ASX shares opened lower on Friday with the All Ordinaries index down 3% before midday on Friday, following overseas markets downward.
Global stocks mixed
Europe’s markets slowed after three consecutive days of gains, with the FTSE off 3.5% and Euro Stoxx down 2.2% as investment bank Société Generale posted a first-quarter loss and Royal Dutch Shell cuts its dividend for the first time since World War II.
More positively, oncology and asthma drug maker, Astra Zeneca, remains 1-of-11 FTSE stocks up for the year, after announcing a 16% rise in revenue on the back of a 17% increase in China. The company has also teamed up with the UK Government to push forward on a coronavirus vaccine.
US markets fell, the S&P 500 down 1% and the Dow Jones sliding 1.2%. However, the S&P managed to deliver the largest one-month gain since 1987 – up 11%.
The ASX was similarly up 2.4% for the day on Thursday, and 8.8% for the month.
The EU reported its worst GDP result in decades, falling 3.8% for the quarter, with France the worst-hit economy at negative 5.8%. Is the market getting ahead of itself? Is the worst still to come?
Microsoft’s cloud revolution
The power of the cloud and the digitisation theme continued overnight with Microsoft Corp (NASDAQ: MSFT) announcing they had seen two years of digital transformation in just two weeks. Microsoft’s revenue increased 15% with general cloud up 35% and the growing Azure business, used by smaller companies, putting on another 59% — keep in mind, these are quarterly growth rates.
In-line with Coles’ report, Woolworths announced a 10.7% increase in sales for the March quarter, with online sales up 34% and reaching close to 5% of their total. If anything, the COVID-19 lockdown seems to be pushing more and more people online. This can only be positive in the long-term. Of course, it wasn’t all good news for Woolies with management highlighting the increased costs due to COVID-19, 22,000 new staff and their hotel business costing $30 million to $35 million to run each month.
More capital raisings… and a deferred dividend?
Port logistics provider Qube Holdings announced the details of its $500 million capital raising, opting to treat all investors fairly by structuring it as a 1-share-for-6.35 existing shares entitlement offer at a price of $1.95. Qube indicated the funds will add a $600 million buffer, allowing them to push forward with growth expenditure on a number of new projects with Bluescope, BHP and Shell. They also announced the sale process of a portion of Moorebank remains on track with another tenancy to be signed in May.
ANZ Banking Group (ASX: ANZ) shocked the market, announcing the decision on their interim dividend would be deferred until after the crisis. Is this a deferral or an outright cut? Only time will tell.
Following NAB’s lead, ANZ announced a 51% fall in statutory profit after increasing loan impairments to 0.53% from 0.13%. They have already received repayment holiday requests for $36 billion worth of home loans.
Finally, Amazon.com Inc reported 26% growth in quarterly revenue as consumers flocked to its online platform. However, profits were below market expectations with $4 billion in operating profit to be dedicated towards COVID-19 related costs.
This update was written by Drew Meredith, Director of Wattle Partners.