Rex Airlines folds, joins Bonza in administration path, grounds fleet

Good morning. Here's what happened overnight and what you need to know today.

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1.

Rough landing: Rex Airlines entered voluntary administration, grounding its domestic Boeing 737 fleet, cancelling major airport flights, and marking the second domestic airline to fail this year after startup Bonza. The loss-making airline, which expanded from regional routes to major cities like Sydney and Melbourne to compete with Qantas and Virgin Australia, has struggled in a price war, losing 34% of its value this year. Ernst & Young were appointed administrators to resolve the company's future by either securing a rescue deal or find the best result for creditors, including Westpac and private equity firm PAG. “This is a difficult moment for Australian aviation,” Virgin Australia CEO Jayne Hrdlicka said. Virgin has offered to transfer, free of charge, tickets for Rex customers on cancelled flights to 13 overlapping Virgin Australia services. Virgin and the administrators were also considering a codeshare or interline agreement to support regional customers, they said. (Capital Brief)(REX statement)(Virgin statement)

2.

Beirut hit: Israel confirmed it carried out a targeted strike in Lebanon’s capital, Beirut, aiming at the Hezbollah commander allegedly responsible for a rocket attack on the Golan Heights. The Israeli air force blamed the Iran-backed Lebanese armed group for the Saturday strike on Majdal Shams, which killed 12 youths. Hezbollah has denied involvement. Meanwhile, Reuters reported the Israeli military said 10 rockets had been fired from Lebanon and one had hit Kibbutz Hagoshrim, killing a 30-year old man. Later, a large explosion on Tuesday evening hit Beirut’s southern suburbs, a Hezbollah stronghold, causing several floors of a residential building to collapse and large plumes of smoke to rise. The strike followed Israeli leaders’ vows for a severe response to the Golan Heights attack. (BBC)(Reuters)

3.

Tech selloff: A selloff in major tech stocks ahead of key central bank decisions hit global markets, while bonds and gold rose amid geopolitical tensions. The Nasdaq dropped as much as 2%, driven by declines in chip and megacap stocks ahead of Big Tech earnings, while gains in financial stocks amid hopes for rate cuts by the Fed buoyed the Dow. Despite most S&P 500 shares rising, tech weakness, with Nvidia falling as much as 8% to its lowest level since late May, weighed on the index, while the Dow was 0.51% higher. Microsoft shares fell as much as 2.19% ahead of its much-anticipated results. Other major tech stocks, including Apple, Amazon, Meta, and Tesla were also lower. The Fed is expected to hold rates unchanged on Wednesday but hint at cuts in September. US consumer confidence rose, and job openings exceeded forecasts. Treasury yields fell to 4.14%, oil stayed near USD75 ($145) and the yen rose ahead of the Bank of Japan’s monetary decision. Procter & Gamble fell almost 7% after missing sales expectations, while Pay Pal jumped as much as 10% after beating Q2 earnings estimates. (Reuters)(Bloomberg)

4.

VP voyage: Vice President Kamala Harris will tour battleground states next week with her vice presidential candidate, signalling the conclusion of the selection process, Reuters reported citing unnamed sources. The presumptive Democratic nominee for US President saw her list of potential running mates narrow on Monday. Minnesota governor Tim Walz, Pennsylvania Governor Josh Shapiro, Kentucky Governor Andy Beshear, Senator Mark Kelly and even Transportation Secretary Pete Buttigieg - seen as a long shot - remain as contenders. But North Carolina Governor Roy Cooper and Michigan Governor Gretchen Whitmer are no longer in consideration. Cooper said he was honoured but felt it wasn't the right time, while Whitmer said on national television she's not part of the vetting process and will serve as governor until 2026. Harris plans to announce her pick before the tour, one of the sources said. (Reuters)

5.

Aussie AI alliance: Canva will buy Australian text-to-image AI platform Leonardo.Ai, which has 19 million users, for an undisclosed sum. Blackbird Ventures' investment documents reviewed by Capital Brief imply Leonardo.Ai's valuation at north of $300 million. The acquisition aligns with Canva’s preparations for its IPO, expected within 18 months, and enhances its AI capabilities ahead of increasing competition from free generative AI tools and rivals like Microsoft’s Designer app. Leonardo.Ai’s recent launch of the Phoenix AI model, Australia’s first foundation model, was a key factor in the acquisition. Canva’s chief product officer, Cameron Adams, described the acquisition as "two Australian companies joining forces to bring world-first breakthroughs in AI and creativity." Leonardo.Ai’s team will join Canva while continuing to operate independently. (Capital Brief)

6.

AI watch: Britain's antitrust regulator is formally investigating Alphabet's partnership with AI startup Anthropic, and what impact it has on competition in the UK, it said Tuesday. The scrutiny comes amid heightened regulatory focus on partnerships between tech giants and smaller AI startups. The Competition and Markets Authority (CMA) is seeking public input during phase one of its review from 30 July to 13 August. A decision on a formal investigation will follow. Antitrust regulators around the world are also reviewing Microsoft's partnerships with OpenAI, Inflection AI and Mistral AI, as well as Alphabet's connections with Cohere. Alphabet last year agreed to invest up to USD2 billion in Anthropic, the maker of AI-powered chatbot Claude, which competes with Google’s Gemini. (Capital Brief)(CMA statement)

7.

Meta pays: The state of Texas secured a USD1.4 billion ($2.14 billion) settlement with Facebook’s parent Meta over its now-discontinued use of facial-recognition technology that breached privacy rights. Texas Attorney General Ken Paxton said the deal, which requires Meta to pay the sum over five years, was the largest from an action brought by a single state and the first under Texas' biometric identifier law. Texas accused Facebook of capturing biometric information "billions of times" from photos and videos that users uploaded to the social media platform as part of a free, discontinued feature called "Tag Suggestions." Meta denied wrongdoing and on Tuesday said it was pleased to resolve the matter, saying it looked forward to “deepen” investments in Texas, including potentially developing data centres. Texas has also sued Alphabet over alleged violations of the state’s biometric law. In 2020, Facebook settled a class action lawsuit over similar claims in Illinois for USD650 million. (Capital Brief)(Ken Paxton statement)(Reuters)

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Polio risk: Polio is “very likely” to have infected people in the Gaza Strip, marking a major setback for global eradication efforts, the World Health Organization (WHO) said Tuesday. Gaza's health ministry declared a polio epidemic after virus samples were found in sewage, though no human cases have been confirmed. "Having vaccine-derived polio virus in the sewage very likely means that it's out there somewhere in people," WHO spokesperson Christian Lindmeier said. "So the risk of (it)... spreading further is there and it would be a setback definitely (for global efforts)." The WHO has sent over one million vaccines to Gaza, where conflict has reduced vaccination rates from 99% to 89% amid displacement, damaged health infrastructure and security issues. Israel plans to vaccinate its soldiers in Gaza, as the WHO warns the potential for polio to spread to neighbouring countries like Egypt and Israel remains high if outbreaks in Gaza are not contained through mass vaccinations. (Reuters)