TWU demands Qantas pay $2.7bn in pandemic relief as airline sees record annual profit, ASX slides, as it happened (2023)

• ASX 200: -0,05% a 7.260
• All ordinary:-0,05% a 7.447
• Australian dollar: fixed at 66.53 cents
• Nikkei 225:-0,4% a 30.958
• Shanghai Composite:-1% a 3,264
• Dow-Jones: -0.4% to 33,287 points
  
• S&P 500: floor at 4,193
• Nasdaq: +0,5% a 12.721
• STOXX Europe 600: flat at 469 points
• golden point: -0,4% a 1.961,65$/onza
• rough brent: +0.5% all $US 76.34/vat
• iron ore: -3.4% tot $ US101.80/ton
• Bitcoin: +1.6% a $27,313

Towards the end, the market was exhausted as the US debt ceiling negotiations dragged on for another day.

The ASX 200 Index missed the day's gains and fell lower.

Major banks and energy stocks pared losses, while consumer and mining stocks were in the red.

Qantas (-2.2 percent) fell despite forecasting a record $2.5 billion pre-tax profit for the year.

Uranium firm Paladin Energy (+5.3 percent) was the best performer, while artificial intelligence firm BrainChip Holdings (-17.7 percent) was the worst performer in the ASX 200 Index.

That's after more than half of investors voted against the company's compensation plans and disappointing sales at today's annual general meeting.

Thanks to Swissquote Bank Senior Analyst Ipek Ozkardeskaya for the last word today on the US debt ceiling negotiations, which resemble Groundhog Day.

Overnight, US President Joe Biden met with House Speaker Kevin McCarthy for "productive" talks on lifting the US government's debt limit.

Charging...

There is still no deal, and it looks like negotiations will conclude on June 1, the deadline for when the US government runs out of money.

"Yesterday was another day with the same issues," said Ms. Ozkardeskaya.

"US debt ceiling talks continued with US President Joe Biden expressing optimism about reaching a deal."

"US Treasury Secretary Janet Yellen said the Treasury will soon run out of money and will be unable to pay its debts."

He notes that despite time running out, investors are not turning to the safe haven of gold and markets have not crashed.

That's probably because most people wait for a deal at the last minute, as happened during previous stalemates over the US debt ceiling.

"The stronger US dollar and higher yields weigh on gold demand at a time when investors may be willing to take higher opportunity costs due to increased default risk."

But the fact that stocks are holding strong despite rising yields, and that gold is seeing limited safe-haven inflows, suggests that investors are viewing the US debt ceiling saga as a American film, knowing that eventually there will be a happy ending..."

The Australian stock market closed slightly lower as negotiations in the US continue on a deal between US President Joe Biden and Republican leaders to raise the debt ceiling to $31.4 trillion.

The ASX 200 Index fell 0.05 percent to 7,260, with banks and energy stocks limiting losses.

The Australian dollar is trading sideways at around 66.51 pence.

The Australian Council of Trade Unions also criticized Qantas after forecasting pre-tax profits of up to $2.5bn for fiscal 2023.

Qantas says strong travel demand is putting the airline back in the black.

However, ACTU president Michele O'Neil says the expected record profit will be paid for by workers and the public.

“Qantas employees know that much of this gain is the result of their jobs being outsourced to various companies, and that Qantas has set up labor recruitment companies, which has allowed the airline to reduce wages and benefits. to benefit outgoing CEO, Alan Joyce. Qantas shareholders.

“Qantas customers know that standards have been dramatically lowered, with continued flight delays and lost luggage, all because good, safe jobs have been outsourced to reduce wages and benefits, hurting both employees and customers. to the clients".

• ASX200: +0,1% a 7.271
• All Ordinary:+0.1% a 7,458
• Australian dollar: fixed at 66.51 US cents
• Nikkei 225:-0,4% a 30.968
• Shanghai Composite:-0,6% a 3.277
• Dow-Jones: -0.4% to 33,287 points
  
• S&P 500: floor at 4,193
• Nasdaq: +0,5% a 12.721
• STOXX Europe 600: flat at 469 points
• golden point: -0,3% a 1.963,57 $/onza
• rough brent: +0.2% all $US 76.12/vat
• iron ore: -3.4% tot $ US101.80/ton
• Bitcoin: +0.6% a $27,060

Some members of Virgin Australia's Velocity Frequent Flyer program who remain with the airlines must resume using their accounts before the end of June or their credit will expire.

That's for customer accounts that have been inactive for three years.

Virgin Australia says it has extended the value of points balances in July 2022 until at least June 30, 2023, due to the hardship travelers are facing during COVID-19.

A Virgin Australia spokesperson says customers must earn or redeem points before the end of June to reactivate their account.

"Those affected by the next expiration will not have had activity in their accounts for three years."

"Members can extend the validity of their balance by earning or redeeming just one point, which automatically extends their balance for two additional years."

Meanwhile, Bloomberg reports that Virgin Australia owner Bain Capital plans to float the airline again in November.

Many borrowers feel the pressure, with theReserve Bank cash interest rates increased 11 times in the past year, from 0.1 to 3.85%.

