ASX loses ground, Qantas records large fall in profits as parliamentary banking inquiry begins — as it happened

The Australian share market has ended lower on Thursday, weighted by energy, consumer and utilities sectors.

The ASX 200 closed down 26 points or 0.3 per cent to 8,045.

Here are the top and bottom movers at close.

Japan's Nikkei share average slipped on Thursday, as technology stocks fell after artificial intelligence (AI) darling Nvidia's forecasts failed to impress some growth-hungry investors.

The Nikkei was flat at 38,359 after falling as much as 1.12% earlier in the day.

Chip-testing equipment maker Advantest, a supplier to Nvidia, declined 2.7%, while chip-making equipment giant Tokyo Electron slid 0.9%. AI-focussed startup investor SoftBank Group dropped 1.4%.

"Nvidia's earnings and sales forecasts topped estimates, but not by the extent required to meet the lofty expectations of some in the market," said Maki Sawada, an equities strategist at Nomura Securities.

"But it was another positive set of results from Nvidia, and I don't think selling is going to continue for very long."

On top of the moves in Japanese shares, investors also need to keep an eye on the direction of US stock futures, she said.

Futures for the tech-heavy Nasdaq were down 0.7%.

Electronic component maker Nidec was the Nikkei's biggest decliner, slumping more than 3.4% after US server manufacturer Super Micro Computer - with which it is building water-cooling modules for servers - delayed the filing of its annual report, sending its shares tumbling 19%.

Iron ore futures prices rose on Thursday, buoyed by renewed hopes of improving demand in top consumer China in the coming weeks, but caution about high inventories and concerns over the extent of recovery in downstream steel demand capped gains.

The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) ended morning trade 0.99% higher at 763.5 yuan ($US107.21) a metric tonne.

The benchmark September iron ore on the Singapore Exchange climbed 1.34% to $US102.15 a tonne, by 2pm AEST.

"We expect hot metal output to rebound next week although a continued fall will be seen this week," said Xie Qingwei, an analyst at consultancy Shanghai Metals Market (SMM).

Output of hot metal, a blast furnace product, is typically used to gauge iron ore demand.

Analysts at BMI revised down their 2024 iron ore price forecast from an annual average of $US120 a tonne to $US110 a tonne, as subdued demand in China continues to pressure the iron ore market.

"We expect negative sentiment over the sluggish Chinese property sector, the downfall of which now looks irreversible, to persist, further capping prices."

Other steelmaking ingredients on the DCE advanced, with coking coal and coke up 0.72% and 0.43%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar added 0.4%, hot-rolled coil nudged up 0.15%, wire rod shed 1.32% and stainless steel was almost flat.

"Several steelmakers started equipment maintenance or production cuts amid loss sweeping through the whole industry, contributing to somewhat falling stocks and a rebound in steel prices," Jiang Wei, secretary general of the state-backed China Iron and Steel Association (CISA), said in a statement on CISA's WeChat account on Wednesday.

"But the rebound is still quite fragile....steel mills should continue exercise 'self discipline' to control production so as to lower stocks, adjust supply and demand fundamentals, stabilize the market and avoid the 'involution' style vicious competition," Jiang added.

Shares of McPherson’s fall as much as 10.4% to $0.41, set for worst day since November 29, 2023, if losses hold.

The beauty products maker says its full-year statutory net loss after tax widened to $16.0 million, from a net loss of $5.1 million last year.

The company reports a 6% drop in its annual revenue.

Share price of McPherson’s is down 24.4% year to date, as of last close.

Australian shares slipped lower in afternoon trade, dragged by losses in energy stocks, after investors reeled back from interest rate cut hopes as local inflation data remained above forecasts for July.

The ASX 200 index fell 0.4% to 8,042. The benchmark ended flat on Wednesday.

The US S&P 500 index was mostly unchanged on Wednesday, while Nasdaq lost 198.79 points, or 1.12%. S&P 500 E-minis futures were down 32 points, or 0.57%.

The yield on benchmark 10-year Treasury notes rose to 3.8387% compared with its previous close of 3.841%.

