ASX slips; energy stocks gain, Helia Group sinks
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ASX edges higher as energy stocks gain, Helia sinks
Australian shares are tilting modestly lower, as gains in energy stocks fail to offset moderate decline across much of the index.
The S&P/ASX 200 is 7.5 points or 0.1 per cent lower at 7772 near 11am.
Early in trade, energy stocks are the best performing, up 1 per cent, following gains in oil and LNG overnight. Woodside and Santos are both up around 1 per cent.
In a quiet session, none of the other 10 ASX sectors have moved more than 0.5 per cent in either direction.
Overnight, the S&P 500 rose 0.3 per cent to 5487.03 – yet another record closing high – buoyed in part by Nvidia, which surged higher to become the world’s most valuable publicly traded company. The stock gained 3.5 per cent, lifting its market cap to $US3.4 trillion.
While Nvidia rallied, the rest of the magnificent seven were lower. Microsoft and Apple closed lower. Microsoft’s market cap slipped to $US3.32 trillion, while Apple’s slid to $US3.29 trillion.
Outside of tech, stocks were little changed after US retail sales rose 0.1 per cent in May, versus the 0.3 per cent increase expected by economists polled by Reuters, while a separate report showed May industrial production and manufacturing output both beat expectations.
Stocks in focus
Shares in Helia Group are the worst performing, down 15.2 per cent to $3.56 after Commonwealth Bank of Australia flagged potential changes to the companies’ existing lenders mortgage insurance contract. The existing contract accounted for more than half of Helia’s gross written premium in 2023.
Downer EDI has been awarded a new contract by NBN, valued at more than $100 million. Shares added 0.6 per cent to $4.71.
Kerry Stokes-backed Beach Energy has been slapped with broker downgrades overnight, sending shares 3.6 per cent lower to $1.48. Yesterday, Beach Energy fell 2.2 per cent to $1.53 after the company said it would slash spending, operating costs and jobs and raise the bar on returns for projects in a bid to improve the company’s performance.
Lifestyle Communities has appointed former Myer chairwoman JoAnne Stephenson as a non-executive director amid the departure of the land lease company’s own chairwoman.
Insurance group QBE will close its North American middle-market business, saying the segment has “experienced performance challenges over several years”. Shares slipped 0.3 per cent to $18.32.
Pharmaceutical developer Botanix has paused trading of its shares, pending the outcome of the US Food and Drug Administration’s review of the company’s Sofdra product.
WA1 and Firefly Metals soar on results
Shares in WA1 Resources and Firefly Metals are soaring this morning, following separate positive results from their respective mining developments.
Firefly revealed Assays up to 10 per cent copper and 4 grams per tonne gold from its Green Bay copper and gold project in Canada, sending shares 15.1 per cent higher to 80¢.
Meanwhile, WA1 revealed high-grade niobium concentrate results from its West Arunta project in WA. WA1 shares are 17.3 per cent higher at $19.01.
Downer nabs $100m NBN contract
Downer EDI has been awarded a new contract by NBN, valued at more than $100 million.
Under the three-year contract, Downer will extend the fibre technology to businesses in large parts of Western Australia, South Australia, Northern Territory and NSW.
Downer CEO Peter Tompkins said the company looked forward to extending its relationship with NBN.
“This contract reinforces Downer’s position as a key long-term NBN delivery partner,” Tompkins said.
Dexus hit with write-downs
Dexus Convenience Retail REIT’s assets have been hit with a near $10 million write-down.
Following an external review of 51 of the REIT’s 100 assets, the book has been devalued by $9.6 million for the six months to the end of June 2024, representing a 1.3 per cent decrease on book values.
Despite the hit, Jason Weate, DXC fund manager, said transaction volumes for fuel and convenience assets remained relatively robust.
Beach Energy hit with downgrades
Kerry Stokes-backed Beach Energy has been slapped with broker downgrades overnight.
The downgrades come after Beach Energy’s new boss, Brett Woods, unveiled plans to diversify the oil and gas producer into gas power generation and storage as part of a far-reaching turnaround strategy designed to leave five years of underperformance behind.
Jarden has downgraded the stock to neutral from buy, saying the plans represent a “material reset to market expectations on production, reserves and costs”.
Meanwhile, Citi analyst downgraded the stock to sell.
“We think the share price has more work to reflect the lower quality nature of the portfolio. A strong balance sheet is helpful, though the means to improve quality are still a ways off,” Citi analyst James Byrne said.
Botanix halts shares ahead of FDA decision
Pharmaceutical developer Botanix has paused trading of its shares, pending the outcome of the US Food and Drug Administration’s review of the company’s Sofdra product.
The announcement is expected by Friday. Sofdra is a treatment of skin condition primary axillary hyperhidrosis.
Lifestyle Communities appoints former Myer chairwoman to board
Lifestyle Communities has appointed former Myer chairwoman JoAnne Stephenson as a non-executive director amid the departure of the land lease company’s own chairwoman.
Stephenson is also currently non-executive director of Challenger and Qualitas.
Alongside her appointment, the board announced chairwoman Philippa Kelly will retire at the end of August. She will be succeeded by non-executive director David Blight.
Treasury Wines appoints new director from California
Penfolds owner Treasury Wine Estates has appointed Leslie Frank as a director of the company.
Frank was a founder of Frank Family Vineyards, a high-end wine group based in California’s Napa Valley, bought by Treasury Wines for $434 million in 2021. Frank starts on July 1.
QBE to close North America business
Insurance group QBE will close its North American middle-market business, saying the segment has “experienced performance challenges over several years”.
The company will maintain its other speciality, crop and commercial North American businesses.
“The closure of middle-market will serve to refocus North America’s strategy on those businesses which hold more meaningful market position, relevance and scale,” the company said.
In a market update, the company said group catastrophe costs in the five months to May 2024 are estimated at $500 million, compared to a 1H24 catastrophe budget of $609 million.
“Recent events have included US convective storms, the Dubai floods and an initial estimate of $175 million to $225 million to account for QBE’s net exposure to the ongoing civil unrest in New Caledonia,” the company said.
Seek’s Brazil exit boon for Car Group: Morningstar
News last week that job ad platform Seek was exiting its Brazil operation could prove a boon for competing digital marketplace Car Group, according to Morningstar.
“We had expected Seek to be unsuccessful in the region, while we expected and continue to expect Car Group to be successful there due to differences in network effect dynamics,” said Morningstar analyst Roy Van Keulen in a note overnight.
“Following our review, we are upgrading our revenue growth and margin expansion assumptions for Car Group’s Latin American segment,” he said.
Despite the modest 4 per cent upgrade to the stock’s fair value, Morningstar maintains an equivalent sell rating on the stock, saying shares continue to screen as materially overvalued.
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