Due to market pricing and the economic consensus, the spot rate typically begins to fall from that peak sometime later this year or early next year.

But new research fromMarcel Thieliant on Economics of Capitalsuggests that borrowers should not count on interest rates falling too far from current levels for too long.

he thinks sothe spot rate is likely to average 3.5% over the long term, an estimate that is broadly consistent with previous statements by RBA officials such as Governor Philip Lowe.

Of"neutral" interestit is one that, according to economists, neither increases nor subtracts demand in the economy or, as Thieliant says:

"The neutral rate is the rate that allows economic activity to evolve in line with its potential and keeps inflation close to the central bank's target."

Thieliant says his current estimates put it at around 0.5% in real terms, excluding the effects of inflation.

When you add in the RBA's target inflation rate of 2-3%, that's what's leftthe current 'nominal' neutral interest rate around 3%.

But Thieliant expects this to rise to around 3.5% by 2050 as the real neutral cash rate rises to 1%.

Since the estimates of the real neutral rate are based on econometric models, the results vary slightly depending on the data and assumptions used.

The RBA seems to think that the real interest rate is already at least 1%, Thieliant said.

“The RBA estimated last year that the real neutral policy rate fell from around 3% in the early 1990s to just over 0% before the pandemic, although the RBA estimates that it has since risen to around 1%," he said.

"Documents to be released by the RBA in response to a freedom of information requestshow that RBA staff now believe the nominal neutral rate is closer to 4%, which implies a real neutral rate closer to 1.5%."

The good news of a rising neutral rate is that it is an indication that the economy could escape the low-growth slump it has been in for the past decade.

“Arguably the main reason real interest rates have fallen in recent decades is the decline in potential GDP growth in advanced economies,” Thieliant wrote.

According to OECD estimatesAustralia's potential GDP growth slowed from 3.3% in the 1990s to just 1.7% on the eve of the pandemic.. That matters because lower potential growth reduces future returns on capital and therefore reduces investment demand.

Stronger economic growth, if widely distributed across the population, means that most borrowers should be able to handle those slightly higher long-term rates.

The Transport Workers Union has called on Qantas to pay back $2.7 billion in government aid it received during the COVID-19 pandemic.

That's after Qantas forecast record pre-tax profit of almost $2.5 billion for this financial year thanks to a rebound in travel demand.

TWU also announced a $100 million increase in the airline's share buyback program for investors.

Here is TWU National Secretary Michael Kaine:

“This obscene profit forecast is the result of Qantas management bleeding workers, passengers and the taxpaying public to death.”

"The right thing to do would be to pay back every dollar of uncommitted government spending that Qantas received from Scott Morrison before he destroyed every vital part of the airline to support executives and shareholders."

"The $100 million increase to the stock buyback plan is a kick in the stomach for the illegally laid off workers who were told they would sacrifice their jobs to save this amount," Kaine said.

For more on the Supreme Court battle between Qantas and TWU over outsourcing baggage handlers, here's my colleague, Elizabeth Byrne.

National Australia Bank has increased mortgage rates on floating rate home loans for new customers for the third time in three months.

That's for owner-occupiers and investors with an investment of more than 20 percent.

The increase of 0.1 percentage points is added to the increases in official rates of the Reserve Bank.

That means NAB's lowest variable-rate home loan since March 1 has risen 0.75 percent for new customers, while existing customers have seen their rates increase by 0.5 percentage points.

Canstar says it's the second NAB variable-rate mortgage rate increase in less than two weeks.

It is also the fourth time the lender has increased variable interest rates out of cycle with the RBA's decisions on spot rates, according to Canstar.

Canstar financial expert Steve Mickenbecker says that's bad news for borrowers, as smaller lenders are likely to follow suit as well.

"The NAB's second rate hike in two weeks on variable home loans will further alarm borrowers who are already reeling from a year of rate hikes."

“The Reserve Bank's cash rate increase in May had already added $79 to the monthly payment on a $500,000 NAB variable-base loan, and the 0.10 percent increase adds up to $112.

“Bank spreads are under pressure as depositors finally start to take full advantage of Reserve Bank cash interest rate hikes, and other borrowing costs have already risen to more normal levels after years of COVID support.”

"Off-cycle increases by the big banks will ease pressure on smaller lenders that don't have a large deposit base, which could allow them to reprice their home loans to cover their higher borrowing costs."

RateCity says all four major banks have raised rates for new customers in the past three months, on top of the RBA rate hikes in March and May.

Most sectors are higher on the ASX 200 today, with industrials, energy stocks, banks and mining companies being the winners.

Going down are consumer and education companies.

Uranium company Paladin Energy (+5.7 percent) is doing the best today, technology company BrainChip Holdings (-15.2 percent) the worst.

Qantas (-2 per cent) is down despite forecasting record profits for 2023.

