ASX closes lower despite Iluka, BHP rally
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The news: The Australian sharemarket finished lower as a strong mining rally led by rare earths producers and iron ore giants was offset by losses across every other sector.
The benchmark ASX 200 fell 0.11% to end at 8,580.1 with 10 out of the 11 sectors finishing in the red.
The materials sector (+1.8%) was led by rare earths producers Iluka Resources (+22.9%) and Lynas Rare Earths (+16.7%) which soared after US rival MP Materials announced a USD400 million ($609 million) investment from the US Department of Defense.
Iron ore miners also pushed the sector upwards, tracking strong futures. Mineral Resources (+7.8%), Champion Iron (+3.4%), BHP (+2.8%), Rio Tinto (+2.3%) and Fortescue (+2.9%), all gained.
Meanwhile, the real estate sector (-1.5%) was the worst performing. Macquarie analysts downgraded their position on nine stocks on valuation grounds, including Goodman Group (-1.8%) and Scentre Group (-1.3%).
Biggest Movers:
- Lifestyle Communities (-5.4%) – Has the biggest ASX 200 decline as it extended heavy losses after a tribunal on Tuesday ruled that deferred management fees in some of the company’s residential contracts were void. On Thursday, Citi analysts cut their target price on the stock from $9 to $4.50.
- Gold miners – Bellevue Gold (-3.2%), Northern Star Resources (-2.2%) and Emerald Resources (-2.7%) were among the biggest losers on the ASX 200 despite haven-demand remaining high amid uncertainty over US tariffs.
M&A news:
- Johns Lyng (+22.6%) – The board of the building services provider unanimously recommended that shareholders vote in favour of a proposed $1.1 billion takeover from private markets investor Pacific Equity Partners.
- Spartan Resources (-1.3%) – Shareholders voted in favour of a proposed takeover by rival gold miner Ramelius Resources (-1.7%). It is expected to be completed on 31 July.
- Contact Energy (-1.7%) – The New Zealand-based utility company completed its acquisition of rival Manawa Energy.
Deals:
- IGO (+1.8%) – The critical minerals miner said it intends to withdraw from its Fraser Range nickel joint venture with ASX minnow Carawine Resources.
- Cromwell Property Group (+1.4%) – Entered an agreement for lease to develop an office building for an unspecified Commonwealth government department in Barton, Canberra. Cromwell said it was a 15-year lease that includes a five-year extension option.
- Ventia (-1.9%) – Secured an amendment to its fibre upgrade contract with NBN Co that adds an additional $280 million in revenue. Service Stream (-1.5%) also secured an amendment to its NBN Co contract which is expected to deliver $360 million in revenue.
Other news:
- CSL (-0.6%) – Morgans analysts described the stock as “materially undervalued” as it trades more than 25% below its one-year average in the wake of US President Donald Trump’s announced intention to put a 200% tariff on pharmaceuticals.
- Washington H Soul Pattinson (-0.8%) – Outgoing Boral chief executive Vik Bansal will join the board of the investment house on 15 August. Earlier this week, Orica (-0.3%) announced that Bansal would be its next chair.
What’s ahead:
- Statistics Canada will release employment change and unemployment data for June this evening at 10:30pm AEST.
- BusinessNZ will release services index data for June on Monday at 8:30am AEST.
