ASX 200 rises; Elders profit, dividend down; Star jumps on Hard Rock interest; Michael Hill dives

Index advances towards March closing record as gold, iron ore jump. Star jumps with Hard Rock consortium among suitors. Elders gains. Profit warning, analyst downgrades hit Michael Hill. Guidance boost for Nuix.

Corporate and economic updates are making for an exciting week for ASX investors. Picture: Gaye Gerard

Welcome to the Trading Day blog for Monday, May 20. The ASX 200 index closed 0.6 per cent higher at 7863.70 points, led by strong mining and energy sector gains. This week the index may test its March 28 record high close of 7896.90 points.

The Aussie dollar is trading near US67.01c.

Updates

4:37 pm May 20, 2024

Resources lead 0.6pc gain in ASX 200

David Rogers

Strong gains in resources stocks in the materials and energy sectors, combined with solid gains in the financials sector lift Australia's share market at the start of the week following gains in commodities and US stocks.

The S&P/ASX 200 index ends up 0.6 per cent at 7863.7 after hitting 7873.8.

The benchmark share index is only about 0.5 per cent from record highs.

Outperforming sectors include energy, materials and tech.

BHP gains 1.9 per cent and Rio Tinto adds 2.8 per cent – even as Citi downgrades – as iron ore futures test $US120 a tonne after the latest stimulus measures for China's housing sector announced on Friday.

Sandfire Resources jumps 3.9 per cent amid surging copper prices.

Evolution Mining leaps 5.2 per cent as spot gold jumps 1.6 per cent on Friday and 1.4 per cent on Monday, hitting a record high of $US2,450 after Iran's president died in a helicopter crash.

Crude oil rose slightly and Woodside Energy adds 2.1 per cent.

Uranium stocks soar with Paladin Energy up 7.6 per cent after the US government will ask companies to bid next month on contracts for as much as US$3.4B of domestically produced nuclear reactor fuel.

It came as President Biden signed a ban on imports of enriched uranium from Russia, unlocking $US2.7bn in funding to build out the US uranium fuel industry.

New Hope leaps 5.8 per cent on a strong production report and guidance.

Financials do much of the heavy lifting with three of the major banks up 0.6-0.7 per cent and Macquarie Group up 1.7 per cent.

Star Entertainment leaps 20 per cent after confirming takeover approaches.

3:53 pm May 20, 2024 Highlight

Gold soars on Iran uncertainty

David Rogers

Spot gold hit continues to hit record highs after the death of Iran's President Ebrahim Raisi was confirmed after a helicopter crash.

Gold extends its intraday rise to 1.4 per cent, hitting a record high of $US2,450.04 per ounce after Iranian state media declared the President was dead.

Gold hit $US2,440.59 after his helicopter went missing, exceeding a previous peak of $US2,431.52 that was reached on April 12th before Iran's missile and drone attack on Israel.

But oil prices still aren't reacting much at all these potentially destabilising latest events in Iran. Brent crude oil futures are up 0.4 per cent at $US84.28 a barrel. WTI crude futures are up 0.2 per cent at $US80.22.

2:37 pm May 20, 2024

AVJennings down as drops Qld project

Megan Neil

AVJennings shares have fallen after the developer dropped plans for a 3500-lot housing estate in Queensland, citing a jump in development and infrastructure costs.

After spending several years working on the development approval for the Rocksberg project, AVJennings has terminated its option in relation to the land in Caboolture. Finalisation of the option had been expected in late 2024.

"Expected development and infrastructure costs have increased significantly since the option option was entered into and have not been matched by increases in forecast revenue," AVJennings told the ASX. "The extended length of time until meaningful returns could be expected to flow to the company would put significantly greater pressure on the company's balance sheet than originally contemplated."

The housing estate developer said negotiations about a restructure of the agreement failed to reach an agreement with the landowner and other key stakeholders before the next option payment this month.

AVJennings will write off $17.2m in capitalised development expenses and its lots under control will reduce by 3500. "The funding previously earmarked for the Rocksberg project will be redeployed and will result in significant additional capital being available for the company’s other live projects over FY25 and FY26."

AVJennings shares are down 9 per cent to 30.5c, in a stronger overall market.

1:35 pm May 20, 2024 Highlight

Qantas curveball hits compo hearing

Robyn Ironside

Qantas has thrown a curveball to the Federal Court on the final day of hearings to decide what compensation the airline should pay to workers whose jobs were unlawfully outsourced.

Both Qantas and the Transport Workers Union were due to make final submissions, but the hearing was delayed when the airline revealed it wanted to introduce a new “counterfactual”.

In a written submissions before Monday’s hearing, Qantas raised the prospect it would have outsourced the workforce in December 2020 lawfully, based on the evidence of former executive Andrew David.

The TWU argued the new theory should not be allowed, but Justice Lee said he would have to consider it in the interests of procedural fairness. Shares in Qantas are flat near $6.12 at 1.35pm AEST.

Full report here.

1:17 pm May 20, 2024

Iron ore futures rise 2pc helping miners

David Rogers

Singapore iron ore futures rise 2 per cent to a two-week high of $US117.70 a tonne, on track for a third straight rise and a 5 per cent rise in this time as Friday's property stimulus measures appear to have some impact after being flagged by media reports at the start of last week.

The move is rubbing off on iron ore miners with Rio Tinto rising 2.5 per cent to a five-month high of $135.42 even as Citi downgrades to Neutral.

BHP gains 2.1 per cent to a four-month high of $45.82.

Fortescue gains 1.7 per cent to a four-month high of %$27.50.

