ASX News LIVE | XJO to Fall; Oil Prices Spike Again as Middle East Risk Escalates; Qantas Loses More Leadership

The Australian stock market experienced a downturn as investors swiftly sought refuge in bonds and gold amid growing concerns about escalating tensions in the Middle East.

The ASX 200 index dropped by 0.35%, or 24.5 points, closing at 7026.5. 9 out of the 11 industry sectors saw declines, with technology stocks leading the losses. The broader All Ordinaries index also fell by 0.4 %.

In response to the market conditions, the federal government introduced a new 31-year bond, marking the longest-dated bond currently in circulation. The proposed issue size for this bond is approximately $8 billion. The order book received bids totalling more than $23.8 billion at indicative pricing ranging from 37 to 39 basis points over futures. The book will remain open overnight, with pricing expected on Tuesday.

The transaction is being jointly led by Barrenjoey, Commonwealth Bank, JPMorgan, UBS, and Westpac, with maturity set for June 2054.

The information technology sector experienced the most significant decline, falling by 2.8%. This decline was led by major players such as WiseTech, which dropped by 2.3% to $62 per share, Xero, which lost 3.4%, closing at $114, and NEXTDC, which declined by 2.3%, closing at $12.28.

On the other hand, gains in energy stocks partially offset losses in other sectors. The rise in oil prices, reaching $91 per barrel, supported major oil producers, who saw a 5.7% increase over the weekend due to the ongoing conflict between Israel and Hamas. Woodside Energy experienced a 0.9% rally, closing at $36.06, while Karoon jumped by 3.1%, reaching $2.69.

NZ construction giant Fletcher Building [ASX:FBU] has seen its shares drop by 8.6% today as it comes out of a trading halt after it struggles to shift the blame that has been laid on its feat.

The company has shifted the blame back to WA’s largest home builder, BGC, after the WA company alleged that issues over plumbing pipe leaks in 11% of new houses built in the state between 2017 and last year had been because of a specific Fletcher product.

Fletcher Building chief executive Ross Taylor said a detailed study by Fletcher and external experts had found it was poor installation of the Iplex Pro-fit thin pipes in new houses and generally lower governance standards for the plumbing industry in WA compared with other states were the core issues.

‘This is a Perth issue, not a national issue,’ Mr Taylor said at a briefing. He said 17,500 houses were built by different builders in WA over the five years using the Pro-fit pipes, and BGC constructed 65 per cent of them.

He said 15,000 homes built on the east coast of Australia where Pro-fit pipes were installed had a leakage rate of 0.19%. The failure rate in Perth is around 10.9%.

So far, his words have not swayed investors who pressed the sell button today.

The ASX 200 is down -0.15% at 7,040.2 with the largest losses seen in the Info Tech Sector which is down -2.26%, while Energy (+0.67%) and Materials (+0.61%) are today’s main gainers on the higher oil prices.

In company movements:

Fletcher building is down nearly 10% as it comes out of trading halt after WA plumbing issues came to light which showed 11% of new houses built in the state that used their products have seen issues.

Qantas dropped 2% as Loyalty CEO Olivia Wirth resigned her position.

SkyCity Entertainment fell 2.7% after announcing that chief executive Michael Ahearne will step down early next year.

Magellan Global Fund rose 4.76% after announcing it will convert the Magellan Global Fund’s closed class units to open class units in aid of narrowing its discount to the net asset value.

US battery chemicals giant Albemarle has abandoned its $6.6 billion takeover bid for Liontown Resources [ASX:LTR], citing ‘growing complexities’.

As reported by us last week, those complexities were filled mainly by one large woman in the Australian landscape.

Albermale began its takeover attempt last October with an initial offer of $4.3 billion. After the takeover news, prices have risen more than 80%.

As share prices steadily rose, Australia’s richest person and iron ore magnate, Gina Rinehart, made a $1.3 billion raid on Liontown, progressively hoovering up a 19.9% stake in Liontown.

It appears Mrs Rinehart wants all roads of Liontown to progress through her and had made it clear that she would block any takeover in the shareholder vote unless she was part of the conversation.

It seems like that was a bridge too far for Albermale.

Shares in Liontown are currently halted as the company attempts to pivot from the news.

A raft of speeches from Central Bank officials throughout this week will determine much of the market’s sentiment beyond the tensions in the Middle East.

Speeches from the Bank of England Deputy Governor this evening, as well as multiple Fed officials and European Central Bank meetings and speeches, will shape the expectations of further interest rate positions for the remainder of the year.

Currently, the CME FedWatch has a probability of 7.2% for a further interest rate hike in the US in the next FOMC meeting in 16 days.

In Australia, the RBA meeting minutes will be released tomorrow morning to provide insight into how our officials are thinking about the impacts of rising oil prices on embedded inflation and the need for further tightening.

The ASX RBA Rate Indicator has the chance of a raise in the next meeting at only 5%, but it should be interesting to see the change in the market expectations post-minutes.

Good morning all,

The ASX 200 opened slightly down this morning at -0.09%, 7,044.6, as fears of the war against Hamas escalating into a broader conflict dampened global markets.

Oil prices spiked heavily over the weekend, up nearly 8%, with Brent Crude back above US$90, at US$91.05, while WTI crude sits at US$87.86 as fears of Iran responding to the war in Gaza have centred global concern around oil shipping from the Gulf States.

The Straight of Hormuz, immediately south of Iran, has become the focus for much of these concerns as over 20% of global oil and a significant portion of gas travel through the thin channel from the Gulf States, which could be at risk if a wider conflict breaks out.

Source: Freeworldmaps

The U.S. has announced it is sending a second aircraft carrier group into the region but has said it has no intentions to engage in combat activities on behalf of Israel.

‘There is no intention or plan to put American troops on the ground in Israel,’ John Kirby, strategic communications coordinator for the National Security Council, said Thursday.

The Dow +0.12%, Nasdaq -1.23%, S&P 500 -0.50%.

Gold is down -0.35% overnight, ending its strong weekend gains of around 5.40%.

Iron Ore is up nearly 1% as hopes of China stepping in to aid its ailing property sector heat up.

The Aussie dollar is up +0.27% after falling over the weekend, reaching US63.07 cents.

Bitcoin is up 0.83% to US$27,089 as it passes the US$26,800 resistance but fails to climb higher.

Looking ahead to this week, we have:

-CPI data out from NZ on Tuesday

-RBA meeting minutes on Tuesday

-Retail sales in the US Tuesday night AEST.

– GDP data for China Wednesday

-CPI data from the UK and Europe on Wednesday

-Employment data for Australia on Wednesday

-Fed Chair Jerome Powell speaks on Friday