ASX 200 rises; Collins Foods results; Paladin on watch; Healius cuts guidance; Sev.en push for Coronado control fails

CBA soars, sets itself to defend class action appeal. Ex-Seven boss joins tech micro-cap. KFC operator Collins Foods rises on earnings beat. Healius rebounds from downgrade falls. 

Economic and corporate updates are driving equity investor sentiment. Picture: Dylan Coker

Welcome to the Trading Day blog for Tuesday, June 25. The ASX 200 index closed 1.4 per cent higher, to 7838.80 points for its best day in six weeks. US markets closed mixed with AI darling Nvidia entering correction territory.

The Aussie dollar is near US66.72c at 5pm AEST ahead of Wednesday's May inflation update.

Updates

3:55 pm June 25, 2024

CBA to face class action appeal

Joseph Carbone

Shareholders in losing class actions against Commonwealth Bank have decided to appeal the decision in the Federal Court.

The two class actions, which were brought against the nation's largest lender in 2017 and 2018 were decided in the bank's favour in late May.

CBA have announce they intend to defend the appeal.

The class actions pertain to alleged breaches by CBA of continuous disclosure requirements the bank is obligated to provide under anti money-laundering and counter-terrorism financing rules, where civil proceedings were brought by Austrac and it is alleged the bank made misrepresentations to the market.

CBA's shares again broke a fresh record in Tuesday trading, and just before close are 1.2 per cent higher to $128.29 per share.

1:58 pm June 25, 2024 Highlight

Warburton joins family tech micro-cap

Valerina Changarathil

Former Seven West Media chief executive officer and managing director James Warburton has secured a new board gig – with options on the side – with micro-cap tech business Tinybeans.

Mr Warburton left Seven Media in April in a fast-tracked exit after five years of running the group as its board grappled with allegations the Spotlight program misused funds to pay for prostitutes and drugs.

At Tinybeans, which has an online app to allow families to journal memories, it is expected Mr Warburton's experience will assist in accelerating its strategy both in Australia and offshore when he comes on board on July 1. "James has impressive experience, leadership and knowledge within the broader media and advertising landscape that adds valuable strength to the board as it focuses on leveraging the business’s platform for growth," Tinybeans chair Chantale Millard says.

Mr Warburton is "excited about the opportunity for Tinybeans". "It is a business that has incredible potential to grow and scale given the issues of privacy that will continue to be at the forefront of people’s minds," he says.

"To incentive his efforts and align his personal interests with the interests of shareholders", Mr Warburton will also receive 10 million options in three tranches in the business, subject to investor approval and vesting conditions, including that he remain a director for at least two years.

1:49 pm June 25, 2024

Fertoz pays alleged greenwashing fines

Valerina Changarathil

ASX-listed micro-cap Fertoz has coughed up $37,560 to comply with the financial regulator's infringement notices alleging greenwashing.

Fertoz paid the money on June 21 in response to ASIC's notices that it made allegedly false or misleading statements in November 2023 about its reforestation project in the Philippines.

On 15 November 2023, the group specialising in fertiliser mining, manufacturing and supply, made statements in a presentation published on the ASX that the project would obtain an offtake partner or receive funding by the end of 2023, and begin planting the initial hectares in the respective area of the project in the fourth quarter of that.

ASIC alleges that the statements were false or misleading as Fertoz had ended funding discussions with two prospective offtake partners in April and August 2023, resulting in delays in securing a funding partner and initial planting.

It had not signed any letters of intent, non-disclosure agreements or engaged in advanced discussions with new offtake partners that were at the stage of reaching completion at the end of 2023 and not secured any funding. Payment of an infringement notice is not an admission of guilt or liability.

12:57 pm June 25, 2024

ASX 200 rises 1pc to two-week high

David Rogers

Australian stocks are having a better day amid overall positive leads from offshore markets.

The S&P/ASX 200 is up 0.9 per cent at 7799.8 after hitting a two-week high of 7810.1.

