ASX retreats ahead of CPI; Mesoblast soars 45pc
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ASX retreats ahead of CPI data; Mesoblast soars
Australian equities followed Wall Street lower on Tuesday, retracing some of the previous session’s gains ahead of a batch of key inflation data this week.
The S&P/ASX 200 ended the day down 31.7 points, or 0.4 per cent, at 7780.2. The All Ordinaries fell by a similar margin. The losses followed comparable overnight dips in New York where the Dow, Nasdaq and S&P 500 all ended Monday’s session about 0.3 per cent lower.
“Overall, the market moves at the start of this week appeared to be a pushback against last week’s dovishness,” said the ING head of Americas research, Padhraic Garvey, referring to rate cut expectations.
“We had initially suspected that some of last week’s dovish momentum could be retained, at least early this week.”
He said Friday’s US personal consumption expenditures data – the preferred inflation measure of the US Federal Reserve – was probably adding to the bearish attitude among traders.
All eyes on inflation
Meanwhile, local traders will be eyeing Australia’s monthly inflation data to help gauge the timing of rate cuts from the Reserve Bank of Australia.
On the benchmark, risk-sensitive tech stocks were the worst performing, down 1.5 per cent. The real estate and communications sectors also dragged the benchmark lower.
The iron ore price also weighed on the index, with futures pricing in Singapore slipping 2.7 per cent to $US105.65 per tonne. Materials stocks ended the session 0.7 per cent lower, led by Fortescue which fell 1.2 per cent to $25.20.
The losses were partly offset by gains in the energy sector, which rose 0.5 per cent. Brent crude held near $US87 a barrel after gaining 1.6 per cent overnight as officials from OPEC+ said they expected planned output cuts to go ahead despite rising geopolitical tensions in Russia and the Middle East.
Woodside rose 1 per cent to $30.37. The oil and gas giant said it had finalised the sale of a 10 per cent stake in its WA Scarborough gas project to Japan LNG.
In other corporate news, Premier Investments rose 4.4 per cent to $32 after revealing better-than-expected half-year sales and news that it was proceeding with a demerger of the children’s stationery chain Smiggle and exploring other demerger options.
Kerry Stokes’ Seven Group called an independent review into its proposed takeover of Boral “fundamentally misleading”. The report, authored by Grant Samuel, recommended that Boral shareholders reject its takeover offer brought forward by Seven this year. Seven shares dipped 4.1 per cent to $39.62, and Boral dropped 2 per cent to $6.03.
29Metals shed 25.9 per cent to 40¢ after halting operations at its Queensland copper mine site due to recent rainfall and wild weather. The company said the decision followed several tropical storms hitting its Capricorn Copper operation, which had delayed the restart of mining.
Shares in Australian biopharmaceutical company Mesoblast leapt 45.5 per cent to 48¢ after the US Food and Drug Administration deemed recent trial data sufficient to allow the company to re-submit a previously rejected licence application.
Canadian gold play Firefly in $52m cash call
Gold and copper explorer Firefly Metals was in front of investors on Tuesday morning with a $52 million equity raising, Street Talk understands.
A term sheet, seen by Street Talk, shows the raising was structured as a three-part flow-through placement with shares priced at a 10 per cent discount to the last traded price of 68¢ and a 4.8 per cent discount to the 10-day volume-weighted average price.
The $247 million market cap company will use the proceeds to develop its Green Bay copper-gold project, for exploration and its new port access agreement, announced to the market on Tuesday.
Canaccord Genuity is the global co-ordinator on the raise. It’s working with Bank of Montreal as joint lead managers and book runners. Brokers Argonaut, Euroz Hartleys, and Shaw and Partners are acting as co-managers.
Solomon Lew’s $3b bet on global growth
At the ripe young age of 79, retail billionaire Solomon Lew is making one of his biggest bets on growth, announcing a plan to split his retail empire into three separately listed companies.
Following a strategic review of Lew’s Premier Investments vehicle, he announced on Tuesday that he would spin off kids stationery giant Smiggle and pyjama chain Peter Alexander in calendar 2025, with the two businesses to be primed for growth via international expansion.
Lew’s legacy brands, including Just Jeans and Portmans, will remain inside the Premier Investments vehicle, which many analysts have suggested will eventually consider a merger with department store giant Myer, in which Premier holds a 29 per cent stake.
29Metals halts operations as weather worsens
29Metals has halted operations at it Queensland copper operation due to recent rainfall and wild weather.
The company said the decision followed several tropical storms hitting its Capricorn Copper operation has delayed the restart of mining.
CEO Peter Albert said the decision to suspend operations had not been taken lightly.
“Unfortunately, the combination of elevated water levels at the beginning of the wet season (as a result of the event a year ago) and the sustained rainfall since late January this year has more than offset our successes reducing water levels through mechanical evaporation and authorised releases of treated water within prescribed limits,” he added.
The company added that the during the stoppage it expected a significant reduction in headcount and activity at site as it ramps down mining and milling activity over the next six weeks.
Shares are 26 per cent lower at 40¢.
Mesoblast soars 47pc on as FDA process takes next step
Shares in Australian biopharmaceutical company Mesoblast jumped as much as 45 per cent after the US Food and Drug Administration allowed the company to re-submit a licence application.
