ASX 200 ends flat; Goodman lifts guidance; Perpetual's KKR deal details; downgrades hit Imdex

The market closed broadly flat, with seven of the 11 sectors in the black. Perpetual's forgettable day after KKR deal triggers calls for chair to exit with outgoing CEO. Analyst downgrades hit Imdex. IPH bids for Adamantem-target Qantm.

Corporate updates are on investor radars for Wednesday. Picture: Gaye Gerard

Welcome to the Trading Day blog for Wednesday, May 8. The ASX 200 index closed broadly flat at 7,804.5 points after strong gains in recent days, with industrials and technology stocks finding investor support.

The Aussie dollar is trading around US65.79c after RBA governor Michele Bullock put potential rate hikes back on the agenda after the board’s meeting on Tuesday.

Updates

4:28 pm May 8, 2024

ASX 200 ends flat after strong gains

David Rogers

Australia's share market ends flat after strong gains in recent days.

The S&P/ASX 200 index ends up 0.1 per cent at 7804.5 points after hitting a four-week high of 7814.9 in early trading.

Most sectors rise with industrials, tech, property, health care and utilities outperforming and consumer discretionary the main laggard.

Among large cap standouts Pro Medicus adds 2.8 per cent, Atlas Arteria gains 2.4 per cent after its Macquarie Australia Conference presentation, Transurban gains 1.4 per cent and ANZ jumps 1.2 per cent cum-dividend.

So far the Macquarie conference has seen less downgrades than feared.

Perpetual dives 7.1 per cent as investors cash out after it after agreeing to sell its wealth and corporate trust units to KKR for about $2.2bn.

The ASX 200 rose 1.4 per cent rise on Tuesday after the RBA was less hawkish than feared, adding to positive leads from Wall Street as interest rate worries receded after the FOMC statement and US jobs data last week.

A 3 per cent rise in the last four days was the best such rise in five months.

4:06 pm May 8, 2024

Aussie return to the office

Staff writers

The country's CBD office occupancy rate has increased six per cent from the last quarter, up from 70 per cent in December 2023, according to CBRE Group office occupancy data on Wednesday.

“Australia’s capital cities have the benefit of better access to public transport, shorter commute times and lower inner-city crime rates,” CBRE said.

Brisbane’s occupancy averages 87 per cent on the peak day (Tuesday), up from 83 percent in December last year.

Sydney has improved from an occupancy rate of 65 per cent in the first quarter of 2023 to a weekly average of 77 per cent in the same period in 2024.

While Melbourne and Canberra have the lowest attendance rates, both cities improved over the 12 months.

2:24 pm May 8, 2024

Top Namoi shareholder gives takeover tick

Joseph Carbone

Samuel Terry Asset Management announces its support for Olam's sweetened off-market takeover proposal for Namoi Cotton.

STAM, Namoi's largest shareholder with 25 per cent voting power, has indicated it will vote in favour of the new 70c per share bid from Olam after obtaining a relevant interest in 50.1 per cent of the cotton ginner's shares.

Saudi-backed Olam revised its initial 66c per share offer (requiring a 90 per cent relevant interest) after the Louis Dreyfus Company attempted to steal the deal with a 67c per share all-cash bid.

NAM shares are up 3.4 per cent to 76c per share.

1:50 pm May 8, 2024

Perpetual's worst day in 18 months

David Rogers

Perpetual shares are having their worst day in 18 months.

Shares are down 7.6 per cent at $22.19 after falling as much as 9.4 per cent to a more than five-month low of $21.76.

Investors will be wondering what Washington Soul Pattinson is doing with its 11.64 per cent stake as the share price plunges after the KKR deal.

It's the worst day since a 13 per cent fall on 17 November 2022.

1:34 pm May 8, 2024 Highlight

Ex-Perpetual boss wants chair out too

Cliona O'Dowd

Former Perpetual equities boss Peter Morgan has slammed the company's board and management and called for chairman Tony D’Aloisio to go alongside CEO Rob Adams.

“The best way to put it is that this (deal) is trying to correct mistakes made by people who really had no idea about how to run a funds management business,” Mr Morgan said.

“It’s just turned into a mess. Personally I think the chairman should be going too… And it was such an easy business but it just became a plaything, basically, for the board and management.”

Mr Morgan was speaking to The Australian after Perpetual announced it would sell its corporate trust and wealth management businesses to private equity giant KKR for $2.2bn.

Shares are still being hammered, down 7 per cent to $22.29 at 1.30pm AEST.

1:33 pm May 8, 2024

Goodman can beat revised guidance: Citi

David Rogers

Goodman can beat its upgraded FY24 guidance at its year-end results and provide strong guidance for FY25, according to Citi analyst Howard Penny.

"In our view, the medium-term growth outlook remains attractive," Mr Penny says after Goodman's presentation at the Macquarie Australia Conference.

