ASX 200 eases; Telstra job cuts; James Hardie, Star and Sonic fall; TechOne, ALS gain

ANZ probing internet banking issues. RBA avoids 'excessive fine-tuning'. James Hardie's cloudy outlook weighs. Sonic flags weak earnings. TechOne, ALS gain. Telstra job cuts. Star falls on Hard Rock dismissal. 

Economic and corporate discussions are firmly on investor radars on Tuesday. Picture: David Moir/Bloomberg

Welcome to the Trading Day blog for Tuesday, May 21. The ASX 200 index closed 0.2 per cent - or just 12 points - lower at 7851.70 points, as mining and telco falls offset tech gains. Nasdaq hit a record in mixed US session.

The Aussie dollar is trading around US66.59c, easing after the RBA minutes.

Updates

4:40 pm May 21, 2024

ASX 200 slips 0.2pc; James Hardie, Telstra, Sonic dive

David Rogers

A small fall in Australia's share market on Tuesday was actually a good performance considering steep drops in James Hardie, Telstra and Sonic Health.

The S&P/ASX 200 closed down 0.2 per cent at 7851.7 points after hitting an intraday low of 7841.5.

"There was a monster transition (change of mandate) in the market today we saw over 100 Blocks worth $1.28 billion," says Bell Potter head of institutional sales and trading, Richard Coppleson.

"Citi was running it and it was in growth mid-to- large cap stocks – it was going both ways – so selling and buying growth stocks.."

"As a result value was huge at $7.8bn," he added.

Coppelson says the transition flow should continue Wednesday.

James Hardie plunges 15 per cent, Telstra drops 2.7 per cent and Sonic Healthcare dives 6 per cent, shaving 15 points off the index after providing disappointing earnings guidance.

Rio Tinto falls 1.3 per cent, Goodman slips 0.7 per cent and Fortescue loses 0.8 per cent. But BHP adds 0.7 per cent, ANZ rises 0.5 per cent, Qantas jumps 3.3 per cent, ALS jumps 5 per cent on a solid FY24 results and Technology One jumps 4.6 per cent, also on positive half-year results and outlook.

JB Hi-Fi gains 1.5 per cent and Harvey Norman adds 1.2 per cent as Macquarie upgrades in anticipation of strong demand for AI computers.

Overall consolidation is likely before FOMC minutes and results from Nvidia which are due early Thursday Australian time.

4:27 pm May 21, 2024

Cochlear completes Oticon acquisition

Megan Neil

Cochlear expects to incur about $30m in pre-tax integration costs in the 2024 financial year after completing its acquisition of Demant's Oticon Medical cochlear implant business.

Cochlear says following Demant's decision to discontinue its efforts in hearing implants, the ASX-listed company acquired the cochlear implant business "for a zero headline purchase price".

Cochlear says the business will be integrated into Cochlear over the next few months.

"Cochlear expects to incur integration costs in FY24 of around $30m pre-tax, primarily
related to restructuring. This amount will be reported as a non-recurring significant item, with no impact on Cochlear’s FY24 underlying net profit guidance of $385-400m."

Cochlear’s chief executive and president Dig Howitt said Cochlear was working on a smooth transition as Oticon Medical’s 20,000 cochlear implant customers moved to the company.

3:51 pm May 21, 2024 Highlight

China deal advances Alcoa's Alumina takeover

Matt Bell

Alcoa will give a Chinese state-owned entity a small proportion of shares in the American aluminium giant in exchange for support of its bid to buy bauxite and alumina group Alumina.

The company said an affiliate of CITIC will receive a small proportion, about 1.5 per cent of the pro forma outstanding Alcoa common stock of its consideration under the scheme in non-voting convertible series A preferred stock.

The amendment to the takeover bid announced in March is the result of cooperative discussions with all parties — including CITIC, which holds or controls through its affiliates a 18.9 per cent stake in Alumina — to advance the transaction, which is expected to be completed in the third quarter of 2024.

Alcoa chief executive William F. Oplinger said the US giant had a longstanding working relationship with CITIC, which holds a stake in the Portland Aluminium joint venture in Victoria, and the change to the deal would bring it closer to completion.

“The agreed change to the scheme brings us a step closer to completing the transaction, which will provide significant and long-term benefits to both Alcoa and Alumina Limited shareholders,” he said.

3:05 pm May 21, 2024

Rate hike hurdle seems high: CBA

Megan Neil

The RBA board's reluctance to 'fine tune' monetary policy means the hurdle for another rate hike seems high, CBA senior economist Belinda Allen says.

Ms Allen says the minutes of the RBA's May board meeting confirm the board deliberated on a rate hike before deciding the on-hold decision was the stronger case.

