Star Entertainment surges on takeover speculation, ASX up 0.6pc — as it happened (2024)

• ASX 200: +0.6% to 7,864 points
• Australian dollar: +0.2% at 67.02 US cents
• Nikkei: +0.7% at 39050 points
• Hang Seng: +0.6% at 19664
• Shanghai: +0.4% at 3691 points
• S&P 500 (Friday): +0.1% to 5,303 points
• Nasdaq (Friday): -0.1% to 18,546 points
• FTSE (Friday): -0.2% to 8,420 points
• EuroStoxx (Friday): -0.1% to 523 points
• Spot gold: +0.1% to $US2,447/ounce
• Brent crude: +0.4% at $US84.29/barrel
• Iron ore (Friday): flat at $US109.20/tonne
• Bitcoin: +0.2% to $US67,107

Prices current around 16:20pm AEST.

Live updates on the major ASX indices:

The ASX had a solid start to the week, up 0.6%, fuelled by the miners and China's decision to tip in a few billion yuan into its ailing property sector and a bit of help from a surge in Star Entertainment over takeover speculation.

Rio Tinto (+2.8%), BHP (+1.9%) and Fortescue (+1.1%) were all big beneficiaries of China's decision on Friday to tip in another 4.3 trillion yuan ($A910 billion) into its property sector which has seen several spectacular crashes amongst developers recently.

Talking of spectacular crashes, Star Entertainment emerged from the wreckage of its own making to say "Yup, the AFR was right, we have had an unsolicited takeover offer".

That saw Star in the unusual role of the best-performing stock of the day, up 20% to 54 cents. A realist would point out it was around $5.40 in 2018.

Healthcare had a disappointing day, dragged down by Cochlear (-3.2%).

On the currency market, the Australian dollar pushed up through 67 US cents thanks in large part to the news out of China.

Markets in Asia were largely strong too, led by Japan's Nikkei up 0.7%, the Hang Seng 0.6% and Shanghai's Composite +0.4%

Question on notice from Rob wanting to know the difference between "consumer discretionary" and "consumer staples" in the stock quote indices. Well in my humble opinion the line can be a bit blurred on the margin but here goes.

The ASX staples index is made up of three industry groups and 70 companies at the moment.

• Food & beverage which includes agricultural producers such as AACo, Ridley, Select Harvests (tobacco has been butted out of this sector),
• Household and personal products such as Bubs Australia and skincare player Live Vedure
• Food and staples retailing. The biggies, supermarkets Coles and Woolies, Metcash are parked here

Consumer discretionary is deemed to be less essential, although you could argue the toss in many cases.

There are about 120 consumer discretionary companies on the ASX in four groups.

• Speciality and multiline retailing think JB Hi-Fi and Harvey Norman
• Consumer services such as hotels and leisure companies - Star lurks here, along with the likes of Flight Centre and Webjet
• Consumer durables and apparel - Premier Investments, Lovisa, Breville
• Automobiles and components - ARB and Eagers Automotive

To show there is a difference in terms of investment returns, here's a chart of the ASX consumer discretionary index (in blue) vs consumer staple (white).

I guess over 12 months at least, it shows discretion is the better part of value.*

*Not investment advice.

Just a little more on the Chinese government's rescue plan to support its decidedly wobbly property market, a move that has put the jets under the big Australian miners today.

The package to stabilise property sector was released on Friday and its central plank is a 4.3 trillion yuan ($A910 billion) fund to be made available to complete unfinished, presold projects.

There's 300 billion yuan ($A63 billion) for state-owned enterprises to buy unsold homes, 100 billion yuan ($A21 billion) in re-lending for rental housing, 500 billion yuan ($A105 billion) in supplementary lending to redevelop older buildings in urban areas, and the list goes on.

A trillion here, a trillion there, pretty soon you're talking serious money.

China’s Real Estate Newspaper – published by the housing ministry – called it an "historic moment" for the sector, and China's recently moribund CSI real estate index jumped almost 10 per cent on the news.

Investors in Australia's big miners followed suit today on the theory that trillions of fresh yuan being pumped into Chinese property will mean greater demand for Australian resources.

Rio Tinto rose 2.6% in the wake of the news, BHP (+2%) and Fortescue (+1.6%) were not far behind.

So, will it work?

Certainly, results won’t be known for some time, but it will give Chinese property developers a bit of confidence in the midst of a crisis that seen some of the biggest players such as Evergrande and County Garden go under, while even a major state-linked developer like Vanke is tottering at the moment.

