largest offgrid solar farm at any Mite in the world it certainly was the largest offgrid solar farm when it was built about four or five years ago and about 15% of our energy sources and we are remote we're off-grid we have then risen to the challenge and looked at alternative and renewable energy sources as best we can so we have a solar farm on that site that oscillates with the sun it provides about 15 to 20% of our energy and you know we were we're a business that uses somewhere in the order of probably 30 million liters of diesel a year to run remote generators in a power plant and we've been able to reduce that VI about 20% so that that is a great you know positive impact being able to do that clearly you know having strong energy from a diesel generation is something that you know it's hard to replicate as we see at the moment but yes we're certainly looking at alternative energy sources as best we can we've just received permitting after six years of work a permit in the US in Central Montana and that is the first new Hard Rock mining permit that has been issued to a company in Montana in 26 years and the First new hard rock copper permit in 40 years now we have made commitments at that mine which will be 100% underground to ensure that it is a 100% underground mine it will be 100% reclaimed as a mine site and it will be 100% guaranteed return back to Prior use which is presently cattle grazing so they're the commitments we are making as a business to be a modern Mining Company doing it right from the beginning Kyle thanks for talking to fear and greed it's been my pleasure thank you very much for having me that was Kyle simage Chief Executive Officer of sandfire resources there's plenty more in my extended interview with kyl simage I took the chance to ask him a few straightforward questions about resources we also talked about the slightly thorny topic of community engagement in the wake of rento's Yukan Gorge explosion Kyle is very Frank and it makes for a great conversation you can find it as bonus content in your playlist now how about this for review of fear and greed left on Apple podcast by a listener calling themselves dub W presumably that's W they say just what I needed I always find myself late with catching up on business news but fear and greed fills that gap for me the podcast arrives just before the day starts and now with evening catchup and the week ahead it's just like icing on the cake the universe has answered my prayer World Dum team thank you w that's quite a review we're an independent podcast with no medor affiliations so we rely on people like you to spread the word and I'm glad to hear you like the afternoon Market rap too certainly nice to know it's appreciated that's it for today it's Tuesday the 22nd of September 2020 I'm Sean Almer and that was fear and greed enjoy your day