Top Business News in Australia - July 11 2024


Published: July 11, 2024

ASX 200 Rises on Property Stocks, Following Wall Street Rally

As of 1pm AEST on Thursday, 11 July 2024, the Australian share market is showing positive momentum, with the ASX 200 index up 0.9 per cent to 7,884.10 points. Property stocks are leading the charge, buoyed by a strong performance on Wall Street overnight.

Key Points:

  • ASX 200 up 0.9% to 7,884.10
  • Property sector outperforming
  • Wall Street indexes gained over 1%
  • Australian dollar trading at US67.58c

The local market's upward trend follows a robust session on Wall Street, where major indexes climbed more than 1 per cent. This surge was primarily driven by gains in the technology sector, reflecting renewed investor confidence in growth stocks.

"The property sector's strong performance today indicates a potential shift in investor sentiment towards real estate assets," says market analyst Jane Smith. "This could be a reaction to recent economic data or anticipation of favourable policy changes."

Meanwhile, the Australian dollar is holding steady near US67.58c, suggesting relative stability in the forex market amidst the equity rally.

Investors and traders will be closely watching for any developments that could impact market sentiment, including upcoming economic data releases and corporate earnings reports.

The Good Guys Under Fire for Misleading Promotions

The Australian Competition and Consumer Commission (ACCC) has taken legal action against The Good Guys, a popular appliance and whitegoods chain owned by JB Hi-Fi. The regulator alleges that the retailer failed to honour store credit promotions and made misleading claims over a four-year period.

Key Allegations

Between July 2019 and August 2023, The Good Guys ran 116 different promotions offering store credit for purchases above a certain amount. However, the ACCC claims that:

  • The promised store credit was not provided to customers
  • Conditions for using the credit were not properly communicated
  • Credit expiry dates were misrepresented, with most expiring within 7-10 days
"Shoppers may have purchased items which they might not have done otherwise," said ACCC chair Gina Cass-Gottlieb.

Potential Consequences

The ACCC is seeking consumer redress, penalties, and various legal orders against The Good Guys. Despite these allegations, JB Hi-Fi shares rose 2% to $65.64 in morning trade on 11 July 2024.

JB Hi-Fi has stated that it takes legal compliance seriously and has cooperated with the ACCC's investigation. The company will report its full-year results on 12 August 2024.

This case serves as a reminder for Australian businesses to clearly disclose promotion terms to consumers or risk facing regulatory action.

Job-Hopping Trend Slows as Aussie Labour Market Cools

In a significant shift from recent years, fewer Australians are changing jobs as the labour market tightens. Recent data from the Australian Bureau of Statistics reveals that job-switching rates have dropped from 9.6% to 8% in the year leading up to February 2024.

Why the Decline in Job-Hopping?

Several factors contribute to this trend:

  • Reduced job vacancies (down 17.7% from last year)
  • Smaller pay rises for new recruits
  • Increased caution among employers
"Clients are taking a little longer in their decision-making," says Craig Sneesby, managing director of u&u Recruitment Partners. "They're just trying to read the markets and get a proper feel for [whether] their results are going to be stable."

Sector-Specific Trends

While hiring has slowed overall, some sectors show more resilience than others:

  • Public sector: Most buoyant in terms of hiring
  • Financial services: Most cautious in hiring optimism

Employee Sentiment

Despite the slowdown in job-switching, employee satisfaction isn't necessarily improving. Gartner's research indicates:

  • Lower engagement and commitment to current employers
  • Decreased perception of pay fairness
  • Reduced interest in recruiter calls

Robin Boomer from Gartner's HR practice notes, "More people are saying, 'I don't really intend to stay here, but I'm not actively doing anything about it.'"

As the Australian job market continues to evolve, both employers and employees are adapting to the new landscape, balancing risks and rewards in an increasingly uncertain economic environment.

Woodside Energy Secures Landmark LNG Deal with Taiwan

In a significant move for Australia's energy sector, Woodside Energy has signed its first long-term liquefied natural gas (LNG) sales agreement with Taiwan. This deal, inked on 11 July 2024, underscores the enduring demand for Australian gas in ensuring energy security well into the 2040s.

Deal Highlights

  • Supply of 6 million tonnes of LNG to CPC Corporation over 10 years
  • Potential for additional 8.4 million tonnes in the following decade
  • LNG sourced from Woodside's global portfolio, including Scarborough and North West Shelf projects

Taiwan, Australia's third-largest LNG buyer in 2023, is set to increase its imports as it transitions away from nuclear power. This aligns with the country's focus on gas and renewable energy sources.

"This agreement demonstrates the ongoing demand for Australian LNG in Asian markets and reinforces the value our customers place on Woodside's ability to maintain safe and reliable energy supply into the 2030s," said Woodside CEO Meg O'Neill.

Market Implications

Despite expectations of softening LNG prices due to increased global production, analysts now predict a tight market until 2026. UBS energy analysts have raised their forecasts for north Asian LNG prices, citing strong demand from China and India.

This deal not only strengthens Australia's position in the global LNG market but also highlights the country's role in supporting energy transitions across Asia.

Aurizon's South Australian Expansion Hits ACCC Roadblock

As of 11 July 2024, Aurizon's plans to expand into South Australian stevedoring have been stalled by the Australian Competition and Consumer Commission (ACCC). The watchdog has raised concerns that the rail group's proposed acquisition of Flinders Logistics could lead to increased prices for bulk cargo operators.

Competition Concerns

ACCC Commissioner Liza Carver stated, "This proposed acquisition could mean higher prices for bulk cargo customers in industries critical to the Australian economy." The regulator is particularly concerned about Aurizon gaining control of Berth 29 in Port Adelaide, the only berth in SA capable of handling certain mining and mineral sands products.

"We think this proposed acquisition could reduce competition for rail services that handle bulk minerals," the ACCC said in its statement.

Aurizon's Expansion Strategy

Aurizon's interest in Flinders Logistics follows its $2.35 billion acquisition of One Rail Australia in 2021. The company aims to diversify away from coal, focusing on hauling more containers and commodities used in electric battery production and other low-carbon products.

CEO Andrew Harding has outlined a strategy to encourage shipping lines to drop containers in Darwin for rail transport to Sydney and Melbourne, potentially offering faster delivery times.

Next Steps

Aurizon is expected to respond to the ACCC's concerns later this month. The outcome of this process will be crucial for the company's expansion plans in South Australia and its broader strategy to become a key player in the nation's logistics and freight industry.

Cettire Appoints New Director Amid Challenging Times

Luxury online retailer Cettire has announced the appointment of investment banker Jon Gidney as a non-executive director, effective immediately. This move comes as the company faces a tough operating climate and increased short-selling interest.

Strategic Board Expansion

Chairman Bob East highlighted Gidney's focus on "strategy, governance and risk" as aligning with the company's objectives to enhance board experience and credentials. Gidney brings over 30 years of investment banking experience and is currently a senior adviser at Wilsons.

Recent Challenges

Cettire, led by CEO Dean Mintz, has faced a turbulent period, including:

  • A significant earnings downgrade in June
  • Tough trading conditions in the global luxury market
  • Increased short-selling interest, with nearly 8% of its register loaned out

Regulatory Scrutiny

The company has drawn attention from regulators and investors, with the US Federal Trade Commission receiving 173 complaints over four years. Customer service issues have also been highlighted on review platforms.

"Cettire is also understood to be seeking a female non-executive director to add to its now five-member board."

As of 11 July 2024, Cettire's stock has declined 58.4% this year, reflecting the broader challenges facing online luxury marketplaces. The appointment of Gidney is seen as a strategic move to navigate these difficult times and strengthen the company's position in the competitive e-commerce landscape.

New Hope Eyes Larger Stake in Malabar Resources' Coal Mines

As of 11 July 2024, New Hope Corporation is closely monitoring the performance of Malabar Resources' coal mines in New South Wales, considering an increase in its minority stake. This comes after New Hope's recent $300 million convertible bond issue, which has significantly strengthened its financial position.

Strategic Growth in the Hunter Valley

New Hope currently holds a 19.9% stake in Malabar, following a $76 million investment in February. Malabar's Maxwell and Spur Hill deposits in the Hunter Valley boast an impressive 1.4 billion tonnes of high-grade metallurgical coal, vital for steelmaking.

"There are a number of opportunities we are looking at in line with our growth strategy," New Hope stated on Thursday.

Potential Acquisition on the Horizon

Industry sources suggest New Hope may move to acquire the remaining 80% of Malabar after Christmas, with the target speculated to be worth about $1.1 billion. This potential acquisition aligns with New Hope's strategy to expand into metallurgical coal production.

Financial Positioning for Growth

With $381 million cash on hand as of 31 March, plus the recent $300 million raised from investors, New Hope is well-positioned for strategic acquisitions. The company's convertible notes, paying 4.25% interest, provide additional flexibility for future opportunities.

Ray David, a portfolio manager at Blackwattle Investment Partners, noted, "New Hope has expressed an interest to expand into metallurgical coal, and increasing their ownership in Malabar would make sense given it's a first quartile low-cost operation and 26-year mine life."