Australian inflation slowed to a four-month low in July, data showed on Wednesday, as government rebates on electricity bills kicked in. But the July report showed there is not much further progress on goods disinflation.

Investors have now dialled back hopes of a first easing from the Reserve Bank of Australia in November.

The Aussie dollar was 0.04% stronger against the US dollar to $0.6789.

The energy sector was the biggest laggard, falling 1.6% amid broad-based declines.

Santos was down 2.2% and Woodside was 0.9% lower.

Bucking the trend, financial stocks rose 0.3%, with the big four banks gaining between 0.2% and 0.7%.

Wesfarmers was down 3.8%, as sales growth in the conglomerate's major segment Bunnings moderated in the first eight weeks of fiscal 2025.

Qantas dipped 0.6%, after the airline reported a 28% decline in annual profit.

Meanwhile, New Zealand's benchmark NZ 50 index fell 0.6%.

Air New Zealand, the country's flagship carrier, reported a 61% slump in annual profit while warning of a challenging outlook ahead. Shares are down almost 12% this year as of last close.

Dairy manufacturer Bega Cheese has posted its full year results today, for the year ended 30 June 2024.

• Group statutory revenue was $3.52 billion, up 4%
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $165.1 million, up 15%
• Earnings before interest and taxes (EBIT) was $74.3 million
• Fully franked final dividend 4 cents per share 
• Bega Cheese says "a significant recovery in the profitability of the Branded segment offset challenges in the Bulk segment and reinforces the importance of the Group’s transition to a Branded business"
• It expects a normalised EBITDA range Of $190 To $200 million in the financial year 2025
• Shares jumped 6.6% to $4.54

Southern Cross Media posted its full year results today, for the year ended 30 June 2024.

• Group revenue was $499.4 million, down 1%.
• Net profit after tax (including significant items) was a loss of $224.6 million, down 1,275%. 
• Net profit after tax (excluding significant items) was $11.1 million, down 49%.
• Underlying EBITDA was $66.2 million, down 14% (excluding significant items).
• It recognised an impairment charge of $326.1 million ($228.3 million after tax) against the value of broadcast licences. That reflects observed market pressures, independent estimates of radio broadcast growth rates showing declines over the forecast period, and a consequent reduction in the long-term growth rates.
• It will not be paying a final dividend for FY24.
• It has re-commenced a strategic review of its non-core regional television assets and is in active negotiations with several parties with an interest in acquiring those assets.

Broadcast radio business:

Its broadcast radio business consists of two complementary networks operating across Australia's capital cities and regional Australia.

Its Triple M network is skewed towards men in the 25 to 54 age bracket and its Hit Network is targeted towards women in the 25 to 54 age bracket.

Its total broadcast revenues were $366.6 million, down 1.6%.

Television business:

Its television business consists of 96 regional television licenses. Each regional television licence receives programming from a metropolitan television network affiliate.

During the financial year, the Group received the majority of its programming from the Ten Network in the 3-AGG market (comprising the Queensland, NSW and Victoria television markets), while Tasmania, Darwin, and Central licence areas received Seven Network programming.

It total television revenues were $97.5 million, down 8.6%, with its advertising markets down 5.3% and SCA's market share in the 3-AGG market declining largely due to continuing falls in affiliate network ratings and increased competitive pressure.

What is its strategy?

The company says its shift towards its digital audio business is ongoing.

Its digital audio business consists of the Group's digital platform, LiSTNR, and the digital assets associated with the radio broadcasting business.

LiSTNR is a curated and personalised app offering radio, podcasts, music and news. It's a "key element" of SCA's digital transformation. It features all of SCA's existing digital content and a range of new premium content, in a single app.

SCA says its Group digital audio revenue increased in the year by 42.2%, to $35 million, driven by strong performance in InStream and Podcast revenue.

It says total listenership of SCA and partner digital audio content measured across all digital platforms exceeded 10 million listeners on a monthly basis, and the number of listeners who have signed up with LiSTNR now exceeds 2 million users.