ANZ’s senior China strategist Zhao Peng Xing believes while the package may win the immediate battle, the longer-term war is a different question as the fundamentals are unchanged.

"The impact of the rescue plan will be mixed," he said.

"Under the destocking plan, the government is virtually a single buyer acquiring the existing inventory and redistributing to potential buyers who are financially insufficient or unwilling to buy at the prevailing price.

"Our view is that the rescue plan will be sufficient to stabilise the market outlook on the supply side, but the demand-side measures are insufficient."
.

The ASX has enjoyed a strong start to the week (+0.7%), underpinned by a surge in mining stocks and a new rescue effort by Chinese authorities to prop-up its ailing property sector.

The rise wasn't hurt by a surge in buying interest in Star Entertainment group – normally a dead weight on proceedings – on news of a potential takeover bid, although Star is now such a non-entity in terms of index weightings it probably hasn't made that much of a difference.

Star was up 22% to 55 cents after starting the day in a trading halt.

The real lifting has been done by the miners: Rio Tinto +2.8%, BHP +2.1% and Fortescue +1.8%.Energy stocks have been in the money too, Santos +1.5% and Woodside +0.9% respectively, although both shaded by uranium miner Paladin +8.3%

The banks have been a mixed bag, ranging from CBA +0.3% to ANZ and NAB both -0.1%.

Property stocks have lagged with the likes of BWP Trust, Stockland and Mirvac all down around 1.6%.

• ASX 200: +0.7% to 7,865 points
• Australian dollar: +0.1% at 67.02 US cents
• S&P 500 (Friday): +0.1% to 5,303 points
• Nasdaq (Friday): -0.1% to 18,546 points
• FTSE (Friday): -0.2% to 8,420 points
• EuroStoxx (Friday): -0.1% to 523 points
• Spot gold: +0.2% to $US2,420/ounce
• Brent crude: +0.2% at $US84.17/barrel
• Iron ore (Friday): flat at $US109.20/tonne
• Bitcoin: -0.4% to $US66,630

Prices current around 12:15am AEST.

Live updates on the major ASX indices:

More on the takeover speculation at the troubled casino operator Star Entertainment Group.

Star has exited its temporary trading halt this morning at warp speed, up around 20% to 54 cents on the hope a US entertainment business' interest in taking over the company could salvage something out of the wreckage for investors.

Star was forced to issue a statement to the ASX this morning after the Australian Financial Review reported the US-based Hard Rock Hotels and Casinos was sniffing around Star’s assets.

The AFR said under Hard Rock’s plan, Star would be rebranded, and its properties would be separated from the casino operator, with properties more focused on live music, food and beverages and less reliant on gambling.

Star in its statement to the ASX said the nature of the interest to date has been unsolicited, preliminary and nonbinding.

“At this stage, none of the approaches has resulted in substantive discussions,” Star said.

Star also noted it was currently more focussed on dealing with numerous reputational issues currently on its plate, including the remediation activities in New South Wales and Queensland and participating in the second inquiry into its Sydney casino.

Star’s woes are manifold, including the departure of chairman David Foster last month after a text message in which he suggested the state's casino regulator should be abolished was made public.

That embarrassment emerged in the second inquiry into Star, led by Adam Bell SC, which was announced in February.

It came 18 months after the findings of an initial inquiry by Mr Bell, who deemed Star Entertainment Group unsuitable to operate a casino in Sydney.

The 2022 inquiry heard allegations of money laundering, organised crime links, and fraud at the casino in Pyrmont.The NICC suspended The Star's licence indefinitely and slapped the casino with a $100 million fine.

The troubled casino operator Star Entertainment has confirmed it has received an unsolicited and non-binding takeover offer.

"At this stage, none of the approaches has resulted in substantive discussions," Star said in a statement to the ASX this morning.

Share trading in Star has been placed in a temporary halt pending further details.

More to come.

Just a bit more about the US market hitting record highs last week.

The benchmark S&P500 fell 4% in April. It's now up 11% over the year.

Reuters has dug up an analyst who tracks the history of rebounds and perhaps there's no surprise that he believes the current rally has a bit more puff in it.

The co-chief investment officer at Truist Advisory Services, Keith Lerner, said records since 2009 show past rebounds in the S&P 500 from 5% pullbacks have been followed by a median gain of 17.4%.

"Once you find the low, the market typically has further to go than what we've seen so far," Mr Lerner told Reuters.

Taking the research back to the 1950s, Mr Lerner's research found the median length for a bull market has been just over 4.5 years compared to slightly more than 1.5 years since the start of the current one.

