ASX 200 LIVE: Shares fall; Woodside rallies after broker upgrade; BHP down (2024)

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ASX extends losses ahead of Fed rate decision; BHP, Rio down

Joanne Tran, Alex Gluyas

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The Australian sharemarket extended losses on Wednesday in a broad sell-off, with investors on edge ahead of tomorrow’s key US Federal Reserve interest rate decision.

The benchmark S&P/ASX 200 Index fell 0.5 per cent, or 39.9 points, to 7715.5 at the closing bell, with 10 out of the 11 sectors finishing in the red. The All Ordinaries also lost 0.5 per cent.

The local bourse tumbled the most in six weeks on Tuesday, falling 1.3 per cent, as traders braced for the Fed to push back on immediate rate cuts at its policy meeting.|

Investors are keenly awaiting the latest US inflation report due later tonight followed by the Fed’s policy decision at 4am on Thursday (AEST) where the central bank is widely expected to alter its rate cut projections.

Mining sell-off

On the ASX, the mining sector was once again among the worst performers as iron ore threatens to fall below $US100 a tonne and traders turn increasingly pessimistic about a revival in China’s property market despite ongoing attempts by Beijing to rescue the sector.

Iron ore traded in the spot market dropped 4 per cent to $US104 a tonne overnight, marking the lowest level since April 5. Futures in Singapore recovered slightly to $US105.45 a tonne on Wednesday.

The sell-off has dragged mining giant BHP down 6 per cent over the past three weeks, while Rio Tinto has fallen 11 per cent and Fortescue 15 per cent.

All three stocks extended those losses on Wednesday, with BHP down 0.6 per cent to $43.50, Rio declining 1.5 per cent to $121.04 and Fortescue sliding 1.3 per cent to $23.29.

“The market is waking up to the fact that ‘good news is bad news’ for Chinese property,” Westpac’s head of commodity and carbon research, Robert Rennie, said. “Plans to date are simply nowhere near enough to address the current issue and much more will need to be done.

“We are not at all surprised to see iron ore languishing sub-$US110 and cannot rule out a potential dip down towards $US100.”

Westpac’s bearish view comes just a week after Citi downgraded its short-term iron ore price forecasts to $US95 a tonne.

Stocks in focus

Interest-rate-sensitive tech stocks also recorded declines ahead of the Fed announcement, with WiseTech down 2.7 per cent to $96.93 and NextDC falling 1.2 per cent to $17.71.

Elsewhere, Macquarie upgraded Woodside to an “outperform” rating, with analysts arguing that the market is excessively pricing commodity, project and climate risks into its valuation. The shares rallied 2.6 per cent to $27.79.

Automotive parts retailer Bapcor rose 1 per cent to $5.02 after surging 14 per cent on Tuesday, when it received an unsolicited bid from US-based Bain Capital to buy its shares at $5.40 apiece.

And the board of Super Retail has appointed Fonterra’s global markets chief executive, Judith Swales, as chairwoman, replacing Sally Pitkin. The shares were down 1.1 per cent to $13.07.

Slowing economy puts RBA rate cut on the cards: Minack

Jonathan Shapiro

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Globally renowned market strategist Gerard Minack says the next move from the Reserve Bank will be to cut interest rates later this year or early 2025 as more evidence emerges that Australia’s economy is slowing enough to lower inflation.

Mr Minack described the RBA’s current 4.35 per cent cash rate as “very restrictive,” despite being lower than the US Federal Reserve and other developed markets, including Canada, which cut its policy rates last week.

“Look at the impact on cash flows: in the US, household debt serviceability is unchanged. In Australia – it’s up [by] 7 per cent of income,” he told the Morgan Stanley Australia summit in Sydney. “That’s a massive whack over the head.”

“We’ve had restrictive fiscal policy and there’s a squeeze on discretionary spending. If you don’t have a mortgage you’re probably renting, and that’s taking a bite out of your income.”

Read more here.

Canva’s IPO pitch lands just as markets are warming up

Timing and a first-mover advantage helped Canva create one of Australia’s great tech success stories.

Now it needs that blessed timing to put the icing on the cake; a $40 billion-plus sharemarket listing, and the chance to graduate into global software big leagues on the Nasdaq boards.

It is coming. You can tell from the way Canva has upped its market engagement in recent months.

On Wednesday, it was the Morgan Stanley Australia Summit, where co-founder Cliff Obrecht wheeled out what sounded like an IPO pitch with just about the lot.

There was the founder story: a couple of Perth sweethearts who set out to make it easier to design school yearbooks and, after a struggle to attract venture capital funding, ended up with something much bigger than they could have imagined.

Read Chanticleer here.

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ASX falls; Bapcor extends rally; Woodside gains after broker upgrade

Joanne Tran

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The Australian sharemarket recorded losses in the late afternoon amid a broad sell-off with investors on edge ahead of tomorrow’s key US Federal Reserve interest rate decision.

