The ASX 200 has closed 0.25% lower this afternoon, pushed down by consumer goods and utilities stocks.

And that’s where we’ll leave the business blog for today.

Thanks for joining us, and we’ll catch you all tomorrow.

Amid the ongoing saga about flight upgrades for federal politicians, including Prime Minister Anthony Albanese, Opposition Leader Peter Dutton has now admitted his office did ask Gina Rinehart’s office for a ride on her private jet to attend an event in Sydney.

ABC political reporter Jake Evans has the story.

After a couple of years in the doldrums, amid the hangover from HomeBuilder stimulus and the sudden shift from record low to 12-year high interest rates, there are very early signs that housing construction is picking up.

Australian Bureau of Statistics data out today from September shows a 4.4% increase in building approvals to 14,842 last month, which CBA economist Harry Ottley says is the most since May 2023.

He adds that approvals over the September quarter were they highest in almost two years.

Detached houses are driving the gains, up 2.2% in September and 16.7% over the past year, but a 4.7% monthly rise in apartment approvals still left them 12.2% lower over the past year.

“Multi-unit dwellings remain subdued at levels last seen in the early 2010’s,” the CBA economist notes.

“Developers remain cautious about projects given constraints in the sector and profitability/viability concerns.”

Ottley says that the weakness in apartments is weighing on housing supply in Sydney.

“All the mainland states apart from NSW are seeing solid upswings. NSW approve a higher proportion of multi-unit dwellings than other states and so is exposed to weakness in this category. Indeed, Qld is currently approving more homes than NSW in trend terms.

“Both townhouses and apartments are experiencing weaker outcomes than house approvals. Apartments though standout as especially weak. Current annual approval levels are around a third of the peak of the 2010s apartment boom.

“Multi-unit dwelling supply is critical to the rental market and providing more affordable housing options.”

Housing Industry Association economist Maurice Tapang says the price of land in Sydney is a major problem for developers.

“Detached house approvals in Melbourne are double that of approvals in Sydney, despite these two capital cities having comparatively similar population numbers and inflows.

“Detached house approvals in some areas of Regional NSW have also been improving as home buyers in the state search for more affordable opportunities outside the capital city.

“The cost of home building materials are growing at a more normal pace, while build times for houses are back to pre-pandemic levels. The price of shovel-ready land, however, remains prohibitively high especially in Sydney. “

He says that leaves a long way to go to reach the federal government’s housing target.

“The volume of apartment construction needs to double current approvals numbers in order to achieve the Australian Government’s target of 1.2 million homes over five years,” Tapang concludes.

Optus interim CEO Michael Venter issued a statement apologising to people affected by inappropriate sales tactics by the telco.

As reported earlier, the ACCC has taken legal action against Optus claiming it sold products to hundreds of vulnerable consumers.

Mr Venter said:

“We sincerely apologise to all customers affected by this misconduct and for the distress caused.

“Optus does not tolerate employee behaviour which takes advantage of customers. 

“We have taken disciplinary action – including terminations –  against staff whom we determined were responsible for this misconduct involving vulnerable customers.”

I just saw the sad news that former ABC colleague Matt Peacock has died.

For those not familiar with his work, he was most famous for his coverage of asbestos-related diseases and how Australian companies James Hardie and CSL were killing their workers (and others) by producing and selling asbestos, while covering up their knowledge of the adverse health effects.

Matt’s coverage was instrumental in the eventual bans on the production, importation and use of asbestos in Australia, and the compensation funds set up by the former producers of the product to compensate victims of asbestos-related disease.

You can read more about Matt’s life and work in the ABC’s coverage.

It’s the blue chip major stocks on the market that are mainly responsible for pulling the ASX lower today.

Both big supermarkets are down after disappointing (for shareholders, not customers) sales updates — Coles is off 1% to $17.52, while Woolworths is 2.1% lower to $30.16, backing up an even bigger slump yesterday.

Both of Australia’s biggest miners are down around 1%, although Fortescue is posting a modest gain of 0.2%.

Three of the four major banks are down by between 0.3 and 0.5%, with only NAB bucking the trend with a 0.5% rise to $38.65.

Telcos are not taking any comfort from their Singapore-listed rival Optus’s latest misery — it is being taken to court by the ACCC — Telstra is off 0.5% to $3.81.

Meanwhile, as detailed below, energy giant AGL is down 5.8% to $10.50 after investment bank Barrenjoey published new research with a sell rating on the stock.

