ASX closes flat; Pact Group, Woodside shares climb as miners fall

Bitcoin delivered another bout of its notorious volatility in a sharp tumble toward $US40,000 amid a broader crypto sell-off.

The largest token sank as much as 7.5 per cent to $US40,521 before paring some of the losses to trade 4 per cent lower at $US42,095 as of 11:12am in Singapore on Monday.

Smaller tokens such as ether, XRP, polkadot and avalanche also fell. A gauge of the largest 100 digital assets shed about 4 per cent, the largest drop since November 22.

Bitcoin has been on a tear this year on expectations that regulators will allow the first US spot bitcoin exchange-traded funds, widening the potential base of crypto investors. Bets that the Federal Reserve will cut interest rates next year also encouraged a rally in virtual currencies.

“Market leverage had risen materially,” said Sydney-based Richard Galvin, co-founder at Digital Asset Capital Management. “The current fall looks like a market deleveraging as opposed to any fundamental news catalyst.”

Shares in Costa Group have dipped late in trading, after Australia’s largest fruit and vegetable grower wound back revenue expectations for 2023.

In a market update, the company said it now expects full year FY2032 earnings to come in below 2022’s figures.

“Whilst the remaining period of CY23 includes significant trading across both the Produce and International segments, Costa expects this period to be impacted by a continuation of unfavourable impacts from adverse weather conditions,” the company said.

Shares are 2 per cent lower at $3.02 apiece.

Could good news, which has been bad news, be good again?

That’s the question posed by Wall Street’s reaction to Friday night’s US job numbers, which came in stronger than expected, leading the unemployment rate to fall in a sign of economic resilience.

For much of the year, equities have sold off on any hint that the US Federal Reserve may need to keep rates higher for longer. And it has been the sharp drop in bond yields – from just above 5 per cent in October for the benchmark 10-year Treasury yield to 4.2 per cent currently – that has sent sharemarkets around the globe surging since the end of October. The global proxy for risk, the S&P 500, is up 12 per cent since that point.

But on Friday, equity markets ignored any higher-for-longer message in the November labour force report, and a solid jump in bond yields, to finish the week in the green.

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Two of the ASX’s largest iron ore miners are holding near multi-year highs on Monday, after the price of the commodity once again pushed above $US130 per tonne last week.

Rio Tinto is trading flat at $128.87, its highest point since June 2021, while Fortescue is holding near $25.68 per share, its highest since July 2021.

The share price heights arrive after the price of iron ore rose above $US135 per tonne late last week. While futures pricing has dipped to $US133.80 during trading on Monday, the commodity remains well above analysts’ expectations.

SkyCity Entertainment, the operator of casinos in New Zealand and Adelaide, will pay $NZ204 million ($187.5 million) to Macquarie to settle a long-running dispute over an Auckland car park fire.

SkyCity, which is also facing regulatory action in Australia over anti-money-laundering failures, agreed to sell the car park at the New Zealand International Convention Centre to Macquarie Capital Principal Finance in 2019, shortly before a fire caused significant damage to the site.

Macquarie reversed its decision to buy the car park after SkyCity ran afoul of conditions that required it to hand over the property that month. In May, the dispute went to the Auckland High Court after discussions broke down.

On Monday, SkyCity told investors it would pay $NZ204 million and take back the car park. The payment is higher than SkyCity said it should pay, but lower than Macquarie expected to receive. Last month, the High Court sided with SkyCity’s interpretation of what it should pay.

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Perpetual portfolio manager Thomas Rice and Grok Ventures portfolio manager Armina “Arms” Rosenberg – meet the surprise new duo looking to take on global equities under their own brand.

Street Talk understands Rice and Rosenberg have teamed up to launch Minotaur Capital Management – a new Sydney-based long-short global equity investment manager. Sources said their first fund will be far from ordinary, built using artificial intelligence at its core to help uncover winning ideas and manage risk.

High on Minotaur’s hit list is tackling the problem of stock selection – for example, whittling tens of thousands of potential listed companies to a tight portfolio, 40 on the long side, 20-30 on the short.

The firm intends to use AI at the idea funnel stage – filtering the universe, passing ideas through an initial screener (a task generally undertaken by a junior analyst) and using large language models like ChatGPT to track news articles and generate ideas. While the fund is sector-agnostic, Street Talk wouldn’t be surprised to see a technology bias, given Rice and Rosenberg’s backgrounds.

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Oil is steady after its longest weekly losing streak in five years, driven by signs supply is starting to run ahead of demand.