The benchmark S&P/ASX 200 Index fell 0.6 per cent, or 44.9 points, to 7710.5 as of 2.30pm AEST, with nine out of the 11 sectors in the red.

The local bourse fell the most in six weeks on Tuesday, slumping 1.3 per cent as traders braced for the Fed to push back on immediate rate cuts at its policy meeting.

Investors are keenly awaiting tonight’s US inflation report for May scheduled for 10.30pm AEST which will be followed by the Fed’s policy decision at 4am on Thursday where the central bank is widely expected to alter its rate cut projections.

‘A turning point’

Even so, Tom Lee, head of equity strategy at Fundstrat Global, said he’s expecting a renewed rally in the sharemarket after the Fed meeting.

“When markets lack visibility, negative views and concerns prevail and that is why equities have been drifting lower since Friday. But we believe Wednesday [Thursday AEST] will mark a positive turning point for stocks.”

On the ASX, the materials sector was once again among the worst performers after a sharp drop in iron ore prices overnight amid continued concerns over demand in top consumer China.

Index heavyweight BHP fell 0.8 per cent, Rio Tinto lost 1.6 per cent and Fortescue Metal declined 1.4 per cent.

Interest rate sensitive tech stocks also recorded declines ahead of the Fed announcement with WiseTech down 2.5 per cent and Life360 falling 1.2 per cent.

Overnight in New York, banking stocks dragged the Dow Jones lower, while the Nasdaq and S&P 500 rose, bolstered by a 7.3 per cent surge in Apple to $US207.15 on optimism about its plans to boost its devices with AI capabilities.

Stocks in focus

Macquarie has upgraded Woodside to an “outperform” rating, with analysts arguing that the market is excessively pricing commodity, project and climate risks into its valuation. Shares in Woodside rallied 2.3 per cent.

Automotive parts retailer Bapcor was once again among the index’s top performers, up 2.6 per cent after surging 14 per cent on Tuesday when it received an unsolicited bid from US-based Bain Capital to buy its shares at $5.40 apiece.

And the board of Super Retail has appointed Fonterra’s global markets chief executive, Judith Swales, as chairwoman replacing Sally Pitkin. Super Retail which owns Supercheap Auto, Rebel, BCF and Macpac, flagged in 2022 that Pitkin would step down at the 2024 annual general meeting. The shares were down 0.9 per cent.

Weak dollar plays a part in $2.1b buyout of Adbri by Irish giant CRH

Simon Evans

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Irish giant CRH will take control of cement maker Adbri after shareholders gave the green light on Wednesday to a $2.1 billion takeover bid that will result in the company disappearing from the ASX after 62 years.

Almost 97 per cent of proxy votes were cast in favour of the CRH buyout of the 57 per cent of Adbri shares not controlled by Victoria’s Barro family, which holds 43 per cent of Adbri and has backed the takeover.

Adbri’s chairman, Raymond Barro, who has held the role for five years, did not attend the shareholder meeting. The Barro family could not vote their stake at the scheme meeting. Raymond Barro and sister Rhonda, who is also a director of Adbri, were named No. 82 on The Australian Financial Review’s Rich List, with an estimated wealth of $1.82 billion.

Samantha Hogg, deputy chairwoman of Adbri and the lead independent director, presided over the shareholder meeting and said CRH had a long history of making acquisitions around the world.

Read more here.

Need to own a bank stock? Citi says ignore CBA at your peril

Alex Gluyas

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Investors that need to have exposure to Australia’s banking sector should not be put off by Commonwealth Bank’s lofty price tag, according to Citi because it still offers superior returns to its peers despite all the headwinds.

While most brokers are advising clients to sell out of Australian banks entirely, the sector also makes up around a quarter of the ASX, along with a large chunk of key benchmark indices in the Asia-Pacific.

Adding to the dilemma faced by investors, bank shares have continued to grind higher this year, sending Commonwealth Bank to a fresh record of $125.97 last week despite a growing number of analysts naming the stock as their least preferred bank.

But Citi believes Australia’s biggest bank – among the most expensive globally – can continue to outperform. That is thanks to its giant retail banking arm, which it says has weathered margin and profit pressures better than expected and is now showing signs of recovering.

Read more here.

China’s mild inflation fails to quell concerns over weak demand

Bloomberg

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China’s consumer prices rose less than expected in May and factory prices dropped for the 20th month in a row, fuelling concerns over persistently weak demand.

The consumer price index rose 0.3 per cent from a year earlier, the National Bureau of Statistics said on Wednesday, hovering above zero for the fourth straight month and comparing to a median forecast of 0.4 per cent in a Bloomberg survey of economists. Factory-gate prices extended a deflation streak that started in late 2022.

The still-weak prices have fuelled calls for more government action to shore up demand.

