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The hint of recovery in the ASX tech sector yesterday turned out to be just that – a hint – with Afterpay, Xero, Nearmap, and Wisetech Global all diving this morning.
The local tech sector was easily the biggest laggard in early trade as the ASX 200 backed away from yesterday’s record high close with a 0.8 per cent decline.
Tech firms were down a collective 2.1 per cent to resume a slide that has wiped 15 per cent from the sector since April 19.
The fall follows a dour night for the Nasdaq, where US giants Apple, Microsoft, Facebook, Amazon, and Google parent Alphabet retreated amid renewed inflation concerns, which is seen as a threat to long-term revenues typical of the technology sector.
Bloomberg reports that concerns about knock-on price pressures from surging commodities boosted a gauge of inflation expectations to the highest level since 2006. That lifted Treasury yields slightly, taking the benchmark 10-year to 1.6 per cent. Local yields were steady.
After about 90 minutes of trade this morning, buy now, pay later firm Afterpay shed 3.8 per cent to $93.83 and earlier hit a low of $93.58.
The $28 billion firm has dropped 27 per cent – or $34.27- from April’s three month high price of $127.85.
Accounting software firm Xero fell 2.4 per cent to a five-week low $132.71, while Wisetech was also 2.4 per cent lower at a near two-month low of $27.25.
Nearmap dropped 4.1 per cent to $1.75 and Appen was 1.7 per cent down at $11.44, hitting a more than two-year low.
Altium fell 1.7 per cent to $24.47, Megaport dropped 2.3 per cent to $13.09, and TechnologyOne was 2.4 per cent lower at $8.87.
Nuix was up 0.3 per cent at $3.38.
Formerly Australian-owned Coca Cola Amatil is trading its last day on the local bourse, with the company officially set to delist today following its acquisition by Coca Cola European Partners (CCEP).
Amatil was purchased by CCEP for nearly $10 billion in a $13.50-a-share takeover approved by shareholders last month, and has been going through the motions of being removed from the ASX. Shares closed forever at $13.30 on April 21.
The ASX farewells Coca Cola Amatil today after the company was bought out by Coca Cola European Partners (CCEP). Credit:Joe Armao
The company told investors this morning today is its last trading day after CCEP completed its acquisition of the 30 per cent stake held by The Coca Cola Company.
Last week the business completed its buyout of independent shareholders.
Amatil’s board of directors and management have resigned post the acquisition and Amatil’s managing director of Australia, Peter West, has been appointed as the local head.
The company started out in 1904 as British Tobacco before moving into packaging and then striking gold in 1965 when it bought the first Coca Cola Bottlers licence. From there it concentrated on drinks and snapping up Coca Cola distribution rights around Australia and the region.
The National Australia Bank’s bid to fully acquire neobank 86 400 has been given the final tick of approval after the Federal Court waived through the deal.
The takeover required approval from the Australian Prudential Regulation Authority (APRA), Australian Competition and Consumer Commission (ACCC) and the courts.
NAB is moving into the future with the acquisition of neo-bank 86 400. Credit:Morgan Hancock
ACCC chair Rod Sims said any major bank that buys a smaller lender will be treated with an additional layer of scrutiny, as Australia’s banking landscape is already highly concentrated.
“These approvals have now been received,” NAB said in a statement on Tuesday.
The big four bank wants to accelerate its push into digital banking by combining the customer base of subsidiary Ubank with 86 400’s technology.
Ubank chief executive Philippa Watson said bringing together the two entities will create a “leading digital bank that attracts and retains customers at scale and pace and creates the next generation of simple, fast and mobile banking solutions”.
Ubank and 86 400 will continue to operate separately in the short-term, and NAB said customers should not expect any immediate changes.
The final green light comes at an important juncture for the neobank industry, with APRA recently raising the bar for new entrants following the failure of Xinja to develop a sustainable business model amid the historically low interest rate environment.