But before unleashing a torrent of buy orders, two points (a) this blog in no way should construed as providing investment advice and (b) don't too comfortable with that "soft landing" narrative driving the rally.

J.P. Morgan global strategy team noted over the weekend the macro outlook is still uncertain.

"(As) for equities, we are entering into a seasonally tricky time of the year, with a challenging combination of inflation at risk of staying too high, profit margin pressures, and elevated positioning," they wrote in a note to clients.

In other words, things might be a bit too expensive to plunge in with your ears pinned back.

Loading

• ASX 200: +0.6% to 7,861 points
• Australian dollar: +0.1% at 66.97 US cents
• S&P 500 (Friday): +0.1% to 5,303 points
• Nasdaq (Friday): -0.1% to 18,546 points
• FTSE (Friday): -0.2% to 8,420 points
• EuroStoxx (Friday): -0.1% to 523 points
• Spot gold: +0.2% to $US2,420/ounce
• Brent crude: flat at $US83.96/barrel
• Iron ore (Friday): flat at $US109.20/tonne
• Bitcoin: -1.1% to $US66,154

Prices current around 10:20am AEST.

Live updates on the major ASX indices:

The ASX has bounced out of the blocks with a solid 0.6% rise this morning.

The solid start follows a rather quiet end to the week on Wall Street with the most significant event being the Dow Jones Index punching through 40,000 points to a new record close.

The miners and energy stocks have led the way so far both up around 1.6%.

Consumer cyclicals (-0.3%) and utilities (-0.2%) aren't seeing a lot of love from investors at the moment.

ASIC has taken a look at how the banks treat their customers who have asked for "hardship assistance" and the result is not that comforting.

The report found while the banks are obliged by law to help customers in trouble, getting support is so difficult and convoluted that about a third of people seeking assistance drop out of the process.

All this at a time when cost-of-living pressures have seen the number of bank customers seeking hardship support rise by more than 50% from a year ago.

Business reporter Daniel Ziffer has a detailed breakdown of ASIC's findings.

After a couple of interesting weeks of data – not to forget a federal budget and an RBA rates decision – the finance calendar is pretty barren in coming days.

Could be a good time to carry out a bit of maintenance work on the ABS printing presses.

Loading

The RBA releases the minutes of last week's meeting on Tuesday, but these days with instant post-decision media conferences, the delayed poring over language and nuance of the publication has lost some of its fascination, particularly in the high-octane world of finance blogging. This one's for the wonks.

Consumer confidence, or lack of it, is very much on-point these days, so the venerable Westpac-Melbourne Consumer Sentiment (Tuesday) will be worth a read.

The May release will give an initial idea of how consumers (aka voters) responded to the federal budget and its cost-of-living measures, such as electricity rebates and further rent assistance.

Overseas, things are quiet as well.

The UK has inflation figures out (Wednesday) and CPI inflation is expected to tumble from 3.2% in March to below 2% in April.

Capital Economics forecasts it could fall below 1% by the end of the year.

In the words of CE economist Paul Dales, UK inflation may soon be too low. Other peoples' problems.

Good morning, and welcome to the working week.

Stephen Letts from ABC business team limbering up for another blow-by-blow, post-by-post blog of the day's events on the markets and in finance.

Right now, the portents are looking OK. The ASX futures are up 0.5% after a relatively muted close on Wall Street.

The S&P500 nudged higher (+0.1%) and the Nasdaq nudged lower (-0.1%).

Both gained over the week, the fourth consecutive week of gains for both indices, but both were left in the shade by their 30-strong, blue-chip brethren on the Dow Jones.

For the numerically inclined, the Dow was up 0.3%, closing above 40,000 points for the first time since such things became things (Editor's note: May 26, 1896. Also, please don't use "breaking through the psychologically important level" in relation to markets reaching new round figure levels — they are just numbers).

So that's the scene set & we're ready to go.

Loading

• ASX 200 futures: +0.5% to 7,876 points
• Australian dollar: Flat at 66.95 US cents
• S&P 500 (Friday): +0.1% to 5,303 points
• Nasdaq (Friday): -0.1% to 18,546 points
• FTSE (Friday): -0.2% to 8,420 points
• EuroStoxx (Friday): -0.1% to 523 points
• Spot gold: +0.2% to $US2,419/ounce
• Brent crude: flat at $US83.96/barrel
• Iron ore (Friday): flat at $US109.20/tonne
• Bitcoin: -0.1% to $US66,342

Prices current around 9:00am AEST.

Live updates on the major ASX indices: