Prices current around 4:15pm AEDT.
Updates on the major ASX indices:
Righto pals, it’s been fun but my faux-light saving clock tells me it’s time to shut up shop!
Whether you’ve been here this afternoon, all day or all week, thanks for following along!
We’ll be back to do it all again on Monday morning, and I’ve got a feeling it’s going to be a good week.
Until then, you can catch a wrap of the week that was with Close of Business with Alicia Barry on ABC News tonight at 9:30pm AEDT, or anytime on ABC iview.
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I’ve been waiting to do this… 😂 Don’t forget, Kate…It’s 4:10 in Sydney right now 😉
– Natty
Wow, I am feeling called. out. with this one, Natty!
I might be in Queensland but you best believe that I’m gaslighting myself into believing I’m also an hour ahead. It comes with its perks though, like less traffic on the road and a non-existent line to get coffee.
Just don’t ask me how early I’m waking up to make it happen, I’m not ready to talk about it.
Hi there, jumping in at the end of trading day to update you on the conversation I’ve just had with Rio Tinto’s CEO of iron ore, Simon Trott.
He acknowledged he’s seen the slowing in the Chinese economy and expects demand for iron ore to ease as a result, even in the face of increased China stimulus.
“We are at peak steel in China, the initial phases of that (industrialisation) are very steel intensive, China’s economy is maturing and with that we’re seeing steel demand growth rates slow.”
On the stimulus front, Trott says he doubts China will roll out any further big bazooka style support.
“I don’t think that were going to see some of the stimulus that we’ve seen in years gone past particularly around property and infrastructure.”
For context, Deutsche Bank confirms iron ore is Australia’s largest export accounting for 56% of total global seaborne exports in 2023, 82% of which is imported by China.
As for the Trott interview, you can catch it on Close of Business tonight at 9:30pm AEDT on the ABC NEWS Channel or any time on iView.
Well, what a difference a day makes.
After reaching a new record high yesterday, the ASX 200 has closed 0.9% lower to 8,283 points.
It’s the biggest drop Australian shares have seen in six weeks, but it’s not all bad news — overall, the ASX 200 gained 0.8% over the past five days.
Unsurprisingly, all 11 sectors ended lower as a result, with utilities the worst performer (-3%), followed by real estate (-1.9%) and consumer discretionary (-1.8%), while technology and miners shed 1.6% each.
As for the best performing stocks:
While the worst performers included:
What the heck happened today in the markets just logged on and WOW what a bit of a mess
– Chrisso
Better late than never, Chrisso! There’s still a good 15 minutes or so left of trade, so you’re just in time as far as I’m concerned
But yeah, things are looking … bleak. I mean, just look at this chart. It’s putting a real dampener on my Friday vibe.
The reason for the dive comes down to China, and fresh economic data that hasn’t done a single thing to alleviate concerns about its slowing economy.
Then again, it could be my fault. After all, I jumped on the blog at 11:30 and it’s been downhill ever since…
Hey Kate 🖐️
Loved your land banking story, and the story on that frustrating outage 😠– Natty
Hello and happy Friday, Natty — hope you’re having a cruisy end to the week!
Thanks for your kind words about the land banking and outage stories, it’s been a busy few days up here in Brisvegas.
In case you missed it (and if you’ll excuse some shameless self-promotion), I took a day trip to Murwilumbah in the Northern Rivers to take a closer look at allegations of land banking that have been made at the major supermarkets, where they hold onto sites for future stores and keep competitors out.
It’s a practice that the ACCC is taking a closer look at after its interim report into its supermarket inquiry identified 165 blocks of land were being hoarded between Woolworths, Coles and Aldi. (Both Woolworths and Coles deny that they are engaging in the practice.)
Around two-thirds of those sites (or 110 in total) were held by Woolworths, and one of those was a sizeable block of land in Murwillumbah that the supermarket giant has been trying to build on for a decade and is still sitting empty.
But setting up shop isn’t simple, because planning and zoning laws come into play, which is up to local councils and state governments.
And when you factor in those laws change between states and territories, on top of supply chain issues and labour shortages in construction … it makes one heck of a complicated picture.
If you want to learn more, I’ve linked the full story here or you can watch it below — and if you’ve got any questions about it, send ’em my way!
Why did Alcoa suddenly crash in price? I thought it had a great Q3 report?