It says it anticipates digital audio growth will continue into FY2025.

Shares of diversified miner Mineral Resources has fallen as much as 9% to $40.17, their lowest since November 2021.

After market close on Wednesday, the company reported a nearly 80% slump in its underlying annual profit to $158 million, hit by weaker lithium prices.

Citi said the firm's FY25 lithium production guidance of 480-545 kt was about 60kt less than expected at mid-point.

Mineral Resources' FY25 capex guidance of $1.95 billion was also higher than consensus estimate of $1.69 billion.

On one hand the market would like signs on discipline on growth until the balance sheet is looking better, but on the other $1.9 billion of capex was hard to digest, Citi said.

As of last close, stock was down 36.9% year to date.

Managing director Chris Ellison said Mineral Resources was highly unlikely to take on further lithium mergers and acquisitions in the next 12 months given its existing holdings and low prices.

"Look, it's highly unlikely that we'd be looking at any acquisitions of any kind over the next 12 months. We're basically in super conservative mode, and we're just managing the business ... the current environment is that we're down on commodity prices," he said on Thursday.

Questioned by Liberal MP Keith Wolahan about the Greens' idea for a "Robin Hood" tax, CBA boss Matt Comyn adds to his earlier comments, calling it "an example of insidious populism".

"It ignores the beneficial elements that businesses large and small make. We employ 50,000 people, we’ve paid out $7B in dividends… it’s a policy that would seem to be based on (idea) that there’s some pool of assets and capital that can be tapped and there’s no consequences of that.

Pausing for a breath to focus, Mr Comyn keeps going.

"(It's a) false dichotomy that there is something unjust and that profit has been unjustifiably extracted and there’s a reason that this should not (be so).

"These performative policies that are designed to attract attention, that lack rigour and merit and a number of them rely on assumptions that are just demonstrably false."

Bank bosses don't often get stuck directly into policy, in public. That's what lobbying is for!

So this is a reasonably solid kick from the leader of the nation's largest bank.

I've been watching hearings with cool, calm and collected CBA chief executive Matt Comyn for many years.

While he didn't break a sweat or raise his voice, I've rarely seen him go off-tap like he just did when provoked by MP Jerome Laxale.

The Labor member was holding up a $5 note and a credit card with a "$5.08" note on it - denoting the difference in costs to consumers for paying for a $5 coffee with either cash or card.

I'll get a full quote later, but these are my notes from Comyn's response - after he'd spent about 20 minutes trying to explain the intricacies of digital payments, surcharges and how the "cost" of using cash is absorbed and passed on by banks.

"I see this again, over and over, businesses in Australia are being represented in this false dichotomy... it’s often inferred as somehow being unjustly extracted from consumers and this continuing, often fact-free, rhetoric is very damaging, in so far as it is really eroding trust in institutions, and it’s a real cause for concern.

"I think this is my 15th time in parliament, (in front of House of Reps and Senate hearings) and I will appear as often as anyone likes. In 2018 (during the Banking Royal Commission) there were issues we should have been heavily criticised for, and we were... but too often there are claims made that are not true and that’s driving a (wedge).

"I don’t think the right thing is to position things when they’re factually incorrect.. I think the policy that was announced yesterday was an insidious popularity…

"Australia relies on a rule of law and a sense of trust and civility and community sentiment. That’s why Australia responds to lockdowns, vaccinations, it’s unlike other countries… These claims of gouging leading to CPI are just not right."

In this clip from earlier this morning, Qantas boss Vanessa Hudson explains why the profit result the airline delivered today was a "strong result," because it's about getting the balance right between competing objectives.

She says it will allow Qantas to keep investing in new aircraft, for Jetstar and Qantas, and an on-market buyback of $400 million will deliver for shareholders.

"Our results are lower than what they were last year, and what underpins that is three things: lower airfares, greater investment in customer[s], and also lower freight revenue as we've seen revenues normalise faster than what we were expecting after COVID."

After a little more than 20 minutes of trading today, the ASX200 is down 37 points (-0.46%), as the futures expected.

