Rio Tinto's iron ore division chief Simon Trott says the company is taking the lost radioactive capsule in Western Australia "very seriously", while the Australian share market slips from its nine-month high.
This cautious mood comes ahead of a busy week, during which the US Federal Reserve, Bank of England and European Central Bank are due to lift interest rates in an effort to bring inflation down from a multi-decade high.
Scroll down to see how the trading day unfolded.
Disclaimer: this blog is not intended as investment advice.
Live updates
ASX closes 0.2% lower
By David Chau
The local share market spent most of its day in negative territory, with the ASX 200 finishing 0.2% lower, at 7,482 points.
There were some big gains in the share price of tech, lithium and rare earths companies, like Core Lithium (+8.9%), Novonix (+7.5%), Lynas Rare Earths (+6.9%), Lake Resources (+6.1%) and WiseTech Global (+5.2%).
However, that was offset by significant losses across mining stocks like Champion Iron (-7.1%), Perseus Mining (-3.1%) and Coronado Global Resources (-2.9%).
Insurers Suncorp (-2%) and IAG (-3.7%) fell sharply after both companies flagged they would incur significant costs after they received about 8,000 claims from the New Zealand floods.
The Australian dollar was trading at 70.9 US cents at 4:25pm AEDT, after falling 0.2%.
Tech layoffs to slow down, says ex-boss of Facebook Australia
By David Chau
It's only been four weeks into the New Year, and tech firms have already sacked about 60,000 workers.
Here are some of the 'well-known companies and the number of jobs they've cut:
- Amazon: 18,000
- Microsoft: 10,000
- Google: 12,000
- Salesforce: 8,000
- IBM: 3,900
- SAP: 3,000
- Coinbase: 950
- Spotify: 400
On the weekend, I spoke with Stephen Scheeler, the former head of Facebook's operations in Australia and New Zealand.
He doesn't expect these "big lay-offs" to continue, but says there will likely be a significant slowdown in recruitment.
"I think you'll see a tightening of the new hiring that these companies are doing. It all depends on what the economy does.
"If you look at Google and Facebook, for example, almost all of their revenue comes from advertising.
"Advertising tends to go down when we get into conditions of a recession, so advertisers pull back, and their revenue falls.
"If they want to keep their costs tight, they'll probably start cutting back on some 'moonshot' areas [like] building new things for tomorrow. That's where a lot of their investments are today."
We also talked about Microsoft's strategy (with its $US10 billion investment in artificial intelligence) and the future of the "Metaverse", among other things.
You can watch my full interview with Stephen Scheeler here.
Apple, Amazon, Google, Facebook to report their earnings
By David Chau
America's tech giants will report their quarterly earnings later this week, including Apple, Amazon, Alphabet (Google), and Meta (Facebook).
If their results don't meet expectations (or if they provide a gloomier-than-expected forecast about future earnings), that might derail Wall Street's recent rally.
The benchmark US index, the S&P 500, has surged 6.4% since the year began, so there's a lot of optimism in the market.
"Apple will give a glimpse into the overall demand story for consumers globally and a snapshot of the China supply chain issues starting to slowly abate," analysts at US-based Wedbush Securities wrote in a note to clients.
"Based on our recent Asia supply chain checks we believe iPhone 14 Pro demand is holding up firmer than expected," they added
"Apple will likely cut some costs around the edges, but we do not expect mass layoffs."
ANZ not expecting a rate cut until late-2024
By David Chau
Australia's cash rate target (at 3.1%) is currently its highest level in a decade, and there's a lot of debate about how much higher it will climb.
ANZ and Westpac are expecting the Reserve Bank will lift rates to 3.85% by around the middle of this year (so three more rate hikes).
There is also growing speculation that the Reserve Bank may have to cut interest rates if there's a larger-than-expected rise in the unemployment rate, or Australia's growth slows down excessively.
"It does take a while for those cash rate hikes to have their full impact, and it's unlikely to be until late 2024 that we actually see any cuts," said Adelaide Timbrell, a senior economist at ANZ.
"There's always a possibility that will come earlier but it's probably not going to come earlier unless we have something like a recession."
For more on this, you can watch my interview with Adelaide Timbrell here.
Why the cautious mood on markets today?
