Australian shares have jumped to their highest levels since early-March, before the lowest point of the COVID-19 sell-off.
By 12:05pm AEST, the benchmark ASX 200 index was up 0.9 per cent to 6,169 points.
Some of the best-performing stocks were Flight Centre (+4pc), CIMIC Group (+4.2pc), Qantas (+4.1pc) and BlueScope Steel (+4pc).
Conversely, Mesoblast (-21.1pc), Challenger (-3.7pc) and Afterpay (-3.5pc) experienced the steepest losses.
The Australian dollar lifted (+0.3pc) to 71.7 US cents.
Sydney Airport swings to massive loss
Sydney Airport has reported a heavy loss ($51.8 million) for the first half of 2020, and will not pay an interim dividend.
Widespread travel restrictions and border closures, to contain the coronavirus pandemic, have decimated its revenue. In the same period last year, the airport earned a massive $199.8 million profit.
In the meantime, Sydney Airport’s shares have been put in a trading halt while it tries to raise $2 billion by issuing more shares.
By raising extra cash, the company would reduce its net debt to $7.1 billion.
Three months ago, the airport operator said it did not foresee the need to raise equity, but that was before COVID-19 cases surged in the city of Melbourne, prompting border closures between states and further hurting travel and business.
“Six months into the pandemic, there remains uncertainty as to how long it will take for aviation markets to return to pre-COVID-19 levels,” the company said in a statement to the ASX.
James Hardie surges on rosy outlook
One of the strongest performers was James Hardie Industries (+5.7pc) after it reported a weak profit result — but upbeat forecast.
Its earnings were boosted by its North American business, on the back of an improving US housing market and ultra-low borrowing rates.
“The North America segment delivered another outstanding result,” its chief executive Jack Truong said.
“We continued to grow above market while delivering exceptional returns.”
Operating profit margin for the North American division, its biggest earner, was 29 per cent in the first quarter (at the top range of its 27 – 29 per cent forecast).
Overall, the world’s largest fibre cement maker said its adjusted net “operating profit” (which excludes compensation costs) was $89.3 million in the June quarter, a slight drop from last year’s $90.2 million.
But its profit was much worse when those one-off compensation payments to workers claiming asbestos-related illness were included.
On that measure (which conforms with international accounting standards), its “statutory profit” had plunged 89 per cent to $9.4 million.
But the company is forecasting a strong full-year operating profit in the 2021-22 financial year, between $330 million and $390 million.
For reference, its operating profit was $352.8 million for the previous fiscal year — the mid-range of its new target.
Tech slips from record highs
On Wall Street overnight, the Nasdaq index slipped (-0.4pc) to 10,968 points, after consistently hitting new records in the past week.
The S&P 500 fell (-0.3pc) to 3,360 points and has nearly climbed back to its February record high.
The Dow Jones index was the best performer, jumping 358 points (or 1.3pc) to 27,791.
Investors pulled money out of big tech names like Amazon (-0.6pc) and Facebook (-2pc) and poured it into stocks like Boeing (+5.5pc) and energy companies, which have been more sensitive to the economic cycle.
They are also betting on a potential coronavirus vaccine being developed soon and unprecedented amounts of stimulus — which has been benefiting the stock market more than the real economy.
More recently, sentiment has been lifted by a better-than-expected quarterly earnings season, which has been exceeding the market’s very low expectations.
Former McDonald’s boss accused of sexual misconduct
McDonald’s is suing its former chief executive Steve Easterbrook to recoup tens of millions of dollars in severance and benefits.
The fast food giant alleges he covered up and lied about sexual relationships with at least three employees.
The lawsuit came nine months after McDonald’s ousted Mr Easterbrook without cause, after determining he had engaged in a “non-physical” and “consensual” relationship with an employee that violated the fast food chain’s policy.
McDonald’s said it reopened the matter last month after receiving an anonymous tip and discovered Mr Easterbrook engaged in the sexual relationships with employees in the year before his departure.
Lawyers for the former McDonald’s chief did not immediately respond to requests for comment.
When he left McDonald’s, Mr Easterbrook called his consensual affair with an employee a “mistake,” and that it was “time for me to move on.”
His severance package was worth $US41.8 million ($57 million) when he left the Chicago-based company, executive pay firm Equilar has estimated.
But McDonald’s said Easterbrook no longer deserved that payout because of his “silence and lies,” and that had its board known the full picture it would have fired him “for cause.”
In its complaint in Delaware Chancery Court, McDonald’s said it had found dozens of nude or sexually explicit photos of women, including the three employees, that Mr Easterbrook sent to his personal email account from his company email account.
McDonald’s said Mr Easterbrook deleted the emails and attached photos from his company-issued phone shortly before his ouster, but they remained on a company server without his being aware.
It also said Mr Easterbrook approved an “extraordinary” stock grant of hundreds of thousands of dollars to one employee soon after their first sexual encounter and lied to investigators by denying any physical sexual relationships with employees.
Mr Easterbrook, a native of England, became McDonald’s chief executive in March 2015.
He had been credited with modernising the chain, introducing touch-screen kiosks and launching an all-day breakfast menu.
Investors did not know what to make of the latest developments with McDonald’s.
The company’s share price fluctuated between sharp falls (-0.9pc) and a modest rise (+0.4pc). In the end, it closed 0.3 per cent lower at $US204.12.