ASX 200 closes flat; ANZ slapped with $250m capital penalty; Tabcorp's $4.6m fine; Inghams misses profit estimates; Wall Street awaits Powell speech

APRA slaps ANZ with $250m penalty after trading scandal. Rex administrators given more time to find buyer. Elanor scraps dividend. ASIC's win in crypto firm fight. Inghams' profit miss, mixed guidance. Legal battles weigh on Fletcher. 

Earnings season commentary has kept investor sentiment on a rollercoaster this week.

Welcome to the Trading Day blog for Friday, August 23.  The ASX 200 index closed flat, marginally down to 8023.90 points - ending its 10-day winning streak.

The Aussie dollar is near US67.25c at 5.20pm AEST.

Updates

5:11 pm August 23, 2024

ASX 200 supported as US futures soar

David Rogers

Australia's stock market ends a 10-day winning streak but only just.

The S&P/ASX 200 closes down just 3.1 points at 8023.9 after dipping to 7990.3, driven entirely by a sharp fall in US stocks and subsequent rebound in US futures.

S&P 500 futures rise 0.4 per cent before Fed chair Powell's highly-anticipated speech at the Jackson Hold Economic Symposium at midnight AEST.

It fell 0.9 per cent on Thursday as Fed officials called for gradual rate hikes, implying that market pricing of some chance of a 50bps cut next month are a stretch.

ASX 200 sectors closed mixed after broad-based falls this morning.

Utilities, energy, tech and materials underperform, with Origin down 2 per cent, Whitehaven down 7.2 per cent as Barrenjoey downgraded to Neutral, and Fortescue Metals down 2 per cent as a tentative rebound in iron ore prices stalls.

ANZ falls 2.2 per cent as ASIC hits it with a $250m capital add-on.

Inghams dives 20 per cent on a disappointing outlook.

Health care, communications, discretionary, staples and property outperform, with Fisher & Paykel Healthcare up 12 per cent after reporting, Telstra up 1.3 per cent to a six-month high of $4.03, Wesfarmers up 1.3 per cent, Woolworths up 1.1 per cent and Stockland up 3.6 per cent on upgrades.

3:21 pm August 23, 2024

Monash IVF sinks after settlement

Joseph Carbone

Shares in Monash IVF sink 3.8 per cent after reaching a $56m class action settlement with former patients.

On Friday MVF's share price hit its lowest point in around a year, per Bloomberg.

More than 700 people were part of the class action brought against Monash IVF which centred on the NiPGT test, launched by MVF in 2019. Plaintiffs argued the test had a high risk of producing false positive and false negative results, which was not disclosed to patients.

MVF last at $1.21 per share, down 3.8 per cent.

2:01 pm August 23, 2024 Highlight

More time to find Rex buyer

Robyn Ironside

The administrators of Rex have been given more time to try to find a buyer for the embattled airline.

EY was appointed as voluntary administrator on July 30 after Rex buckled under the weight of around $500m in debt.

An extension of the administration to November 25 was granted by the Federal Court, although barrister Daniel Krochmalik for EY said the "obvious motivation" of the administrators was that if the process could be done sooner, it would be. It's understood EY was hopeful of finding a buyer for Rex through a deed of company arrangement that would provide a return for some 4800 creditors, in particular employees.

To date more than 600 employees of Rex have been let go, following the permanent grounding of the Boeing 737 operation on July 31. Despite being made redundant the workers have not received any sort of payout, or their final week's wages and other entitlements.

Mr Krochmalik told the court that employees out of pocket as a result of the administration, were not likely to be paid sooner if the airline was "wound up" as opposed to being sold through a deed of company arrangement (DOCA). "There's no reason to think a liquidation scenario will provide employees with access to payment more quickly than a DOCA," said Mr Krochmalik.

He revealed EY was seeking to sell Rex in its entirety rather than in parts, due to the fact the law required all of the relevant entities in external administration to be liable for the debt of each other. "It's not guaranteed but overwhelmingly likely that any DOCA will be one that captures all of the company," he told Justice Elizabeth Cheeseman. "If there's some left in liquidation… those debts will come back to bite them," Justice Cheeseman interjected.

It's understood it was now up to EY to make a request to Transport Minister Catherine King, to extend the government guarantee for Rex's regional services. The guarantee announced last week, was designed to instill confidence in the regional flights, by assuring customers they would receive a refund in the event their flight was cancelled.

1:41 pm August 23, 2024

Change of guard at Investible

Joseph Lam

Charlie Ill will take the reins at Investible, succeeding former boss Rod Bristow who resigned on Friday after near four years in the role.

Mr Ill takes over after two years as chief investment office at the early-stage venture capital firm.

Mr Bristow had been chief executive since January 2021 and launched two early-stage funds during his tenure.

1:18 pm August 23, 2024

Whitehaven hit by Barrenjoey downgrade

David Rogers

Whitehaven Coal falls as much as 7 per cent to $7.02 as Barrenjoey downgrades.

Barrenjoey's Glyn Lawcock cut Whitehaven to Neutral from Overweight on valuations grounds as he estimates that it trades on 4 times FY25 EV/EBITDA and in line with its net present value.

"Whitehaven reported a miss to consensus from an earnings perspective, but the final dividend was well ahead of market expectations," Lawcock says.