By David Chau
Analysts say we're certain to see interest rate hikes in Europe and the United States this week, along with US jobs and wage data that may influence how much further they still have to go.
Investors are confident the US Federal Reserve will raise rates by 0.25 percentage points on Thursday morning (AEDT), followed the day after by half-point hikes from the Bank of England and European Central Bank.
Any deviation from that script would be a real shock to what markets have already priced in.
Just as important will be the guidance on future policy with analysts expecting a hawkish message of inflation is not yet beaten and more needs to be done.
"With US labor markets still tight, core inflation elevated, and financial conditions easing, Fed Chair [Jerome] Powell's tone will be hawkish, stressing that a downshifting to a 25bp [basis point] hike doesn't mean a pause is coming," said Bruce Kasman, chief economist at JPMorgan, who expects another US rate hike in March.
"We also look for him to continue to push back against market pricing of rate cuts later this year."
There is a lot of pushing to do given futures currently have rates peaking at 5% in March, only to fall back to 4.5% by year end.
Market snapshot at 2:50pm AEDT
By David Chau
With the Australian trading day nearly over, it looks like the market will finish trading with tiny losses:
- ASX 200 at 7,482 points (-0.2%)
- Australian dollar at 70.9 US cents (-0.2%)
- Spot gold at $US1,925 an ounce (-0.1%)
- Brent crude oil at $US86.60 (-0.1%)
Meanwhile, it's a mixed bag for the Asia-Pacific as the Chinese stock market returns from its one-week Lunar New Year break:
- Hang Seng at 22,403 points (-1.3%)
- Shanghai Composite at 3,289 (+0.7%)
- Nikkei at 27,474 (+0.3%)
- KOSPI at 2,453 (-1.3%)
- NZX 50 at 12,021 (-0.1%)
Chinese tourist numbers reflect Beijing-Canberra relations
By David Chau
The re-opening of China could be a litmus test for the superpower's relationship with Australia, as tourists from the mainland decide whether to travel south for holidays.
China was considered Australia's top tourism market before the pandemic, with visitors from there spending around $10.3 billion here every year. That overwhelmed the value of other nations' travellers.
As China and Australia's relationship worsened into a so-called "trade war", the impact of this on the crucial trade relationship of tourism was masked by the pandemic's closed borders.
"The Chinese government has a range of mechanisms by which it can direct tourists away from certain countries or to certain countries based on political considerations," said Benjamin Herscovitch, a research fellow at the Australian National University.
"China is such an important source of international students and tourists for countries like Australia, that those signals will be particularly potent when you're directing either tourists or students away from Australia."
So how does China really feel about Australia now?
Tourism may show us, as the nation and its people decide whether they'll head back Down Under in the same numbers they were pre-pandemic, as Emilia Terzon writes.
Lachlan Murdoch claims Crikey 'benefited financially' from defamation case
By David Chau
News outlet Crikey wanted to be sued by Lachlan Murdoch and "benefited financially" from a wave of new subscribers sparked by the defamation case, a court has been told.
Fox News chief executive, Mr Murdoch, claims Crikey's senior management made a "commercial decision" to repost an article at the centre of a legal complaint he made weeks earlier.
He is suing journalist Bernard Keane, Crikey's editor-in-chief Peter Fray, and parent company Private Media over the article, which allegedly referred to his family as "unindicted co-conspirators" in the US Capitol riots.
The publishers deny the story defamed Mr Murdoch and are employing a recently updated public interest defence for media companies.
The Federal Court was told that Crikey had sold 5,000 new subscriptions in August 2022 — a "windfall of $500,000" — at a discounted "Lachlan Murdoch rate".
Here's the story by Heath Parkes-Hupton, who has been following the case closely.
Adani responds to fraud allegations
By David Chau
Gautam Adani faces a critical day — the second day of his flagship company's $US2.5 billion ($3.5b) capital raising is being overshadowed by a $US48 billion rout in the Indian billionaire's stocks.
Shares of companies in the Adani conglomerate plunged by around 20% in two days.
It was after a US short seller (Hindenburg Research) published a report last week, flagging concerns about high debt levels and the use of tax havens.
Adani Group issued a detailed response late on Sunday, saying it complies with all local laws and has made necessary regulatory disclosures.
It has called the Hinderberg report baseless and said it was considering taking action against Hindenburg.