"Ultimately the case to leave the cash rate steady was the stronger one with a credible path where inflation could return to target in a suitable timeframe. Holding the cash rate steady could also mitigate against risks around a more material slowing in the economy," she says.

"The board also seems focused on looking through the 'short‑term variation in inflation to avoid excessive fine‑tuning'. As a result the hurdle to hike again seems high and instead the risks sit to a later start to the easing cycle than our base case."

CBA's base case is that the RBA will start cutting rates in November. "However the arrival of circuit breakers on 1 July will need to be watched for the consumer response," Ms Allen says.

2:37 pm May 21, 2024

Xref approached by potential suitors

Megan Neil

Listed reference check software group Xref says a number of parties have expressed interest in potentially buying the company.

The company's board says it will conduct a strategic review to assess whether any proposal or offer may be forthcoming that the directors should consider. "The inquiries and discussions are still preliminary in nature and there is no certainty that a transaction will result from the strategic review," Xref says.

In a later ASX release, Xref added that the enquiries have been of a a preliminary nature only, either for the purpose of introducing parties or seeking to understand whether Xref has any interest in conducting a corporate transaction of some nature.

"Such enquiries have arisen over approximately the last six months and have generally been made by private equity funds or companies associated with their investments in HR tech companies. No specific proposal or offer has been received. Xref has not entered into any preliminary agreements (such as confidentiality agreements) or provided any
non-public information to any party."

2:31 pm May 21, 2024

Openn Negotiation to continue trading

Megan Neil

Proptech Openn Negotiation will continue trading after its administrators secured funding.

Voluntary administrators Richard Tucker and John Bumbak of KordaMentha say they have secured funding to continue to trade the group's operations on a business-as-usual basis, while pursuing a potential sale or recapitalisation of the business.

"We are calling for expressions of interest for the either a recapitalisation of one or all of the companies within the Openn Group and/or a sale of the Openn Group’s assets including the subsidiaries," KordaMentha said.

Openn Negotiation, a real estate platform facilitating real-time digital property transactions, went into voluntary administration on May 13.

2:11 pm May 21, 2024

Schroders uses AI for investment strategy

Glenda Korporaal

London-based global asset manager Schroders is using artificial intelligence to help develop its investment strategy, according to its chief investment officer Johanna Kyrklund.

Interviewed for the Morningstar Investment Conference on Tuesday, Ms Kyrklund said Schroders, which manages some $1.4 trillion in global assets, developed its own AI tool called Genie last year.

She said the firm was using it to process information, including analysing the speeches of central bankers around the world to see if they were hawkish or dovish.

“We are also now running components of our (investment) strategies using AI to generate the answer. We are basically using the signals generated by AI in fixed income to generate exposures to certain credit markets.”

She said it was using AI to do the work of an investment analyst. She said the firm was exploring the possibility of having a team of two or three portfolio managers assisted by artificial intelligence to make decisions on investing.

1:57 pm May 21, 2024

Bowen not alarmed by AEMO warning

Climate Change and Energy Minister Chris Bowen is not alarmed by the latest report from the Australian Energy Market Operator (AEMO) – which warned the risk of large-scale energy shortfalls has risen – given it is designed to identify gaps in the energy system.

“This is the process working; the Electricity Statement of Opportunity (report) is designed to show governments and the private sector where there might be some gaps and where the investment should be directed…the (reports) have forecasted reliability gaps for years,” he said during a Sky News interview on Tuesday afternoon.

“Investments come forward to make sure that (shortfalls) don’t happen and that’s what will happen in relation to this as well."

– Elizabeth Pike

1:47 pm May 21, 2024

Future gas strategy a critical step: O'Neill

Colin Packham

Labor’s future gas strategy is the first time the federal government has been clear eyed on the role of the fuel source, Woodside Energy chief executive Meg O'Neill says.

Labor earlier this month unveiled its strategy over the future of gas and its role in Australia’s $2.5 trillion economy.

Ms O’Neill said the policy was a critical step and one grounded in science – for the first time.

“It's really the first time that the federal government has used a data driven approach and not a wishful thinking approach to outline energy policy,” Ms O’Neill told the Australian Energy Producers conference.

1:43 pm May 21, 2024 Highlight

ANZ investigating internet banking issues

Joseph Lam

ANZ customers have reported issues accessing internet banking and the big four bank's mobile app.

The bank has confirmed it is investigating the situation, and that its phone banking is still functioning as are its ATMs and eftpos facilities.

"We’re investigating an issue affecting some customers accessing the ANZ app and internet banking. We’re working to resolve this as soon as possible and apologise for the inconvenience," the bank said.

"The ANZ Plus app, phone banking, ATMs and eftpos facilities continue to be available."