“The deflationary pressure has not faded yet,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management, noting that consumer prices fell modestly in May from April. “A more comprehensive and proactive policy stance covering fiscal, monetary, and the property sector may be necessary to boost domestic demand more effectively.”

More pain tipped for iron ore as BHP, mining stocks sink

Alex Gluyas

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Iron ore prices are threatening to drop below $US100 a tonne as traders turn increasingly pessimistic about a revival in China’s property market despite ongoing attempts by Beijing to rescue the sector.

Iron ore traded in the spot market dropped 4 per cent to $US104 a tonne overnight, marking the lowest level since April 5. Futures in Singapore recovered slightly to $US104.95 a tonne on Wednesday.

The sell-off has dragged mining giant BHP down 6 per cent over the past three weeks, while Rio Tinto has fallen 11 per cent and Fortescue 15 per cent. All three stocks extended those losses on Wednesday, falling more than 1 per cent by midday.

The latest move comes despite China unveiling a set of stimulus measures in May to encourage home buyers. And while the rescue package initially supported iron ore prices, strategists believe the measures have ultimately fallen well short of what is required to boost steel demand.

Read more here.

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ASX extends losses; BHP, Rio down over 1pc

Joanne Tran

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The Australian sharemarket extended losses at lunchtime amid a broad sell-off with investors on edge ahead of tomorrow’s key US Federal Reserve interest rate decision.

The benchmark S&P/ASX 200 Index fell 0.7 per cent, or 51.8 points, to 7703.6 at noon, with 10 out of the 11 sectors in the red.

The local bourse fell the most in six weeks on Tuesday, slumping 1.3 per cent as traders braced for the Fed to push back on immediate rate cuts at its policy meeting.

Investors are keenly awaiting tonight’s US inflation report for May scheduled for 10.30pm AEST which will be followed by the Fed’s policy decision at 4am on Thursday where the central bank is widely expected to alter its rate cut projections.

‘A turning point’

Even so, Tom Lee, head of equity strategy at Fundstrat Global, said he’s expecting a renewed rally in the sharemarket after the Fed meeting.

“When markets lack visibility, negative views and concerns prevail and that is why equities have been drifting lower since Friday. But we believe Wednesday (Thursday AEST) will mark a positive turning point for stocks.”

On the ASX, the materials sector was once again among the worst performers after a sharp drop in iron ore prices overnight amid continued concerns over demand in top consumer China.

Index heavyweight BHP fell 1.1 per cent, Rio Tinto lost 1.7 per cent and Fortescue Metal declined 1.3 per cent.

Interest rate sensitive tech stocks also recorded declines ahead of the Fed announcement with WiseTech down 2.2 per cent and NextDC falling 1.5 per cent.

Overnight in New York, banking stocks dragged the Dow Jones lower, while the Nasdaq and S&P 500 rose, bolstered by a 7.3 per cent surge in Apple to $US207.15 on optimism about its plans to boost its devices with AI capabilities.

Stocks in focus

Macquarie has upgraded Woodside to an “outperform” rating, with analysts arguing that the market is excessively pricing commodity, project and climate risks into its valuation. Shares in Woodside rallied 2.3 per cent.

Automotive parts retailer Bapcor was once again among the index’s top performers, up 3.4 per cent after surging 14 per cent on Tuesday when it received an unsolicited bid from US-based Bain Capital to buy its shares at $5.40 apiece.

And the board of Super Retail has appointed Fonterra’s global markets chief executive, Judith Swales, as chairwoman replacing Sally Pitkin. Super Retail which owns Supercheap Auto, Rebel, BCF and Macpac, flagged in 2022 that Pitkin would step down at the 2024 annual general meeting. The shares were down 0.7 per cent.

Morgan Stanley’s Wagner says Australia is safe haven to China woes

Bloomberg

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Morgan Stanley’s Australia chief, Richard Wagner, said the country is benefiting from an increase in capital flows that cements its ability to cushion investment risk during a period of global turbulence.

“It’s very, very hard to lose money in Australia and therefore that safe haven has been an attraction of capital, particularly in the last 12 months as we’ve seen such extended volatility in China,” Wagner said in a Bloomberg TV interview on Wednesday. “Most of the global money that’s been pointed at Asia Pacific has been reweighted away from China. And the beneficiaries of that have been Australia, Japan, and India.”

Deal activity in Australia is improving month by month, Wagner said, with the bank expecting a pick up in activity as investors get more clarity on the trajectory of global interest rates and the US presidential election.

“The rabbit hasn’t jumped out of the hat quite yet, but every month gets better,” he said, speaking to Bloomberg on the sidelines of the Morgan Stanley Australia Summit in Sydney. That follows a “couple of tough years in investment banking,” he added.

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ASX 200 LIVE: Shares fall; Woodside rallies after broker upgrade; BHP down (2024)
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