ASX News LIVE | ASX to Fall; BHP Down After Third Bid Rejected; Commodities Fall

The ASX 200 closed down -0.46% to 7,811.8 as falling commodity prices dragged down the major miners and the ASX in tow.

The materials sector closed down by -2.15% as major gold miners and explorers fell along with the price of precious metals.

Gold saw its biggest one-day drop since April, falling by -1.7% to US$2,365 an ounce.

Mega-cap miners were all down today, with other bad news mixing with the poor commodity prices.

BHP fell by -3.03% as Anglo American rejected their third offer from BHP, giving the miner an extra week to come back with an improved offer.

Fortescue Metals fell by -1.43% to trade at $26.91 per share as the price of Iron ore futures fell -1.4% on the Singapore metals exchange.

Rio Tino fell by -2.23 % as commodity prices and news of a new lawsuit from PNG residents was filed against Rio for its long-shuttered Bougainville mine.

Meanwhile, today’s top performer on the ASX 200 was Xero, which closed up +8.62% after a strong return to profits for the kiwi accounting software company.

This helped push technology to be the standout performing sector today, up by +2.25%. The wider technology sector also helped move the needle as the market anticipates a strong session from the Nasdaq tomorrow on the back of strong results from AI chip powerhouse Nvidia.

In two big share halts on the market today, we could get some very good or very bad news.

Neuren Pharmaceuticals [ASX:NEU] has gone into a trading halt as the company anticipates to release information around top-line results from its Phase 2 trial in Pitt Hopkins.

The company said the halt will remain in place until Monday, 27 May, or until an announcement is made; whichever is earlier.

Neuren’s drug targets patients with neurodevelopment disorders and is hoped that it will improve connections within the brain to facilitate hand-eye coordination or visual communication.

Meanwhile, on the other side of town, Australian Vintage [ASX:AVG] has also entered a trading halt pending a far more mysterious and potentially ominous trading update.

The pause comes just two weeks after CEO Craig Garvin was ousted by the board after a reported, ‘lack of judgement‘.

In the background, AVG has also been in talks with Accolade Wines over a potential merger and back-door listing.

Here, investors might have to cross their fingers and hope that the trading update concerns the latter rather than the former.

A class action lawsuit involving 3,000 residents of Papua New Guinea has been filed against Rio Tinto [ASX:RIO], the global mining giant.

The litigation centres around the company’s formerly operated copper mine, the Bougainville mine, which ceased operations in 1989 due to militant activity in the region.

The plaintiffs allege that the mining practices employed at the Bougainville site caused significant environmental damage and social harm to the local communities residing in the area.

Rio Tinto had previously divested its majority stake in the mine’s operator, Bougainville Copper, transferring ownership to the Papua New Guinean government and the local Bougainville community in 2016.

Bougainville Copper, a company listed on the Australian Securities Exchange (ASX), has stated its intention to ‘vigorously defend its position‘ in response to the class action lawsuit.

Rio’s share price is down by -2.05% in trading so far today, at $133.38 per share.

Xero [ASX:XRO] is having a stellar day on the market, up by nearly 10% today to currently trade at $135.76 per share.

Xero’s path to this moment has been years in the making. In late 2022, it undertook a restructuring and management change in hopes of returning to profitability.

For FY24, Xero has shown success in those changes, posting a NZ$175 million profit. That’s well up from its (NZ$113 million) loss in 2023.

Early signs of this success were seen before today, with Xero’s shares up by 25% in the past 12 months.

But today’s full-year results cemented the extent of the change from last year, sending its stock racing.

Source: Xero

The other way many people judge the health of SaaS companies is known as the ‘Rule of 40’.

This loose indicator says that a SaaS business should have revenue growth (in percentage terms) and free cash flow margins should combine to be 40% or over for a healthy SaaS company.

Xero proudly announced a 41% combined metric, 9.1pp growth year-over-year.

CEO Sukhinder Singh Cassidy was especially proud hitting this milestone, saying today:

‘This result shows we’re doing what we said weʼd do. Weʼve delivered a strong and profitable FY24 result and Rule of 40 outcome, demonstrating our commitment to balancing growth and profitability. We have a clear and focused strategy to win on purpose, and Xero is positioned well as we move into FY25.’

