The corporate watchdog has charged four people, who ran a Telegram chat room called "ASX Pump and Dump" with alleged share market manipulation.
Catch up with major events in Australian business and finance from today on our blog.
Disclaimer: this blog is not intended as investment advice.
Key events
- Market update
- China's economic policy in focus
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Live updates
Pinned
End of trade snapshot
By Clint Jasper
These figures are a point-in-time snapshot taken at 1641 AEST from LSEG & the ASX.
- ASX 200: +0.5% to7,971.10 points (live values below)
- Australian dollar: -0.23% to 66.27 US cents
- S&P 500 +1.07% to 5,564 points
- Nasdaq: +1.58% to 18,007 points
- FTSE: +0.53% to 8,199 points
- EuroStoxx: +0.9% to 515 points
- Nikkei: +0.01% at 39,594 points
- Hang Seng: 0.8% at 17,495 points
- Shanghai: -1.21% at 2,928 points
- Spot gold: +0.29% to $US2,391/ounce
- Brent crude spot: -2.01% at $US84.94/barrel
- Iron ore: -0.65% to $US106.1/tonne
- Bitcoin: -2.33% to $US66,560
Market wrap
By Clint Jasper
Australia's S&P/ASX 200 closed 0.5% higher at 7971.1 as financial stocks resumed their recent rises.
The benchmark index jumped at the open following a positive lead from U.S. equities and held onto its early gains despite more weakness in shares of miners and energy explorers.
Banks ANZ, Westpac, Commonwealth and NAB added between 0.75% and 1.2%, recovering ground lost since late last week.
Buy-now-pay-later provider Zip, returning to the ASX 200 this week following Altium's takeover and delisting, jumped another 6.2% following a capital raise.
The materials sector lost 0.45% for a fourth consecutive decline, weighed by shares of iron-ore and gold miners. The energy sector gave up 2.0% amid lower oil prices.
(via Reuters)
Pump and dump foursome charged with alleged share market rigging
By Clint Jasper
The corporate watchdog has charged four people with market manipulation, alleging they were involved in a coordinated scheme to pump up shares in Australian stock values before dumping them at inflated prices.
Syed Yusuf, Larissa Quinlan, Emma Summer, and Kurt Stuart were charged in a Sydney court with conspiracy to commit market rigging and false trading.
ASIC alleges that in an organised operation the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the ‘ASX Pump and Dump Group.’
The group have also been charged with dealing with the proceeds of crime, in relation to the money they each allegedly obtained from selling shares in the so-called pump-and-dump activity.
The alleged actions took place in September 2021 and nine announcements were made to the 'ASX Pump and Dump Group' to boost the selected stocks, the regulator said.
One month later, ASIC warned traders in a Telegram share market chat room they may be breaking the law by seeking to organise stock price manipulation.
The allegedly illegal scheme prompted the corporate watchdog's social media-based intervention, ASIC chairman Joe Longo said.
"ASIC monitors the cleanliness of our markets," he said.
"This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law.
"Coordinated attempts to manipulate the market is a criminal offence."
The matter has been adjourned until July 30 for a detention application to be made in respect of each of the defendants.
(with AAP)
Rates rates rates!
By Clint Jasper
We love some crystal balling of what the RBA might decide to do at its August board meeting.
We had the labour market data out last week (slight rise in unemployment), and inflation data is due out on the 31st.
But this note from Deutsche Bank looks at the degree of trust in the RBA's view on inflation expectations.
Friend of the blog David Taylorasked RBA governor Michele Bullock how the bank would know when inflation expectations had become "unanchored".
"We monitor this quite a lot … there's a number of sources of information. We have survey information on households, inflation expectations, unions, we also have information from financial markets. … Our analysis of those suggests at the moment that [inflation expectations] remain anchored around the middle of the band in the medium term … at the moment we've got quite a lot of information that suggests to us that they do remain anchored."
But analysing data from the Melbourne Institute has left Deutsche Bank economistPhil Odonaghoe not so sure about that.
