ASX falls; Link, Adbri climb over 20pc; real estate drops

Activist investors have rolled the board at Carnarvon Energy, including ousting its managing director, after raiding the share register amid frustrations over its handling of a major offshore gas project majority owned by Santos.

Nero Resources Fund and Collins St Asset Management unified to stage the regime change and force Carnarvon to pledge to the market on Monday that it will not acquire new assets and may even sell some of its interests, which are scattered in the Bedout Basin off Western Australia. Further, it will cut administrative costs, and work with Santos to speed up drilling at the Dorado field in which Carnarvon is a minority owner.

The push for change at Carnarvon comes amid talks between Santos and Woodside about a potential $80 billion merger that could influence Santos’ plans for the Dorado project off the coast of WA.

The investors launched their attack last Tuesday, gunning for long-standing Carnarvon chairman Bill Foster, managing director Adrian Cook and the rest of the board, bar one director.

Read more here.

The Australian sharemarket extended its decline in late trading as central bank officials tempered investor enthusiasm for interest rate cuts next year.

The benchmark S&P/ASX 200 index fell 0.3 per cent, or 23.6 points to 7419.1 near 2.30pm AEDT, with eight out of the 11 sectors in the red. The All Ordinaries fell 0.3 per cent.

The interest rate-sensitive real estate sector was the worst performer, dropping 1.3 per cent. Vicinity Centres declined 2.1 per cent, Mirvac down 2.6 per cent and Dexus lost 2.1 per cent.

That was after the New York Federal Reserve president John Williams told CNBC on Friday (Saturday AEDT) that it was too soon to talk about unwinding the tightening cycle.

“We aren’t really talking about rate cuts,” Mr Williams told the network. He argued it was “premature” to be thinking about easing at the Fed’s March meeting, and said financial markets reacted “more strongly” than policymakers had indicated in their updated rate projections last week.

Stocks on the move

Adbri soared 31.9 per cent after CRH and major shareholder Barro Group agreed to buy the building materials company for $3.20 per share. The deal values Adbri at $2.1 billion.

Link Group jumped 27.1 per cent after it was announced that Mitsubishi UFJ was set to acquire the company for $2.10 cash a share, plus pay a dividend of 16¢, which will be franked at 25 per cent.

Stockland dropped 2.9 per cent, after agreeing to buy 12 Masterplanned Communities from Lendlease for around $1.06 billion via the establishment of the Stockland Residential Communities Partnership (SRCP) with Supalai.

Energy giant Santos fell 1.7 per cent despite securing approval from the national offshore petroleum regulator for its revised plan to drill its $5.8 billion Barossa gas project in the Timor Sea.

Zip Co slid 2.4 per cent. The ASX-listed buy now, pay later company has secured a $150 million loan from US funds management giant Ares at a 15 per cent interest rate.

Tabcorp surged 23.1 per cent after it said would keep its exclusive licence for retail wagering and betting in pubs and clubs in Victoria, keeping out international rivals including Sportsbet.

Chanticleer was recently speaking with one of the wise old heads of Australian capital markets about his plans for the summer break. After a tasty rally to end the year – the ASX 200 is now up 9.8 per cent since the end of October – was he looking forward to putting his feet up and switching off his phone?

Not quite. He hates the dog days of December because of the volatility they bring. With trading volumes naturally lower due to the summer break, stocks can tend to jump around in ways that investors don’t expect leading up to the December 31 end to the first half of the financial year.

Take last year as a case in point.

Markets jumped 1.8 per cent between December 20 and December 22, but then fell almost 2.9 per cent between December 22 and January 3, before going on a near 9 per cent tear in January as investors around the world got overly excited about China’s post-COVID rebound.

The stage is set for some excitement this year, too.

Read Chanticleer here.

Goldman Sachs has added its voice to a chorus of expectations of a weaker dollar after the US Federal Reserve’s clearest sign yet that interest-rate cuts are coming.

Goldman made sweeping changes to its exchange-rate forecasts after the Fed signalled a more-rapid move to “non-recessionary” interest-rate cuts, analysts including Michael Cahill wrote in a note on Friday. For the first time since September, hedge funds and other large speculators switched to a net short position against the dollar as of December 12, Commodity Futures Trading Commission data showed.

Bloomberg’s dollar spot index dropped 1.2 per cent last week and touched a four-month low after the Fed held interest rates and projected three quarters of a percentage point reductions in 2024. Markets rushed to price in as many as six cuts, and Goldman’s economists moved to anticipate five.

“Our new forecasts incorporate more dollar weakness than before,” the Goldman analysts wrote. “The biggest revisions to our forecasts are in the rate-sensitive currencies that would have struggled under a ‘higher for longer’ rates regime,” such as the yen, the Swedish krona and the Indonesian rupiah, they wrote.

Big investors in takeover target Azure Minerals are close to striking a partnership pact that could settle the extraordinary battle for control that has erupted around the Western Australian lithium explorer.

Azure shares were halted from trading on Monday as the company said there would shortly be a “material update” to the $1.6 billion takeover bid from Chilean giant Sociedad Quimica Y Minera endorsed on October 26 by Azure directors.

