ASX NEWS LIVE | ASX Opens to New Record High as Major Miners Jump

Australian shares reached a new record high today, riding a global wave of optimism fueled by the US Fed’s 50bp cut and an anticipated soft landing for America.

The ASX 200 gained 0.22% to close at 8,209.5, its highest-ever closing level.

It hit an intraday peak of 8246.2, setting a record for the sixth consecutive session. Overall the index rose 1.3% for the week.

8 of the ASX’s 11 sectors finished in positive territory, led by consumer discretionary and tech stocks.

In tech, family app Life360 surged 5.2% to $18.09, while payment outlet Zip rose 2.7% to $2.67.

Major banks saw gains, with NAB reaching a 17-year high and closing 0.4% up at $39.67. Westpac climbed 0.6% to $33.57, hitting a 7-year intraday high. Macquarie Group ended 0.2% lower at $231.17 despite reaching an all-time high of $233.91 earlier in the session.

Mining stocks experienced a mixed session. Index heavyweight BHP rose 0.4% to $40.34, while Rio Tinto fell 0.5% to $113.02, and Fortescue dipped 0.1% to $17.63.

Department store Myer Holdings dropped 0.6% to 87 cents, having plunged more than 10% after announcing a dividend cut and profit decline for the 2024 financial year.

In contrast, fellow retailer Harvey Norman gained 1.6% to $4.96 as investors brushed off news of a second class action alleging ‘misleading and deceptive’ conduct regarding extended warranty sales.

Regis Healthcare reached an intraday high of $6.12, its highest since 2015, on news of its plans to acquire two aged care homes for $35.5 million. It closed up 1.7% at $5.93.

Namoi Cotton rose 2.1% to 73¢ after its board unanimously recommended shareholders approve Olam Agri’s ‘fair and reasonable’ takeover bid at 75 cents per share.

Car equipment provider Bapcor saw a 2.2% increase to $5.13 following the announcement of its plan to sell its diesel fuel injection business, MTQ Engine Systems.

$4 billion market cap Lithium producer Arcadium Lithium [ASX:LTM] has signalled today that it is moving away from Australia.

The lithium giant is relatively new to the block, having merged the New York-listed Livent and Australia’s Allkem in January.

However, with low lithium prices, Arcadium’s CEO Paul Graves has now said that Australia is no longer their focus.

Today, Mr Graves said he’s considering selling Mt Cattlin, its only asset in WA, as lithium prices fell to US$720 a tonne.

“Do we see Australia as a core hub? If capital was unconstrained, having a big footprint in Canada, a big footprint in Argentina and then a big footprint in Australia, would be fantastic. But we don’t have a big footprint in Australia right now,” he said.

 

“We want to reinvest for investors and for shareholders, and we just don’t have the right asset in Australia to justify that level of investment,” Mr Graves added. “Our primary objective is not to sell Mt Cattlin, but if somebody can offer it a further life that we can’t, we’re certainly open to listen to people.”

A recent report by Citi analysts said that all Australian mines wouldn’t be profitable at lithium prices below US$1000 a tonne except the Greenbushes operation that is part owned by IGO, Tianqi, and US giant Albermale.

So who would buy this mine? Some speculate Rio Tinto could be a buyer with the mining giant setting its sights on more lithium projects in an attempt to ‘future proof’ its operations.

Arcadium’s stock is down by over -60% in the past 12 months, currently trading at $3.68 per share.

In an unexpected move, China kept its benchmark lending rates steady during today’s monthly fixing, contrary to widespread market predictions.

This decision comes in the wake of a significant ‘double’ interest rate cut by the US Fed.

The People’s Bank of China (PBOC) maintained the one-year loan prime rate (LPR) at 3.35% and the five-year LPR at 3.85%.

These rates are crucial as they influence most new and outstanding loans in China, with the five-year rate specifically impacting mortgage pricing.

Market sentiment had strongly favoured a rate reduction. A Reuters survey conducted earlier this week showed that 69% of economists had anticipated cuts.

The expectation was fueled by recent economic data from August, including credit lending and activity indicators, which were all below expectations.

Despite the static rates, analysts believe that further economic stimulus measures are likely.

The US Federal Reserve’s recent easing provides China with an opportunity to loosen its monetary policy without significantly impacting the yuan’s value.

Today, we saw the yuan value shoot higher after the decision.