Brent traded below $US76 a barrel, after logging seven weeks of declines, while West Texas Intermediate was near $US71. A US plan to refill the Strategic Petroleum Reserve helped crude snap a six-day losing streak on Friday, and the global benchmark closed up 2.4 per cent.

Oil has fallen more than a fifth since late September, with even additional output cuts from OPEC+ and statements by Saudi Arabia and Russia that curbs could be extended beyond March failing to arrest the slide. Production from outside the alliance, particularly the US, has been surging, Chinese demand is forecast to slow next year, and there’s a chance of a US recession.

Investors are readying for a week that includes monthly market reports from the International Energy Agency and the Organisation of Petroleum Exporting Countries, as well as the US Federal Reserve’s final rate decision of the year.

Australia’s sharemarket is flat as trading enters its final hours; falls in mining stocks are weighing against gains in the energy sector.

The benchmark S&P/ASX 200 is just 2.3 points lower to 7192.6. The Australian dollar has dipped to US65.75¢.

Mining stocks have extended losses late in trading, to be down 0.8 per cent, with lithium and gold stocks dropping the most dramatically.

Those losses are being offset by a 1 per cent gain in energy stocks, led by sector heavyweight Woodside, which is 1.4 per cent higher. The oil gas giant remains in talks with fellow ASX heavyweight Santos over a potential $80 billion merger.

Meanwhile, a flurry of other M&A activity was also moving stocks on Monday:

Sigma Healthcare kicked off the corporate news flow after agreeing to a “transformational merger” with Chemist Warehouse, a move which will place the country’s most prominent retail pharmacy brand on the ASX and create an $8.8 billion retail giant. The shares last traded at 76.25¢.

Kin Group has upped its buyout bid for Pact Group to 84¢ a share, from a previous 68¢-a-share offer. The shares jumped 23 per cent to trade at the new bid price.

And Whispir says it’s in ongoing talks with Pendula regarding a potential takeover offer of its main operations. The company said any offer would likely top Soprano Design’s off-market takeover bid that was rejected last week. The shares fell 1.9 per cent to 51¢.

Oil also steadied with Brent trading below $US76 a barrel, after logging seven weeks of declines. West Texas Intermediate was near $US71.

Wall Street

On Friday, the benchmark S&P 500 closed up 0.4 per cent, despite a rebound in US bond yields after payroll figures showed 199,000 US jobs were added in November and the jobless rate dipped to 3.7 per cent, prompting traders to temper rate cut expectations for next year.

Still, AMP’s Shane Oliver said that while the employment data topped economist forecasts, the underlying trend remained consistent with a slowing jobs market.

Key events for the market this week include the US consumer price index on Tuesday (Wednesday AEDT) before the Federal Reserve’s last rate decision for 2023 on Wednesday. The European Central bank and the Bank of England also meet, and Reserve Bank governor Michele Bullock is speaking at an event on Tuesday.

Stocks in focus

The board of Platinum Asset Management has appointed US-born Jeff Peters as chief executive after a global search. The shares were trading 1.9 per cent to $1.31 higher after initially falling on the news.

Property giant Dexus has promoted chief investment officer Ross Du Vernet to CEO. The shares added 0.5 per cent to $7.2.

Bubs Australia rallied 6 per cent to 13.25¢ after the infant formula company forecast US revenue to double in the 2024 financial year, to $48 million.

And gold producers fell, with West African off 4.3 per cent, Bellevue Gold down 4.3 per cent and Gold Road Resources dipping 2.6 per cent.

Macy’s has received a $US5.8 billion ($8.8 billion) buyout offer from Arkhouse Management and Brigade Capital, according to people with knowledge of the matter.

The investors offered $US21 a share for the department store operator, the people said, asking not to be identified because the deal hasn’t been publicly announced. Macy’s stock closed at $17.39 on Friday, having dropped 16 per cent this year.

Macy’s didn’t immediately respond to requests for comment on the deal, which was first reported by The Wall Street Journal on Sunday. Arkhouse and Brigade Capital declined to comment.

Retailers have lagged the overall rally in US stocks this year as investors worry higher interest rates will damp spending and as the companies struggled to maintain the pace of growth seen during the pandemic. Department stores in particular have been confronting a broader shift in consumer habits as shoppers gravitate towards specialty and off-mall retail.

Macy’s, which operates the Bloomingdale’s chain alongside its own namesake department stores, last month reported a 7 per cent same-store sales decline in the third quarter.