NAB shares are down 0.4 per cent in morning trade to $26.97.
And if you are wondering, like us, why on earth the bank is called 86 400, the explanation is: “There are 86,400 seconds in a day and our name represents that we’re helping Australians feel in control of their money, every second of every minute of every day.”
As far as Venn diagrams go, ‘elite UK rugby’, ‘ASX-listed biotech’, and ‘nasal spray’ probably doesn’t see much overlap.
Until now.
Harlequins – a giant of the UK rugby scene – this morning announced it has partnered with Melbourne’s Starpharma and the Viraleze Antiviral Nasal Spray.
Harlequins is the first Rugby Club in the UK to partner with Viraleze – which been shown in laboratory studies to rapidly inactivate more than 99.9 per cent of coronavirus/SARS-CoV-2.
Starpharma, a $700 million company, was trading 1.7 per cent lower at $1.725 this morning.
“Viraleze is an ideal product for a team like the Quins, especially when the Club is playing away requiring team travel, as well as the close contact that is unavoidable in playing and training,” Starpharma chief executive Jackie Fairley said.
“We hope Viraleze brings the Club and its supporters’ greater confidence and peace of mind as they embark on the final matches of this season.”
Iron Ore prices keep on raising eyebrows after jumping $US39 in three days to all time highs of $US231 per tonne. The higher prices are driven by strong demand from Chinese steel mills, which use iron ore to make steel. So could these iron ore price cause inflation in Australia as builders and manufacturers pass on higher steel costs?
The Reserve Bank of Australia has made it clear it wants to see inflation return to between 2 per cent and 3 per cent, but this needs to be accompanied by wages growth.
Civil infrastructure projects like rail and tunnels, or even Victoria’s rail tunnel, could face higher costs due to the higher amount of steel used. Credit:Joe Armao
The head of Australian economics at Commonwealth Bank’s Global Economics and Markets Research division, Gareth Aird, told Markets Live it was “absolutely good news for us that iron ore prices are so high” as it leads to higher tax receipts from the mining companies.
“It puts upwards pressure on import costs for business and that could flow through to inflation. (But) it’s still going to take more than that. It’s going to need a very tight labour market and proper wages inflation to come through,″⁣ he said.
“I think we are going to see infrastructure costs for government projects blow out a lot. The projects that state governments have penciled in are going to cost more, and I think in time wages in the construction space are going to go up too.”
This concern about iron ore blowing out the cost of government projects – particularly rail and tunnel infrastructure – is shared by Jane Northey, AECOM’s cost management practice lead in Victoria.
“The recent increase in iron ore pricing has potential to significantly impact the Federal Government’s proposed $10 billion budget investment in Road and Rail projects,″⁣ she said.
China’s steel industry was also facing greater emission reduction targets, which was adding to costs, she said.
“With the Australian Government already heavily invested in civil infrastructure stimulus spend – a shortage of steel may further inflate pricing to meet heavy supply for rail, reinforcement, bridge (or) tunnel structural steel. The industry is currently flagging increases of 10 per cent to 20 per cent, with potential labour shortfalls adding further impacts,″⁣ she said.
The chief executive of the Australian Constructors Association (ACA), Jon Davies, said steel prices were just one of many risk factors for developers and builders. Steel also made up a relatively small proportion of total material cost in most projects, except for steel frame buildings.
He added the ACA wanted the Federal Government to take a more active role in “incentivising best practice procurement and delivery processes”, citing the UK Government’s recent initiative The Construction Playbook.
“Improving these processes can help to bring down the cost of infrastructure and provide greater certainty of outcomes for the benefit of all,” Mr Davies said.
The ASX 200 has backed away from Monday’s record high close with tech stocks leading a broad-based decline.
The market was last down 0.6 per cent at 7132.4 after Wall Street slipped overnight.