Mineral Resources is the biggest highlight in a falling market, after striking a deal with Gina Rinehart to sell a large stake in some of its key projects (see David’s earlier post for details).

Overall, by 1:40pm AEDT, the ASX 200 index is off 0.4% to 8,148 points, with a slightly smaller fall for the broader All Ordinaries index.

The Australian dollar is relatively steady around 65.76 US cents in the middle of the Asian trading session.

There are no market announcements from AGL itself, but a detailed analyst note from investment bank Barrenjoey’s head of energy and utilities research, Dale Koenders, seems to be behind a 5.7% fall in AGL’s share price to $10.51 (by 1:20pm AEDT).

The note is dated yesterday and explains how and why Barrenjoey has slashed its earnings per share (EPS) forecasts for AGL by 8-13% for financial year 2026-27 and around 30% for financial year 2028 and beyond.

The analyst estimates that AGL is facing a roughly $300 million fall in topline profits from expiring gas and coal contracts, with only a third of this accounted for in most analyst forecasts.

He writes that AGL’s billion-dollar-plus of investments over the past year will offset some of the fall in earnings, but not all.

He adds that this is part of the $8-10 billion in investments AGL is making over the next decade just to keep earnings at last financial year’s levels.

That leads Barrenjoey to adjust its valuation of AGL to $10.30-$12.26 a share, with a price target of $11.20 (cut from $13.80 before) and an underweight (or sell) rating.

ACCC chair Gina Cass-Gottlieb has told ABC senior business correspondent Peter Ryan she is “personally shocked” by evidence that Optus allegedly exploited vulnerable Australians, selling them products they didn’t want, didn’t need and couldn’t afford.

Ryan has gone through the allegations with The World Today presenter Sally Sara and spoke with Ms Cass-Gottlieb shortly after the Australian Competition and Consumer Commission publicly revealed its case against the telco.

The salmon-related matters didn’t end up going to a vote at Woolworths AGM this morning.

This was because the initial request to amend the constitution didn’t get 75 per cent, or more, support.

More info here:

With a lot of questions about the salmon farming.

Thanks for staying along with me!

We had quite a lot of commentary from Indeed Asia-Pacific economist Callam Pickering on yesterday’s inflation data — here’s his take on the very much related retail sales data released by the ABS today.

Pickering notes that, in terms of how many things they sold, retailers had their best quarter in more than two years.

“In September, retail trade consolidated the large gains from August that were driven by warmer-than-usual weather. That brought forward some summer spending, in areas such as clothing & footwear, which led to weaker results in those areas during September,” he writes.

“The outlook for the retail sector is fairly mixed. Cost-of-living pressures continue to weigh on Australian households, with budgets still tight. Those cost-of-living pressures are being offset by strong population growth, which has supported retail spending over the past year. ‘Stage 3’ tax cuts will obviously support the sector and so will the range of federal and state government policies designed to provide temporary support to households.

“Perhaps the biggest boost to the retail sector though might come in the form of interest rate cuts, with the market pricing in several rate cuts next year.”

Pickering says the reduction in consumption per capita shows higher interest rates are working as intended to lower demand, but population growth continues to blunt their effect across the economy as a whole.

“Retail volumes rose 0.4% in the September quarter, marking the largest quarterly increase since the June quarter 2022, and that suggests that household consumption may be a little stronger in the September quarter than we’ve recently seen. Volumes are still 1.4% below their peak, with volumes per capita down 6.3%, after declining for nine consecutive quarters,” he notes.

“That means that the average household is still consuming fewer goods than they were a quarter ago, and far fewer goods from their peak, with population growth supporting overall retail activity. Household budgets remain tight and many households continue to tighten their belts, prioritising essentials over discretionary items.

“The ongoing weakness in retail volumes per capita indicates that monetary policy is having the intended impact on Australian household spending. But that’s been offset by strong population growth. Clearly the level of consumer spending is still sufficiently high to keep inflation above the RBA’s 2-3% inflation target, particularly after accounting for the impact of government subsidies.”

Here’s a piece I wrote yesterday about how our retail spending habits over the next few months might shape the RBA’s interest rate decisions.

Not that we’d call it hounding, but here is some recent analysis by the ABC about insurance inflation, which has been sticky.

The supermarket’s sourcing of salmon from waters around Tasmania has been a big political story in the southern state, due to beliefs fishing is threatening the Maugean skate.

