4 APR 2022 – Monday Market Highlights – Transcript

Kate Power
Good morning. It’s Monday, the fourth of April and I’m Kate from Milford. The Australian federal pre election budget was announced this week, which has provided some short term stimulus to help households with the rapidly rising cost of living. Three policies targeting households include having the fuel excise to 22 cents per liter for the next six months, which at current fuel prices will bring the price per liter from about $2.20 to $2. Secondly, an extension and step up of the low and middle income tax offset, where more than 10 million eligible earners will benefit from a tax deduction of up to $1,500, which is up $420 from prior years. This results in 3.9 billion of increased benefits to households. And finally, a one off payment of $250 for pensioners, veterans and concession card holders. This benefits about 6 million taxpayers and will be paid in April 2022. These three policies alone provide a total net benefit of about $8.5 billion for households. Overall, the tax receipts appear to be strong, and the government is not looking to reduce debt levels. The Treasurer did acknowledge that real wage growth is expected to be negative this year, and hence the need for government support. Looking offshore. US President Joe Biden has ordered a massive release of oil reserves of 180 million barrels from the strategic petroleum reserves. This is to be released over the next six months and equates to 1 million barrels released per day. Although this will not resolve the structural oil supply deficit. This should alleviate some short term pressure. Pressure is building on the European Central Bank, with punchy inflation prints out from several European nations, with energy prices still being called out as the key driver of this inflation. Turning to equity News. This week, there was a number of equity raises across the Australian and New Zealand market starting with and New Zealand who announced an equity raise of $1.2 billion, which will be used to repay their existing crown loan, strengthen the balance sheet, improve liquidity and help position and New Zealand for recovery. The equity raise forms part of the group’s comprehensive $2.2 billion recapitalisation package. The offer is a pro rata pronounceable rights offer, allowing eligible shareholders an opportunity to buy additional shares at a discount relative to the last close price. paladin announced a fully underwritten $200 million placement to fund production raise stop at the Langer Heinrich mind you shares will be issued at an 8.9% discount to previous close. The decision to restart production of the mine is driven by that group uranium strategy and the continuing strong uranium market fundamentals. In conjunction to the equity raise, they announced a share purchase plan to raise up to an additional $15 million. Finally, domain has entered into a binding agreement to acquire 100% of real base for an upfront cash consideration of $180 million. This acquisition will be fully equity funded. The offer will be conducted at $3.80 per share, which represents a 5.2% discount to the last close price. Real base is one of the largest campaign management technology platforms for real estate agents in Australia and New Zealand. Looking to the week ahead in Australia, the RBI press conference will be held on Tuesday to announce their decision on the official interest rate, which is expected to remain unchanged at point 1%. In the US, we can expect the is m non manufacturing PMI print, which is an important measure of business activity. This index rating is forecast to increase from 56.5 to 58, which indicates an expansion of business activity. Finally, the Federal Open Market Committee minutes will be released later in the week, which will provide further insights into the FOMC actions on central bank money and the desired federal funds market. Right. Thank you for listening, and we’ll see you next week.