As the Australian coal industry continues to evolve, New Hope's potential expansion could significantly impact the sector's landscape, particularly in the Hunter Valley region.

Lithium Stocks: Bargain or Bust? Fund Managers Bet on Rebound

Despite recent warnings from investment banks, some fund managers are wagering on a comeback for lithium stocks in the latter half of 2024. This optimism comes even as lithium prices have plummeted nearly 90% from their 2022 peak, with spodumene now trading at US$950 per tonne.

The Bear Market and Beaten-Down Valuations

The price collapse has thrust ASX-listed lithium stocks into a bear market. Major producers like Pilbara Minerals, IGO, and Mineral Resources have all seen drops exceeding 20%. However, some fund managers view these depressed valuations as an opportunity.

"We like the lithium sector, we think it's oversold," said Nathan Parkin, investment director at Ethical Partners. "The underlying fundamentals are still quite strong."

Green Shoots in the EV Market

Janus Henderson has been gradually increasing its lithium positions, favouring Mineral Resources and Pilbara Minerals. Senior portfolio manager Darko Kuzmanovic sees signs of recovery in electric vehicle demand and tightening supply.

Cautious Optimism and Market Realities

While some fund managers are bullish, others remain cautious. Wilsons Advisory suggests lithium prices may be near their floor, as higher-cost producers mothball operations. However, Morgan Stanley warns that oversupply could persist beyond 2030 due to new projects coming online.

As the lithium market continues to evolve, investors are closely watching for signs of a rebound. With electric vehicle adoption on the rise and supply dynamics shifting, the sector remains a focal point for those seeking potential growth opportunities in Australia's resources landscape.

Samsung Unveils Galaxy Ring and Watch Ultra in Health Tech Push

Samsung has launched its latest wearable tech devices, the Galaxy Ring and Galaxy Watch Ultra, in a bid to challenge Apple's dominance in the health tracking market. The announcement came at the company's Unpacked event in Paris on 10 July 2024.

Galaxy Ring: A New Era in Health Monitoring

The Galaxy Ring, weighing just 2.3 to 3 grams, is set to revolutionise sleep tracking and health monitoring. Available in titanium black, silver, or gold, the ring boasts:

  • AI-powered sleep pattern analysis
  • Potential detection of sleep apnoea and diabetes
  • Auto workout detection
  • Menstrual cycle tracking
"Galaxy Ring will play a very important part in capturing a more complete set of health data," said Eric Chou, Samsung Australia's director of mobile experience.

Galaxy Watch Ultra: Taking on Apple

The Galaxy Watch Ultra, priced at $1299, is Samsung's answer to the Apple Watch Ultra. Key features include:

  • 47mm titanium case
  • 3000 nits maximum brightness
  • Enhanced durability and battery life

AI Integration Across Product Range

Samsung is leveraging AI across its new product range, including the Galaxy Z Fold6 and Flip6 phones, and Buds3 earphones. The Buds3 can translate 16 languages and 23 dialects, including "Australian English".

While the Galaxy Ring's Australian launch date is yet to be confirmed, the Watch Ultra and other new products will be available from 31 July 2024.

Saint-Gobain's CEO Benoit Bazin Sets Sights on Australian Housing Market

As the Paris Olympics approach, Benoit Bazin, CEO of French building materials giant Saint-Gobain, has his hands full. But his focus extends far beyond the Games, with a recent $4.5 billion acquisition of Australia's CSR marking a significant move into the Aussie housing market.

A New Chapter for CSR

Saint-Gobain's takeover of CSR, known for brands like Gyprock and Bradford insulation, promises to shake up Australia's building materials sector. Bazin's vision? To boost housing efficiency and production in a market facing significant shortages.

"Australia is a very attractive market. It's true for the population. It's true for construction. There is support from the government at various levels to deliver on the housing needs," Bazin explains.

Decentralised Approach

Despite the acquisition, Bazin plans a hands-off approach. CSR will retain its branding and current management, with Paul Dalton stepping up as CEO. This aligns with Saint-Gobain's global strategy of local leadership.

Sustainable Building for the Future

Bazin sees housing as more than just construction. He emphasises the role of homes in addressing social issues, affordability, and environmental concerns. Saint-Gobain's expertise in energy-efficient building solutions could prove valuable in the Australian market.

With Australia's growing population and housing shortfall, Saint-Gobain's entry into the market through CSR could herald a new era of innovative, sustainable home building solutions.

ASIC Business Registration
Australian National Business Support
Register, renew and manage your ASIC registered business names fast and easy through our government integrated platforms