"Metadata from the Melbourne Institute's monthly household inflation expectations survey shows that the proportion of respondents that expect inflation to be in the 2-3% target range has only been lower than current levels during periods of acute price shocks, and never for as long as in the current episode."
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (1) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (1)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-61f7586c-fcdb-4baa-a54e-ca46225302da.jpeg)
Q1-22 was the first time in almost 20 years when household inflation expectations as measured by the Melbourne Institute printed below headline inflation. In other words, "trust" in the inflation target appears to have allowed the RBA to draw on something akin to an inflation target "dividend".
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (2) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (2)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-1cadb81f-89c1-4b29-b13f-5531d7886693.jpeg)
"We continue to think the RBA will lift the cash rate by 25bps at its upcoming meeting in August based on stronger-than-expected inflation outcomes in H1-2024. These early warnings from inflation expectations only add to the case for tighter policy."
Sugar crash
By Clint Jasper
It wasn't that long ago Australian sugar growers were basking in the sweet delight of record prices for their crops — just last year in fact:
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But, as high prices often do, they've enticed more growers around the world to put in a crop. Now the needle's swung the other way and prices are crashing.
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (3) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (3)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-a8df03d1-f87c-4afc-b810-8b1e7ce40afc.jpeg)
Raw sugar futures on ICE hit a seven-week low on Monday amid improved supply prospects.
The bump in that chart was described by some growers as a "once-in-a-generation payday".
This article contains content that is not available.
Dog food deal sends rice stock soaring
By Clint Jasper
SunRice, a Riverina (NSW) based grower, processor, marketer and exporter of Australian rice, has stuck a deal to acquire SavourLife, a premium dog treat maker, for $20.3 million.
News of deal has sent SunRice shares to $8.00 — the highest since 2019.
SunRice is the brand and trading name for RiceGrowers.
Their rice is the mainstay on many Australian supermarket shelves, but the company also includes a stockfeed business, CopRice, which is where CEO Paul Serra sees the synergies.
“This acquisition positions our CopRice business to further expand into the branded companion animal market, where we’ve seen growing demand for premium products."
(with Reuters)
Slowing farm productivity
By Clint Jasper
Australian broadacre farm productivity has slowed to an average annual growth rate of 0.72% from 2000 to 2023, compared to a much higher rate of 2.18% throughout the 1980s and 1990s, according to ABARES.
The productivity slowdown is likely due to a combination of factors including high input prices, fluctuating output prices, limited significant technological breakthroughs, slowing economic dynamism, limited opportunities for productivity enhancing policy intervention, and changes in seasonal conditions.
Increasing productivity will require action by producers and policy makers, with a focus on ensuring structural change in the sector can continue, investments in R&D are maintained and grow , and farms continue to adopt best practice approaches and technologies and implement strategies to build resilience.
ABARES executive director Jared Greenville says innovation and open markets are vital for the success of Australian farming.
"Continued investment in R&D and practices to help agriculture thrive in a changing climate, along with uptake of new technologies by farms will be key.
"Productivity also thrives in free and open markets, so government should ensure that farms are able to consolidate or change without unnecessary barriers.
"Industry and government will need to think creatively to identify new sources of productivity growth so that Australia continues to be a competitive leader in farming."
Where are all the new houses?
By Clint Jasper
JP Morgan analyst Tom Kennedysays new housing construction is lagging behind where most models told us we'd be.
"Supply constraints emerging from 2020 resulted in a large wedge between dwelling commencements and completions in Australia.
"The former spiked on government stimulus, 50-year lows in unemployment and cheap funding rates."
While short-term dislocations are common, starts and completions are obviously highly correlated over time, so the surge in commencements was expected to lead an upturn in new dwelling completions.
To date this dynamic hasn't played out, with completions remaining low in the range and only marginally above the now-depressed quarterly flow of commencements.
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (4) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (4)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-05017847-7798-4516-9987-3cdbdebb174e.png)
It's expected mean that rental rates remain elevated throughout this year and next.
Wine boom for Tassie
By Clint Jasper
The island state's industry hopes this year's bumper vineyard season will help it fill unmet demand for Tassie's wines.
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Would a Trump presidency be good or bad for Aussie farmers?
By Clint Jasper
Grain market analyst Andrew Whitelaw from Episode3 has crunched some numbers on what Republican presidential candidate Donald Trump's trade and agriculture policies could mean for Australian grain growers.
"Trump has proposed that should he win, he would slap a tariff of at least 60% on imports of goods from China and potentially 10% from all other origins. This greatly impacts trade flows around the world when two superpowers start a trade war."
In 2018, the USA introduced a wide-ranging set of tariffs of 25% on products that China imported into the states. As expected, China did not take this kindly and introduced tariffs on American products.
This included a 25% tariff on soybeans, which are the largest agricultural export from the US to China.
When a tariff is introduced, the general effect is that it changes trade flows. We saw this with barley to China (more on that later). In the chart below, we can see the trade in soybeans between Brazil/USA and China. When the tariff was introduced, US-origin soybeans became uncompetitive into China. This meant that Chinese buyers had to switch origin to Brazil.
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (5) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (5)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-9dd6cbf3-4b86-4b54-9972-01050d124956.png)
It is all a bit hypothetical at the moment, but a trade war between China and the USA will likely, in the long term, be harmful for the Australian economy and potentially Australian farmers.
In the short term, it may provide opportunities if China introduces retaliatory tariffs against the United States.
We can guarantee that we will be in for an exciting time.
The worrying graph for Australia's unemployment rate
By Emilia Terzon
ANZ has put out a note about our jobs market, and lingering concerns that further downturn is possible and could be severe.
The bank's analysts included this graph to show a historical trend.
"The unemployment rate generally declines slowly when an economy is doing well but increases quickly during downturns," they note.
"While the labour market is easing slowly, the risks around the RBA's and our forecasts are not symmetric," they note.
"There are some signs the slowdown in the labour market could accelerate and the unemployment rate increase more than currently expected.
In its June minutes, while discussing the case to hold the cash rate steady, the RBA's board noted the risks to the labour market were to the downside and "the unemployment rate could rise quickly once it did start to rise".
"In its upcoming deliberations the board could again weigh up this risk against inflation being above the target for longer than previously anticipated."
Key Event
Market update
By Clint Jasper
Australian shares rose on Tuesday to snap a three-session losing streak, with banking and technology stocks leading the rebound, while Lynas Rare Earths and Woodside emerged as the top losers after reporting dismal quarterly updates.
The S&P/ASX 200 index climbed 0.6% to 7,976.5 by 10:28am AEST.
The Aussie dollar was 0.02% weaker against the US dollar at A$0.66.
Banks gained 0.5% after three consecutive sessions of falls amid renewed interest rate hike fears.
The "Big Four" banks inched higher between 0.6% and 0.8%.
Technology stocks climbed 1.7% after their Wall Street peers closed higher overnight.
WiseTech Global rose 2.8% and Xero gained 1.5%.
Miners climbed 0.3%, even though Dalian iron ore futures fell 1%.
Lynas declined as much as 2.8% to hit its lowest in more than three months after the rare earths miner posted a drop in quarterly revenue, hit by lower production at its Kalgoorlie facility in Western Australia and weaker underlying prices.
Limiting the gains in the benchmark stock index, energy stocks fell 0.8% after oil prices dropped overnight.
Woodside slipped as much as 2.4% after it flagged a jump in the estimated cost of its Scarborough project to $12.5 billion.
Gold stocks gained 0.4% after two sessions of falls.
In New Zealand, the benchmark S&P/NZX 50 index was trading 0.6% higher.
(via Reuters)
Advertised salaries steady last month, Seek reports
By Emilia Terzon
Wages are one of the things the Reserve Bank watches closely when deciding on its policy settings, namely interest rates.
If wages start to look stagnant, it may ease off on interest rates sooner than later, while strong salaries increase the case for it to hold off on any cuts.