This investor is saying that given only a slice of Woolworths homebrand salmon is sourced from this region, that it would make sense for it to shift away from salmon sourced from there.

“We call on you to make this small shift in procurement,” they said.

“Your consumers, your shoppers, are not aware when they go into the supermarket, when they buy that product, that it comes with a risk.”

The Woolies chair Scott Perkins has replied thanking the investor for their question, and said the science they are across is that the issue is not “black and white” and that the livelihood of people for this fishing industry is also important to consider before a review.

“We look forward to making our decision in a transparent way.”

“All our supply from Macquarie Harbour” is certified as independently environmentally responsible, they added. This was a point of contention with the investor.

More here:

It’s not just the big supermarkets which are struggling in the retail sector.

The Australian Bureau of Statistics (ABS) has just released retail sales data for the month of September.

Spending rose just 0.1%, after consumers splashed their cash in August, when sales rose 0.7%, although that followed a flat July.

The ABS says household goods (largely driven by hardware sales in WA) and eating out were the only two segments recording rising sales.

Department stores had a 0.5% fall in turnover last month, while clothing and food retailers saw spending decline 0.1%.

That was largely due to discounting, because the volume of goods sold actually rose by 0.5% last quarter.

The rise in the September quarter followed consecutive falls of 0.4 per cent in both the June and March quarters, noted the ABS.

“Retail sales volumes rose for only the second time in the past two years, regaining some of the lost ground in discretionary spending this year,” said Robert Ewing, who heads business statistics at the ABS.

However, population growth also contributed to the rise in the volume of goods sold — on a per capita basis retail volumes fell for the ninth straight quarter, down 0.1% over the past quarter and 1.9% lower compared to this time last year.

Retail price growth (0.6%) slowed this quarter, down from a 1% per cent rise in the June quarter, based on data from the latest Consumer Price Index, which was released by the ABS yesterday.

“The September quarter rise in volumes coincides with an easing of retail price growth this quarter,” Mr Ewing explained.

“Recent spending patterns continue to show that consumers remain price conscious and responsive to discounting.”

That’s something we’re hearing from pretty much every retailer we speak to.

The person, who says they are a 64-year-old team member at Woolworths, is asking the company’s chair about their pay and conditions.

They are asking why executives get the lure of bonuses for good performance, while those who keep the supermarket running struggle to find a “living wage”.

“It is becoming unaffordable for me to work at Woolworths,” they said.

“It does not seem we are equitably better together.”

My colleagues Rachel, Emilia and David have been bringing you updates from the Woolworths AGM and Coles first quarter sales report this morning.

Yesterday, Woolworths reported modestly falling average prices across its Australian food business over the first quarter (three months to September) compared with the same period a year ago.

This is what economists call deflation, when prices are declining. It might be what consumers want to see, but it’s generally a big problem if it becomes widespread across the economy.

Today, Coles has reported a rise in prices of 1.5% overall, 1% excluding tobacco and just 0.1% if fresh food and tobacco are both excluded.

That’s well below the RBA’s target for annual price rises of between 2-3%, and is what economists call disinflation — that’s where prices are still going up but the rate of increase is slowing.

Investors are not happy with either update.

Coles shares are down 1.3% to $17.47 in morning trade, while Woolworths is getting hammered again — off a further 2.3% to $30.10 after its shares tumbled around 6% yesterday.

Jumping in to elaborate on the argument over the price of the Aussie favourite Tim Tams. A Senate committee earlier this month asked both Coles and Woolies specifically about Tim Tams and why the biscuit was cheaper in the UK than Australia.

The supermarket giants consistently pushed the line that they were not the manufacturer of the biscuit (true) and could not control the deals Arnott’s had with overseas grocers (true).

They suggested the inquiry pull Arnott’s in for questioning.

The prime minister has had little cause to celebrate of late.

Outrage over personal property dealings and days of negative headlines about his calls to former Qantas CEO Alan Joyce for flight upgrades (and the prime minister’s denial that he made those calls) have darkened Labor’s political prospects.

Privately, Labor MPs freely admit they think their only hope of avoiding minority government or an outright loss to Peter Dutton at the next election is if the Reserve Bank of Australia cuts interest rates.

Wednesday’s third-quarter inflation data offered the first tangible prospect that such a scenario may be possible.

It’s one in which Anthony Albanese triggers a campaign in early March for an election just before Easter.

For more, here’s an interesting piece by the ABC’s chief digital political correspondent Jacob Greber: