ASX 200 closes 0.4pc higher; CBA delays rate cut timing; retail trade fell 0.4pc; Coles sales rise; ASIC sues Magnis

The sharemarket extended its gains, closing up 0.4 per cent. Origin, NSW in talks to extend Eraring by four years. CBA pushes back rate cut call. Weak retail data hits Aussie dollar. ASIC sues Magnis and chair. Worley falls.

Global investors are focused on this week’s US Federal Reserve meeting. Picture: David Swift/NCA NewsWire

Welcome to the Trading Day blog for Tuesday, April 30. The ASX 200 extended its gains, finishing up 0.4 per cent as interest rate jitters receded after weak retail sales data. Investors sought out consumer discretionary and property stocks.

The Aussie dollar is trading around US65.22, slipping after the retail sales data.

Updates

4:36 pm April 30, 2024

ASX 200 ends up 0.4pc at two-day high

David Rogers

Australia's share market continues to recover from Friday's selloff.

After a hesitant start as CBA economists pushed out their RBA rate hike expectations, the ASX 200 rose 0.4 per cent to close at a two-day high of 7664.1.

Weaker than expected retail sales data helped as the market dialled back recent pricing of a possible rate hike.

"One minute a few rouge economists are talking a rate hike as next move after the strong CPI last week – that generated the selloff , then today we get retail sales that slow and now rate cuts will be all the rage again," said Bell Potter head of institutional sales and trading, Richard Coppleson.

The Australian dollar fell 0.8 per cent to a three-day low of US75.15c.

Australia's 3-year bond yield fell 8bps to 4.03 per cent.

Eight of 11 ASX 200 sectors rose with gains led by the interest rate sensitive consumer discretionary and property sectors, and big banks and miners rising.

Wesfarmers rose 1.8 per cent, CBA added 0.6 per cent and Goodman Group jumped 1.6 per cent. CSL added 0.6 per cent, Westpac jumped 0.8 per cent, Fortescue rose 1.5 per cent, and Suncorp gained 2.4 per cent.

IGO soared 7.3 per cent as it planned to resume full output from its Greenbushes mine. Arcadium Lithium jumped 8.4 per cent.

Ampol fell 3.3 per cent as its Lytton refiner margin and output disappointed.

Overall quiet trading is expected before the US rates decision early Thursday.

3:28 pm April 30, 2024

Space Machines nabs $8.5m for Indian JV

Joseph Lam

Space Machines Company has picked up $8.5m from the government to fund a joint Australian-Indian space venture to clean up debris.

The Sydney-based company will be developing a new orbital servicing vehicle which will be launched from India on an Indian Space Research Organisation rocket under the Space Mission for Australia-India’s Technology, Research and Innovation project.

Rajat Kulshrestha, Space Machines Company founder and chief executive, says he was proud to be working on the project with Digantara and Ananth Technologies.

“Our vision is to provide long-term ‘Roadside Assistance in Space’, where spacecraft are repaired, refuelled, refurbished, recycled and removed at the end of life. By combining Australian innovation with Indian spaceflight heritage, we’ll make important strides in ensuring a safe and sustainable orbital environment for future space activities,” he says.

“As an Australian-Indian, I’m especially proud that the Sanskrit word ‘MAITRI’ meaning friendship and goodwill encapsulates the spirit of this pioneering international collaboration,” he says.

West Australian space company LatConnect60 and Skykraft from the ACT also received $5.8m and $3.7m, respectively.

3:16 pm April 30, 2024

Heartland completes Challenger Bank buy

David Ross

Heartland Bank has completed its $115.7m acquisition of Challenger Bank, finalising the deal struck in October 2022.

In a market update on Tuesday Heartland Group Holdings said it had completed the acquisition, after securing regulatory approvals from APRA and the RBNZ.

This will see Challenger's banking arm rebranded by the New Zealand owned Heartland Group as Heartland Bank, a digital bank geared around reverse mortgages and livestock finance.

Heartland said its bank would raise retail deposits, providing lower costs of funds, led by a push into term deposits.

The company said it would also look at expanding into new segments, including motor finance and asset finance, noting the success in these two markets in New Zealand.

Heartland Bank also announced its new board on Tuesday, with Geoff Summerhayes resigning from the group and taking on the job of bank chair.

Shane Buggle and Lyn McGrath will join Heartland Bank's board from Challenger Bank, alongside new directors Vivienne Yu and Bruce Irvine.

Heartland Bank CEO Leanna Lazarus and Jeff Greenslade will also take on non executive non independent board roles.

he bank also confirmed Michelle Winzer would take on the job of CEO at the new bank, effective July 22, replacing Christ Flood who has acted in the role.

1:28 pm April 30, 2024

No need for a rate hike: AMP

Megan Neil

AMP sees no need for another interest rate rise, despite financial markets now pricing in the chance of a hike by November.

AMP deputy chief economist Diana Mousina and economist My Bui say the decline in retail sales in March shows consumers are still under pressure, which is "not consistent with an economy that needs higher interest rates".

"After last week’s stronger than expected March quarter inflation data, financial markets (and some economists) have started debating the risk of further RBA rate hikes. Market pricing has taken out any expectations of rate cuts this year and now even has a ~30 per cent rate hike priced in by November," Ms Mousina and Ms Bui say in a research note.

"But today’s retail data is not consistent with an economy that needs further tightening."

The AMP economists say there are multiple signs that the consumer remains under pressure, including the soft consumer spending.

"We see a rate rise by the RBA at next week’s meeting highly unlikely, although the central bank is likely to debate the need for a rate rise and may shift its neutral bias on interest rates to a tightening bias. Although you could also argue that Michele Bullock’s comments that the RBA is not ruling 'anything in or out' is consistent with the board debating the options to hold interest rates steady or to hike.

"We think that the next move in rates will be down, but it will come later (probably around November) than we initially expected."

1:15 pm April 30, 2024

Retail miss argues for balanced RBA: Citi

David Rogers

Weak March retail sales data shows restrictive monetary policy slowing discretionary expenditure, and it pre-dates the dampening in expectations for an RBA interest rate cut this year, so households are likely to further restrain non-essential spending until financial conditions improve, Citi says.

"Furthermore, given the sharp drop in retailing across household goods, clothing, footwear and personal accessory and department stores, we should continue to expect prices falls in the corresponding CPI basket items for these categories," nots Citi Australia chief economist, Josh Williamson.

"The RBA Board now has more space to deliver a balanced message next week, that is it can continue to state that it 'is not ruling anything in or out'."

1:12 pm April 30, 2024

NAB gets $400m gain from NZ wealth sale

Megan Neil

NAB has completed the sale of its New Zealand wealth management businesses to a new entity called FirstCape, a deal that is expected to result in a $400m pre-tax gain for the bank.

As announced in December, FirstCape brings together NAB’s JBWere New Zealand and BNZ Investment Services with Jarden Wealth and Harbour Asset Management.

NAB will hold a 45 per cent stake in FirstCape, with Jarden holding 20 per cent. Funds managed by Pacific Equity Partners acquired a 35 per cent stake in FirstCape, with its investment used to fund the cash payments to NAB and Jarden.

NAB says the transaction is expected to result in a pre-tax gain of approximately $400m before transaction costs, which will be excluded from cash earnings. The gain will be included in the group’s statutory net profit for the half year ending September 30, 2024.

12:48 pm April 30, 2024

Weak retail data argues against rate hike: Indeed

David Rogers

Weaker than expected retail sales data argue against higher interest rates,.

But there's not enough evidence of inflation reaching the RBA's target to justify a rate cut, according to Indeed APAC economist, Callum Pickering.

“Households are struggling and retail conditions are dire,” Mr Pickering says. “Given rising prices and strong population growth, the average Australian household is buying considerably fewer retail goods than they were a year ago.”

Slight quarter-on-quarter rise in nominal retail sales is a "dreadful number in the context of high inflation and historically strong population growth."

But cost-of-living pressures are being offset by population growth, and more support will come mid-year in the form of the new ‘Stage 3’ tax cuts.

"Overall, monetary policy appears to be working but there are still some boxes that the RBA would like to see ticked, particularly around service sector inflation and productivity growth," Pickering says.

"Service sector inflation is still too high and there is a clear disconnect between wage growth and productivity growth that could prove problematic for inflation going forward.”

“The RBA will need to balance those risks against the risk of a downturn or recession….so we expect the RBA to leave rates unchanged in the near-term."

12:39 pm April 30, 2024 Highlight

Origin, NSW in talks to extend Eraring

Colin Packham

The NSW government and Origin Energy are in talks to extend the lifespan of the state’s largest coal power station by four years, an arrangement that should it materialise will ease concerns about blackouts and price rises but ignite a firestorm of criticism from proponents of renewable energy.

The Labor government and Origin have been locked in talks over the future of the Eraring coal power station for months after an independent expert urged an extension. While The Australian understands an agreement remains unconfirmed, it centres on an extension of two years, with an option for Origin to extend the lifespan by a further two years.

Minister for Climate Change and Energy Penny Sharpe did not comment on the timescale of the extension, but confirmed no deal had yet been reached.

“The NSW government is engaging with Origin on its plans for Eraring Power Station and will not comment while the process is ongoing,” Ms Sharpe said.

An Origin spokeswoman declined to comment on details of the negotiations, but pointed to comments in the company’s quarterly report published on Tuesday.

“We remain in discussion with the NSW government on the closure date for the Eraring Power Station,” the company said.

12:19 pm April 30, 2024

Plan for RBA hike rather than cut: RateCity

David Rogers

With economists dialling back their expectations for RBA rate cuts in response to sticky inflation in Australia and overseas, borrowers should "plan for a hike, rather than a cut", according to RateCity.com.au.

While the big four banks are aligned in their prediction for the RBA’s next move, wider recent economic commentary warns the next move from the RBA could be up rather than down, the home loan comparison service says.

"Reserve Bank Governor, Michele Bullock, made it clear following the RBA’s March meeting that the Board 'cannot rule anything in or out'," says RateCity research director, Sally Tindall.

"Therefore, prudent borrowers should plan for a hike, just in case."

“The RBA is not going to revert back to hiking the cash rate without plenty of data on its side, and plenty of warning to borrowers. However, if you’ve got a mortgage, it’s prudent to plan for a hike just to be on the safe side."

12:08 pm April 30, 2024

Whistleblower complaint against Cooke ongoing

Glen Norris

Star Entertainment non-executive director Toni Thornton told the Bell inquiry
that a whistleblower complaint against former chief executive Robbie Cooke was still ongoing.

Ms Thornton said the whistleblower complaint, details of which have not been released by the inquiry, was a factor in the board's decision to let Mr Cooke go in March.