A likely outcome would appear to be a partnership pact with one, or several, of the big investors who have rushed to buy Azure shares since SQM’s offer.

SQM owns 19.9 per cent of Azure, but has been joined on the share register by Gina Rinehart’s Hancock Prospecting, which owns 18.3 per cent, and Chris Ellison’s Mineral Resources, which owns 13.56 per cent.

Read more here. 

The Australian sharemarket fell at noon as central bank officials tempered investor enthusiasm for interest rate cuts next year.

The S&P/ASX 200 fell 0.2 per cent, or 12.4 points to 7430.3 at midday, weighed down by losses in the interest rate sensitive real estate sector. Charter Hall dropped 1.6 per cent and Dexus lost 1.7 per cent.

That was after the New York Federal Reserve president John Williams told CNBC on Friday (Saturday AEDT) that it was too soon to talk about unwinding the tightening cycle.

“We aren’t really talking about rate cuts,” Mr Williams told the network. He argued it was “premature” to be thinking about easing at the Fed’s March meeting, and said financial markets reacted “more strongly” than what policymakers indicated in their updated rate projections last week.

While US stock benchmarks lost momentum on Friday, the S&P 500 notched a seven-week winning streak after the Fed ignited a buying frenzy on Wednesday (Thursday AEDT), signalling it is ready to pivot to rate cuts in 2024. The ASX 200, in turn, has rallied 3 per cent in the past five sessions.

Stocks on the move

Adbri soared 33.3 per cent after CRH and major shareholder Barro Group agreed to buy the building materials company for $3.20 per share. The deal values Adbri at $2.1 billion.

Link Group jumped 27.7 per cent after it was announced that Mitsubishi UFJ is set to acquire the company for $2.10 cash a share, plus pay a dividend of 16¢, which will be franked at 25 per cent.

Stockland dropped 2.4 per cent, after agreeing to buy 12 Masterplanned Communities from Lendlease for around $1.06 billion via the establishment of the Stockland Residential Communities Partnership (SRCP) with Supalai. LendLease shares rose 0.7 per cent to $7.56.

Energy giant Santos fell 1.2 per cent despite securing approval from the national offshore petroleum regulator for its revised plan to drill its $5.8 billion Barossa gas project in the Timor Sea.

Zip Co slid 0.8 per cent. The ASX-listed buy now pay later company has secured a $150 million loan from US funds management giant Ares at a 15 per cent interest rate.

Tabcorp jumped over 20 per cent after it said would keep its exclusive license for retail wagering and betting in pubs and clubs in Victoria, keeping out international rivals including Sportsbet.

Oil posted its first weekly gain since late October as major shipping lines suspended transit through the Red Sea, highlighting the risk to international crude trade.

Brent rose above $US77 a barrel after gaining 0.9 per cent last week to snap a seven-week streak of declines. West Texas Intermediate was near $US72. Egypt’s Suez Canal Authority said it’s “closely following” tensions in the Red Sea after the US said it shot down 14 drones launched from Iran-backed Houthi-controlled areas of Yemen.

Major shippers MSC Mediterranean Shipping and CMA CGM SA were the latest to say at the weekend they will not send vessels through the choke point because of rising threats, while Maersk Tankers A/S said it would insist its vessels have the option to avoid the route. Houthi militants have been attacking more and more merchant ships in the Red Sea — especially vessels they say are connected to Israel — in response to war in Gaza.

Crude has lost about a fifth from a high in late September and is down 10 per cent for the year as US shale supply beat analyst expectations and amid scepticism whether all OPEC+ members will stick to pledges to reduce output. While hedge funds are now the least bullish they’ve ever been, Wall Street analysts see some scope for prices to rebound next year.

The Australian dollar is trading about US67¢, within reach of a four-month high touched last week.

The $A, which rallied 1.8 per cent last week, has surged US4¢ since late October on expectations that the US Federal Reserve will reduce borrowing costs well ahead of the Reserve Bank of Australia.

Traders in both Australia and the US have tempered rate cut hopes for 2024 after several Fed officials suggested it was still too early to contemplate easing monetary policy.

Even so, markets are priced for at least five rate reductions in the world’s largest economy for 2024, and are fully pricedfor one rate cut in Australia by August.

Traders in the US and Australia have tempered their expectations for rate cuts in 2024 after US Federal Reserve officials said it was still too early to contemplate lowering borrowing costs.

Federal Reserve Bank of Chicago president Austan Goolsbee said on Sunday (Monday AEDT) it was too early to declare victory on inflation with monetary policy still dependent on incoming economic reports. That’s after New York Fed president John Williams told CNBC on Friday talk of a March cut was “premature”.

Even so, bond markets in the US are still fully priced for a rate cut by May, and ascribe a 78 per cent chance of a move by March. Traders are still pricing in at least five rate reductions in the world’s No. 1 economy for 2024.

In Australia, the market is now fully priced for one rate cut next year by August, compared with last week’s pricing that showed two moves lower.

Traders ascribe a 90 per cent chance of a move lower by June and are fully priced for a cut by August.