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ASX LIVE: ASX on the skids; Strong April trade surplus; Mineral and Marquee partnership; BHP rating cut; ASX new CEO; Wesfarmers lithium focus; Centuria buys sites; Pro Medicus wins Allina. – The Australian Financial Review

ASX LIVE: ASX on the skids; Strong April trade surplus; Mineral and Marquee partnership; BHP rating cut; ASX new CEO; Wesfarmers lithium focus; Centuria buys sites; Pro Medicus wins Allina. – The Australian Financial Review


ASX closes 0.8pc lower, bruised by tech slide
Health stocks left licking their wounds
Treasury Corp Victoria raises $2.4b in 2028 and 2030 notes
Bond yields rise on expectations of aggressive monetary tightening
April international trade proved resilient
Broker rating changes
Cecile Lefort
Australian shares dropped 0.8 per cent, or 58.1 points, to 7175.9, with tech stocks dragging the index lower.
Nine out of the index’s 11 sectors fell, with energy and utilities the only two categories to make a gain. Tech slumped 2.5 per cent, and healthcare shed 1.8 per cent.
Megaport was the biggest laggard with a 6 per cent tumble. Afterpay owner Block Inc dived 5 per cent.
The major banks slipped between 0.7 per cent and 1.3 per cent, along with mining giants Rio Tinto off 1.7 per cent and Fortescue Metals 0.7 per cent lower. BHP Group trimmed losses to end the session 0.1 per cent lower. Conglomerate Wesfarmers fell 0.6 per cent.
But energy stocks had a good day, led by the index’s top performer Woodside Energy, up 5.2 per cent. Santos rose 1.6 per cent and Beach Energy gained 1.7 per cent.
Bubs Australia jumped 6 per cent after announcing imminent shipments of infant formula to the US.
Jacob Greber
Investors say Australia’s nascent blue carbon industry faces three big challenges – lowering the cost of projects, expanding the range of methods for absorbing greenhouse gasses, and dealing with vexing land ownership questions.
Adrian Enright, the chief executive of TEM Corporate, which develops carbon projects and announced on Thursday it was developing a blue carbon offset project in Manus Province, Papua New Guinea, said a “wave of corporate demand” was being driven by a need for high-quality and high-integrity offsets.
“Gone are the days where organisations are utilising offsets to tick a box and meet a reporting commitment,” Mr Enright said.
“Organisations are using carbon offsets to be able to make the business case for other emissions reductions, whether it be through solar or energy efficiency or technology change.”
TEM said the Manus Province had the potential to stop more than 9.8 million tonnes of carbon from being released into the atmosphere by protecting and restoring the region’s degraded mangrove ecosystems. Read more
Miranda Ward
Property listings portal REA Group says its acquisition days are not over yet, as it looks to own the full gamut of offerings associated with property.
It has signalled plans to expand the business to deliver double-digit revenue and earnings growth.
REA Group chief executive Owen Wilson said the group wanted to own all elements of the property experience, nominating insurance as an example of what the group is yet to offer.
“We know that anyone seriously looking to buy a property is thinking about financing…we know that soon as you buy a property, you absolutely have to insure the banks insist on it, so there are elements that we can still go into,” he said when asked about the group’s plans in the mergers and acquisition space.
Mr Wilson was speaking to The Australian Financial Review following REA Group’s first investor strategy day, designed to highlight how the group has evolved from a property listings portal to a property, finance and data business. Read more
Cecile Lefort
Healthcare stocks took a beating on Thursday with Polynovo, Telix Pharmaceuticals and Nanosonics losing the most on the index.
Polynovo skidded 5.9 per cent to $1.125 and Telix slumped 5.6 per cent to $4.06, within striking distance of a one-year low of $3.55.
Nanosonics shed 5.4 per cent to $3.5, edging closer to a three-year low of $3.33 touched last month.
Michael Bennet
The incoming chief executive of Pilbara Minerals has shrugged off a handful of bearish broker notes on the hot sector, labelling it a “bold” move to call the peak for battery metals given continuing strong demand for electric vehicles and the time it takes to bring on new supply.
