ASX 200 up 0.8pc; minimum wage to rise 3.75pc; APM soars on higher Madison bid; Lovisa dives on CEO succession

ASX 200 adds 0.8pc as US futures point to further US gains and RBA can breathe easier after wage decision. But Iron ore futures dive to six-week low. Lovisa taps Smiggle boss as next CEO. APM soars as Affinity emerges as mystery suitor. Booktopia CEO out in cost-cutting restructure.

Wages, inflation and rates in focus at home and globally this week. Picture: Gaye Gerard

That's all from the Trading Day blog for Monday, June 3. The ASX 200 index closed up 0.8 per cent at 7761 led by financials after a four-day high of 7779 points.

The Aussie dollar is near US66.40c as bond yields cooled after a benign outcome from the Fair Work Commission's annual wage review decision. March quarter GDP update is due on Wednesday. Rate cuts expected in Canada, Europe this week.

Updates

4:38 pm June 3, 2024

ASX 200 ends up 0.8pc amid wage decision

David Rogers

Australia's share market rose strongly for a second day running.

A rebound from a four-week low last week continued amid bullish leads fuelled by cooling bond yields after the latest US economic data.

The S&P/ASX 200 index ended up 0.8 per cent at 7761 points after hitting a four-day high of 7779 points. The move up to the high helped by US futures gains and a lower-than-expected minimum and award wage decision.

S&P 500 futures rose 0.3 per cent pointing to further US gains.

But Singapore iron ore futures dived 4 per cent to a six-week low of $US111 a tonne on Monday, trimming early gains among iron ore miners.

Financials led gains with the big banks up 2.2-2.5 per cent led by Westpac.

Rio Tinto fell 0.3 per cent, Fortescue rose 0.2 per cent and BHP rose 0.7 per cent but were well off intraday highs as iron ore prices slumped.

Lovisa fell 10 per cent as Citi downgraded on CEO transition plans and valuation.

APM Human Services jumped 10 per cent to $1.38 after accepting a $1.45 a share takeover offer from its biggest shareholder.

Focus turns to US ISM PMI data on Monday.

3:46 pm June 3, 2024

Magnis extends loan again

David Ross

ASX-listed battery and graphite player Magnis Energy Technologies has extended the termination date of a $4.6m loan for the fifth time.

In a market update on Monday Magnis told investors it would extend the repayment date of the loan, which fell due on May 31, to June 30.

This comes as Magnis seeks to refinance the loan.

Magnis told shareholders last month it had reached an in-principle agreement to roll over the loan and would provide the full details "once documentation has been finalised and signed by all parties".

However, Magnis failed to provide an update.

On Monday Magnis told shareholders to refer to prior reports for details of the loan.

Magnis’ $4.6m loan now enters its seventh month, with the interest bill last reported at 5.5 per cent after ballooning from an earlier 5 per cent yield.

This could see the company facing more than $1.1m in interest and counting.

2:15 pm June 3, 2024

Synlait flags looming debt risk

Valerina Changarathil

NZ dairy giant Synlait's shares are trending lower on the ASX on Monday – down 3 per cent to 42.5c – after it warned of ongoing weak trading conditions and the risk it is unlikely to meet three of its current banking covenants as at July 31.

The update, which also included the end of a formal process to sell its Dairyworks operation, comes as the group's 39 per cent shareholder, China's Bright Dairy, agreed to lend $NZ130m to meet its prepayment obligation to senior lenders on July 15.

The drawdown of the loan is conditional upon Bright Dairy securing all necessary corporate, shareholder, and external approvals, as well as meeting customary drawdown conditions and consent of Synlait's banking syndicate. Synlait chairman George Adams said the group was "grateful for the support" as it actively progresses remaining work relating to the shareholder loan and a future equity raise.

On Dairyworks, the group had received interest from a number of parties, but a binding offer had not materialised at a level that would be acceptable. While credible offers would be considered, the sale process no longer remains formally open.

Synlait still expects its FY24 earnings to be within the range of $NZ45m and $NZ60m, but will likely be at the lower end due to a further softening of Ingredients margins due to foreign exchange rates and pricing, reduced inventory and potential write-downs as well as higher financing costs.

1:54 pm June 3, 2024 Highlight

Booktopia CEO out as Nash steps up

Valerina Changarathil

Online book retailer Booktopia is on a job-cutting spree – starting with the immediate resignation of chief executive David Nenke – as it attempts to overcome tough market conditions and a dismal trading performance.

Mr Nenke ceased to be Booktopia's chief executive on Monday morning and will serve out a six-month notice and provide assistance "as requested from time to time".

Chairman Peter George has stepped up to take on executive responsibilities alongside co-founder and former CEO Tony Nash, who will assume an executive director role and also become sales director over the next six months. In July 2022, Mr Nash was dumped as CEO for his criticisms of the board at the time and took on the position of non-executive director.

The changes come less than a year after Mr Nenke promised "all the building blocks are in place to return the business back into profitability and growth".

Remuneration for additional responsibilities taken on by both Mr George and Mr Nash will include nil-priced options, which are subject to shareholder approval. To assist with cashflows, other directors have also agreed to have their fees paid to them via nil priced options. The substantial restructure will also see at least 50 redundancies at its Sydney headquarters, resulting in $6.1m in annualised cost savings in FY25.