Iron ore futures look well placed to break above chart resistance at $US120 in in the short-term after repeatedly bouncing off their 200-day moving average which has risen to $US113.72.

However, analysts are generally downplaying the significance of China's latest policy steps which include lowering the minimum downpayment for mortgages and plans to allocate funds from state-backed institutions to buy houses.

Citi cut Rio Tinto to Neutral on Monday with an unchanged target price of $137 as it said China's property indicators are "still in deep contraction" and the latest property support measures won't boost steel demand.

"While the recent Politburo meeting pledged to support the property sector through supply & inventory management to stabilise house price and sales, Citi thinks this is unlikely to stimulate incremental steel demand," said Citi analyst Paul McTaggart.

"Furthermore, China steel mills are now loss-making again and we are heading into a period of seasonal weakness for mining equities."

12:39 pm May 20, 2024

Gold hits record high amid Iran jitters

David Rogers

Spot gold hit record high amid elevated geopolitical risk from the disappearance of Iran's President Ebrahim Raisi after a helicopter crash.

Gold rose as much as 1.1 per cent to $US2,440.59 per ounce as trading got underway in Hong Kong, exceeding a previous peak of $US2,431.52 that was reached on April 12th before Iran's missile and drone attack on Israel.

However, oil prices aren't responding to the latest events in Iran.

Brent crude oil futures are up 0.3 per cent at $US84.20 a barrel.

WTI crude futures are little changed at $US80.17.

12:28 pm May 20, 2024 Highlight

Star ex-bosses not on 'frolic of their own'

Glen Norris

Former Star chief executive Robbie Cooke and chairman David Foster were 'not on a frolic of their own' in their alleged hostile relationship with the casino regulator, the Bell II inquiry has been told.

Luke Livingston, counsel for Mr Foster, said naming the men as "barriers to suitability" to the group recovering its Sydney casino licence was personally damaging and unfair.

Mr Livingston said personal emails between the two men that indicated a hostile attitude to the NSW Independent Casino Commission (NICC) and its manager Nicholas Weeks had been taken out of context.

Mr Livingston said emails from Mr Foster to Mr Cooke that indicated the NICC was prepping for war and "we better do the same" was a response to a perceived threat to the company. "It was a fleeting reaction and quickly corrected," said Mr Livingston.

12:16 pm May 20, 2024

China's loan rates steady

China’s benchmark lending rates were held steady this month, central bank data showed Monday after Beijing announced bold moves to address property-sector malaise.

The one-year loan prime rate (LPR) was steady at 3.45 per cent, while the five-year rate was unchanged at 3.95 per cent, according to the official data.

Economists had expected the benchmark rates to be left untouched after the People’s Bank of China kept key policy rates, including the interest rate on the medium-term lending facility that is used to price LPRs, unchanged earlier this month.

The central bank is still likely to ease its monetary stance further as it needs more liquidity for the nation’s banks to purchase government bonds, including the issuance of ultra-long special treasury bonds that started last Friday.

Meanwhile, Beijing on Friday announced fresh moves to address its prolonged property-sector downturn, including having local governments buy back unsold homes, lowering down payments for would-be home buyers, and removing the floor on mortgage rates that banks offer clients.

– The Wall Street Journal

11:57 am May 20, 2024 Highlight

Nuix surges on guidance upgrade

Megan Neil

Nuix shares have surged as much as 20 per cent after the software company upgrades its annual guidance.

Nuix says based on general positive trading into the second half that includes a significant multi-year win, the company is likely to exceed its strategic target of growing statutory revenue by around 10 per cent.

Nuix says it expects statutory EBITDA for the 2024 financial year is likely to be in the range of $47m-$52m, up more than 35 per cent on the previous year. Underlying EBITDA, which excludes non-operational legal costs, is likely to be in the range of $63m-$68m, up more than 36 per cent.

Morgan Stanley analysts say they see the upgrade to the FY24 guidance "as validation of our overweight thesis".

"At first look, we view this news as incrementally positive and matches our own industry feedback/channel checks about client interest in Nuix's new products (e.g. Neo platform + new modules) and other product enhancements (e.g. Rampiva workflow automation software and AI NLP software Topos).

"Next key catalyst for the shares will likely be first-time outlook provided for FY25 –
revenue, ACV (annualised contract value) and underlying EBITDA – to see if this rate of improvement is sustainable, which is expected to come with the release of full year FY24 results in August 2024."

Nuix says it remains confident of achieving its previously-stated target of growing its ACV for FY24 by around 10 per cent.

Nuix shares jump as much as 20 per cent to $2.86, and are currently up 18 per cent to $2.81.

11:47 am May 20, 2024

ASX 200 up 0.6 per cent; gains broaden

David Rogers

Australia's share market gains broaden as the index nears record highs.

The S&P/ASX 200 index is up 0.6 per cent at 7858.4 after hitting an intraday high of 7870.5, not far from a record high close of 7897 reached on March 28th.

Materials and energy stocks remain in the lead but gains broaden to include all sectors except property and health care.

Takeover interest in helps sentiment with Star Entertainment confirming that it has had approaches from multiple parties albeit nothing substantive.

In the materials sector BHP and Rio Tinto rise about 2 per cent, Evolution Mining jumps 5.3 per cent and Sandfire gains 4.1 per cent.

Uranium stocks lead the energy sector with Paladin up 7.5 per cent and Deep Yellow up 6.7 per cent. Coal miner New Hope jumps 6.8 per cent as its quarterly coal production and sales rose over 20 per cent and New Acland coal sales guidance jumped 21 per cent on increased rail capacity availability.