The jobs listing website Seek has just put out its latest data, showing salaries on advertised roles were "steady" at 0.3% increase in June.
"Average advertised salaries are growing at a consistently higher rate than before COVID, but have slowed since September last year, when they rose 0.5% month-on-month," it notes.
"Despite job ads coming off historic highs two years ago, employment remains strong which is supporting growth in advertised salaries."
Important to note that advertised salaries are different to all wages, which measure what people are getting while also in existing roles.
Mighty Craft shares still paused after administration announced
By Emilia Terzon
The Australian alcohol company, which owns brands like Better Beer and Tasmanian Green Ant gin, announced it appointed administrators yesterday.
Trade in its stock was paused at the same time.
Currently, the paused stock is worth basically nothing, at 0.005 cents per share.
The company had made some hugeacquisitions in recent years that hadn't proved profitable.
It told the ASX it had been trying to organise a merger to go forward, but this now looked unlikely and administration was the best option — either to find a way out or get a better deal for creditors.
ASX rises 0.5pc on open
By Emilia Terzon
The index is up 0.5% to 7,976 points.
Right now the top gainers are Belluvue Gold (+1.6%), as the price of gold rises, and Life360, which is up 1.5%.
This graph sums up what's happening with rents
By Emilia Terzon
More detail on the data just out from PropTrack.
Good to note that this is asking rents, not real rents which can't be measured by advertisem*nts, as PropTrack's data does.
![As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (7) As it happened: ASIC charges pump and dump group chat with alleged market manipulation, Australian shares close higher (7)](https://i0.wp.com/au-img-cdn.livecenter.com/lc-aus-images/lcimg-11433339-d0ea-49f1-a5ca-5323cc064acf.jpeg)
Is the rental squeeze finally over in Australia?
By Emilia Terzon
Advertised rents didn't go up nationally in the last 3 months, according to data from PropTrack out today.
They held steady at $600 a week.
This was as the national rental vacancy rate increased in the June quarter, with it up 0.3% to 1.4%.
Rental listings on realestate.com.au (which PropTrack is associated with) are also down 4.7% year-on-year, reaching their lowest level for the month of June since 2010.
While this might all sound like good news for stressed renters, they are now paying much more than just a few years ago.
Overall, national rents have risen by 9.1% or $50 in just a year.
There is a lot of divergence in the markets. For instance, capital city rents are dropping, but now regional is on an upswing.
Meanwhile, cities like Perth are still spiking, while Tasmania and Canberra are down.
CrowdStrike shares slip 13pc overnight
By Emilia Terzon
The stock has slipped a lot further since Friday, when the impact of the mass global computer outage linked to CrowdStrike was only just being realised.
There's also been talk of short-sellers making hay.
Here's a great wrap of the situation by our reporter Nadia Daly.
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Markets are bracing for a US election like no other
By Emilia Terzon
AMP's chief economist Shane Oliver and Pepperstone's head of research, Chris Weston, joined The Business last night.
They explained why markets will be volatile throughout the US presidential campaign, especially leading up to the August Democratic National Convention in Chicago.
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Key Event
China's economic policy in focus
By Clint Jasper
You may have picked up on a theme in today's blog — metal markets have jitters about future demand from China.
The ABC's chief business correspondentIan Verrender's got you sorted for everything you need to know about the rising uncertainty over China's economic output:
In Beijing, the all-important Third Plenum, a summit that takes place just twice a decade, has just concluded.
And what a contrast. While Americans have been subjected to a rhetoric-laden, chaotic and violent lead-in to this year's election, China's supreme rulers have just concluded the forum with a self-congratulatory memo that delivered a "highly positive assessment" about everything undertaken by President Xi Jinping.
Missing from the communique, however, was any real mention of the problems plaguing China's economy, let alone any serious measures to alleviate them.
Growth is slowing at an alarming pace. The most recent figures, for the three months to the end of June, were the worst in five quarters while consumer prices again threaten to tip into negative territory.