"This [report] is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors," Adani said in the 413-page response issued late on Sunday.
The research report, Adani said, made "misleading claims around offshore entities" without any evidence whatsoever.
Hindenburg did not immediately respond to a request for comment on the Adani response on Sunday.
For more on this, you can read the full story here.
BHP flags Mount Arthur Coal Mine may close even earlier
By David Chau
The company behind New South Wales' largest coal mine fears it could have to close earlier than anticipated, leaving thousands of workers questioning their future.
In a letter obtained by the ABC, BHP management told its 2,000 staff at Muswellbrook's Mount Arthur Coal that it might need to bring forward its impending closure.
Mining giant BHP last year announced it was bringing forward the closure from 2045 to 2030 after being unable to find a buyer for the Mt Arthur site.
BHP's vice-president of NSW Energy Coal Adam Lancey told staff, due to the NSW government's "unexpected" announcement of its coal reservation scheme, coupled with the coal price cap, it had led management to reassess the 2030 plan.
For more on this, here's Amelia Bernasconi with the story.
China, Australia and the isolation game
By David Chau
From a cultural, diplomatic and military perspective, Australia and China remain as deeply divided and suspicious of each other as ever. That's played out in recent months with tensions over Taiwan and the Pacific.
Meanwhile, the long-running trade war, instigated by Beijing, shows no sign of abating despite all the warm embraces.
The only things China these days buys from Australia are the things it absolutely needs and can't easily source elsewhere.
That's the only reason Australian iron ore and natural gas never went out of favour.
When it comes to almost everything else, from grain, timber, seafood, wine and even service industries, Australia remains firmly on the trading blacklist.
Here's the latest analysis from our business editor Ian Verrender, onwhy China will continue to play the isolation game with Australia.
Local tech stocks follow Wall Street's lead
By David Chau
Technology stocks are doing particularly well, despite the Australian share market being dragged lower by heavyweight miners.
Some of today's best performers include WiseTech Global (+4.9%), Block (+4.6%), NextDC (+4.6%) and Xero (+3.4%).
It comes after a strong performance on Wall Street last Friday, particularly after surging US tech stocks boosted the Nasdaq Composite by 1%.
Meanwhile, shares of Lynas Rare Earths jumped 3.9%.
It was after the company reported a 14.8% jump in second-quarter revenue from growing demand for specialised metals used in components of electric vehicles.
ASX turns negative as miners and insurers weigh on market
By David Chau
The local share market has fallen into negative territory, with the ASX 200 down 0.2% to 7,482 points by 11:55am AEDT.
Mining companies were some of the biggest drags on the market, including iron ore miners Champion Iron (-6.5%), Rio Tinto (-1.4%) and Fortescue Metals (-2.3%).
Gold miners are also doing poorly, including Perseus Mining (-3.6%), Silver Lake Resources (-2.8%), Gold Road Resources (-2.8%) and Regis Resources (-2.6%).
The insurance giants are also in the list of worst performers, namely Suncorp (-3.2%) and Insurance Australia Group (-4.3%).
This was after both insurers announce there would be significant costs from the roughly 8,000 claims they received from the New Zealand floods so far.
Rio Tinto apologises after radioactive capsule lost in WA
By David Chau
Rio Tinto's iron ore division chief Simon Trott has issued an apology — after a contractor hired by the company lost a radioactive capsule in transit in Western Australia, which sparked a radiation alert across parts of the state.
Authorities said the radioactive capsule used in mining was lost during transport from north of Newman - a small town in the remote Kimberley region - to a storage facility in the northeast suburbs of Perth, a distance of 1,200 km.
A search is now underway for the small silver capsule containing Caesium-137 which emits radiation equal to 10 x-rays per hour and which authorities have recommended people stay at least five metres from.
"We are taking this incident very seriously," Mr Trott said in a statement.
"We recognise this is clearly very concerning and are sorry for the alarm it has caused in the Western Australian community.
"Rio Tinto engaged a third-party contractor, with appropriate expertise and certification, to safely package the device in preparation for transport off-site ahead of receipt at their facility in Perth," he said, adding that Rio was also conducting its own investigation into how the loss occurred.
Early reports suggested the loss was not discovered for almost two weeks after the capsule left Rio's Gudai-Darri mine site.