He says the selldown of 30 per cent of the Blackwater mine for $US1.08bn was the highlight of the result, and the final dividend was well above expectations.

But FY25 guidance disappointed with lower volumes and higher unit costs driving a 48 per cent cut to FY25 EPS and cuts to consensus could be more, Lawcock says.

WHC last down 6 per cent at $7.19.

1:04 pm August 23, 2024

The lone rule to follow for falling (and rising) markets

Eric Johnston

There’s only one rule that billionaire investor Howard Marks says is worth following during market selldowns, and it holds true for rallies too: markets behave mostly irrationally nearly all the time.

"The investment world might be less unstable if there were immutable rules – like the one governing gravity – that could be counted on to always produce the same results. "But there are no such rules, since markets aren’t built on natural laws, but rather the shifting sands of investor psychology,” Marks says.

Full commentary here.

12:44 pm August 23, 2024

Elanor halts trading, scraps dividend

Ben Wilmot

Listed real estate funds house Elanor Investors Group has requested a trading suspension on the ASX and cancelled its dividend as it seeks to stabilise its financial position, in a sign debt conditions remain tough in the sector.

The group has grown an empire across almost all commercial property sectors, and last year took on management of Challenger' property assets, but asked for a suspension while it explores refinancing options, via debt arranger MA Moelis Australia.

The real estate investment and funds management group has about $6bn in funds under management across Australia and New Zealand and has been one of the most notable deal-makers in the otherwise quiet property sector.

The manager said it had kicked off the orderly divestment of the hotel assets in the Elanor Hotel Accommodation Fund and will exit from the hotels, tourism and leisure sector, where it manages about $500m worth of assets.

It said this would enable it to focus on the significant institutionally-led growth opportunities within its core real estate sectors of retail, office, healthcare and industrial.

Elanor has appointed Citigroup Global as exclusive financial adviser, and King & Wood Mallesons as its legal adviser.

Elanor is also considering the divestment of other assets from the balance sheet as it looks to right the ship.

12:44 pm August 23, 2024

ASIC to seek penalties against Kraken crypto operator

Valerina Changarathil

Financial regulator ASIC will seek financial penalties against Kraken cryptocurrency exchange operator Bit Trade following a Federal Court decision.

The court on Friday ruled Bit Trade failed to comply with design and distribution obligations when offering a margin trading product to Australian customers.

Since October 5, 2021, Bit Trade’s "margin extension" product has been available to customers trading on the Kraken exchange without a target market determination, as required by law. ASIC took Bit Trade to court in September last year alleging that Bit Trade failed to comply with the legal obligations for the margin trading product, which allowed users to "receive an extension of credit of up to five times the value of the assets they use as collateral".

ASIC claimed Bit Trade’s margin trading product is a credit facility as it offers customers credit for use in the sale and purchase of certain crypto assets on the Kraken exchange.

The court on Friday found found the obligation to repay a digital asset was not an obligation to repay money and was therefore not a deferred debt. But agreed with ASIC that a margin extension in a national currency created a deferred debt, which meant that the product was a credit facility.

ASIC and Bit Trade have seven days to agree on declarations and injunctions.

12:14 pm August 23, 2024

Pacific Smiles terminates Crescent takeover deal

Valerina Changarathil

Dental group Pacific Smiles has terminated its $2.05 per share takeover deal with Crescent Capital's NDC Bidco after the parties did not reach an agreement on alternative means or methods to progress the scheme following a failed shareholder vote.

They became obliged to consult in good faith to determine whether they could reach agreement after the deal failed to get requisite majorities at a shareholder meeting on August 8. Rival bidder Genesis Capital voted against the scheme at the meeting. The takeover battle had turned into a prolonged saga for other investors in the lead up to the meeting.

"No such agreement has been reached. Pacific Smiles has today provided notice to NDC terminating the scheme implementation deed with immediate effect," the target told investors on Friday. "The board is confident in Pacific Smiles' strategic position and outlook and, together with its management team, will continue to strive to deliver growth in shareholder value."

After the meeting's result, the board was unclear on whether Genesis Capital's $1.91 per share bid "remains available".

Pacific chair Zita Peach, who led board discussions with both suitors, will retire on August 20 once the group's results are announced, handing over the reins to Giselle Collins. Shares in Pacific Smiles are down 0.23 per cent to $1.77 at 12.15pm AEST.

11:58 am August 23, 2024

ASX 200 down 0.4pc as caution prevails

David Rogers

Caution prevails as the Australian stock market ends a 10-day winning streak after the US retreated before Fed chair Powell's Jackson Hole speech at midnight AEST.

The S&P/ASX 200 index is down 0.4 per cent at 7998.3 near midday after hitting a two-day low of 7990.3 even as S&P 500 futures rose 0.3 per cent in APAC trade.

Most sectors fall with utilities, energy, materials and tech underperforming.

Origin Energy falls 1.7 per cent, Woodside slips 0.9 per cent, Whitehaven Coal retreats 5.7 per cent after surging Thursday on its mine stake sale, Fortescue sheds 1.2 per cent and Xero slips 1.2 per cent. Inghams dives 20 per cent after reporting.

Health care is the only sector in the green as Fisher & Paykel Healthcare jumps 10 per cent after reporting.