ASX ends the session higher but posts first weekly loss in four

Australian shares ended Friday’s session higher but plunges by Mesoblast, Block and ResMed capped gains.

Healthcare stocks posted the biggest loss, down 1.2 per cent, with a late bounce from tech and energy offsetting the damage.

The S&P/ASX 200 edged up 0.2 per cent, or 13.7 points, to 77325.4, but recorded a weekly loss of 1 per cent after three consecutive weeks of gains. The All Ordinaries also finished up 0.2 per cent higher at 7535.9.

Shares in sleep disorder and breathing devices company ResMed tumbled 9.3 per cent to $30.7 in the worst session in three years after revenues came in slightly below expectations in the fourth quarter of fiscal 2023.

Biotech company Mesoblast tanked 56.9 per cent to 47¢ and hit an intraday low of 45.5¢, the weakest since 2005 after the US drugs regulator requested more data to approve remestemcel-L used to treat a pediatric steroid refractory disease. It was the company’s worst daily drop in its trading history.

Afterpay parent Block slumped despite second-quarter earnings beating forecasts and a stronger outlook, with the company calling out Australian spending as being more challenged than the United States. Its share price shaved off 5.8 per cent to $109.51 in the biggest daily drop since March.

ANZ Bank shares rallied 0.8 per cent to $25.45 as it vowed to continue its fight to buy Suncorp Bank after the competition regulator knocked back its $4.9 billion acquisition on competition concerns.

Bendigo Adelaide Bank eased 0.1 per cent to $9.15 after flagging a $61 million impairment charge relating to software that will affect its 2023 profit.

Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar have added around $3.2 billion each to their wealth after the software company’s shares surged more than 23 per cent in after hours trading on Wall Street.

Shares in the Australian technology company surged higher after it reported better-than-expected full year results on Friday morning, brushing off concerns of a slowdown in technology spend.

Before the rally, the Australian billionaires had a fortune of around $20 billion this year, according to the Financial Review Rich List. According to calculations by a Rich List analyst, the morning surge equated to about $3.2 billion apiece.

The Nasdaq-listed firm reported $US3.5 billion ($5.3 billion) in revenue for the full fiscal year, up 26 per cent from the year prior, and a net loss of $486.8 million, compared with a net loss of $519.5 million for fiscal year 2022.

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Nomura reiterated its interest rates forecast of one final increase, most likely in November, taking the cash rate to 4.35 per cent.

Andrew Ticehurst, a senior economist, predicts the first rate cut in May next year, with the benchmark returning to a “more neutral level of around 3.6 per cent” by around August next year.

ANZ Bank has vowed to continue its fight to buy Suncorp Bank, after the competition regulator knocked back the $4.9 billion acquisition, fearing it would “further entrench an oligopoly” and lead to reduced competition in home loans, agribusiness and business banking in Queensland.

The Australian Competition and Consumer Commission on Friday rejected ANZ’s takeover, declaring second-tier banks provide “an important source of competitive pressure on the major banks” and that a bigger ANZ would be more likely to coordinate pricing with the other major lenders.

ANZ and Suncorp immediately flagged an appeal to the Australian Competition Tribunal. This will delay a final ruling by around six months.

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Not long after Gina Cass-Gottlieb became the chairman of the Australian Competition and Consumer Commission, she professed her admiration for the woman she calls “the mother of Australian competition law”, Maureen Brunt, and her pragmatic approach to competition policy.

“You really need to be based on facts,” Cass-Gottlieb told Chanticleer. “Professor Brunt would say, ‘what’s going on here?’”

Cass-Gottlieb recused herself from the competition watchdog’s decision on ANZ’s $4.9 billion takeover of Suncorp’s banking division because of a prior conflict from her work as a top competition lawyer before she joined the commission.

But it is striking that the ACCC decision to block the ANZ/Suncorp deal appears to be based less on facts and more on two “what ifs” that will be heavily contested by ANZ, which has immediately announced it will take the decision to the Australian Competition Tribunal.

The ACCC’s finding that the merger would substantially lessen competition is based on the idea of co-ordination, a competition theory that was most neatly summarised by the ACCC’s independent expert on this matter, British competition guru Mary Starks.