US futures have been slightly positive, potentially adding to positive leads from strong gains in European equities and strength in most sectors of the US share market on Monday.

The energy, property, consumer discretionary and financials sectors are outperforming while tech, utilities, industrials, health care and consumer staples are underperforming the index.

BHP jumps 1 per cent even as iron ore futures hit their lowest price in almost three months.

NAB leads the major banks with a 1.9 per cent rise, while CBA is up 0.9 per cent after hitting a fresh record high of $128.68 in early trading.

Woodside jumps 3.3 per cent as Brent crude oil futures remain near two-month highs.

12:34 pm June 25, 2024

UBS upgrades consumer discretionary sector

David Rogers

UBS upgrades the Australian consumer discretionary sector to Overweight based on its June quarter Evidence Lab survey of about 1000 adults in late May and early June.

The results were "clearly positive" as aggregate spending intentions for the next 12 months rose further into positive territory to the highest point since at least 2019.

Improvement was evident across several industries; especially in areas that were previously weak, including food, eating out, international travel, and entertainment,

"Importantly, spending intentions by income level over the next 12 months are strongest for middle-income households earning $48k to $120k per year," says UBS Australia equity strategist Richard Schellbach.

"Meanwhile income expectations continued to rebound, also driven by middle-income households."

Potentially of concern to the RBA as it battles inflation, Mr Schellbach says the lift in spending intentions suggests large tax cuts worth $23bn – almost 1 per cent of GDP – will likely be largely spent by consumers once the tax cuts get underway next month.

Interestingly, households reported their financial outlook was supported by a resilient labour market fueling perceptions of higher job security, and rising asset prices, but they were more worried about rising interest rates.

Indeed, household expectations for interest rates over the next year were materially higher.

Schellbach says this probably reflects the RBA turning more hawkish over recent months, and now clearly stating they are considering hiking rates again, in contrast to earlier in 2024 when they considered a rate cut.

Even as many other consumer sentiment measures have remained weak over the last two years, the UBS Evidence Lab Australian consumer survey stayed constructive on the ability of Australian households to keep spending.

"The survey's accurate calling of this cycle has been against consensus and other surveys," Mr Schellbach says. "Recent months have seen an unusual level of dispersion in the views on the economy / consumer from both economists and stock analysts.

"In an uncertain backdrop, we are even more inclined to pay attention to our survey's findings."

11:52 am June 25, 2024

ASX 200 rises 0.8pc to two-week high

David Rogers

Australia's share market hits a two-week high on broad-based gains after positive offshore leads for most sectors even as sharp falls in some tech giants weighed on the S&P 500.

The S&P/ASX 200 index is up 0.8 per cent at 7796.8 points after rising to 7798.2.

All sectors are in the green with energy, property, discretionary, communications and financials leading. CBA is up 1 per cent after hitting a fresh record high, NAB jumps 1.4 per cent, BHP is up 0.6 per cent, Woodside Energy gains 2.6 per cent and Wesfarmers gains 1.4 per cent.

Paladin dives 7 per cent after agreeing to buy Fission Uranium in an all-scrip takeover.

If the index closes above last week's high at 7796.9 it might signal that it's heading for a test of this month's high at 7862 and a further test of resistance toward the record high of 7910.

However, tax loss selling and profit warnings may be a risk before financial year end.

11:31 am June 25, 2024

Whyalla steelworks close to production return

Cameron England

The Whyalla steelworks should be able to return to normal steel production "soon", after GFG Alliance makes further progress in bringing the blast furnace back online.

The blast furnace went cold in mid-March during routine maintenance, and its restart was delayed following damage to its shell during efforts to get hot steel flowing again.

GFG said in late May the furnace had started flowing hot metal through the emergency tap hole, and on Tuesday said hot metal was now flowing through a normal tap hole.

