ASX 200 down; Fletcher's debt deals; Bright makes changes to Synlait board; Lovisa downgrades; Borghetti to chair Crown

Local sharemarket sees late sell-off as volatile commodity prices weigh. Peter Warren shareholder buys the dip. Country Road CEO keeps job. Lovisa hit with fresh downgrades. Virgin ex-CEO Borghetti to chair Crown.

Local and global economic data in focus this week. Picture: Gaye Gerard

Welcome to the Trading Day blog for Tuesday, June 4. The ASX 200 index closed down 0.3 per cent to 7737.10 points on mining and energy falls. US markets closed mixed.

The Aussie dollar is trading near US66.65c after Australia's net exports and company profits came in below expectations for the March quarter.

Updates

4:45 pm June 4, 2024

'Costs and benefits' to FMIA: productivity chair

Patrick Commins

Productivity Commission chairwoman Danielle Wood says "there are costs as well as potential benefits" associated with industry intervention under Labor’s Future Made in Australia program.

Appearing at her first Senate estimate hearing on Tuesday afternoon since being appointed to the top job, Ms Wood said the PC had not conducted — or been asked to undertake — a deep analysis of Labor’s flagship industry policy, but repeated earlier warnings government subsidies risked propping up uncompetitive industries over the longer term.

"You can create businesses that, if they're not successful in establishing a competitive position, come back for further subsidies. You can divert resources to different parts of the economy, from different parts of the economy where they may be more productive," she said.

Ms Wood’s candid public comments in April about the risks of the Future Made in Australia program triggered a backlash from Labor national president Wayne Swan, who called her "completely out of touch," despite her comments being enthusiastically endorsed by leading economists and all former PC chairs.

Prime Minister Anthony Albanese referred to these experts as "flat earthers".

4:27 pm June 4, 2024

ASX 200 rebound fades with commodities

David Rogers

Australia's share market ends a two-day rebound as commodities weigh after disappointing manufacturing data from the US and China in recent days and OPEC's plan to slowly unwind cutbacks from October.

The S&P/ASX 200 index ends down 0.3 per cent at an intraday low of 7737.1 after bouncing as much as 2.2 per cent from a four-week low last week.

The Energy and Materials sectors lead broad-based falls as Brent crude oil futures fall 1.1 per cent to a four-month low of $US77.60 a barrel after falling 3.6 per cent on Monday, and Singapore iron ore futures fall 1.3 per cent to a six-week low of $US108.45 a tonne after dropping 3.2 per cent on Monday.

BHP falls 1.2 per cent and Woodside Energy loses 1.8 per cent.

Banks, property, staples and health care lend support as the US 10-year bond yield dived 11bps to 4.39 per cent on weak ISM manufacturing data.

CBA adds 1 per cent, Goodman gains 0.6 per cent, Ramsay jumps 3.1 per cent and Coles rises 0.6 per cent.

"Ahead of tomorrow’s GDP release, the rates market has removed the risk of an RBA rate hike before year-end, that was built in after last week's higher-than-expected inflation reading," says IG market analyst Tony Sycamore.

In its place, there resides a 30 per cent chance of a 25bp RBA rate cut in December. A prospect that has supported the big banks today. "

4:02 pm June 4, 2024

UBS trims Australian GDP forecast

David Rogers

UBS trims its Australian economic growth forecasts for the March quarter after disappointing partial economic activity data released in recent days.

The Swiss bank lowers its GDP forecasts to 0.1 per cent growth on-quarter and 1.1 per cent on-year versus 0.2 per cent and 1.2 per cent previously forecast, after the December quarter saw growth of 1.2 per cent and 1.5 per cent.

UBS chief economist George Tharenou says his revised forecasts are likely to be close to the RBA's implied forecast profile for the economy.

That would mark the slowest annual growth rate since late 2020.

Bloomberg consensus is currently at 0.2 per cent and 1.2 per cent.

March quarter national accounts data are due at 1130am AEST Wednesday.

3:48 pm June 4, 2024 Highlight

Country Road CEO keeps job

Eli Greenblat

Country Road Group chief executive Raju Vuppalapati will keep his job in the wake of the handling of sexual harassment and workplace bullying allegations which engulfed the fashion house.

The allegations have already seen two former high-ranking male executives leave the business.

The long awaited review and investigation into Country Road Group’s handling of allegations from mostly female staff complaints of sexual harassment and bullying was issued on Tuesday, and has seen the retailer’s parent, South Africa’s Woolworths Holdings, bring in sweeping changes to its complaints processes, handling of workplace incidents and fresh sexual harassment training.

Woolworths Holdings CEO Roy Bagattini is currently in Australia to explain and detail the results of the external investigation to Country Road Group staff at its headquarters in Melbourne.

1:53 pm June 4, 2024 Highlight

ASIC probing Serbian criminal syndicate

David Ross

The Australian Securities and Investments Commission has revealed it had an “advanced criminal investigation” on foot into a Serbian criminal syndicate that had defrauded more than 30,000 Australians.

Speaking at Senate estimates on Tuesday, ASIC deputy chair Sarah Court said the regulator was looking at “individuals that are based in Australia” who are believed to have assisted the scam which had defrauded millions. This scam was revealed in The Australian.