The Reserve Bank of Australia (RBA) Board is set to convene next week on Monday thoughTuesday to deliberate on interest rates, with an announcement scheduled for Tuesday at 2:30 pm AEST.

According to a Reuters poll, the broad expectation is for the cash rate target to remain unchanged at 4.35%.

The poll suggests that the RBA will maintain its current policy stance not just for the upcoming meeting but throughout the remainder of the year.

This stance is driven by the reality of persistent inflationary pressures, despite a recent slowdown in inflation to 3.5% in July, coupled with a robust job market.

But still, the RBA appears to be taking a more cautious approach compared to other central banks.

The Reserve Bank of New Zealand, Bank of England, Bank of Canada, and the U.S. Federal Reserve have already initiated rate cuts, with the Fed recently implementing a 50 basis point reduction this week.

The economists surveyed overwhelmingly predict rate stability through the end of the year, with 40 out of 44 expecting no changes. However, interest rate futures markets paint a slightly different picture, pricing in a marginally higher than 50% probability of a rate cut by year-end.

Robert Carnell, regional head of research for Asia-Pacific at ING, says that there is ‘no possibility’ of the RBA easing rates at this meeting.

He suggests that the risk, if any, is tilted towards further tightening, given that the RBA’s previous rate hikes may not have been sufficient to slow the economy and control inflation effectively.

Among major Australian banks, ANZ, NAB, and Westpac forecast rates to remain steady this year, while CBA stands out in predicting one cut before year-end. These views remained unchanged even after the Federal Reserve’s recent rate decision.

Looking ahead, economists agree that the RBA will commence its easing cycle in 2025. They anticipate 25 basis point cuts in the first, second, and third quarters, followed by a pause. This trajectory would bring the cash rate to 3.60% by the last quarter of 2025.

What does this mean for us?

First, it’s likely that would mean a stronger Australian Dollar. We’re already seeing that somewhat, with the AUD up +1.38% in a week.

This higher Aussie dollar could hurt our major miners and exporters as our goods become more expensive for foreign buyers.

But it could also help stamp out any imported inflation we have through purchasing foreign goods or services.

The Bank of Japan (BoJ) has decided to keep its short-term interest rate unchanged at 0.25% following a two-day policy meeting.

This decision was hardly a surprise for many market watchers who have noted the cautious approach of the BoJ.

In its post-meeting statement, the BoJ expressed a more positive outlook on consumer spending, noting that ‘private consumption has been on a moderate increasing trend despite the impact of price rises and other factors.’

This was a notable upgrade from their previous assessment, which merely described consumption as ‘resilient.’

The central bank’s optimistic stance suggests growing confidence in Japan’s economic recovery.

This outlook may pave the way for further interest rate increases in the coming months, continuing the BoJ’s gradual shift away from its long-standing accommodative monetary policy.

Still the BoJ has been carefully adjusting its approach to monetary policy this year.

In March, it ended its negative interest rate policy, and in July, it raised short-term rates to 0.25%.

These moves are a large departure from its decade-long stimulus program that was implemented to boost inflation in Japan.

Australian shares reached new heights today, mirroring the upward trajectory of US markets following the Federal Reserve’s significant rate cut.

This move fueled hopes for a smooth economic transition in the world’s largest economy.

The ASX 200 climbed 0.3% to 8,215.8, marking its fifth consecutive record-breaking session.

10 of the 11 sectors on the ASX posted gains, with materials and technology leading the charge, and only health care falling slightly.

Among the market movers, mining giant BHP saw a +0.55% increase, while Rio Tinto was up +0.13%.

In the tech sector, Life360 stood out with a +5.41% rise. The banking sector also participated in the rally, with ANZ leading its peers with a +0.68% gain.

However, not all companies shared in the day’s success. Myer saw a sharp decline of nearly 8% after reporting disappointing profit and sales figures for FY24.

Across the Pacific, Wall Street celebrated its own milestones. The S&P 500 surpassed 5,700 for the first time, closing +1.7% higher.

The Dow Jones broke through the 42,000 barrier before finishing up +1.3%. The tech-heavy Nasdaq outperformed with a +2.5% jump.

In the wider financial landscape, Bitcoin saw an uptick in value. Commodity markets also reacted positively, with gold approaching an all-time high.

