ASX bounces as real estate, tech rally; First Quantum mothballs mine

The Australian dollar climbed to its highest in nearly a year against the New Zealand dollar due to a diverging interest rate outlook.

The Aussie fetched $NZ1.099, a level last seen in June and is up 0.8 per cent this month. Traders are wagering a 50 per cent chance the Reserve Bank of Australia will raise the cash rate to 4.6 per cent this year, in contrast to NZ where the market is fully priced for a reduction in the cash rate to 5.25 per cent before Christmas.

Meanwhile, the Australian dollar rose to a three-week peak at US65.86¢ against the greenback.

First Quantum will put its Ravensthorpe nickel and cobalt operations into care and maintenance within days, leaving more than 500 people out of work as the fallout from a rapid increase in nickel supply from Indonesia continues to rock Australian producers.

The Canadian miner, which owns Ravensthorpe in partnership with South Korea’s POSCO, said royalty relief offered by the WA government in an attempt to save the industry was not sufficient to keep the mine open.

The mine lost $US22 million in the first three months of this year following heavy losses last year as nickel prices plunged.

First Quantum will shed about 330 of its workers at Ravensthorpe. Another 200 contractors will be left out of work. The job losses are on top of job cuts that affected about 325 workers in January.

Star Entertainment Group is in salvage mode.

If what’s left of the board is to salvage something for long-suffering shareholders, it needs a salvage CEO. And if there is to be a great escape, it needs to happen quickly.

One name keeps coming up. It’s an executive who has done it before, has full probity clearance, knows the regulators and politicians, and has investors’ backing.

That executive is former Lendlease boss Steve McCann.

If up for the challenge, McCann could demand a pretty penny. Some influential investors have already made it known that they would consider it money well spent. The investor push is on.

Hong Kong’s benchmark equity index is headed for a technical bull market as a surge in Chinese property shares gives more impetus to this month’s stellar rebound.

The Hang Seng Index jumped more than 2 per cent on Monday, taking its advance from a January 22 low to over 20 per cent. A close at those levels will have the gauge meet the definition of a bull market, joining a cohort of other indexes in China and Hong Kong that have reached such a milestone in recent weeks.

Monday’s trading witnessed a broadening of the rally that has seen equities in Hong Kong rank among the best performers globally in April, with Goldman Sachs Group Inc. saying that a “fear of missing out” may be building up. The gains have come on the back of strong inflows from the mainland as well as a rotation by global funds into relatively cheap Chinese internet stocks, which carry a high weighting on the Hang Seng Index.

“The recent rally and out-performance were likely driven by some re-allocation flows as global risk sentiment took a hit and China, with its deep discount, found some support from investors,” strategists at Nomura Holdings, including Chetan Seth, wrote in a note. “Thus, we think China may continue to outperform, especially in a scenario where global risk sentiment remains cautious.”

On Monday, property stocks were leading gains in the broader market, with sentiment boosted after a major developer reached a solution with bondholders for its liquidity issues. A Bloomberg Intelligence gauge of builders’ shares jumped more than 12 per cent, the most since November 2022. Shares of Macau casino operators also surged after the introduction of measures to streamline the entry and exit process for Chinese citizens.

Australia’s sharemarket is holding higher as trading enters its final hours, offsetting some of the sell-off that swept the market in the previous session.

The S&P/ASX 200 is 58.7 points or 0.8 per cent higher at 7611.4, recouping some of Friday’s 1.4 per cent decline. Eight of the 11 industry groups are trading in the green. The All Ordinaries is also up 0.5 per cent.

The interest-rate-sensitive real estate sector is the best performing, up 1.5 per cent.

Wall Street rallied on Friday after strong earnings from Microsoft and Google parent Alphabet pushed the Nasdaq up more than 2 per cent. Amazon, AMD and Apple will report earnings this week. On the local bourse, the tech sector gained 0.9 per cent.

Meanwhile, wealth giant Perpetual has risen 3.4 per cent after confirming it is in talks to sell its wealth and trust business to buyout giant KKR. The confirmation comes after The Australian Financial Review’s Street Talk column reported the parties were nearing a deal.

Stocks on the move

Boss Energy is the best performing on the benchmark, up 7.8 per cent to $4.72 after unveiling its first quarterly report since beginning uranium production at its Honeymoon project in South Australia.