The ASX 200 is down by -0.65%, trading at 7,797.5 around noon as Mining sells off along with falling commodity prices today.

The materials sector is down by -2.23% today, with big losses seen in the market cap giants.

BHP has fallen by -3% as its third bid for Anglo American was rejected, although the mining rival did give BHP a week extension for another offer.

Fortescue fell by -1.50% to $26.89 per share as iron ore futures fell -1.48% overnight on the Singapore exchange.

As we predicted this morning, losses are concentrated heavily around gold miners in trading today, with heavy losses seen by mid-caps Sandfire Resources down by -6.38%, and Emerald Resources down by -5.87%.

On the other end of the market, technology stocks are up today after the positive post-close reporting by Nvidia that was released this morning.

In anticipation of a positive day on the Nadaq tomorrow, the technology sector is up by +2.21%.

So far, the stand-out trading performance is Xero, which is up 8.76% to trade at $135 per share after the company reported a 22% increase in revenues to NZ$1.7 billion for FY24.

Weebit Nano also had a strong morning of trading, up by +6.31%.

The top performer on the wider benchmark is PYC Therapeutics, up by nearly +12% without any announcements.

The Australian Communications and Media Authority (ACMA) has launched legal proceedings against Optus over its major data breach in September 2022.

The massive data breach saw around 10 million customers’ personal information exposed, including names, dates of birth, phone numbers, and email addresses.

In the filing today the ACMA alledged that Optus, ‘failed to protect the confidentiality of its customers’ personal information from unauthorised interference or unauthorised access‘.

Optus has yet to comment on the suit.

The Judo Bank Flash Australia Composite Purchasing Managers Index (PMI) remains unchanged in May at 49.6.

This suggests the manufacturing sector conditions continue to deteriorate for the fourth straight month as ongoing challenges in the manufacturing sector weigh on sentiments.

Despite recent positive trends of falling inflation growth, inflation is still higher than the target band.

It’s main flow through for manufacturers is in rising input prices, especially for intermediate materials which have pushed up average costs for manufacturers.

Despite this, Judo Bank’s chief economic adviser, Warren Hogan, said the data indicated improvement, showing rising business activity and increased output across the Australian economy.

‘At face value, the strength in the Australian PMI activity indexes in 2024 points to an economy growing at around the long-term trend rate, if not a touch higher. But we know that consumer spending remains soft and will be a drag on growth over the first half of 2024,’ he said.

Good morning. Charlie here,

The ASX 200 is down by -1% to 7,769.0 in the first hour of trading today as the market sees a sell-down as the FOMC meeting minutes revealed the level of concern around the slow progress in tackling inflation.

This ‘higher-for-longer’ lean has seen the AUD/USD fall -0.77% in trading to US 66.17 cents.

The more bullish story of Nvidia’s latest earnings came after the bell, sending the stock over US$1000 in after-hours trading as the chips giant again shattered earnings forecasts.

Nvidia had an EPS of US$6.12. Well above the already loft estimates of US$5.60, which totalled US$24.59 billion.

This is likely to spur the Nasdaq and other markets for a stronger return tomorrow, but for now, markets are retreating.

Meanwhile, commodities finally saw mean reversions (corrections back to the normal trading range) after a strong week-and-a-half run, which saw Gold, Silver, Uranium, and Copper all reach near or above decade highs.

Today on the ASX expect corrections from larger miners, especially in gold, while technology is likely the bright spark for today, anticipating a strong move on the Nasdaq next session.

Wall Street: S&P 500 -0.27%, Dow -0.51%, Nasdaq -0.18%.

Overseas: FTSE -0.55%, STOXX -0.43%, Nikkei +0.59%, SSE flat.

The Aussie dollar fell -0.77% to US 66.17 cents.

US 10-year bond yields +1bps to 4.43%.

Australian 10-year bond +2bps to 4.26%.

Gold fell -1.90% to US$2,375.68, while Silver fell -4.73% to US$30.51.

Bitcoin fell -1.04% to US$69,424, while Ethereum fell -0.93% to US$3,747.

Oil Brent fell -0.20% to US$81.74, while WTI Crude fell -0.48% to US$77.20.

Iron ore fell -1.32% to US$120.80 a tonne.