ASX 200 shoots up on soft CPI data; Rio soars; Origin FY24 LNG revenues down; Rex in administration; Microsoft drops after results

RBA unlikely to hike rates next week with core inflation heading south. CBA shares reach intraday record of $137.34. Rio Tinto lifts on first-half profit jump. Telix, Origin among losers. Asian buyer circles Rex. 

Rio Tinto chief executive Jakob Stausholm's commentary on its interim results will be closely parsed. Picture: Lyndon Mechielsen

Welcome to the Trading Day blog for Wednesday, July 31. The ASX 200 index closed 1.8 per cent to 8092.30 points with all sectors green. US markets closed mixed and Microsoft dropped after hours on its results.

The Aussie dollar was trading near US65c at 4.55pm AEST, after the release of June quarter inflation data by the Australian Bureau of Statistics.

Updates

4:40 pm July 31, 2024

ASX 200 soars 1.8pc to record high on CPI

David Rogers

Australia's share market soars to a record high as lower than expected inflation data brings forward expectations of interest rate cuts by five months.

In its best day since 11 November 2022, the S&P/ASX 200 index closed up 139.1 points or 1.75 per cent at a record high of 8092.3 points.

It came as underlying trimmed mean CPI rose 0.8 per cent on-quarter and 3.9 per cent on-year versus consensus estimates of 1.0 per cent and 4.0 per cent.

Also helping was a 0.9 per cent rise in S&P 500 futures as Nasdaq 100 futures leapt 1.5 per cent with Nvidia up 7.7 per cent as AMD rose 5 per cent after reporting.

All sectors rose with tech, energy, consumer discretionary, materials, communications and property outperforming. In those groups, Xero rose 2.9 per cent, Woodside rose 2.7 per cent, Wesfarmers jumped 2.8 per cent to a record high $73.65, Rio Tinto jumped 2.5 per cent after its first half results, SEEK leapt 5.7 per cent and GPT added 4.8 per cent. CBA rose 1.1 per cent to a record high close of $137.49.

The FOMC decision and results from Meta are due early Thursday.

3:34 pm July 31, 2024

'Only a question of time' before info is public in Super Retail case

Eli Greenblat

Justice John Halley says he couldn’t see how the "entire" statement of claim surrounding the Super Retail workplace lawsuit could be suppressed.

He said it’s "only a question of time" once material becomes public, its content and the ability of the parties becomes more difficult.

Lawyers appearing for Ms Farrell said Super Retail was trying to make the whole case confidential and suppress details of the case, but at the same time have "repudiated" a termination settlement of Ms Farrell’s sacking which they claim existed.

Lawyers for Ms Farrell have claimed she reached a termination settlement with Super Retail.

"We say there was (a settlement) and it has been repudiated and not performed," lawyers for Ms Farrell told the court.

3:30 pm July 31, 2024

Certain paragraphs in statement 'untested': Super Retail lawyers

Eli Greenblat

Lawyers for Super Retail asked Justice John Halley for the statement of claim not to be released or published as they consider and argue before the court the release of certain paragraphs within the statement of claim believed to have been lodged with the court by Ms Farrell.

Justice Halley said, after a brief review of the affidavit, there was an argument there were "untested" statements in the statement of claim which could see its public release contested.

However, he stressed just because the statement of claim might have untested allegations doesn’t mean it should necessarily stop it being publicly released.

The parties are currently before the Federal Court in Sydney arguing over the public release of documents surrounding the looming court case between Super Retail and its sacked former chief legal officer Rebecca Farrell.

3:27 pm July 31, 2024

Super Retail lawyers attempt to suppress documents

Eli Greenblat

Lawyers acting for Super Retail Group have appeared before the Federal Court in Sydney in a hastily organised appearance to suppress key documents relating to a looming court battle with its sacked chief legal officer Rebecca Farrell, as details surrounding allegations of workplace misconduct are aired.

Allegations of workplace misconduct, including a secret affair between the CEO and head of HR have been made.

Appearing before Justice John Halley on Wednesday afternoon there were also concerns raised by the Justice about the public release of an affidavit by a person involved in the court case which could disclose never-before-seen details of the scandal which has erupted around Super Retail.

Lawyers for both Super Retail and Ms Farrell, represented by specialist workplace law firm Harmers Workplace Lawyers, were careful in their discussions and arguments before Justice Halley so as not to release details of an affidavit.

Justice Halley later agreed to redact some parts of the affidavit, which is believed to help shield the identity of a whistleblower who works or previously worked for Super Retail.

2:28 pm July 31, 2024 Highlight

BoJ raises key rate, will trim bond buying

The Bank of Japan has raised key interest rates and decided to reduce government bond purchases, taking another step toward unwinding massive monetary stimulus.

The Japanese central bank raised its target for the overnight call rate to 0.25 per cent from the range of 0-0.1 per cent it set in March when it ended the world’s last negative interest rate policy. The BOJ said it would reduce its monthly JGB purchases to 3 trillion yen in January-March 2026, compared with around 6 trillion yen previously.

Heading into Wednesday’s decision, markets were split on the BOJ’s rate call, which comes as recent data show continued weakness in the Japanese economy.

Momentum has been struggling, and gross domestic product slid by an annualised 2.9 per cent in the January-March quarter. Volatility in the yen has complicated matters, inflating import prices and denting consumption. That’s drawn concern from officials and ratcheted up political pressure on the BOJ to act.

– The Wall Street Journal

1:44 pm July 31, 2024 Highlight

New ASIC ban for Sydney ex-property spruiker

Valerina Changarathil

Former Sydney-based property spruiker Dominique Grubisa – previously publicly slammed by financial regulator ASIC for her "habit of not telling the truth" – has been slapped with an 18-month ban from managing corporations.