The FDA said the data from a phase three trial of the company’s Ryoncil product was sufficient to re-submit the Biologics Licence Application. Mesoblast has submitted for the licence twice before.
“We thank the agency for their collaborative approach. The responses and guidance from FDA are clear and provide us with a high level of confidence to refile,” said Mesoblast CEO Silviu Itescu.
Shares had been halted ahead of the announcement and have soared 47 per cent to 48.5¢ after hitting the market at around 1pm.
ASX on track to end lower; Woodside, Santos pop
Australian shares are tipping lower as trading enters its final hours, with gains in the energy sector playing tug-of-war with declining tech stocks.
The S&P/ASX 200 is 21 points lower at 7790, paring some of the strong gains made in the previous session. The loss follows similar dips on Wall St, where the Down Jones, Nasdaq and S&P 500 all ended Monday’s session around 0.3 per cent lower.
Tech stocks are the worst-performing, down 1.8 per cent, with real estate and communications sectors also dragging the benchmark.
The losses are being offset by gains in the energy sector. Oil and gas giants Woodside and Santos are both up more than 1.5 per cent, after the price of oil held its biggest weekly gain overnight. Global benchmark Brent traded near $US87 a barrel after gaining 1.6 per cent on Monday, while West Texas Intermediate was above $US82.
The iron ore price is also weighing on the index, with futures pricing in Singapore slipping 2.6 per cent to around $US106 per tonne. Materials stocks are down 0.8 per cent.
In his latest equity markets note, Citigroup’s Chris Montagu said the S&P/ASX 200 positioning “could lead to near-term profit taking, especially given the market’s leverage to China through resources”.
“There has been no let-up in bullish momentum for the S&P/ASX 200. Positioning is one-sided and levels are currently the most extended seen in the past three years,” he said.
Stocks on the move
Premier Investments is up 1.7 per cent to $31.19. Chairman Solomon Lew said the spin-off of star brands is well under way, with a demerger of the children’s stationery chain Smiggle due by the end of January 2025, while he explores a demerger of sleepwear label Peter Alexander at the same time.
Kerry Stokes’ Seven Group has hit back at the independent review that recommended Boral shareholders reject its takeover offer brought forward earlier this year. Shares are 1.7 per cent lower at $40.61.
Meanwhile, Atlas Arteria is the worst-performing, down 4.3 per cent to $5.11, as shares begin trading ex-dividend this morning.
Beach Energy is up 4 per cent to $1.80 after being raised to a buy rating at Morgans.
Sandfire Resources has slipped 2.8 per cent to $8.62 after being cut to a sell rating by Citi.
Seven starts throwing haymakers to get Boral bid moving
Grumbling about independent expert’s reports is par for the course in takeovers.
Seven Group CEO Ryan Stokes is also chairman of Boral. David Rowe
The fact that Seven Group wants to do it so publicly at cement maker Boral tells you everything you need to know about the bidder.
Seven Group, run by Ryan Stokes, is not going away without a fight.
It made three big threats when it came for Boral, and we should expect to see it start using them.
The obvious place to start is Boral’s board. Seven has two seats on Boral’s six-man board – chairman Ryan Stokes, and non-executive director Richard Richards, who doubles as Seven Group’s CFO.
Clarity Pharmaceuticals taps investors for $121 million
Clarity Pharmaceutical has halted its shares ahead of a $121 million equity raise.
The offer from the clinical stage pharmaceutical company will comprise a $101 million institutional component and a further $20 million entitlement offer, all of which is underwritten by Bell Potter.
“The capital raising provides Clarity with a strengthened balance sheet at a time when there has been significant M&A activity and strong strategic interest in radiopharmaceutical assets,” the company said.
Woodside sells 10pc of gas project to LNG Japan
Woodside has sold a 10 per cent stake in its controversial Scarborough gas project in Western Australia to Japan LNG.
Meg O’Neill. Dominic Lorrimer
Woodside CEO Meg O’Neill welcomed completion of the sale.
“LNG Japan’s commitment to the Scarborough Joint Venture is a demonstration of the value our customers place on gas as a long-term source of energy as they navigate the energy transition.”
“Completion of the sale to LNG Japan is a significant milestone as we progress toward first LNG cargo from Scarborough targeted in 2026,” she added.
Gold holds near record as infaltion data nears
Gold held Monday’s gain as investors remained cautious ahead of key US inflation data, which may provide traders with a firmer view on when the Federal Reserve will start cutting interest rates.
The core personal consumption expenditures index, to drop on Good Friday, is expected to show inflation probably remained uncomfortably high in February. That could hinder plans by US policymakers to implement three interest rate cuts this year. Lower borrowing costs typically benefit the precious metal, which doesn’t yield interest.
Swaps markets trimmed wagers for a rate reduction in June to 65 per cent from 69 per cent late last week, after Fed Bank of Atlanta President Raphael Bostic reiterated his expectation for just one cut this year. Still, gold remains near an all-time high amid building momentum surrounding the central bank’s long-awaited pivot to monetary easing.
Meanwhile, bullion saw some support from a slightly weaker US dollar, which snapped a two-day rally after the People’s Bank of China on Monday set a stronger-than-expected reference rate for the yuan. Spot gold was steady at $US2172.97 an ounce on Tuesday, after gaining 0.5 per cent on Monday.
The Bloomberg Dollar Spot Index was flat. Silver and platinum were little changed, while palladium edged up
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