Australian shares have risen in afternoon trade after a volatile session on Wall Street, as oil prices sank on renewed COVID-19 lockdowns in parts of Europe.
By 12:50pm AEDT, the benchmark ASX 200 had lifted (+0.3pc) to 6,808 points.
Rio Tinto is being sued in a class action by the largest minority shareholder of its Mongolian copper project.
Crude oil prices tumbled — wiping out most of yesterday’s gains — as a large container ship remains stuck in the Suez Canal and may block a vital shipping route for weeks.
Brent crude dropped (-4.1pc) to $US61.77 per barrel.
AMP boss still in the job
Embattled wealth manager AMP has insisted (twice in the past 24 hours) that its chief executive Francesco De Ferrari has not stepped down — despite media reports claiming the opposite.
In a statement on Friday, AMP said “there has been no change to the CEO’s position and that Mr De Ferrari has not resigned”.
But then it hinted that the chief executive’s future may not be as certain after today.
“The board and Mr De Ferrari are working together and constructively discussing the future strategy and leadership of the group, post the completion of AMP’s portfolio review.
“These discussions are ongoing and AMP will provide updates as required.”
The vague statements from the company came after its share price plunged on Thursday afternoon, which prompted AMP to request the first trading pause.
Investors dumped their AMP shares after Nine’s newspapers reported that Mr De Ferrari would “resign from the company” yesterday, after two years in the top job.
The company tried to calm investors down with a one-line statement in the evening, which said: “AMP Limited notes the media reports today and confirms that Francesco De Ferrari remains as chief executive officer of the group.”
AMP has lost two-thirds in value and struggled to repair its reputation since the 2018 banking royal commission found the company had lied to regulators and engaged in serious misconduct (in particular, the “fee for no service” scandal).
The financial services firm has also been rocked by controversy over its handling of sexual harassment complaints internally.
It led to the resignation of its then-chairman David Murray, board director John Fraser, and the demotion of Boe Pahari from his role as head of AMP Capital, its most lucrative division.
AMP shares had risen (+0.8pc) to $1.34 by the afternoon. Earlier today, they jumped by around 5 per cent, before their rally ran out of steam.
Best and worst performers
Seven out of every 10 companies on Australia’s benchmark index were trading higher, led by the energy and consumer discretionary sectors.
Some of the top-performing stocks were Pilbara Minerals (+6.6pc), Ingham’s (+4.5pc), Lynas Rare Earths (+4.3pc), Austral (+4.6pc) and BlueScope Steel (+4.5pc).
On the flip side, TPG Telecom (-7.6pc), Polynovo (-3.3pc), Resmed (-2.5pc) and A2 Milk (-2.8pc) suffered heavy losses.
TPG shares plummeted after the telco announced its chairman, the reclusive billionaire David Teoh, had resigned after 30 years leading the company.
His son, Shane Teoh, also resigned from TPG’s board of directors after he was convicted of assaulting an Uber driver earlier this month.
The Australian dollar has recovered slightly (+0.3pc) to 76 US cents on Friday morning, though it has dropped sharply these last few days.
After peaking at 77.56 US cents this week, the local currency fell by about 2 per cent as the US greenback climbed to a four-month high.
Class action over Rio’s Mongolian project
Rio Tinto has been accused of covering up billions of dollars’ worth of cost overruns and delays at its copper project in Mongolia (Oyu Tolgoi) in a New York lawsuit.
The mining giant said the lawsuit is without merit.
Rio operates the mine via its Canadian subsidiary Turquoise Hill, which owns 66 per cent of Oyu Tolgoi. The rest of the mine has been owned by the Mongolian government since the project was launched in 2009.
Activist investor Pentwater Capital Management LP is Turquoise Hill’s largest shareholder after Rio with a 9 per cent stake.
Senior executives from Rio Tinto and Turquoise Hill “repeatedly assured investors that progress on that development was on plan and on budget and that the deadline for achieving sustainable first production when the mine would begin generating cash flows remained intact”, Pentwater argued in its legal paperwork filed in the US District Court for the Southern District of New York on March 16.
“In reality … the underground expansion project was many months behind schedule and hundreds of millions of dollars over budget,” it said in the 160-page filing.
“Ultimately, Turquoise Hill investors incurred massive losses as Turquoise Hill shares lost well over 70 per cent of their value when the true extent of the delays and cost overruns at Oyu Tolgoi came to light,” it added.
Turquoise Hill was not immediately available for comment.
The lawsuit is seeking compensation for losses incurred by investors in Turquoise Hill.
The underground mine expansion has been severely delayed by a dispute over funding as the Mongolian government seeks a bigger portion of the profits, even as costs have ballooned due to difficult geology.
Rio in 2019 announced a cost overrun at the project of up to $US1.9 billion ($2.5 billion), expecting total capital expenditure to be in a range of $US6.5 billion to $US7.2 billion.
A year later, it said it would raise up to $US500 million through additional lending to develop the mine, which is now expected to start production in 2022.
‘Confused’ markets stage comeback
US markets were on track to finish trading with significant losses but managed to stage a late-day rebound.
The Dow Jones index closed 199 points higher (+0.6pc) at 36,219. At its worst point, the industrial-skewed index had dropped by as much as 348 points.
The S&P 500 lifted (+0.5pc) to 3,910, which was a major improvement over its 0.9 per cent loss (at its lowest point).
The Nasdaq Composite crawled its way into positive territory — ending 0.1 per cent higher at 12,978 — as major technology stocks reversed their earlier losses.
Companies that have been hardest hit by the pandemic (and are depending on an economic reopening) were the best performers overnight, like American Airlines (+4.4pc), United Airlines (+4.1pc) and Boeing (+3.3pc).
These ‘value’ stocks outperformed ‘growth’ stocks in tech-related sectors, like Apple (+0.4pc) and Tesla (+1.6pc). They were both caught in the selling but were able to recover by the closing bell.
“It’s a very confused stock market, there isn’t real leadership,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“One day cyclicals are in favour, the next day it’s tech-plus is in favour,” he said. “But on the positive side, there isn’t what I call aggressive selling.”
Shares of Nike fell (-3.4pc) as the sporting goods giant faced a Chinese social media backlash over its comments about reports of forced labour in Xinjiang.
US job market recovering
The number of Americans who applied for unemployment benefits last week fell to a one-year low — a sign the US economy is on the verge of stronger growth as its vaccine rollout accelerates.
Initial jobless claims tumbled by 97,000 to a seasonally adjusted 684,000 (compared to the previous week), according to the latest Labor Department figures. Reuters-polled economists were expecting 730,000 applications from newly unemployed US workers.
But the big picture is that a staggering 18.95 million Americans, in total, were receiving unemployment cheques in early March, and it will likely take years for the US job market to fully recover from the pandemic’s scarring.
European markets had a mixed performance, following the biggest rise in new coronavirus cases in Germany since January 9.
France also recorded its largest number of patients with COVID-19 requiring intensive care so far this year.
Britain’s FTSE fell (-0.6pc), while Germany’s DAX (+0.1pc) and France’s CAC (+0.1pc) posed minor gains.
Spot gold dropped (-0.4pc) to $US1,727.47 an ounce, while bitcoin slid (-3.5pc) to $US52,403.