"The successful connection to a normal tap hole was made at midday on Monday 24th June following previous repeated attempts to move from the emergency tap hole which has been used to evacuate hot molten material,"’ GFG subsidiary Liberty Primary Metals Australia (LPMA) said in a statement.

LPMA chief executive Sandip Biswas said the blast furnace was anticipated to be brought back 'on wind' in coming days as expert crews continued to work towards bringing the blast furnace back to normal production.

"The connection with a usual tap hole on the blast furnace is a positive and important step on the difficult journey back to high quality steelmaking,’" he said. "I am grateful to our team and remain confident we will resume normal steel production soon."

10:41 am June 25, 2024

Consumer sentiment remains 'deeply negative': Westpac

David Rogers

Consumer sentiment rebounded slightly last month but remains "deeply pessimistic", according to Westpac.

The Westpac–Melbourne Institute Consumer Sentiment Index rose 1.7 per cent to 83.6 in June from 82.2 in May, with assessments of finances and buyer sentiment less negative, but inflation, interest rate, and growth fears weighing more heavily.

Half of consumers expect mortgage rates to rise over the next 12 months and an uncertain economic outlook is eroding confidence around jobs.

“Despite the improvement, consumer sentiment remains below its March level and still
firmly in deeply pessimistic territory," says Westpac senior economist, Matthew Hassan.

"The survey detail suggests positives from fiscal support measures are being negated by increased concerns about inflation and the outlook for interest rates."

He says this was clear in consumer assessments of recent news coverage.

"Budget and tax" and "inflation’" news was recalled as by nearly half of consumers surveyed.

The former was viewed as "less unfavourable" than in March, reflecting the well-received Commonwealth budget, the cost-of-living measures delivered by both Federal and state governments, and the stage 3 tax cuts set to commence on July 1.

However, the news on inflation was viewed as less favourable than in March, with assessments retracing most of the way back to the levels seen in December, when the RBA had just raised the cash rate in response to persistently high inflation.

“Notably, the wider news backdrop is still viewed as broadly unfavourable," Hassan added.

Across the fifteen detailed news topics covered, there has not been one "net favourable" assessment in two and a half years – the longest run of broadly negative news sentiment since Westpac began running the survey in the mid-1970s.

10:40 am June 25, 2024

Paladin falls on Canadian uranium deal

Valerina Changarathil

Shares in uranium group Paladin are down 7 per cent to $12.31 as investors react to its $1.25bn friendly all-scrip deal with Canada’s Fission Uranium.

"For the long-term uranium bulls, the transaction looks advantageous and creates an impressive mergeco production pipeline," analysts at Citi say. Fission's flagship Patterson Lake South project "looks promising" with first production expected in 2029.

Citi rates Paladin at buy with a target price of $17 per share.

10:30 am June 25, 2024 Highlight

Qld orders CS Energy review

Nick Evans

Queensland Premier Stephen Miles has ordered a review of the operations of state-owned power provider CS Energy in the wake of revelations its own decisions have been blamed for the catastrophic explosion at the Callide C power plant in 2021.

Mr Miles said on Tuesday the government will appoint special advisors to the CS Board and ordered the Queensland Treasury department to review CS Energy operations to ensure the company is "aligned to deliver on the Queensland Energy and Jobs Plan, optimise energy transition and ensure downward pressure on consumer prices, while maintaining operating and business performance".

The Premier’s decision comes after The Australian revealed the draft conclusions of forensic engineer Sean Brady into the Callide C explosion included criticism CS Energy’s purchasing decisions led to the disaster and were not "fit for purpose".

CS Energy had previously said the explosion was ultimately caused by the failure of battery back-up systems, but — based on draft findings by Dr Brady — the federal court was told on Monday the systems failed because a battery charger installed by CS Energy was "not fit for purpose".

CS Energy has fought for months to keep Dr Brady’s report from public view, but findings read to the court — in a hearing aimed at slowing the sales process of the half of the generator owned by private investors — include criticism of both CS Energy and its board, and the state government mandate which helped strip the company of cash.