The disqualification, effective on May 24, follows her involvement in the failure of two companies DGI Accounting (DGIA) from April 10, 2018 to August 26, 2022, and DGI Debt Management (DGID) from January 2019 to August 2022.
DGIA provided accounting services and DGID provided debt management services.

ASIC found that Ms Grubisa fell short of the standards expected of a company director and, as well as engaging in insolvent trading, failed to exercise her powers and discharge her duties as a director of DGID and DGIA with the degree of care and diligence required. At the time of ASIC's decision, the two companies owed a combined total of about $305,623 with the main creditor being the Australian Taxation Office.

The Administrative Appeals Tribunal has granted an interim stay of ASIC's decision until October 18 pending resolution of applications by Ms Grubisa. Ms Grubisa will remain a director of Master Wealth Control (DG Institute) "for limited purposes" following the massive fine imposed by the Federal Court last month in response to separate legal action by competition regulator ACCC.

In April 2022, ASIC imposed a four-year ban on Ms Grubisa from engaging in credit activity, providing financial services, performing any function in a credit entity, or controlling a credit entity or financial services business for four years. But the AAT set aside those orders in October 2023.

Competition regulator ACCC commenced legal action against Master Wealth Control and Ms Grubisa in December 2022. In July this year, the Federal Court ordered Master Wealth Control (DG Institute) to pay $5m in pecuniary penalties and to pay consumer redress totalling $14.7m to students enrolled in its programs. Ms Grubisa was also ordered to pay $1m in penalties, and disqualified from managing corporations for five years, for being knowingly concerned in the contraventions by DG Institute.

1:43 pm July 31, 2024

RBA can't afford to ditch hawkish bias: Citi

David Rogers

The RBA will breathe a sigh of relief as inflation remains on-track to moderate down below the top of the target band by Q424, but can't afford to ditch its hawkish policy bias, according to Citi.

"The RBA will not need to push out the timetable for CPI at the August Statement on Monetary Policy," says Citi chief economist, Josh Williamson.

"This means the RBA can keep the cash rate target unchanged at 4.35 per cent, now likely to be the peak of the cycle, for the entirety of this year.

But he says the RBA "can't afford to jettison the hawkish bias" as market-based inflation remains high and June retail and credit data were stronger than expected.

"Households now have tax cuts and with further fiscal expansion likely this year ahead of elections, it is too early for the RBA to signal that the next move is down."

1:25 pm July 31, 2024

CPI data good enough to rule out rate hike: Betashares

David Rogers

June quarter CPI data were "better than feared" and "good enough to rule out an interest rate hike by the RBA next Tuesday", according to Betashares.

"Those with a mortgage can breathe a sigh of relief, at least for now, though Australia retains a sticky inflation problem and interest rate increases at some stage this year can still not yet be confidently ruled out," says Betashares chief economist, David Bassanese.

"Today’s numbers are not bad enough to likely require the RBA to revise up its inflation forecasts within next week’s August Statement on Monetary policy.

"The RBA will likely retain its expectation that inflation will fall within the target band by late 2025. Importantly, although the rate of decline has slowed so far this year, annual underlying inflation is continuing to fall.

"That said, inflation remains uncomfortably high, with still firm prices gains for renters and those taking out insurance especially."

1:18 pm July 31, 2024

RBA policy pricing flips to cuts: IG

David Rogers

IG market analyst Tony Sycamore notes that Australia's money market has flipped from pricing in a possible RBA rate hike by year end to pricing in a possible cut by year end after core inflation undershot expectations.

"Ahead of today's Q2 2024 CPI release, the Australian interest rates market was pricing in about an 18 per cent chance of a 25bp RBA rate hike for August," Mr Sycamore says.

"Following the cooler-than-expected core inflation measure, the rates market has removed all chance of a rate cut and now prices in a high chance of a first RBA rate cut before year-end."

The November 5th meeting has 10bp (40 per cent chance) of a 25bp rate cut priced. The December 10th RBA meeting has 17bp of a 25bp rate cut priced.

The February 18th, 2025, RBA meeting is almost fully priced for a 25bp rate cut, which would take the RBA’s official cash rate back to 4.10 per cent.

A second rate cut, to 3.85 per cent, is more than fully priced by July 2025.

"The rates market was definitely caught on the wrong foot again," Sycamore adds.

12:56 pm July 31, 2024

RBA will sit on 4.35pc until Feb: Moody's

Valerina Changarathil

While there is enough good news in the June quarter CPI print to keep the RBA from hiking the cash rate, there are still "plenty of pockets" suggesting inflation is becoming harder to quell", says Moody's Analytics economist Harry Murphy Cruise.

Goods inflation ticked up for the first time since the September quarter of 2022, while services inflation rose for the first time since the middle of last year, he notes.

Overall, June quarter CPI rose 1 per cent for a 3.8 per cent print year on year – in line with market expectations. The trimmed mean, which strips out the volatile items, came in at 3.9 per cent, below market expectations of 4 per cent, which was tipped to be the key number that would force the RBA to pass on a 25 basis points hike at its meeting next week, taking the cash rate to 4.60 per cent.

But rental growth is soaring and insurance premiums are rocketing. "What's tricky for the Reserve Bank of Australia is that they have next to no control over these prices; rate hikes won’t prompt insurers to cut premiums, nor will they lower rent and dwelling construction costs," Mr Murphy Cruise says. He also sees the cost of living supports and new tax cuts as a "double-edged sword" that will ease pressures on households, but "be an additional handbrake on disinflation—making the RBA’s job harder."

Moody's sees inflation elevated for the rest of 2024, ending the year at 3.5 per cent, sneaking into the top of the RBA’s 2-3 per cent target band by the middle of next year and returning to 2.5 per cent in 2026.