Rio said it was informed by the contractor the capsule was missing on January 25.
"We have completed radiological surveys of all areas on site where the device had been, and surveyed roads within the mine site as well as the access road leading away from the Gudai-Darri mine site," he said.
Rio Tinto's share price was down 1.6% to $124.97, by 11:35am AEDT.
Brisbane property prices drop 10.9% from peak
By David Chau
Brisbane's housing market has experienced its largest (and fastest) downturn on record, according to CoreLogic's latest data.
Median home values in Queensland's capital have fallen 10.9% since their record high on June 19, soon after the Reserve Bank began its aggressive rate-hiking cycle.
In comparison, Australia's median property price has fallen by a smaller 8.6% from its recent peak.
But that "record" drop in Brisbane is relatively small, considering prices there surged 43.5% between August 2020 (its COVID low point) and June 2022.
“Brisbane now stands out as one of two capital city markets with record declines, the other being Hobart," said CoreLogic's head of research Eliza Owen.
"Sydney continues to have the largest peak-to-trough falls of the capital city markets (currently at -13.8%), while peak-to-tough falls remain mild in some cities (such as Perth, where values are down just -1.0% from a recent peak in August 2022),” she added.
Australian insurers receive over 8,000 claims after New Zealand floods
By David Chau
Insurance Australia Group and Suncorp's New Zealand divisions have cumulatively received over 8,000 claims so far following severe storms and flooding across the country.
As of Monday morning, Suncorp's Vero and AA Insurance brands have received about 3,000 claims, while IAG's AMI, State and New Zealand Insurance brands have obtained over 5,000 claims.
Both insurers expect the number of claims to rise further over the coming days, as the event continues to unfold and customers identify damages.
New Zealand's death toll from heavy rain rose to four on Sunday as flash floods and landslides on the North Island continued.
Battered since Friday, Auckland, New Zealand's largest city, remains under a state of emergency.
Thousands of properties remained without power, while hundreds were without water, NZ authorities had said.
Share price sinks on flood update
Both companies experienced a significant drop in their share price on Monday morning.
By 11:40am AEDT, shares of IAG had fallen 4.2% to $4.86, while Suncorp was down 3% to $12.42.
IAG noted that it was too early to determine the financial impact of the floods, and the company said it may review its $909 million estimate for fiscal year 2023 natural peril costs once the situation becomes clearer.
Suncorp said losses from this event will be capped at NZ$50 million ($45.7m) as its reinsurance program provides additional protection for New Zealand losses.
In a research note, brokers at Citi observed that IAG's exposure to the floods in Auckland (which could be potentially as much as $236 million) is "much greater" than the NZ$50 million cost Suncorp is likely to incur.
In comparison, IAG received 24,000 claims in the first three days of flooding in Sydney and across the New South Wales state last year.
Both insurance agencies, IAG and Suncorp, have a significant market in New Zealand.
Local New Zealand insurers have yet to provide any details on claims received.
Australian market opens 0.1% higher
By David Chau
Good morning! Welcome to today's blog, where I will take you through the market action throughout the day.
It's a cautious start to the trading session, with the ASX 200 rising 0.1% to 7,501 points (by 10:30am AEDT).
Here's a snapshot of how other parts of the market are faring:
- Australian dollar: 71.06 US cents (-0.1%)
- Spot gold: $US1,927 an ounce (-0.1%)
- Brent crude oil: $US87.29 a barrel (+0.7%)
- Iron ore: $US122.70 per tonne (+0.2%)
It comes after tech stocks rebounded on Wall Street last Friday, boosting the Nasdaq Composite by 1% to 11,622 points.
However, gains for the rest of the US market were a lot smaller, with the Dow Jones rising 0.1% to 33,978, and the S&P 500 gaining 0.3% to 4,071.
Meanwhile, it will be a busy week of central bank meetings, with the US Federal Reserve set to lift rates on Thursday at 6am AEDT.
Markets are betting it will be a 0.25 percentage point rise (its smallest increase in the current rate-hiking cycle).
It will be followed by rate hikes from the Bank of England (on Thursday evening) and European Central Bank (on Friday morning).
The BoE and ECB are likely to lift rates by 0.5 percentage points each, according to market pricing.
ABC/Reuters