– Stefan
Hi Stefan,
You’re on the money (pardon the pun — but it is a business blog after all!) about Alcoa. In fact, it’s one of the worst performers on the ASX today.
It’s been riding the highs of the alumina price surge and that’s been reflected in its third quarter results thanks to increasing its aluminium production, but its stock price was down 4% on Wall Street and is down around 8% on the ASX today.
So what’s going on? It’s got to do with the fact that despite the strong Q3 report, its sales came in lower than what analysts were expecting — and a miss there means its stock price takes a hit as well.
And speaking of Alcoa, the US aluminium giant was the subject of a story from our friends at 7.30 earlier in the week.
The company has been accused of failing to rehabilitate the world’s only jarrah forests in Western Australia where it mines bauxite, as part of its agreement with the state government.
You can watch (or read) the full story from Cason Ho below:
The courts have ruled that both Harvey Norman and Latitude have misled consumers in an advertising campaign promoting various payment methods.
The case relates to those TV and radio advertisements you might have heard where the voiceover spruiks interest free payments and no need for a deposit when buying something rather large.
Turns out the devil was in the detail.
“The Federal Court today ruled Latitude Finance Australia and Harvey Norman Holdings Ltd engaged in misleading conduct and made false or misleading representations in relation to a widespread advertising campaign for a 60-month interest free and no deposit payment method,” ASIC, which brought the case, said in a statement.
“ASIC was concerned the advertisements masked the fact consumers were required to take out a credit card, such as the Latitude GO Mastercard, to purchase goods.
“The advertisements were published between January 2020 and August 2021.”
The court found the advertisements’ statement of the payment method was presented as a complete statement, when it was far from complete.
Justice Yates summed up his ruling this way:
“… consumers who wished to make such a purchase had to enter into a fundamentally different financial arrangement than the one promoted — namely, a continuing credit contract with Latitude that was linked to a credit card (the GO Mastercard), whether or not they wanted a credit card (let alone a GO Mastercard), which required them to pay an establishment fee and ongoing monthly account service fees in respect of that linked account.”
The bottom line couldn’t be simpler: the court found both companies needed to give consumers a better picture of what the goods they were going to purchase were actually going to cost them.
ASIC will seek relief including pecuniary penalties against Latitude and Harvey Norman.
China’s economy is still losing steam, with the latest quarterly figures showing its GDP rose by 4.6% over the past 12 months to September.
That’s down from the previous quarter’s GDP figure of 4.7%, and is the slowest pace the country’s economy has seen since March last year.
Economists polled by Reuters had expected China’s GDP to come in at 4.5% for the year in the third-quarter.
But despite the figures coming in better than analysts expected, it’s still keeping the pressure on authorities to keep up its policy stimulus to revive its economy and keep it on track to meet the government’s target of 5% economic growth this year.
On a quarter-by-quarter basis, GDP expanded 0.9% in July-September, slightly below expectations for a 1.0% rise and compared with a revised 0.5% gain in the previous quarter.
Corporate travel manager Flight Centre is far and away the worst performer on the ASX 200 today, having shed 17.4% as of 1pm AEDT.
That slide has seen its shares hit their lowest level in more than 10 months to $17.85 after reporting a marginal increase in its first-quarter underlying profit.
Flight Centre however didn’t include the profit figures, but did state that its underlying profit and profit margin are both marginally higher than they were a year ago.
And while its corporate business has been hit by lower airfare prices and a quieter corporate travel period, it is seeing some positive signs as it enters a busy trading season.
Still, it’s the lowest its stock price has been since November 2023.
As we head into the afternoon session, the ASX 200 is still trading lower, down 0.7% to 8,299 points at 12:35pm AEDT.
It’s a sea of red as far as the sectors are concerned — they’re all in the negative except for education (+2.6%), and consumer staples is flat.
The worst performers are utilities (-2%), real estate (-1.6%) and miners (-1.3%) followed by technology (-1%) and energy (-0.8%).
As for the top performers, there are some individual gains:
We’ll take a closer look at the worst performers in a moment.
Millions of Australians have been enduring a cost-of-living crisis now for years.
A major federal government policy to ease the cost of living hit workers’ bank accounts earlier this year, but the last private sector data shows that’s exactly where it remains.
“So basically what’s happening is the [stage 3] tax cuts look like they’re not boosting [economic] activity much,” NAB’s chief economist Alan Oster said.
He says there’s a cohort of Australians still really struggling financially and it’s getting worse.
It follows yesterday’s surprisingly strong labour force data showing the unemployment rate holding steady at 4.1%, but Oster says “a lot of that is driven out of the public sector and the private sector I think is still doing it pretty tough“.
Indeed, the NAB’s latest Consumer Sentiment Survey for the third quarter shows “around 1 in 3 Australians drew down their existing savings more rapidly in Q3 to combat living costs, while almost 1 in 5 sold possessions”.
Oster told the ABC many Australians continue to hock possessions in order to pay for life’s basic essentials.
“That’s been happening for six months at least,” he said.
There is a silver lining though — he thinks the cost-of-living crisis has bottomed, or should improve ever-so-gradually from here.
Well hello! I’ve sent Emilia on her way which means it’s just you, me and the financial markets for the rest of this fine Friday.
Let me know what’s happening in your part of the world and what your weekend plans are (shout out to any Canberrans heading to vote tomorrow!) as we get through the rest of the day.
And as always, if you’ve got any questions, ask away and I’ll do my best to answer them.
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This just in from our parliament bureau:
Treasurer Jim Chalmers has given his strongest indication yet that the federal government is not planning to bring in changes to negative gearing, as the teal independents urge a rethink of Labor’s “unrealistic” plan to build 1.2 million homes.
Mr Chalmers said on Friday that people “shouldn’t anticipate this is part of our housing policy, it’s not”, effectively assuring property investors that there will be no changes to the controversial tax arrangements.
Read more here:
The travel website and company has put out notes on the ASX from a conference presentation.
It notes that its margins are down compared to before the pandemic, which saw travel companies frozen.
It says revenue margins has dropped from 12.9% in 2019 down to 11.4% today, and more of its business is in dealing with corporate travel, which is lower margin.
Yet it says its leisure business is more profitable.
Its FY25 guidance says its experiencing some inconsistency “month to month”. UBS has just dubbed the update “subdued”.
Investors clearly aren’t impressed. Its stock is down 15%.
The ASX 200 is down 0.4% this morning.
Bottom stocks include Flight Centre (-11%) and Alcoa Corp (9.2%). We’ll bring you news on why soon!
Here’s some recent analysis from Ian Verrender.
China and Australia are polar opposites of the same problem.
Where Australian households are amongst the world’s most indebted — courtesy of hefty mortgages on some of the world’s most expensive real estate — Chinese households are stacked to the rafters with savings.
Household savings are running at close to 110 per cent of GDP after growing strongly since the pandemic, and are way above debt levels which have plateaued since 2020, as the graph below illustrates.
Why is that a problem? Because Chinese citizens don’t spend. And, as Wen indicated, that increases China’s reliance on other countries to consume its output.
At the heart of the problem is China’s lack of social security, particularly in old age. Throughout their working lives, Chinese citizens sock away as much as possible to ensure they can survive their retirement years.
Read more here:
This piece by our business colleague, Rachel Clayton.
Ms Kaur arrived in Australia with her family in 2015 on a temporary work visa as a cook, a job on the short-term skilled occupation list, by a company called Bracken Gem at the Richmond Hill Hotel.
But things quickly unravelled.
In 2018, Australian Border Force sanctioned Bracken Gem for breaching sponsorship obligations. The ABC understands the sanctions were related to Ms Kaur and another worker being underpaid and the business failing to provide records.
The sanctions meant the business was barred for three years from sponsoring migrant workers. And Ms Kaur’s visa was automatically cancelled.
Now she’s about to be deported.
Good morning, Emilia with you here!
The Australian wine company Treasury Wine Estates put out forecasts this week, where is said sales of Penfolds in Asia and America were strong, and its push to “luxury” wine in the US was promising.
Analysts at Jarden have now analysed the results and say they’re “positive” about the company’s future.
They say TWE is becoming a higher growth, less volatile, more brand focused business via ongoing exit from commercial, valued brands.
Just this week, the company settled a long running class action against it for $65 million. It was brought after allegations by shareholders that it hadn’t disclosed information.
Its also released a new line of wine in the US and Australia that’s targeting younger women, and has collaborated with the production house of Hollywood star Reece Witherspoon on the creative direction.