The Nasdaq plunged 2.6 per cent as tech giants Apple, Microsoft, Amazon, Facebook, Google and Tesla all fell heavily.
Local tech stocks followed suit, with Afterpay down 2.7 per cent at $94.87.
New records for iron ore have not translated into gains for materials stocks, with BHP only narrowly ahead and Rio Tinto and Fortescue Metals falling.
The big banks were also mixed in early ASX trade. A2 Milk continued its downward spiral.
Wall Street traders like Trey Griggs are finding a new lease on life in the $US2.4 trillion ($3.1 trillion) crypto Wild West.
After two decades in energy trading, the 51-year-old was lured by a former Goldman Sachs colleague this February into a new world of market-making in digital currencies.
The surging value of cryptocurrencies is attracting new traders to the space.Credit:Bloomberg
Now he’s in fighting spirits – unleashing old-school finance tricks to exploit the industry’s rampant inefficiencies, volatility and downright weirdness.
“All the fun that used to be had 30 years ago in the commodity markets and is no longer fun — that fun is now in crypto,” says the US chief executive officer at GSR Markets in Houston.
Griggs is among crypto newcomers deploying systematic strategies that are tried-and-tested in conventional asset classes – price arbitrage, futures trading, options writing – in a booming new corner of finance. As more mainstream investors get behind bitcoin, boutique firms are joining the likes of Mike Novogratz in an ever-broadening crypto rally that keeps breaking records.
Read the full story here
Bloomberg
The ACCC has asked for the public’s opinion on a proposed deal between Woolworths and food services company PFD aimed at assuaging competition concerns related to the two companies’ $550 million tie-up.
The competition regulator announced this morning it had received a proposed undertaking from Woolies and PFD which would see the two businesses maintain a degree of separation for three years post the acquisition and impose a raft of requirements on PFD’s board when dealing with suppliers.
Woolworths announced its intention to acquire 65 per cent of PFD in August last year, however the deal has drawn significant interest from the ACCC and independent suppliers, who are concerned the acquisition could see Woolworths increase its already substantial bargaining power with food manufacturers.Credit:Jacky Ghossein
Woolworths announced its intention to acquire 65 per cent of PFD in August last year, however the deal has drawn significant interest from the ACCC and independent suppliers, who are concerned the acquisition could see Woolworths increase its already substantial bargaining power with food manufacturers.
In response, the supermarket giant promised the ACCC it would keep trading terms for each business and its suppliers intact and ‘firewall’ them so the retail and non-retail sides of the business did not influence each other.
On Monday, it released a draft of its proposed undertaking with PFD which would preserve the independence of the two businesses for three years following the acquisition in order to maintain “current market dynamics” and let the market adjust to a Woolworths-controlled PFD.
Obligations would be placed on PFD’s board to impose confidentiality protocols for certain supplier information and the company would also be required to implement a charter when dealing with suppliers requiring the business to act in good faith and with confidentiality.
“The release of an undertaking for public consultation should not be viewed as a sign that we will ultimately accept it, or any other form of undertaking,” ACCC Chair Rod Sims said.
“We are seeking feedback from market participants about whether the proposed behavioural undertaking is likely to address competition concerns raised by Woolworths’ acquisition of PFD.”
Consumer confidence dropped by 1 per cent last week, mainly due to the COVID case registered in Sydney that was followed by the restrictions put in place to prevent an outbreak.
However, one of the more notable things from the latest ANZ-Roy Morgan survey is that the proportion of respondents expecting ‘bad times’ in ‘current economic conditions’ dropped to just 12 per cent, its lowest level in over forty years.
“(This) points to positive sentiment about the near-term outlook being very widespread,” said ANZ head of Australian Economics David Plank.
“The fall in overall confidence was not surprising given that Sydney recorded a mysterious case of COVID-19, and restrictions were imposed to prevent any further spread. As a result, confidence in Sydney took a hit of 7.6 per cent.”
Rating changes, via Bloomberg
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