Ms Court said ASIC was taking enforcement action, noting there was a separate matter in February this year where charges were laid for criminal offences, including conspiracy to defraud. ASIC had executed a number of search warrants, as well as tracing complex bank and crypto transactions which were used to export stolen funds.

ASIC was alerted to German authorities investigating these scams in January 2023, after search warrants were executed in Serbia. However, she said German authorities only shared information with ASIC on the basis that it was “to be used for intelligence purposes only”, passing on documents in August 2023 after diplomatic efforts were made. But she said German police did not “proactively” contact ASIC.

Ms Court said ASIC was told not to contact investors identified in seized information. “It was not provided for the purpose of ASIC contacting individuals that were identified right in that material,” she said. ASIC was provided 67,000 documents by German authorities. But Ms Court said much of the information dated from 2020 and 2021.

12:53 pm June 4, 2024 Highlight

Paul Warren buys the dip in Peter Warren

Valerina Changarathil

Automotive dealership Peter Warren's major shareholder Paul Warren has lost no time in buying the dip in its share price following its profit warning on May 28 – mirroring the drive shown by billionaire Nick Politis who tipped in $4.2m to boost his hold on Eagers Automotive after its dismal trading update on May 22.

A director's notice to the ASX shows Mr Warren bought 541,000 shares on market across transactions on May 28, 29 and 30, tipping in a total of $998,055. He now controls 64.3 million shares and 22,171 performance rights.

His first buy-in since March this year came after the group cut its FY24 underlying profit before tax expectations to $52m to $57m due to tough trading conditions. Shares in Peter Warren are flat at $1.78 at 12.45pm AEST – down 17 per cent from the $2.14 it closed at on May 27, before its trading update.

Trading Day last week reported on billionaire Nick Politis's on-market buy-in of 400,000 shares for $4.2m after Eagers flagged a 15 per cent drop in underlying profit for the first half on May 22, citing cost of living pressures on consumer spending and inflationary strain on business costs.

Mr Politis is the biggest shareholder in Eagers Automotive with 72.9 million shares. Shares in APE are flat at $10.09 at 12.45pm AEST.

12:18 pm June 4, 2024

Ackman's Pershing IPO a test of fame

US billionaire hedge fund manager Bill Ackman is planning to take his investment firm public as soon as next year, the boldest move yet by the hedge-fund manager to capitalize on his social-media fame.

As a precursor to a public listing, Ackman is selling a stake in the firm, Pershing Square, to investors in a funding round expected to value the firm at about $US10.5bn, people familiar with the matter told The Wall Street Journal. That deal is expected to close in the coming days.

Pershing Square managed about $US16.3bn in net assets as of the end of April; other asset managers with valuations in the same ballpark manage several times that.

Pershing Square has been telling investors its valuation is warranted because it plans to bring in billions more in sticky assets. Today it primarily holds a concentrated portfolio of stocks of large companies it believes are undervalued, including Chipotle Mexican Grill and Universal Music Group.

– The Wall Street Journal

12:13 pm June 4, 2024

New York plans teen social media curbs

New York plans to prohibit social-media companies from using algorithms to steer content to children without parental consent under a tentative agreement reached by state lawmakers, people familiar with the matter said.

The legislation is aimed at preventing social-media companies from serving automated feeds to minors. Critics say the feeds lead children to violent and sexually explicit content. The bill, which is still being completed but expected to be voted on this week, also would prohibit platforms from sending minors notifications during overnight hours without parental consent.

Democrat Kathy Hochul said the measure would make social media less addictive, adding that heavy usage by teens has contributed to higher instances of mental illness. Industry groups have raised questions about the constitutionality of the proposal and said media literacy would have a more immediate impact. They have won court injunctions blocking regulations in other states from taking effect.

New York would become the first state to enact restrictions on how content is delivered, though similar legislation is advancing in California.

– The Wall Street Journal

12:10 pm June 4, 2024

ASX 200 rebound stalls as commodities fall

David Rogers

Australia's share market is on the back foot amid commodity price falls.

But falls in the materials and energy sectors has been partly offset by gains in in financials, health care, property and consumer staples sectors after the recent fall in bond yields accelerated on weak US manufacturing data.

The S&P/ASX 200 index is down 0.1 per cent at 7751.7 after falling to 7743.7.

Iron ore and oil producers are the biggest drags with Fortescue down 1.7 per cent and Woodside down 1.4 per cent as iron ore futures hit six-week lows and crude oil prices hit four-month lows.

QBE Insurance falls 1.4 per cent and Lovisa drops 6 per cent on downgrades.

But the major banks lend support with CBA up 0.9 per cent.

Goodman Group gains 0.8 per cent and Ramsay Health jumps 4 per cent.

11:48 am June 4, 2024

Net exports, company profits below estimates

David Rogers

Australia's net exports and company profits have come in below expectations for the March quarter while inventories rose more than expected.

Net exports are set to cut 0.9 percentage points from GDP versus expectations of a 0.7 per cent detraction according to Bloomberg.

The current account deficit came in at $4.90bn versus $5.2bn expected.

Public sector demand is expected to contribute 0.2 percentage points to GDP according to the ABS.

Company profits fell 2.5 per cent versus an expected 0.9 per cent fall.

Inventories rose 1.3 per cent versus an expected 0.7 per cent rise.