ASX slumps; Star reveals debt proposal; Bendigo and Westpac fall

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket started the week firmly in the red as energy and banking stocks weighed heavily on the index.

The S&P/ASX 200 dipped sharply at the beginning of the session before partially recovering to close 18.7 points or 0.2 per cent lower, at 8537.1 points. Most sectors were trading either flat or in the green, with utilities and consumer staples stocks performing well. Seven of the 11 sectors finished higher.

Wall Street closed the week with a mixed session. Credit: AP

The lifters

Audiovisual networking business Audinate Group stormed 26.5 per cent higher on Monday as earnings beat analyst expectations thanks to software sales and cost savings. Infant formula maker A2 Milk soared almost 20 per cent after upgrading its full-year revenue guidance and issuing its first-ever dividend of 8.5¢ fully franked. Revenue for the half-year grew 10.1 per cent to $893.8 million and net profit rose 7.6 per cent to $91.7 million.

Steel producer BlueScope gained 13 per cent, with chief executive Mark Vassella saying potential Trump tariffs would boost business, but also raise the risk of Chinese steelmakers dumping their stock in Australia.

Embattled gaming company Star Entertainment announced it had received a $650 million debt financing proposal from US asset management giant Oaktree Capital Management. The Star said it was considering the offer, with its shares closing 12.5 per cent higher.

Adore Beauty ticked up 0.6 per cent after revealing that reported earnings had doubled, net profit was up 90 per cent and gross margins had increased by 2.7 percentage points to 36.2 per cent.

Pulling back and tweaking promotional periods has helped improve the quality of the revenue. “I’m not interested in low-margin sales,” chief executive Sacha Laing told this masthead.

The laggards

Bendigo Bank was the poorest performer of the day, shedding 15.3 per cent after the regional lender announced a fall in interim cash profit to $265.2 million, below market expectations. The bank also flagged higher funding costs and said investment spending was elevated.

Westpac was 4.1 per cent lower after releasing its first quarter trading update which showed its net interest income fell 6 per cent in the final three months of 2024. CBA lost 0.3 per cent, NAB slipped 1.2 per cent and ANZ dropped 0.4 per cent.

Miners lost ground. Fortescue shed 0.6 per cent, Rio Tinto lost 0.2 per cent while BHP slid by 0.3 per cent.

The lowdown

Market watchers are expecting a rate cut from the Reserve Bank tomorrow, with MLC Asset Management senior economist Bob Cunneen saying there are many reasons why it could and should cut.

“Australia’s economic activity is lacklustre with annual GDP growth below 1 per cent for the September quarter 2024. Consumer spending is modest at best. Inflation pressures have eased significantly with the December quarter showing annual headline inflation at 2.4 per cent and the trimmed mean at 3.2 per cent,” Cunneen wrote in a note.

“By the RBA’s own measures, the current cash interest rate of 4.35 per cent is above the neutral interest rate of circa 3.75 per cent which indicates that monetary policy is restrictive.”

On Friday on Wall Street, the S&P 500 barely budged and slipped by less than 0.1 per cent, a day after rallying within 0.1 per cent of its record set last month. The Dow Jones dipped 165 points, or 0.4 per cent, while the Nasdaq composite rose 0.4 per cent.

The S&P 500 still closed out its first winning week in the last three thanks in part to reports showing companies made even fatter profits at the end of 2024 than analysts expected. They’ve helped the market power through a range of worries centred on higher interest rates and stubborn inflation.

The hope among investors has been for economic data to remain at a Goldilocks level, where it’s not so weak that it raises worries about a downturn but not so strong that it creates upward pressure on inflation.

This past week featured a couple of disappointing reports that showed inflation unexpectedly accelerated last month. Besides squeezing tighter on US households’ budgets, such stubbornly high inflation is likely to keep the Federal Reserve on hold for a while when it comes to providing relief through lower interest rates.

Inflation may feel more upward pressure from tariffs that President Donald Trump has announced recently. So far, though, the US stock market has taken such threats in stride. The belief is that Trump is using tariffs as a tool for negotiation, and he may ultimately avoid triggering a punishing global trade war in order to prevent damage to the US sharemarket and economy.

His most recent tariff announcement, for example, won’t take full effect for at least several weeks. That leaves time for Washington and other countries to negotiate and hopefully lessen the ultimate shock.

Tweet of the day

Quote of the day

“Have you ever done anything successful on your own?”

That’s a question that James Murdoch, the son once seen as heir-apparent to his father Rupert Murdoch’s media empire, was asked by Rupert’s lawyers amid his siblings’ legal challenge to “Project Family Harmony”. Read more on how James broke the cardinal rule that had governed his life: do not speak on the record about the family.

You may have missed

Rupert Murdoch’s move to squeeze three of four eldest children out of controlling his media empire was arguably the biggest dice-roll of his 70-year business career. And he failed.

The hubris that made him believe safeguarding his legacy as a media mogul was more important than the future of his family will now reverberate.

The risks for Rupert were enormous: win or lose, he stood to blow up the already fraying fabric of the Murdoch family. But a loss has added the venom of galvanising three of his children (Prudence, Elisabeth and James) against his firstborn son and anointed successor, Lachlan. Read more from our columnist Elizabeth Knight.

With AP

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