Wall Street records propel ASX higher, RBA follow-up comments ‘settle nerves’

Record highs on US markets propelled the ASX firmly into the green, while fresh comments on interest rates have settled nerves.

The Australian sharemarket was propelled higher by a positive lead from Wall Street, but managed to outperform it, while follow up comments to yesterday’s rates decision appear to have “settled nerves”.

The benchmark S&P/ASX200 index rallied 0.93 per cent to 7392.7, while the All Ordinaries Index strengthened 0.87 per cent to 7713.

CommSec analyst Steven Daghlian said the local bourse outperformed US markets, which hit fresh record highs overnight, with the Dow Jones Industrial Average closing above 36,000 for the first time, up 0.4 per cent.

After the Reserve Bank of Australia held its monthly board meeting on Tuesday, keeping the cash rate at a historic-low 0.1 per cent, governor Philip Lowe said he strongly disagreed with current market pricing for hikes in 2022.

“He basically said hikes next year, while not impossible, are extremely unlikely,” Mr Daghlian said.

“But he did say it’s possible for rates to rise in 2023, so it seems to have settled nerves, to an extent.”

AMP Capital chief economist Shane Oliver remains convinced both Australian and US central banks will “start raising rates later next year”.

OMG chief executive Ivan Tchourilov noted reactions to the RBA meeting had been mixed, with the central bank “refusing to match the hawkish outlook of other major financial institutions”, and credited the ASX rise to the upbeat US lead.

“There weren’t a lot of losers today – even iron ore miners were in the green, despite iron ore prices crashing overnight,” Mr Tchourilov said.

Mr Daghlian said the iron ore price had fallen for five straight days, back below $US100 per tonne, and had tumbled about 20 per cent in a little over a week.

“This is on some fresh restrictions on steel production in China in a bid to control pollution ahead of next year’s Beijing Olympics,” he said.

Rio Tinto lifted 1.17 per cent to $89.70, BHP added 1.07 per cent to $35.94 and Fortescue advanced 3.08 per cent to $14.38.

A particularly strong performer was lithium miner Orocobre Ltd, which surged 6.7 per cent to $9.70.

The banks gained ground after three straight trading days of losses.

Commonwealth Bank revealed it will become Australia’s first bank to offer customers the ability to buy, sell and hold cryptocurrency assets, including Bitcoin and Ethereum, directly through its CommBank app.

The pilot will start in coming weeks and CBA intends to progressively rollout more features next year.

CBA put on 1.17 per cent to $107, National Australia Bank rose 1.35 per cent to $28.58, Westpac inched two cents higher to $23.15 and ANZ gained 2.26 per cent to $28.47.

Investors applauded AMP announcing it had completed its exit from life insurance after more than 170 years in the business, selling its 19.13 per cent interest in Resolution Life Australasia for $524m.

The group sold the majority of the business last year for $3bn and says the divestment of the remaining stake provides balance sheet flexibility ahead of the planned demerger of its private markets division, which holds real estate and infrastructure investments.

“It’s a welcome capital injection for the wealth manager, if their new fancy building in Sydney CBD is anything to go by,” Mr Tchourilov said.

“AMP’s streamlining plans hit a hitch when the company was rinsed at the 2019 Hayne Royal Commission – it seems they are now starting to find their feet again.

“They’re focusing on banking and wealth management and divesting from the rest, usually maintaining a stake in the divested entity.”

AMP shares leapt 9.3 per cent to $1.17.

Telstra renewed its contract with the Department of Defence, clinching a five-year deal worth more than $1bn, but its shares didn’t budge from $3.90.

Packing giant Amcor firmed 0.75 per cent to $16.11 after delivering a solid first quarter result and reaffirming its full-year outlook, despite sales in some parts of the business being hit by raw material shortages.

Insurance Australia Group continued to backtrack, losing 1.11 per cent to $4.45 a day after downgrading its full-year guidance due to higher estimates for hail and severe storm damage claims, which sent its shares tumbling more than 7 per cent on Tuesday.

“Four brokers have reduced their expectations for its shares over the next 12 months,” Mr Daghlian said.

Domino’s Pizza held its annual general meeting, announcing its commitment to net zero emissions by 2050, flagging its plan to operate more than 6650 stores by 2030 – up from 3169 currently – and also warning it expects to be faced with higher food and energy costs next year.

Domino’s shares eased 0.13 per cent to $142.30.

In economic news, building approvals fell by 4.3 per cent in September, but were up 12.8 per cent on a year ago.

Approvals to build detached houses dropped 16.1 per cent in September – which CommSec senior economist Ryan Felsman said was the biggest monthly decline in 21 years – but higher-density apartment approvals lifted 17.4 per cent.

“Building construction is expected to remain elevated over the next 12 months due to strong homebuyer demand,” Mr Felsman said.

“Builders and their contractors are under pressure to deliver projects on-time and on-budget as they work through a huge pipeline of residential, commercial and infrastructure-related construction work.

“Already construction companies are experiencing skilled trades labour shortages and rising building materials costs due to supply-chain disruptions.”

The Aussie dollar was buying 74.32 US cents, 54.53 British pence and 64.15 Euro cents in afternoon trade.

Originally published as Australian sharemarket surges into the green, notching up gains across the board

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Rollercoaster session for ASX, fails to hold onto post-Reserve Bank of Australia meeting rally

The ASX surged after the RBA flagged keeping the cash rate at its historic low for another two years, but couldn’t hold onto the gains.

The Australian sharemarket slumped lower despite positive overseas leads and after failing to hold onto its post Reserve Bank of Australia meeting rally.

The benchmark S&P/ASX200 index closed 0.63 per cent lower at 7324.3, while the All Ordinaries Index erased 0.59 per cent to 7646.6.

Ord Minnett said US stocks rose overnight in generally lacklustre trade, as investors looked ahead to the Federal Reserve’s monetary policy meeting on Wednesday, while European stocks hit record highs as expectations of interest rate hikes supported bank stocks.

CommSec analyst Steven Daghlian said the local bourse started out in the green but faded as investors traded tentatively awaiting the outcome of our own central bank’s monthly board meeting.

OMG chief executive Ivan Tchourilov said it had been a rollercoaster, with the ASX gaining ground after the RBA determined to keep the cash rate on hold, as expected, while noting higher than expected inflation.

“The Reserve did well to remain ambiguous on expectations, although we’re still looking at a 2023 interest rate hike instead of the previous 2024 forecast,” Mr Tchourilov said.

“Commodity prices were mixed, as was our resources sector.”

After iron ore prices slumped, Rio Tinto lost 2.54 per cent to $88.66, BHP dropped 2.34 per cent to $35.56, Fortescue shed 2.65 per cent to $13.95 and Champion Iron sank 7.22 per cent to $4.24.

Nickel miner IGO plunged 8.42 per cent to $8.92, while Whitehaven Coal plummeted 9.54 per cent to $2.37.

Origin Energy slid 1.95 per cent to $5.02, while Beach Energy dropped 3.93 per cent to $1.34 after announcing its managing director and chief executive Matt Kay had handed in his resignation to pursue other opportunities.

But battery minerals company Magnis Energy Technologies was a stellar performer, rocketing 18.48 per cent to 54.5 cents.

“Magnis released their annual report after market close yesterday and the market is starting to see some value in Magnis’ proposition,” Mr Tchourilov said.

“Despite operating at a loss without a finished product, they have $665m in binding offtake sales lined up for 2022.

“The patented battery technology is gaining traction in the US market, where a new battery plant is being built in New York to meet demand.

“Magnis has already returned 280 per cent in share price this year, but will be one to watch especially closely into 2022 when battery production begins to ramp up.”

Insurance providers retreated after Insurance Australia Group downgraded its full-year guidance, upping its assumptions for hail and severe storm impacts in South Australia and Victoria last month to $1.045bn, from $765m previously.

“Cost allowances for natural perils have been lifted significantly after the first quarter came in more expensive than expected,” Mr Tchourilov said.

“Margin guidance for the period has slipped a full 3 per cent and they’re allowing room for extreme weather events to continue into next year.

“IAG is maintaining strong underlying performance as reported in its end of year results. However, if the first quarter is anything to go by, it will be an expensive year for insurance providers.”

IAG shares tumbled 7.03 per cent to $4.50, while Suncorp gave up 4.15 per cent to $11.31 and QBE softened 2.39 per cent to $11.83.

Financial technology platform provider Praemium Ltd leapt 14.46 per cent to $1.42 after knocking back Netwealth Group’s $785m takeover offer, saying the bid did not appropriately value its current performance and near-term trajectory.

Wealth manager Netwealth gave up 2.06 per cent to $17.15.

ANZ fell 1.1 per cent to $27.84, Commonwealth Bank backtracked 0.5 per cent to $105.76, National Australia Bank declined 0.88 per cent to $28.20 and Westpac slumped 2.73 per cent to $23.13 a day after releasing disappointing full-year results.

However, Morningstar equity analyst Nathan Zaia said Westpac could fix its productivity issues, noting it was the cheapest of the major banks.

Property stocks fared well, with Goodman Group surging 5.57 per cent to $23.49 after upgrading its full-year guidance, while Charter Hall Group rose 3.28 per cent to $18.59 after doing the same on Monday, while Lendlease added 2.39 per cent to $10.70.

Mr Daghlian said Goodman, the largest industrial property group on the ASX, which operates in 17 countries, was pocketing higher earnings partly because of demand for warehouses had surged during the pandemic-driven e-commerce boom.

Meal kit delivery service Marley Spoon continued to tumble after downgrading its full-year guidance last week, sinking 11.9 per cent to 92.5 cents.

The Aussie dollar was fetching 74.76 US cents, 54.76 British pence and 64.4 Euro cents in afternoon trade.

Originally published as Rollercoaster session for ASX, fails to hold onto post-Reserve Bank of Australia meeting rally

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Hsin-Yu Tsai: Why bank worker stole $3.5m from Commonwealth Bank

A former bank worker who stole $3.5m to pay for a lavish lifestyle has been jailed.

A former Commonwealth Bank employee who ripped off customers to the tune of $3.5m to pay for a lavish lifestyle and appease an abusive ex has been jailed.

Hsin-Yu Tsai, 33, had claimed that she was not motivated by greed when she used her position as a customer service officer to move millions of dollars out of the accounts of unsuspecting clients.

However, a NSW District Court judge ruled that she did reap substantial amounts of money from the scheme and said there was no other option than for her to be jailed.

The court was told that Tsai claimed she was pressured into the offending in order to satisfy her then boyfriend’s desire for expensive watches and clothes.

Judge John Pickering said that according to Tsai, shortly after she moved in with the man, he pressured her to lavish him with material gifts.

Tsai pleaded guilty to three counts of dishonestly obtaining financial advantage by deception and one count of using false documents to gain advantage by deception.

Judge Pickering said aspects of the boyfriend’s behaviour were similar to those of a “domestic predator” and Tsai claimed that he had been violent and abusive.

It was in those circumstances that she began stealing from the bank, the court was told.

She moved $2.4m out of the account of a South African national who lived overseas; however, he did not discover the fraud for another three years.

She also siphoned off money from the term deposit account of another customer and in all stole $3.5m.

She claimed that her then boyfriend was a financial burden on her and had pressured her into buying a $600,000 Ferrari.

“She felt she had to please him and keep him happy because she had no other family to rely on in Sydney. Her parents were overseas and she had been isolated from her friends,” Judge Pickering said.

However, she also used the money for her own gain.

When the relationship ended, they negotiated through lawyers for her to be paid a $1m settlement.

She used the money to travel to Taiwan, China and Europe, bought designer handbags and purchased property.

However, Judge Pickering noted, her offending ceased following the break-up and despite her having the opportunity to continue stealing money over the next three years while she continued to work at the bank.

“Sometimes the proof is in how you live your life after this,” Judge Pickering said.

“ … That needs to be balanced by the fact she made a lot of money including the million dollars she got at the end of her settlement.

“But nevertheless it is a remarkable circumstance that she continued to be employed by the Commonwealth Bank, did not take the opportunity to commit any fraud and placed herself in a completely different life.”

The court was told that with the help of her parents, Tsai had paid back the money she had stolen from the Commonwealth Bank.

Judge Pickering noted she was now working in the health industry, had a young family and had rehabilitated herself.

However, he said there was no other option than to send her to prison considering the amount of money she had stolen.

“It would be an extremely rare scenario where someone who defrauded the bank of $3.5m and was an employee … did not go to jail fulltime,” Judge Pickering said.

Tsai also made full admissions to police and pleaded guilty at the first opportunity.

She was sentenced to three years and three months in prison, with a 14-month non parole period, meaning she will be eligible for release in December next year.

Originally published as Why Sydney woman stole $3.5m from Commonwealth Bank

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Australian sharemarket claws back to flat after ‘immediate’ inflation data sell-off

New figures showing the strongest annual inflation growth rate in almost six years sent the ASX tumbling but it managed to claw back to finish flat.

The Australian sharemarket yet again finished barely changed, with the benchmark index scraping into the green by just a few points after new inflation data sparked a sell-off.

The S&P/ASX200 firmed just 5.3 points to 7448.7, while the All Ordinaries Index slipped 1.3 points to 7758.

CommSec analyst Steven Daghlian said the ASX had a positive but cautious start to the trading session ahead of the latest Australian Bureau of Statistics inflation figures, which showed the consumer price index representing a basket of goods rose 0.8 per cent in the September quarter.

It’s this week’s most significant Australian economic news, partly for what it means for interest rate hikes, Mr Daghlian said.

The local bourse faded after the figures were released, then staged a steady comeback, but wound up flat.

“The headline numbers were bang on expectations, but the trimmed mean numbers, which is what the RBA watches most closely, was actually above what the market was expecting: 0.7 per cent growth over the quarter, compared to 0.5 per cent.

“And 2.1 per cent growth over the year compared to (an expected) 1.8 per cent. So this is the strongest annual growth rate in inflation in almost six years and it means that inflation is back within the RBA’s 2-3 per cent target range.”

OMG chief executive Ivan Tchourilov said the above-forecast result immediately triggered a sell-off in both equities and bonds.

“The ASX 200 index fell 47 points in the 30 minutes following the announcement and bond yields rose across the board,” he said.

“The RBA is holding firm, but this will only increase the market’s expectation of an early rate hike.”

Both the ABS and Woolworths noted fruit prices fell markedly, due to favourable growing conditions and reduced demand from the food service industry.

Woolworths made the observation in its quarterly report and said it had felt the impact of global supply disruptions as it stocked up shelves for Christmas.

Group sales were up 7.8 per cent compared to the same quarter last year, including food sales in Australia growing by nearly 4 per cent and by almost 10 per cent in New Zealand as customers ate more at home.

But store closures and trading restrictions slashed Big W sales by 17.5 per cent.

This month, customers in NSW started to return to eating out as restrictions eased, but Big W sales trends improved as Greater Sydney stores reopened.

Shares in Woolworths, which also held its annual general meeting, fell 3.24 per cent to $39.16.

Investor day was not a good day for A2 Milk shareholders, with the company slumping almost 12 per cent to $6.03 as it continues to struggle with the collapse of the important Chinese diagou infant formula reseller market.

“The presentation confirmed we won’t be getting back to July 2020 heights any time soon and the lucrative Chinese market is not the river of gold it once was,” Mr Tchourilov said.

“The key takeaway from today was uncertainty, which management isn’t shying away from.

“On the other hand, shareholders can and will get away from as much uncertainty as possible, resulting in today’s sell-off.

“The now $6 mark is an enticing price for entry for anyone looking to buy, but beware of the question mark hanging over forecast revenue.”

Water control products maker Reliance Worldwide had a delayed bull run, gaining 4.6 per cent to $5.44 after releasing its quarterly on Tuesday, Mr Tchourilov said.

“The vote of confidence came from Ord Minnett, who gave the quarterly a tick of approval this morning, after which the stock has been heavily bought,” he said.

“This will typically happen to companies with less traded volume or industries in which most investors don’t have much expertise.

“Still, the numbers don’t lie. The plumbing parts supplier announced quarter-on-quarter growth across the board plus lower cost margins.

“They’ve also purchased a US distributor of plumbing supplies, EZ-FLO, to expand their presence in North America.”

Marley Spoon rocketed 8.33 per cent to $1.62 with advising US investment giant BlackRock Group now holding 6.55 per cent in the meal kit delivery company.

It announced on Monday it had entered the booming pet food market with a new “vertical” called bezzie, while customers of Marley Spoon and its budget arm, Dinnerly, started earning rewards points as part of the Woolworths loyalty program as of Tuesday.

Shares in Youfoodz left the boards after its takeover by HelloFresh.

ANZ inched two cents lower to $28.39, Commonwealth Bank put on 0.95 per cent to $106.10, National Australia Bank gained 1.38 per cent to $29.30 and Westpac improved 0.62 per cent to $25.95.

Rio Tinto appreciated 1.83 per cent to $94.14, BHP dropped 1.44 per cent to $37.66 and Fortescue shed 2.58 per cent to $14.

The Aussie dollar was fetching 75.18 US cents, 54.58 British pence and 64.8 Euro cents in afternoon trade.

Originally published as Australian sharemarket claws back to flat after ‘immediate’ inflation data sell-off

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