Australian stocks picked up momentum in afternoon trading, closing higher for the second day in a row.
The local market slowly recovered some of the heavy losses it suffered on Friday (-3pc), its worst trading day since June.
The benchmark ASX 200 ended up 1.1% at 6,007 points.
At its peak, the ASX had jumped 1.4% before slashing some of those gains midway through the session.
Some of the top performing stocks were Sims (+ 7.8pc), Webjet (+ 7.7pc), and Nufarm (+ 7.3pc).
On the other hand, JB Hi-Fi (-2.8pc), Sydney Airport (-2.8pc) and Mineral Resources (-2.7pc) were among the worst performers.
Market gains were driven by banks and mining companies, notably Commonwealth Bank (+1.7 pc), Rio Tinto (+1.4 pc) and Fortescue Metals (+3.5 pc).
Westfield rent collection increases
Shares of mall owner Scentre Group rose 4.1%, after the company said it managed to raise $ 183 million (or 86% of rent) from its retail tenants last month.
This is a huge improvement from the $ 59 million (or 28% of gross rental bills) it received in April.
The Westfield owner has taken a particularly aggressive stance against retailers who have said they were unable to pay rent in full due to the impact of COVID-19 on their sales.
On August 21, Scentre locked out several hundred workers from 129 stores in its malls.
The affected retailers were Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W. Lane and Crossroads, all owned by Mosaic Brands.
Mosaic retaliated by announcing its intention to permanently close up to 500 of its stores.
However, the two sides have since put aside their differences in the bitter rent dispute.
Mosaic stores reopened in Westfield malls across the country last week, with the exception of Victoria (which is subject to severe shutdowns) as the two sides reached a confidential agreement on the new rental terms.
Victoria’s labor market is underperforming
Australia’s salaried jobs fell 0.4% in the month to August 22, according to the latest figures from the Bureau of Statistics (ABS).
Victoria continues to underperform the rest of the states, the numbers show.
The ABS said salaried jobs fell 2% in Victoria during the month, while they rose 0.1% for the rest of Australia.
In addition, salaried jobs in Victoria are still 7.9% below the level reported in mid-March (compared to 2.9% for the rest of Australia).
The ABS data release is an experimental weekly series and is different from the official monthly employment data.
Payroll figures are based on Australian Taxation Office (ATO) salary payment figures.
“Today’s data on payroll jobs and wages shows the current two-speed nature of the Australian economy, with Victoria continuing to underperform the rest of the country,” the economist said in Head of EY, Jo Masters.
“For households, the persistent weakness in the labor market and high job insecurity will weigh on confidence and likely lead to further cautious spending behavior.
Businesses Worried About Recovery
Business conditions fell sharply in August as Victoria slumps into a coronavirus lockdown, while confidence remained fragile, according to a reputable monthly survey conducted by the NAB.
The NAB Business Conditions Index slipped to -6 points in July (down from 0 in the previous month).
But it was still higher than a low of -34 points in April, at the height of the pandemic – although far from the long-term average of +6 points.
The biggest drag was the employment conditions sub-index, which plunged to -13 points (down from -2 in July).
Although the survey’s measure of business confidence rose, it was still firmly in negative territory. It climbed to -8 points in August (down from -14 the previous month).
The decline in conditions was widespread in all states except New South Wales.
“Uncertainty around the virus and the global economy remains high, as does the path for reopening nationally,” said NAB group chief economist Alan Oster.
“The fact that other states have seen a setback suggests that the virus continues to pose a risk everywhere, not just in states with significant containment measures in place. “
The pandemic has wreaked havoc in two of Australia’s most lucrative industries, tourism and education, with the country in its worst recession since the Great Depression of the 1930s.
In response, the Reserve Bank of Australia (RBA) cut interest rates to an all-time high of 0.25% and launched a major bond buying campaign to keep yields low, while the government has pledged more than $ 300 billion in fiscal stimulus.
The sale of technology eases with the holidays
Wall Street was closed for the Labor Day long weekend.
Local investors could take inspiration from European markets, as they rebounded from heavy losses last week, triggered by the massive selloff in US tech stocks.
The UK FTSE and German DAX jumped more than 2% each.
Some investors are concerned that any rally will be short-lived due to fears the market may be overvalued, especially in the context of a global economic recession.
“This market rally could likely be brought to a halt given the strained valuations,” said Stéphane Ekolo, equity strategist at TFS Derivatives in London.
The Australian dollar was flat at 72.78 cents US.
But the local currency jumped (+ 0.9pc) to 55.34 British pence, on the growing prospect of a no-deal Brexit.
This was due to reports that British Prime Minister Boris Johnson is preparing to withdraw from talks with the European Union if a trade deal is not reached by mid-October.
Spot gold slipped (-0.3 pc) to US $ 1,926.33 per ounce, while Brent crude fell (-1.4 pc) to US $ 42.05 per barrel.
Oil prices fell to their lowest levels since July, after Saudi Arabia’s main producer slashed prices (to five-month low) to supply crude to Asia.
ABC / Reuters