• ASX200: +0,2% a 7.276
• All Ordinary:+0,2% a 7.466
• Australian dollar: -0.1% to 66.45 cents
• Nikkei 225:+0,8% a 31.318
• Shanghai Composite:-0,3% a 3.288
• Dow-Jones: -0.4% to 33,287 points
  
• S&P 500: floor at 4,193
• Nasdaq: +0,5% a 12.721
• STOXX Europe 600: flat at 469 points
• golden point: -0,4% a 1.960,79$/onza
• rough brent: +0.5% all $US 76.33/vat
• iron ore: -3.4% tot $ US101.80/ton
• Bitcoin: +0.6% a $27,060

The Australian stock market is holding up for the afternoon after US President Joe Biden met with the Speaker of the US House of Representatives and top Republican Kevin McCarthy to discuss more about the uprising of the US government borrowing limit

The ASX 200 Index is up 0.2 percent at 7,277, with oil stocks the gainers after an overnight rise in oil prices.

Both Biden and McCarthy said they had a productive discussion on the debt ceiling, but no deal was reached as negotiators rushed to raise the country's debt limit in time to avoid a potentially chaotic federal bankruptcy.

"Time to spend, just spend more money in America and the government is wrong," McCarthy said after the Oval Office meeting.

In a brief statement after the meeting, Biden called the session productive, adding that he, McCarthy and their top negotiators "will continue to discuss the way forward." McCarthy said his teams would "work through the night."

i met AP

Australian mining and energy companies will benefit from billions of dollars in subsidies in a deal between the US and Australia to develop critical minerals.

Climate, critical minerals and clean energy are compactaims to expand and diversify Australia's clean energy supply and promote the sustainable supply and processing of critical minerals, and support the development of clean hydrogen technologies, batteries and other clean energy products.

US President Joe Biden has pledged to ask Congress to treat Australia as a domestic supplier under the US Inflation Reduction Act.

Nicolette Boele of the Smart Energy Council says that if approved, the deal will attract investment in the critical minerals sector.

Charging...

Here are the best ones in the ASX 200 mid-morning trade.

• ASX200: +0,25% a 7.281
• All Ordinary:+0,25% a 7.469
• Australian dollar: +0.1% to 66.60 cents on the dollar
• Dow-Jones: -0.4% to 33,287 points
  
• S&P 500: floor at 4,193
• Nasdaq: +0,5% a 12.721
• STOXX Europe 600: flat at 469 points
• golden point: -0.3% a $US1,972/onza
• rough brent: +0.6% a $US76.06/barril
• iron ore: -3.4% tot $ US101.80/ton
• Bitcoin: apartment for $26,892

The Australian stock market is taking gains in early trading as US debt ceiling negotiations continue.

The ASX 200 Index was up 0.2 percent at 7,276, while the All Ordinaries Index was also up 0.2 percent at 7,464.

Most sectors are higher in the benchmark, with energy stocks leading the way after oil prices rose overnight.

Gaming company Tabcorp (+5 percent) is performing the best, while agricultural company Elders (-4.8 percent) is performing the worst.

Qantas has told investors they can expect strong earnings again, buoyed by strong demand from consumers looking to travel.

The airline expects an underlying pre-tax profit of between$2.43 billion and $2.48 billionfor the current exercise.

It also increased its existing share repurchases by up to $100 million.

Flight activity increased in the second half as new planes and more wide-body jets returned from long-term storage, the company said in a statement.

Jet fuel prices remain high but recent declines will fuel cost improvement in the second half, Qantas said.

The airline posted an annual underlying pretax loss of $1.86 billion in the 2021-2022 fiscal year. But earlier this year it hit a record first-half profit as wanderlust grew.

Also he said:

"As predicted, the steady recovery in overall market capacity has led to a moderation in rates from the peaks reached in the first half of FY23, but revenue is expected to remain significantly above pre-FY23 levels. COVID in FY24, especially internationally."

In other words, airfares should be a bit cheaper, but they will still be much higher than they were before the coronavirus pandemic.

There will also be some changes to the board.

One of Qantas' directors, Michael L'Estrange, retires.

He will be succeeded by Doug Parker, former president and CEO of American Airlines, who has more than 35 years of experience in the airline industry.

A new type of industry is being built in Australia's former heartland based on fossil fuels.

At Kwinana, south of Perth, land was secured to produce highly refined battery ores.

A lithium-ion battery "gigafactory" is being built in Geelong, while another gigafactory has just opened in the Hunter Valley.

And news broke earlier this month that lithium, a central ingredient for batteries, will soon be worth more to WA than oil, gas and coal combined.

It's clear that the humble rechargeable battery has become a big deal and global demand is expected to increase tenfold over the next decade, and fivefold by 2050.

Now a question is being asked, and the answer could shape Australia's prosperity for generations. Who makes the batteries?

For more, here's the tech reporter storyJames Purtil:

Australian Foreign Minister Penny Wong has indicated that Prime Minister Anthony Albanese will not travel to China unless "continued progress" is made in resolving trade and consular disputes.

The invitation from Chinese officials came earlier this year and follows clashes between the two countries, which have seriously hampered Australian exporters in particular.

In recent years, China has imposed trade sanctions on various products including wine, rock lobsters, coal and barley, costing exporters billions of dollars.

While some restrictions have been reversed, there are still some bans.

Ms. Wong suggested that further progress was needed in lifting trade sanctions before a visit to China could be scheduled.

For more on this, here is the story.Stephanie Boris: