Australian shares ended flat despite a flurry of takeover bids ahead of the four-day Christmas break and as mining giants traded at record levels.
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Markets have been in a celebratory mood for weeks as data on global inflation has slowed significantly, fueling hopes of rate cuts.
The All Ordinaries finished unchanged. The ASX will be closed on Mondays and Tuesdays for Christmas Day and Boxing Day. Operations will resume on Wednesday.
Mining giants came to the spotlight on expectations of healthy iron ore demand for winter restocking. Fortescue broke a historical top of $28.4 intraday and closed up 1.1 per cent at $28.35. Rio Tinto tested Thursday’s record peak of $135.4 but settled where it started the day at $134.40.
BHP Group was also unchanged at $49. 73, on the verge of a high of $50. 21 in 2023.
Iron ore prices have risen 25 percent this year due to higher demand from China after Beijing reopened its factories following a severe COVID lockdown.
January’s benchmark iron ore on the Singapore Stock Exchange rose $1. 4 to $137. 55 a tonne, with weekly gains of $2. 7.
But it was corporate news that sparked the biggest moves in the ASX.
Taxi company A2B Australia jumped 17. 3 percent to $2. 14 after receiving a $182 million takeover offer from Singapore-listed shipping giant ComfortDelGro.
Probiotec’s contract production rose 15. 5% to $2. 91 following a takeover bid from Indonesian pharmaceutical manufacturer PT Pyridam Farma.
Cleaning and security company Millennium soared nearly 74 percent to $1,075 after receiving an offer from technology company SoftBank Robotics Singapore at $1. 15 per share.
“The underperformance of small-cap trading companies relative to the broader ASX over the past two years has created opportunities,” said Bryan Johnson, head of equity sales at MA Moelis Australia.
“As the chances of a ‘soft economic landing’ improve, we expect potential buyers to become more confident, thereby spurring more M&A activity.
Meanwhile, shipbuilder Austal jumped 7. 2% to $1. 86 after winning a contract with the U. S. Navy. The U. S. Department of Homeland Security has issued a $1. 3 billion U. S. contract and orders from the Australian government, adding two patrol boats for $157 million.
One of the biggest losers on the ASX is Core Lithium, which plunged more than 21 cents per cent to 26¢ after postponing work on its BP33 project in the Northern Territory to maintain liquidity amid falling lithium prices.
Dairy producer Synlait Milk sank 6.5 per cent to 87¢ after issuing a profit downgrade due to increased borrowing costs amid an ongoing dispute with a2 Milk.
Azure Minerals rose 1. 4 percent after reporting the “global significance” of its WA Andover lithium mine following promising drilling results.
Finally, the Australian dollar rose to a five-month high above 68 US cents as rate cut hopes weighed on the greenback on US inflation knowledge that may simply provide clues about the Federal Reserve’s policy outlook.
Cecile Lefort
Star Entertainment said the Destination Brisbane Consortium (DBC), which it partially owns, has settled its dispute with Multiplex Constructions.
The consortium and Multiplex have agreed to review the dates of the finishing touches for the remaining works and the accumulation of damages. Queen’s Wharf Brisbane is scheduled to open in August 2024.
Multiplex and its consumer consortium Star Entertainment have initiated proceedings for lawsuits and counterclaims that account for more than one-fifth of the $3. 6 billion charge for the delayed and over-budget casino and hotel project.
The total amount payable through the Consortium to Multiplex under the settlement agreements is expected to be between $30 million and $85 million.
The Star’s share of the project’s prices is approximately $110 million.
Brad Thompson
Austal, the Forrest family-backed shipbuilder, won a roughly $1. 3 billion contract to design and build three medical ships for the U. S. Navy.
The U. S. Navy’s latest contractIt comes as the Perth-based company, with an order book already worth $11 billion, continues to attract interest from the private equity budget sector.
All three shipments will be built through Austal, a shipping provider to the U. S. Navy. The company is based in the U. S. at the company’s shipyard in Mobile, Alabama.