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China’s Ministry of Commerce said on Friday it would drop anti-dumping and anti-subsidy tariffs on Australian barley imports that had been in place for three years, affecting billions of dollars of trade, as the two nations repair strained ties.

China and Australia agreed in April to resolve their dispute over barley imports, with Canberra to suspend a case at the World Trade Organisation (WTO) over Beijing’s anti-dumping and countervailing duties on barley, while China promised to speed up a review into the tariffs.

Australian Trade Minister Don Farrell said on Wednesday that he was expecting a positive outcome within days.

The tariffs will be dropped starting on Saturday, China’s Ministry of Commerce said, citing a changing situation in China’s barley market without providing further details.

Beijing implemented tariffs totalling 80.5 per cent on Australian barley in May 2020, wiping out imports of the grain by the world’s biggest beer market, worth as much as $2 billion a year.

That prompted a formal complaint by Australia to the WTO in December that year.

Since then, Chinese buyers have turned to Canada, France and Argentina to replace Australian supplies, while Australian sellers shifted exports to feed barley markets in the Middle East.

Those trade flows are likely to shift again after China drops the tariffs, with its barley buyers expected to begin purchases of the new Australian crop harvested in October for arrival by year-end.

The S&P/ASX 200 turned negative, down 0.2 per cent, as plunges by Mesoblast, Block and ResMed erased earlier slim gains.

Healthcare stocks extended losses, with a drop of 2 per cent. Energy and materials were the only sectors in the black.

Shares in sleep disorder and breathing devices company ResMed and Afterpay parent Block were the biggest losers on the main index, down between 9 and 11 per cent.

Biotech company Mesoblast tanked 55 per cent after the US drugs regulator requested more data before receiving approval to market remestemcel-L to treat a pediatric steroid refractory disease.

ANZ Bank shares trimmed earlier gains but were still up 0.5 per cent, even though the competition regulator rejected its planned $4.9 billion ANZ/Suncorp bank merger.

Bendigo Adelaide Bank slipped 0.2 per cent after flagging a $61 million impairment charge relating to software.

Economic growth is expected to slump to its lowest level in the three decades outside the pandemic as rising mortgage rates and high taxes batter household budgets.

In its latest Statement on Monetary Policy, the Reserve Bank downgraded its near-term growth forecasts as the economy cools in response to the fastest interest rate tightening cycle in decades.

The central bank expects gross domestic product to expand by just 0.9 per cent in the 12 months to December 2023 as a result of a weaker-than-expected March quarter national accounts – down from its previous forecast of 1.2 per cent, and below the current rate of 2.3 per cent.

Economic growth is expected to remain subdued in the period ahead, increasing to just 1.6 per cent in December 2024 and to 2.3 per cent in December 2025.

“The soft near-term outlook reflects subdued growth in household consumption, as higher interest rates and cost-of-living pressures weigh on real disposable income,” the central bank said.

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The S&P/ASX 200 eked out a small rise of 0.1 per cent, tracking a similar move on Wall Street, as plunges by Mesoblast, Block and ResMed capped gains.

The energy sector led the increase, up 1.1 per cent, while healthcare stocks dropped 1.8 per cent.

Shares in Afterpay parent Block tumbled 10 per cent despite results beating forecasts, with investors seemingly pessimistic about the Australian market compared to others.

Biotech company Mesoblast tanked 55 per cent after the US drugs regulator requested more data before receiving approval to market remestemcel-L to treat a pediatric steroid refractory disease.

Sleep disorder and breathing devices company ResMed plunged 10.5 per cent despite reporting an 18 per cent increase in revenue.

ANZ Bank shares rallied 1 per cent, defying a rebuff by the competition regulator, which rejected its planned $4.9 billion ANZ/Suncorp bank merger. ANZ said it remained hopeful of a deal.

Suncorp stock, however, retreated 0.5 per cent.

Bendigo Adelaide Bank slipped 0.2 per cent after flagging a $61 million impairment charge relating to software.

New Zealand co-operative Fonterra Shareholders’ Fund was flat despite cutting its milk price forecast on slower demand from China.