Booktopia, with support from Mr Nash, has also secured $1m in funding to assist in the payment of redundancy related costs through a revolving debt facility with Mark Paton's AFSG Capital. The group will pay Mr Nash's Tony Nash Enterprises $400,000 plus GST as an arrangement fee via the issue of 7.3 million shares in consideration of collateral provided to AFSG to support the facility, subject to shareholder approval.

Booktopia will also pay an establishment fee of $200,000 plus GST by way of an issue of 3.7 million shares to LA&MDP Pty Ltd as trustee for the Paton Family Trust, which is not subject to shareholder approval. Consent from secured lender Moneytech is being sought for some of the arrangements.

1:49 pm June 3, 2024

Iron ore futures fall to 6-week low

David Rogers

Iron ore futures drop to a near six-week low amid renewed jitters about China's demand outlook after disappointing PMI data last week.

Singapore iron futures fall 3.5 per cent to $US111.45 a tonne after hitting a three-month high of $US123 on Thursday. China's monthly manufacturing PMI for May unexpectedly fell back into "contraction" territory on Friday.

China's value of new-home sales from the 100 biggest real estate companies fell 34 per cent on-year in May and iron ore inventory at China's ports hit a more than two-year high according to the latest data on Monday.

The intraday fall in iron ore futures has potential to weigh on the ASX 200.

Fortescue falls 0.2 per cent after rising 1.6 per cent earlier.

Rio Tinto falls 0.9 per cent after rising 1.1 per cent.

BHP is up 0.6 per cent after rising 1.5 per cent earlier.

ASX 200 last up 0.7 per cent at 7757.

12:56 pm June 3, 2024

'Very positive' July ahead: ACTU

Valerina Changarathil

The Australian Council of Trade Unions says July will be a very positive month for Australian workers with more money in their bank accounts as tax cuts and the minimum wage increase of 3.75 per cent roll in.

An entry-level retail or hospitality worker will be $2600 per year better off. A mid-level community sector worker will be $3260 a year better off, and a forklift driver will be $3170 better off, ACTU says in its statement hailing the Fair Work Commission's decision on Monday.

The above-inflation pay rise means a full-time worker on the minimum wage will be $33.11 better off each week. However, the ACTU is disappointed that the FWC is not acting immediately to provide interim pay rises to workers in key feminised occupations.

12:48 pm June 3, 2024

RBA to welcome 'fair' wage call: RBC

Valerina Changarathil

The Fair Work Commission's 3.75 per cent minimum wage increase decision is 'fair' and will be welcomed by the RBA, RBC Capital Markets’ chief economist Su-Lin Ong says.

"Amid ongoing cost of living pressures and numerous anecdotes of these pressures, there was some risk of a larger increase. The FWC has been both fair and prudent."

She sees the increase in line with the RBA's wage price index forecast over the next year (3.8 per cent by end-2024 and 3.6 per cent mid-25) as it hopes for the recent (likely cyclical) improvement in productivity to be sustained.

12:42 pm June 3, 2024

Wage rise 'tests limits' of businesses

Valerina Changarathil

The Fair Work Commission's 3.75 per cent minimum wage increase, effective from July 1, "tests the acceptable limits of businesses", says industry lobby group ACCI.

"The outcome is slightly above current inflation and well over the Reserve Bank’s target range for inflation,” the Australian Chamber of Commerce and Industry's chief executive Andrew McKellar says. "This decision is not in line with the trajectory needed to shore up the Australian economy, but it does not pose a significant inflation threat so long as productivity is addressed".

“This decision is further evidence of wages being de-linked from underlying productivity, which is not an economically prudent approach.”

The new national minimum wage from July 1 will be $915.90 per week or $24.10 per hour, up from $23.23 an hour.

12:33 pm June 3, 2024 Highlight

Affinity emerges as mystery APM suitor

Bridget Carter

The identity of another suitor for APM has emerged, as the human services provider confirmed to the market on Monday that it has agreed for 29 per cent shareholder Madison Dearborn Partners to privatise the business for a price that values it at $1.3bn.

DataRoom understands that Affinity Equity Partners has been taking a look at APM in the lead up to the deal with Madison Dearborn Partners.

In other developments, this column can reveal APM’s suitor, CVC, made efforts to embark on a joint bid with Madison Dearborn, but the attempts never gained any traction.

At 12.30pm AEST, APM shares are up 10per cent to $1.38.

Full report here.

12:25 pm June 3, 2024

ASX 200 up 0.7pc after 4-day high

David Rogers

Australia's share market remains solidly in the green as US futures add to positive leads from Friday's US session when falling bond yields helped stocks.

However, the ASX 200 is set to close above a key chart point which negates the recent bearish setup following a bullish key reversal day on the S&P 500.

The S&P/ASX 200 is up 0.7 per cent at 7758.1 in early afternoon trading after hitting a four-day high of 7779.

The energy, financials, utilities, materials and industrials sectors lead gains with Woodside up 1.2 per cent, Westpac up 1.6 per cent, AGL up 1.8 per cent and Brambles up 1.4 per cent.

APM Human Services jumps 10.4 per cent to $1.38 after accepting a $1.45 takeover offer from its biggest shareholder.

Lovisa is down 10 per cent on CEO transition plans.