Oil prices rallied more than 1%, buoyed by expectations that the US rate reduction would boost economic activity and, in turn, energy demand.

Here’s the latest from the new Fat Tail Daily video series.

Publisher James ‘Woody’ Woodburn is away, so this week, Fat Tail Daily editor Nick Hubble will join us to discuss the key trends and offer unique insights into market movements.

Yesterday, Nick spoke with Diggers and Drillers Editor James Cooper.

Gold deposits are getting harder to mine, more complex to develop and far more difficult to find.

The latest data from S&P Global shows that gold discoveries have fallen more than 70% over the past 20 years. And that’s despite massive pools of capital already flowing into gold exploration. Gold is getting rarer!

But how do you capitalise on this knowledge as an investor? Former geologist James Cooper believes you should focus on heavily discounted junior gold stocks.

Specifically, those holding large undeveloped deposits. To learn more, click below.

Myer’s [ASX:MYR] stock is today’s worst performer on the benchmark, plunging 11.4% to 77.5 cents by late morning .

The drop today continues a long-term decline, with shares down around 80% since 2010.

The big news seeing shareholders sell today was its weaker sales reports in its FY24 results.

The company’s full-year sales fell -2.9% to $3.26 billion, while annual net profit dropped -26% to $52.6 million amid ‘challenging conditions‘ and store closures.

The company tried to calm shareholders today by saying a comprehensive strategic review is underway. This review is said to be examining the possibility of buying many of Premier Investment’s major apparel brands, such as Just Jeans, Jay Jays, Dotti, and others.

On a positive note, Myer attracted 706,000 new members to its loyalty program, mostly under 35, potentially securing future customers as their incomes grow.

Myer’s new Executive Chair, Olivia Wirth, said on the results today:

‘Today’s result reflects the challenging macroeconomic environment for Australian retailers.’

 

‘Despite the tougher trading conditions, work undertaken by the Myer team in recent years has helped stabilise the business and established a foundation for future growth. With a highly engaged customer base, a leading loyalty program, positive comparable department store sales growth and high levels of trust in the Myer brand, there are significant opportunities for growth.’

With the Fed’s first major double cut behind us and markets hitting new record highs, are the major stocks set to outperform?

If we look back to the early 2000s, small-caps tended to outperform the larger cap companies after cuts.

Lower interest rates, after all, make money cheaper, enticing investors to park their savings into riskier ventures, like small-cap stocks.

Here’s an interesting post from Kevin Gordon looking at the S&P 500.

So far this month, the equal-weighted S&P 500 is outperforming the cap-weighted S&P 500 by 0.59% … if it holds, it will be the third consecutive month of outperformance, which hasn't happened since the end of 2022 pic.twitter.com/BhqtzrVRkT

— Kevin Gordon (@KevRGordon) September 19, 2024

Retail giant Harvey Norman [ASX:HVN] was served a second class action for alleged ‘misleading and deceptive‘ conduct in selling extended warranties days after Echo Law launched the first such legal case against the company.

Maurice Blackburn is the second firm going after Harvey Norman in this case, with the company posting on its website today.

Harvey Norman’s shares have remained unmoved by the suits, climbing +0.72% in trading today.

Almond grower Select Harvests [ASX:SHV] has halted its shares ahead of a $80 million capital raise.

The raise will include a $30 million institutional placement and $50 million shareholder raise, offering a price of $3.80 per share.

That’s a 15.6% discount to the last traded price of $4.50 yesterday.

For full details of the raise and strategy of Select Harvests, you can see their latest investor presentation here.

Select’s shares have returned 12.5% in the past 12 months and are currently $4.50 per share.

Good morning. Charlie here,

The ASX 200 followed global markets higher, opening up +0.42% to 8,225.9, a new record high, as markets surged following yesterday’s Federal Reserve double cut.

The Australian Dollar also surged, gaining 0.64% to US 68.09 cents as the market anticipates the RBA to be one of the latest Central Banks in this rate-cutting cycle.

Almost all major commodities rose overnight, except crude oil, which eased slightly. Today, expect the major miners to follow these higher commodity prices as markets catch the wave of market enthusiasm.

Both the S&P 500 and Dow Jones pushed to new highs on Wall St, closing at new records.

On the ASX, we’ll be watching Inghams as it trades ex-dividend and Harvey Norman as it’s served its second lawsuit in as many days.