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ASX 200 jumps 2.6% on vaccine hopes and jobkeeper

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) rose by 2.6% today with jobkeeper being extended as well as promising vaccine news from the UK.

The Morrison government has announced that jobkeeper will be extended, but at a reduced rate. The $1,500 per fortnight payment will reduce to $1,200 after September and then to $1,000 per fortnight in the first three months of 2021. Businesses will have to show a continued drop in turnover to qualify. The jobseeker coronavirus payment will also reduce.

Meanwhile, a potential vaccine in the UK is showing good signs from a clinical trial. The University of Oxford and AstraZeneca effort showed that the COVID-19 vaccine trial was safe and induced a strong antibody response in all vaccinated volunteers.

The biggest ASX 200 news today was from the biggest resource business:

BHP Group Ltd (ASX: BHP) share price rises 1%

BHP announced its FY20 production numbers earlier.

Compared to FY19, petroleum production was down 10%, copper production was up 2%, iron ore production was up 4%, metallurgical coal production was down 3%, energy coal production was down 16% and nickel production was down 8%.

The miner expects to achieve full year unit cost guidance at Western Australia iron ore (WAIO), Queensland coal and New South Wales energy coal. Petroleum and Escondida unit costs are expected to be slightly better than guidance.

BHP said that Chinese domestic industrial activity has been improving, spurred on by supportive credit and fiscal policy. But a second wave of infection is a major risk. Potential negative feedback loops to China from the downturn in the rest of the world is also a potential problem.

The ASX 200 resources company believes if China can avoid a second wave of COVID-19 then steel and pig iron production can both rise in the 2020 calendar year compared to 2019.

Big FY20 for Kogan.com Ltd (ASX: KGN)

The online retailer released some of its FY20 revenue and profit numbers.

FY20 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose by more than 57% to $7.9 million. Adjusted EBITDA increased by more than 149% in the fourth quarter of FY20.

In the three months to 30 June 2020, gross sales and gross profit increased by 95% and 115% respectively. FY20 gross sales were more than $94 million and gross profit was more than $17 million.

Kogan.com added another 109,000 active customers during June 2020 to finish FY20 with 2,183,000 active customers.

The online retailer said it finished with cash on the balance sheet of $147 million with no debt and that doesn’t include the proceeds of the $20 million share purchase plan.

Capital raising by Downer EDI Limited (ASX: DOW)

ASX 200 share Downer is doing a capital raising to complete the acquisition of Spotless, an integrated services business.

It’s raising $400 million to strengthen its balance sheet as well as buy the rest of Spotless. Some of the cash will be used to invest in Downer’s core business. The raising will be done with a 1 for 5.58 offer at a share price of $3.75, which is a 12% discount to the last closing price.

Downer plans to exit ‘non-core’ businesses like its mining portfolio and laundries business. It also plans to reduce its cost base with annual saving costs of between $15 million to $20 million. It has booked restructuring costs of $142 million.

Downer also announced some FY20 profit numbers. It expects to report underlying earnings before interest, tax and amortisation (EBITA) of between $410 million to $420 million. Underlying net profit is expected to be between $210 million to $220 million for FY20.

However, Downer expects to recognise $386 million of charges in FY20 which includes goodwill impairment and the restructuring costs.

The statutory FY20 loss is expected to be in the range of $150 million to $160 million.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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