On the weekend, Goldman Sachs’ UK-based analysts warned the battery metals bull market was “over for now”, and Credit Suisse’s Australian team told clients lithium prices may peak in the “next few months” as markets price in a balancing of supply and demand in coming years.
It followed reports that Argentina planned to set a reference price for lithium carbonate exports and that Chinese EV manufacturer BYD was in talks to buy six African lithium mines that could supply it with raw materials for a decade.
The collision of negative headlines sparked a share price rout among Australian listed lithium companies, including Pilbara, IGO, Liontown Resources, Allkem and Mineral Resources on Wednesday. Pilbara suffered one of the biggest declines of 18 per cent.
By early afternoon on Thursday, share prices were flat or had recovered some of the losses. Read more
Cecile Lefort
Treasury Corporation of Victoria (TCV), the financing arm of the state of Victoria, has raised $2.4 billion in six- and eight-year floating rate notes.
The issue consisted of $2.15 billion of notes maturing on March 15, 2028 paying a spread of 6 basis points over three-month BBSW, and $2.25 billion of notes maturing on March 15, 2030 at 12 basis points over the same benchmark.
TCV is rated triple A by S&P and Aa2 by Moody’s. The four major banks jointly led the transaction.
Chanticleer
When you stop and think about it, the similarities between the crypto world and the lithium sector are fascinating.
The massive financial gains investors in these asset classes have enjoyed in recent years is the most obvious similarity.
And both sectors also have a certain opaqueness about them; in crypto, it can be very difficult to see who is on the other side of a trade, and in the lithium sector, pricing has been historically woolly.
But as lithium share prices plunged on Wednesday around the world following bearish forecasts by Goldman Sachs, another similarity between crypto and lithium was made clear – the cult-like ability of bulls to dismiss different views.
Social media lit up with lithium fans accusing Goldman Sachs of everything from gross incompetence to market manipulation. Lithium investors urged each other to hold their stocks – although unlike crypto bulls, they at least spelt the word correctly. Read more
Cecile Lefort
Australian bond yields pulled higher on Thursday, in tandem with their US counterparts, on expectations of aggressive central banks’ tightening to contain red-hot inflation.
On Wednesday, the Bank of Canada lifted its policy rate by a lofty 0.5 of a percentage point to 1.5 per cent and opened the door to a more aggressive pace of tightening, saying it was prepared to act “more forcefully” if needed to tame inflation.
Australian three-year yield climbed to a three-week peak before steadying at 3.15 per cent in the afternoon session, up 3 basis points. The 10-year bond yield rose 2 basis points to 3.49 per cent.
Interbank bond futures are fully priced for a quarter of a percentage point increase at the Reserve Bank of Australia’s June 7 policy meeting and then again in July. They also give a chance of a larger increment at both meetings. The RBA raised its cash rate for the first time in more than a decade last month with a quarter-point increase to 0.35 per cent to tame 20-year high inflation.
Analysts are divided between a 25 basis point or 40 basis point increase next week. CBA says a “business as usual” 25-basis point rate increase is more likely than a larger one, while AMP, ANZ and RBC favour a 0.4 percentage point increase.
The Australian dollar drifted 0.1 per cent lower to US71.65¢ on Thursday, away from an overnight peak of US72.31¢.
Cecile Lefort
JPMorgan forecasts further upside for LNG shipments in the coming months given contract prices are linked to Brent crude with a lag. Data released on Thursday by the Australian Bureau of Statistics showed LNG exports rose a remarkable 5 per cent in April.
Australia’s trade surplus in April widened to $10.5 billion in April, above analysts’ forecasts of $9.3 billion and following a surplus of $9.7 billion in March.
Economists said the upside surprise came from the services sector, particularly travel exports which jumped 27 per cent month on month. “It wasn’t all one-way traffic with travel imports also posting a large gain,” said economist Tom Kennedy at JPMorgan. He noted Australia’s travel balance returned to deficit following the reopening of the national border late last year.
ANZ noted that rural exports were also higher, largely driven by an increase in cereal and grain exports. “This suggests Australian suppliers may be filling gaps in the market left by Russia and Ukraine,” said Madeline Dunk, an economist at ANZ.
She said imports fell due to a decline in car purchases and manufacturing imports.
Bloomberg
Broker rating changes from Bloomberg:
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