Regarding Warren Buffett, here's a very interesting couple of minutes of him talking about the insights he learned, for successful investing, from reading John Maynard Keynes's General Theory (1936).

"It's the chapter that jumps out to you about securities and so on ... I would recommend reading that," Buffett says.

"Keynes and [Ben] Graham, from vastly different starting points, came to the same conclusion, at about the same time in the 30s, as to the soundest way to invest over time.

"They differed on their ideas on diversification. Keynes believed in diversifying far less than did Graham."

As per Reuters, Warren Buffett's Berkshire Hathaway's market value closed about US$1 trillion for the first time overnight.

It says Buffett's company joined six other US companies, all in or tied to the technology sector, valued at more than US$1 trillion: Apple, Nvidia, Microsoft, Google parent Alphabet, Amazon, and Facebook parent Meta Platforms.

Part of the story reads:

Buffett, who turns 94 on Friday, has run Omaha, Nebraska-based Berkshire since 1965.

He transformed it from a failing textile company into a colossus with dozens of old-economy businesses such as Geico car insurance, the BNSF railroad, Berkshire Hathaway Energy, Brooks running shoes, Dairy Queen ice cream, Ginsu knives and the World Book encyclopedia.

The operating businesses generated $22.8 billion of profit in the year's first half, up 26% from 2023.

Berkshire also has a huge stock portfolio even after selling tens of billions of dollars of Apple and Bank of America, its largest and until recently its second-largest stock holdings, in 2024.

The sales are a major reason Berkshire's cash hoard, mainly in U.S. Treasury bills, soared to $276.9 billion as of June 30. Berkshire has also slowed repurchases of its own stock.

[....]

Since the year Buffett took charge, Berkshire shares have gained more than 5,600,000%.

That's about 20% annually, nearly double the annualized gain in the Standard & Poor's 500 including dividends.

No single catalyst appeared to fuel Wednesday's gain. Berkshire's Class A shares are up 28% this year, while the S&P 500 excluding dividends is up 17%.

Buffett still owns more than 14% of Berkshire despite having donated more than half his shares to charity since 2006.

His $146 billion fortune makes him the world's sixth-richest person, Forbes magazine said on Wednesday.

The Commonwealth Bank brought back in variable remuneration for its home lenders - something that had got the industry into huge trouble in the Royal Commission as less-scrupulous lenders chased bonuses by signing up vulnerable people big loans.

The bank's CEO Matt Comyn isn't copping criticism of the shift, saying the institution can manage the risk - and the bigger issue is all the mortgage brokers not bound by the same issue.

"We felt we were putting ourselves at a significant competitive disadvantage… and we see it still as a much lower risk channel than (loans coming from) the mortgage broking channel."

Labor MP Daniel Mulino points out that regulator ASIC and others that variable remuneration on loans drives bad performance.

"We've got to make the best decisions in the interests of the Comm Bank… it’s a valid concern. We had an extensive dialogue with regulators… there's an undue level of concern about (our)  few hundred lenders as opposed to the 20,000 mortgage lenders"

Comyn says the decision was not "made lightly".

Mulino is about to hand over to the next questioner. Comyn and group executive Monique Macleod are set to answer questions until around 1PM AEST.

Wesfarmers Limited has reported a statutory net profit after tax (NPAT) of $2.5 billion ($2,557 million) for the full year ended 30 June 2024, an increase of 3.7% on the prior year.

Managing director Rob Scott says it was a challenging market environment over the last year, but the result highlighted the quality of the Group's portfolio of businesses.

That portfolio includes Bunnings, Kmart, Officeworks, WesCEF, and others.

You can watch the livestream of the bank inquiry here.

It comes to you from the Australian Parliament House Streaming Portal, via Youtube:

Commonwealth Bank chief executive Matt Comyn has just started speaking to MPs in Canberra.

Earlier this morning, committee chair and Labor MP, Daniel Mulino, told the ABC why the regular inquiry was an important 'accountability mechanism,' given the role banks play in Australia's economy.