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Reuters
Five of China’s largest state-owned banks, including the Agricultural Bank of China and the Construction Bank of China, cut interest rates on some deposits on Friday.
Bank of China and Bank of Communications have also adjusted their rates on some deposits.
The cuts could offset pressure on banks’ net interest margins — a key indicator of profitability — and help lower loan prices as the government urges banks to revive the economy.
Rates for 1-year and 2-year term deposits were reduced through 10 foundational issues (bps) and 20 foundation issues, respectively, and rates for 3- and 5-year term deposits were reduced through 25 foundation issues.
The move comes after the Industrial and Commercial Bank of China (ICBC), China’s asset lender, announced on Thursday that it would cut interest rates on some deposits.
Reuters
Dalian iron ore futures extended gains for a fourth direct consultation on Friday, buoyed by upbeat news from state-owned banks and demand.
The most-traded iron ore in May on China’s Dalian Commodity Exchange rose 3. 1 yuan to 977 yuan ($136. 65), in line with the metric ton and is up 3. 6 this week.
On the Singapore Stock Exchange, January’s benchmark iron ore rose $1. 4 to $137. 5, with weekly gains of $2. 7
Five of China’s largest state-owned banks, the Agricultural Bank of China and the China Construction Bank, have cut interest rates on some deposits, according to the banks’ websites.
“China’s trading metals definitely reacted to the news as the country aims to stimulate customer spending and spur credit and borrowing growth,” said Atilla Widnell, managing director at Navigate Commodities.
“With SGX consistent with iron ore futures per cent above resistance at around US$136 per metric tonne, the market is poised to target between US$145 and US$158 per tonne in the next quarter. “
The projection is driven by higher output from China’s blast furnaces as they try to fill domestic iron ore inventories, along with relief in seaborne tonnes due to seasonal mining systems in the first quarter, Widnell added.
Peter Ker, Elouise Fowler, Brad Thompson
One of Australia’s next big lithium investments is in doubt after Core Lithium announced it has postponed work on its BP33 project in the Northern Territory and could also halt production at its existing Grants mine.
Suspension of the BP33 project was one of several measures announced by Core as it attempts to preserve cash amid a slump in lithium prices.
Core’s measures may be just the start of a bleak summer for the sector, with several mines being marginalized at a time when costs of lithium-rich spodumene are approaching $1,100 a tonne; below approximately US$8,000. per tonne in January.
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Street Talk
ASX-listed Probiotec Limited, which supplies contract production to global bigwigs such as Pfizer and L’Oreal, has discovered a buyer.
Following a lengthy strategic review, first reported via Street Talk in May, Probiotec reportedly won a constant $3 percentage bid from indexed Indonesian pharmaceutical manufacturer PT Pyridam Farma.
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Angela Macdonald-Smith
Neoen has pledged to build a huge solar farm near Albury-Wodonga, adding to a wave of progress to build a blank force in New South Wales to upgrade decommissioned coal power stations.
The French renewable energy company’s decision to build the 440-megawatt allocation in Culcairn comes just days after the company secured a subscription contract from the New South Wales government promising long-term minimum revenues as part of the state’s policy to boost the expansion of renewables.
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Brad Thompson
Sandfire Resources has apologised for disturbing two scattered Indigenous sites in Western Australia as part of an investigation into the copper miner’s breach of heritage protection laws.
In a meeting with representatives of the Yugunga-Nya community, Sandfire stated that it had failed to protect the scattered sites and was “deeply remorseful. “
Sandfire and Yugunga-Nya leaders are understood to have reached an agreement that could lead to mining investment in housing and education in Meekatharra, as well as creating employment and business opportunities for the Yugunga-Nya similar to the rehabilitation of De’s operations. Grussa copper and gold plants, which were closed earlier this year.
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Cecile Lefort
Shares in cleaning and security contractor Millennium exploded 73 per cent higher to $1.07 after receiving a bid by tech company SoftBank Robotics Singapore at $1.15 per share. The offer represents an 85 per cent premium to Thursday’s close of 62¢.
Millennium’s Board of Directors has unanimously issued the offer to shareholders.
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