ASX 200 dips as miners offset health gains; Santos down after Aramco says bid report 'inaccurate'; US markets closed for Independence Day holiday

Saudi Aramco dismisses 'inaccurate' Santos takeover report. Samsung flags 15-fold profit jump. Bitcoin down. NIB reassures on cover amid public St Vincent's brawl.

Quieter trading session likely to end the week. Picture: Nikki Short

Welcome to the Trading Day blog for Friday, July 5.  The ASX 200 index closed flat to 7822.30 points .

The Aussie dollar is trading near US67.30c at 5.00pm AEST.

Updates

4:57 pm July 5, 2024

ASX 200 ends flat before US jobs data

David Rogers

Australia's share market ends flat in quiet trading after Independence Day in the US with non-farm payrolls data due later Friday.

The S&P/ASX 200 index closes down 0.1 per cent at 7822.3 after hitting an intraday low of 7807.7. It sustains Thursday's break of a resistance line from the May peak that calls for a retest of the record high at 7910 in coming days.

Six of 11 sectors rise with health care, utilities, tech, discretionary and staples up.

CSL, Origin, WiseTech, Aristocrat and Woolworths rise 0.6-1.5 per cent.

But the heavyweight financials and materials sectors fall with the big banks down 0.6-2/2 per cent and the big iron ore miners down 0.9-1.1 per cent.

After the close Bloomberg reports that UBS upgraded Vicinity Centers, Mirvac, Leendlease, Deterra and IGO, while downgrading Scentre, Goodman, Centria Capital, BWP Trust, Arena REIT and Regis Resources.

4:39 pm July 5, 2024

Woodside pledges gas supply amid shortfall threat

Perry Williams

Woodside Energy pledges to deliver 250 petajoules of gas from Victoria's Bass Strait between now and 2033 to head off a supply shortfall that could land by 2027.

The competition regulator brought forward its prediction of gas shortfalls on the east coast market from 2028 to 2027, calling for urgent development of new sources of supply and suggested the use of LNG import terminals as a stopgap measure.

Woodside said it had been taking steps to support the east coast gas market following warnings about supply from AEMO and now the ACCC.

"We continue to work with Esso, the operator of the Gippsland Basin Joint Venture, to maximise gas production and offer all available volumes to market," a Woodside spokeswoman said.

"We also have a supply commitment with Esso under the Gas Code of Conduct for circa 260 PJ of gas to be made available between now and 2033.

"This volume of gas is from two infill well projects that would provide incremental production, subject to final investment decisions being taken.

"Woodside remains willing to work with government, industry and the community to explore other policy options that could be introduced to support increased domestic gas supply and put structural, long-term downward pressure on prices."

2:11 pm July 5, 2024

Clinuvel soars on UV drug results

Valerina Changarathil

Shares in Clinuvel Pharma are up 15 per cent to $17.48 at 2pm AEST on Friday after positive results from a study involving its afamelanotide drug.

The final set of results from the study conducted at the Salford Royal Hospital, Manchester, showed afamelanotide assists in patients' DNA repair response following ultraviolet radiation.

For the overall XP-DNA Repair Program, which Clinuvel started in 2020 evaluating afamelanotide in patients with xeroderma pigmentosum (XP), the results indicate that critical genes expressed after UV-damage can be positively affected with the drug.

For the general population, and specifically individuals with a fair skin type who easily sun burn, the results indicate that afamelanotide can reduce oxidative damage and inflammatory reactions after sun exposure and skin damage.

1:44 pm July 5, 2024

PayPal Australia's 'unfair' term in small biz contracts

Valerina Changarathil

PayPal Australia used an 'unfair' term in its standard form contracts with small businesses, a Federal Court has found.

The court also ordered the company pay ASIC's litigation costs in the case, which commenced in September 2023 and covered small businesses who opened a PayPal Business Account between September 21, 2021 and November 7, 2023. At the end of June 2023, there were over 600,000 small businesses with PayPal Business Accounts.

The unfair term was declared void from the start of the contracts and PayPal is now restrained from applying, relying on, or enforcing, the term in its contracts with small businesses.

PayPal agreed that the term was unfair and consented to the declarations, having voluntarily removed the term from its contracts on November 8, 2023. ASIC noted the group cooperated with and voluntarily assisted the regulator during its investigation and also cooperated in resolving the court proceedings.

1:32 pm July 5, 2024 Highlight

Samsung flags 15-fold profit jump

South Korean giant Samsung Electronics expects second-quarter operating profits to rise more than 15-fold on-year as chip prices bounce back and demand for generative AI continues to grow.

South Korea’s KOSPI was the best performer among Asian bourses on Friday, rising nearly 1 per cent in the afternoon, after a 1.5 per cent lift in Samsung Electronics Co's stock price – the nation's largest stock.

The flagship subsidiary of Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy, said in a regulatory filing that its April-June operating profits were expected to rise to 10.4 trillion won ($US7.5bn), up from 670 billion won a year earlier. The expectation exceeded the average estimate by 25.8 per cent, according to South Korea’s Yonhap news agency, which referenced its financial data firm. Sales, meanwhile, are expected to rise 23.3 percent to 74 trillion won, Samsung said.

Semiconductors are the lifeblood of the global economy, used in everything from kitchen appliances and mobile phones to cars and weapons. And demand for the advanced chips that power AI systems has skyrocketed thanks to the success of ChatGPT and other generative AI products. Semiconductors are South Korea’s leading export and hit $US11.7bn in March, their highest level in almost two years, accounting for a fifth of South Korea’s total exports, according to figures released by the trade ministry.

The US in April announced grants of up to $US6.4bn to Samsung to produce cutting-edge chips in Texas. That same month, industry tracker International Data Corporation (IDC) said Samsung regained its position as the top smartphone seller, wresting back the lead from Apple.

Samsung is set to unveil its latest flagship foldable smartphones, equipped with AI features, along with a range of accessories including a new health-monitoring “smart ring”, on July 10 in Paris.

– AFP

1:23 pm July 5, 2024

Bitcoin dives to four-month low

David Rogers

Bitcoin dives to a more than four-month low and cracks major chart supports.

XBT/USD is down about 5 per cent since 0700am AEST after falling to $US55,344.25, its lowest point since late February.

Major chart support from the 200-day moving average at $US58,466 and the May low at $US56,500 have been tentatively broken.

A daily close below these points would target $US40,000 on a technical basis.

"The retreat from Monday's $US63,794 high appears to be related to creditor selling from the failed Mt Gox exchange," says IG market analyst Tony Sycamore.

"Nonetheless, providing Bitcoin holds above a band of support between $US57,500 and $US55,000 – which includes the 200-day moving average, currently at $US58,466, the May $US56,500 low and trend channel support – we expect the uptrend to resume, leading to a retest/break of the March $US73,794 high."

12:24 pm July 5, 2024 Highlight

Best wait rather than time market: VanEck

Valerina Changarathil

Equity investors must "wait rather than trying to time the market" with the next six months a significant inflection point for the global economy, warns VanEck Asia Pacific CEO Arian Neiron.

"With the majority of the Western world going through elections and changed governments, central banks hoping none of the eggshells beneath their feet crack, ongoing geopolitics and impacted supply chains, there is a lot waiting to unfurl this year," he says in VanEck's latest outlook commentary.

"Earnings season will be a confession for businesses on profit margins and, importantly, how interest rates and inflation have impacted businesses." If the domestic economy comes under pressure, as the cost-of-living crisis worsens, investors who are overexposed to Australian banks and cyclicals are going to feel the pressure, he says. "While Q1 GDP remained above zero by the smallest margin possible, it all but assured a negative print in Q2."

On the local bourse, over-exposure to companies deriving their earnings from households is best avoided, he says, with the focus staying firmly on earnings resiliency, strong balance sheets and positive free cash flow.

12:16 pm July 5, 2024

ASX 200 recovers from dip before US jobs data

David Rogers

Australian shares recover from an intraday dip in quiet trading before US non-farm payrolls data. The S&P/ASX 200 index flat at 7830.1 after dipping to 7807.7.

It's sustaining Thursday's break above resistance from a Symmetrical Triangle pattern that can retest the record high at 7910. An Ascending Triangle pattern may form if 7910 caps again, with potential for a dip to 7800 before further gains.

Sectors are more balanced between winners and losers after the rebound.

Property, financials and materials are the main drags but falls there are small.

Goodman falls 0.2 per cent, NAB falls 0.8 per cent and BHP slips 0.5 per cent.

Health care, consumer discretionary and staples are strongest.

Cochlear jumps 1 per cent, Aristocrat adds 1 per cent and Woolworths gains 0.4 per cent.

11:59 am July 5, 2024

Headline inflation fall will matter: CBA

David Rogers

With government subsidies set to shave about 0.66 percentage points off headline CPI in 3Q, CBA takes a somewhat non-consensus view that headline inflation is just as important for the policy outlook as underlying inflation in 2024-25.

"It is true that headline inflation is ‘artificially’ lowered by the electricity rebates, but we do not expect a $75 rebate per quarter to stimulate demand more broadly in the economy," says CBA head of Australian economics, Gareth Aird.

He also argues that headline inflation outcomes play a very important role in influencing the future path of inflation via expectations, indexation and wage setting.

But in the very near‑term financial market participants are focused on the upcoming Q2 24 CPI due for release on 31 July and the outcome "could see the RBA pull the rate hike trigger again if it is sufficiently strong," Aird warns.

"The Board is genuinely concerned about an upside surprise on the Q2 24 CPI and the May monthly CPI indicator means there is a real risk that's sufficiently strong to see the RBA raise the cash rate at the August Board meeting."

In his view the RBA will keep rates unchanged if the 3Q trimmed mean CPI rises 0.9 per cent on-quarter as CBA expects, or it rises 1.0 per cent and the unemployment rate rises. But if core inflation is 1.1 per cent or more and the jobs market doesn't loosen further, he says the RBA "may feel compelled to pull the rate trigger."

11:02 am July 5, 2024 Highlight

ACCC gas report signals policy urgency: industry

Valerina Changarathil

The latest gas inquiry report by the Australian Competition and Consumer Commission, which is forecasting potential shortages in 2027, is a warning to governments to act urgently to fast-track new supply, the industry says.

The report "spells out the government actions needed to address long forecast shortfalls, including removing moratoria on new gas developments, speeding up approvals, and reducing the infrastructure, regulatory and capital barriers faced by producers", Australian Energy Producers chief executive Samantha McCulloch says.

She says the introduction of price controls and the mandatory Gas Market Code has delayed new supply projects and "undermined the market certainty" needed to support investment and address structural shortfalls.

"The Australian Energy Market Operator (AEMO) warned that Victoria almost ran out of gas a fortnight ago because of strong demand for gas-fired power generation during a cold snap. "This should be a wake-up call that gas shortages and blackouts could happen as soon as this winter."