He notes that over the medium term, only 400MW of the potential power bank of 4.3GW is included in its $12.9bn development pipeline.

"As more of the potential power bank shifts into development work in progress, this should continue to drive the duration of growth potential for Goodman relative to real estate peers," Penny says.

"In the short term growth has also been upgraded from 11 per cent to 13 per cent in operational EPS in FY24.

"Although the stock has performed well year to date, we see further potential for GMG to beat this renewed guidance at year-end results with continued strong guidance into FY25. "

GMG last down 0.5 per cent at $34.22.

1:26 pm May 8, 2024

Farmers hit out against biosecurity levy

Charlie Peel

Farmers have launched a last ditch attack on the Albanese government’s looming biosecurity levy, arguing it is in “contempt” of the agriculture industry.

The levy, which would raise $50m a year from producers, is due to be voted on in the senate next week and is supposed to be implemented from July 1. But a Senate committee conducting an inquiry into the tax on farmers was last week told the department was well behind on the implementation of collecting the levies.

The National Farmers’ Federation has launched an eleventh hour “day of action” from the Beef2024 industry event in Rockhampton, where Agriculture Minister Murray Watt has been speaking to farmers.

“On behalf of our members, nearly all of Australia’s 85,000 producers and the thousands of individuals and businesses in the supply chain, we are telling this Government to scrap the tax,” NFF president David Jochinke said.

“We are less than two months away from this proposed levy being implemented, yet we still have no idea how the levy will be collected and managed. What a shambles.”

Farmers have argued against the policy, which will see the levy applied to each industry sector based on its gross value product over three years, saying it would force them to pay for biosecurity measures to protect them from products imported by their competitors. The Nationals have also launched a new petition calling for the levy to be scrapped.

The senate report is due on Friday.

1:11 pm May 8, 2024

Oxford cuts long-run AUD forecasts

Valerina Changarathil

Oxford economists have cut long-run expectations for the Aussie dollar to US74c, from US80c – and very close to its average value since it was floated in 1983 – due to the ongoing structural weakness in the link between the currency and commodity prices and the growing strength of the US dollar.

The local currency is currently trading below US66c, at US65.73c.

"Part of this undershoot (in expectations) can be attributed to a broader flight to quality in recent years that has led to the US dollar performing strongly against most advanced economies' currencies through market ructions related to the pandemic and geopolitical events," Oxford Economics Australia says in its note on Wednesday.

But while the AUD has typically displayed a close link to export prices – the strongest during the mining investment boom – structural changes since the mid-2010s in the terms of trade have had little bearing on the currency, it says.

"The Australian dollar has always had a relatively strong, positive correlation with the terms of trade – as demand and prices for Australia's exports have moved, so has its currency." But this relationship has weakened since around 2015. "Indeed, through the recent spikes in the terms of trade caused by dislocation in global energy markets, the dollar has remained under downward pressure."

Export demand will still play a role in determining the value of the AUD and the currency will appreciate in the medium term as risk sentiment improves and interest rate differentials with other advanced economies become more favourable, but it will trend in the long run "to a level lower than US80c". Since it was floated, the AUD has fluctuated between a low of US47.75c in April 2001 and a high of $US1.10 in July 2011.

12:41 pm May 8, 2024

Qantas gains as CEO spruiks improvements

Tansy Harcourt

Qantas shares are building on gains above the $6 mark after chief executive Vanessa Hudson hailed the airline's improved performance at the Macquarie conference on Wednesday.

Ms Hudson said the airline has been reaching 90 per cent on time performance levels in the past few weeks and that the nation’s biggest carrier is now back to pre-Covid capacity.

Just days after she put to bed a long-standing fight with competition regulator ACCC over selling so-called ghost flights through a $120m settlement, Ms Hudson says the focus is on managing its improved performance while seat loads remain high.

Demand remains strong even as Australians struggle with the cost of living crisis and high inflation. At 12.35pm AEST, Qantas shares are near $6.22.

12:35 pm May 8, 2024 Highlight

Coles 'studying' inquiry recommendations

Tansy Harcourt

Coles chief financial officer Charlie Elias said the supermarket giant is still working through the recommendations from a senate inquiry released late Tuesday.

Some recommendations, which did not receive cross-party support, include supermarkets being be forcibly broken up if they engage in anti-competitive behaviour. However there was agreement on a mandatory code of conduct between supermarkets and suppliers such as farmers.

“We are very mindful that consumers out there face cost of living pressures, whether it's mortgages, rent, energy, and groceries,” said Mr Elias.

“We'll study the recommendations. To the extent that the number of the recommendations for example go to really impacting fair and free competition for example, food and grocery are things that we couldn't support. But the other thing is the mandatory code of conduct. We do support that and so we'll work through those and provide considered responses.”