AU Morning Wrap: Qantas Increases Capacity, Xero Climbs on Broker Upgrades

Stocks advanced Thursday, turning green after House Speaker Kevin McCarthy told reporters that the House of Representatives could vote on a debt-ceiling deal as soon as next week.

Investors have been seeking confirmation that debt-ceiling talks are progressing, after President Biden helped boost sentiment on Wednesday by expressing confidence that a default would be avoided. Treasury Secretary Janet Yellen has warned that absent a deal to raise the borrowing cap, the government could become unable to pay its bills on time by June 1.

Enterprise software bellwether Xero rose again on Friday to help the broader tech sector add 2.1 per cent.

Xero shares are up 3.9 per cent in early trade after posting its full-year profit report on Thursday, with digital players REA Group and SEEK both adding more than 1.5 per cent.

The materials sector is lower, with coal miner Whitehaven down 3.3 per cent and gold miner Newcrest off 2 per cent.

The airline said it would bring two Airbus A330's on from Finland's Finnair, a partner of the group via its oneworld carrier alliance, as it adds a million more seats to its international network from late October.

This will include a big capacity jump to China – Qantas will restart daily Sydney-Shanghai flights for the first time in three years from October 29, and it will increase the number of flights from Sydney and Melbourne to Hong Kong from the same time.

"We see Xero's focus (under the new CEO) on efficient growth as a step in the right direction," Citi said.

The broker upgraded its price target by 14 per cent to $120 and said it sees upside risk to consensus forecasts if Xero can deliver on the "rule of 40", where free cashflow margin plus revenue growth exceeds 40 per cent.

Chief executive Peter King blamed the expected fall in sales and profits on the prior year on tough trading conditions as cautious consumers navigate interest rate rises and cost of living pressures.

US-based shipbuilder Austal says it has won a contract worth up to $US3.2 billion ($4.8 billion) for detail design of the Auxiliary General Ocean Surveillance Ship T-AGOS 25 Class for the United States Navy.

In one of the largest scandals uncovered by the Hayne royal commission, AMP admitted in 2018 it had collected more than $600,000 in fees from these clients, as it had no policy or system in place to stop dead clients being charged.

The bulk of the charged clients were in AMP superannuation accounts, where they were charged for life insurance despite there no longer being any life to ensure.

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