The Star Entertainment Group is 6.4 per cent higher at 41.5¢. Chairman David Foster has stepped down from the embattled casino operator. The board has appointed board member Anne Ward in his place.

Healthtech ResMed is 2.9 per cent higher at$32.40 after reporting a rise in revenue and profits in its latest quarterly report.

Shares in Graincorp climbed 0.9 to $8.34 per cent after ASX activist fund HMC Capital revealed a 5 per cent stake in the east coast grain handler after trading ceased on Friday.

IT company Megaport dropped 5.3 per cent to $13.54 despite upgrading its FY24 EBITDA guidance to between $56 million and $58 million, from $51 million to $57 million previously. However, analysts said weak recurring revenue and KPIs during the quarter were below expectations.

TPG rallied 2.9 per cent to $4.26 after signing a network deal with rival telecommunications company Optus. The agreement will extend TPG Telecom’s 4G and 5G mobile network to reach 98.4 per cent of the Australian population by more than tripling its regional mobile sites. TPG is expected to pay Optus $1.17 billion over the deal’s 11-year term.

Optus parent Singtel is writing off billions of dollars, warning of higher costs and a weaker Australian economy, cushioned by a $1.6 billion cash deal with rival TPG Telecom to expand telecommunications services in regional Australia.

The $S3.1 billion ($3.5 billion) Singtel write-down, revealed early on Monday in Singapore, is mostly related to Optus, which has been struggling with falling profits in its enterprise business, which provides services to business and government clients and is run by former NSW premier Gladys Berejiklian.

Optus’ enterprise assets will take a $540 million impairment in the second half of the financial year ending March 2024, and about $S2 billion ($2.2 billion) will be written off its goodwill due to rising costs and a weaker outlook for the Australian economy.

Star Entertainment Group chairman David Foster has been removed from his position by the company’s board, days after he tried to justify text messages that called for the scrapping of the casino regulator and removal of the manager controlling its Sydney casino licence.

Foster, who became chairman in March last year, was insistent last week that he was best placed to steer the challenged casino group forward, despite admitting he was “trigger-happy” with his text messages and conceding the Sydney casino was unsuitable to regain its licence.

The embattled casino operator has appointed Anne Ward as chairwoman. The director last week revealed she was in the minority in her desire to remove former chief executive Robbie Cooke in December.

“The board met without Mr Foster and resolved to change the chairman,” Ms Ward told an independent inquiry on Monday. “Members of the board had come to the view that new leadership was required and that was the decision.”

Ward was elected over the weekend, and confirmed that Foster would continue with his executive responsibilities and stay on the board until a new CEO was found.

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Gold fell after a weekly drop, before a Federal Reserve meeting midweek where policymakers are expected to reaffirm their stance for higher-for-longer interest rates.

Bullion dropped as much as 0.8 per cent after losing more than 2 per cent last week. The US central bank’s preferred measure of inflation rose at a brisk pace in March, according to data on Friday.

Swaps traders now see only one Fed reduction this year, well below the roughly six quarter-point cuts seen at the start of the year. Higher rates are typically negative for gold as it doesn’t pay interest.

Gold also lost some support as its demand as a haven commodity waned, with US Secretary of State Antony Blinken stepping up efforts to secure a truce in meetings in the Middle East on Monday.

Elsewhere, foreign exchange markets were in focus amid speculation that Japanese authorities might start buying the yen to support the currency after it fell to the lowest in more than three decades. Should they act, it could weaken the dollar, potentially boosting bullion.

Gold has climbed about 13 per cent this year, hitting a record this month, despite the timeline for Fed cuts being pushed back. The precious metal’s ascent has been linked to central bank purchases, robust demand from Asian markets especially China, and rising geopolitical tensions from Ukraine to the Middle East.

Spot gold fell 0.4 per cent to $US2329.50 an ounce in Singapore, after recording its first weekly decline since mid-March.

The US dollar bought more than 160 Japanese yen for the first time since 1990 on Monday as Japan’s currency extended an epic three-year slide against the greenback.

At the start of 2021, the US dollar bought just 103 yen, but has since soared in value as Japanese policymakers maintain their unorthodox monetary policies of holding interest rates at negative or zero as they print money to stimulate its pandemic-hit economy.

Traders speculate that Japan’s central bank might again need to step into the market to support its currency.