Australian dollar rises to new high as Rio Tinto begins reputation recovery

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Australian dollar rises to new high as Rio Tinto begins reputation recovery

Australian shares fell on Friday as a COVID-19 cluster in NSW grew to 28 cases and other states began to reimpose border restrictions.

The ASX 200 closed 1.2 per cent lower at 6,675 points, while the All Ordinaries index lost 1.1 per cent to 6,924.

Despite the fall, the benchmark index still notched up its seventh-straight weekly gain.

Travel and casino stocks came under pressure, including Qantas (-3.5pc), REX (-5.4pc), Star Entertainment (-2.1pc) and Crown Resorts (-0.8pc).

Victoria announced a permit system would be imposed on anyone traveling into the state from NSW and anyone from the hotspot cannot enter Victoria from midnight on Friday, on top of restrictions imposed by other states.

Energy stocks dipped despite an uptick in oil prices, with Ampol (-4.7pc) and Worley (-3.5pc) among the biggest drags.

The big four banks fell, led by NAB (-2pc), while the miners were mixed, with Fortescue shares rising (+2.2pc) while BHP shares fell (-0.4pc).

Shares in medicine company Mesoblast tumbled 36.1 per cent, after a trial of its heart failure treatment remestemcel-L did not reach its intended target.

A2 Milk shares plunged, losing 23.6 per cent after the company lowered its revenue forecast, due to weaker Chinese demand for its products, through the lucrative ‘daigou’ resale channel.

The local currency rose above 76.2 US cents overnight, largely due to a weaker greenback, but pulled back through the local session.

By 5:05pm (AEDT), it was buying around 75.9 US cents.

Investors bet the US Government would need to pass a stimulus bill

On Wall Street, the Dow Jones gained 147 points (or 0.5 per cent) to close at its highest lever ever, 30,302 points.

The benchmark S&P 500 closed up 0.6 per cent to 3,722 while the tech-heavy Nasdaq was up 0.8 per cent to 12,764 points. Both indices also closed at record highs.

US markets lifted as investors bet the US Government would need to pass a stimulus bill to bolster the economy in the face of rising unemployment and surging COVID-19 infections.

Last week, the number of people filing first-time claims for unemployment benefits in the US rose to a three-month high (885,000), according to official US data released overnight.

Data also shows manufacturing activity in the mid-Atlantic region cooled this month, with factories reporting a sharp slowdown in new orders and job growth.

Rio Tinto appoints internal candidate as new head

New Rio Tinto boss Jakob Stausholm will begin the role on January 1.(Supplied: Rio Tinto)

Jakob Stausholm has been named Rio Tinto’s next chief executive, defying expectations it would pick an external candidate to repair its image after the destruction of sacred Aboriginal rock shelters in Western Australia.

Shares in Rio Tinto rose 0.9 per cent to $117.53.

Earlier this year, the mining company blasted the 46,000-year-old rock shelters in WA’s Pilbara region, despite warnings of the site’s cultural significance.

While the destruction was legal, it sparked outrage in the public and investors that ultimately led to the resignation of incumbent Jean-Sebastien Jacques and two deputies.

The appointment of Mr Stausholm, who is Danish, after Frenchman Mr Jacques may come as a surprise to Australian investors, who have argued a new chief executive should have local experience and be based in the country that provides 85 per cent of the company’s profits.

Rio Tinto was given permission to blast the caves under Section 18 of the Aboriginal Heritage Act.(Reuters: David Gray)

Mr Stausholm joined Rio Tinto as its chief financial officer in 2018 and will take on the tough job of repairing strained relationships with investors and Australia’s Indigenous and Aboriginal communities.

Bankers and investors had expected the company to choose an outsider as its new head.

“Some may perceive Mr Stausholm’s appointment as potentially indicating little change in overall strategy,” analysts at Morgan Stanley told Reuters, adding the internal appointment should cut down on the disruption period caused by management transitions.

Some investors said the appointment was unlikely to go down well with markets as a more radical change had been expected, though Stausholm’s knowledge of the company could mean a smoother transition.

As well as navigating Australia’s trade tensions with China, potential aluminium plant closures and job losses, he will have to manage cost overruns at Rio’s biggest growth project in Mongolia, a new iron ore mine in Guinea and legacy issues in Bougainville.

A parliamentary inquiry report, which said Rio Tinto’s role in the destruction of the Juukan Gorge caves was “inexcusable”, has called on the company to pay compensation to Indigenous Australians affected by the destruction of the caves and commit to reconstructing the sacred site.

Mr Stausholm will take over on January 1, 2021, and Peter Cunningham will be appointed as chief financial officer on an interim basis.

Bitcoin surges

Bitcoin has once again hit a new record, surging 10 per cent to $US23,655 ($AU31,031.7) overnight. The cryptocurrency has more than tripled in value this year.

Smaller coin ethereum, which often moves in tandem with bitcoin, was trading 1.6 per cent higher.

With bitcoin’s supply capped at 21 million, investors see in the cryptocurrency a hedge against the risk of inflation as governments and central banks turn on the stimulus taps in response to the COVID-19 pandemic.

“There will be a search for alternative currencies due to constant fiat money debasement,” Deutsche Bank analysts wrote in a note.

“It does feel that bitcoin will continue to be in high demand.”

Brent crude oil rose (+0.7pc) to $US51.45 a barrel, its highest level in nine months.

Spot gold and iron ore also saw big jumps, with the precious metal hitting $1,886 an ounce (+1.2pc) and the steel-making ingredient up 1.3 per cent to $US158.5 a tonne.


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