1 00:00:04,080 --> 00:00:07,049 Michael Thompson: Welcome to the Fear and Greed Afternoon Report for Tuesday, 2 00:00:07,050 --> 00:00:11,039 Michael Thompson: the 6th of June 2023. I'm Michael Thompson. Every afternoon 3 00:00:11,039 --> 00:00:13,679 Michael Thompson: we've got the top five stories that happened today that 4 00:00:13,679 --> 00:00:16,139 Michael Thompson: you need to know about, so let's jump into it. 5 00:00:16,440 --> 00:00:19,590 Michael Thompson: Story number one, the Reserve Bank lifted interest rates by 6 00:00:19,590 --> 00:00:22,500 Michael Thompson: 25 basis points this afternoon triggering a sell off in 7 00:00:22,500 --> 00:00:25,829 Michael Thompson: the local share market. The Central Bank warned that there 8 00:00:25,829 --> 00:00:28,769 Michael Thompson: could be more rate risers in the offing. The Aussie 9 00:00:28,770 --> 00:00:32,400 Michael Thompson: dollar jumped immediately to above 66. 5 US cents. Bond 10 00:00:32,400 --> 00:00:36,269 Michael Thompson: yields rose suggesting that professional investors think following the statement, 11 00:00:36,269 --> 00:00:39,240 Michael Thompson: there's more chance of further rate rises, and the share 12 00:00:39,240 --> 00:00:42,510 Michael Thompson: market fell almost 1% in the minutes after the 2: 13 00:00:42,630 --> 00:00:46,320 Michael Thompson: 30 announcement before rebounding somewhat. Then in the final minutes 14 00:00:46,320 --> 00:00:48,389 Michael Thompson: of trading it tumbled again. By the end of the 15 00:00:48,389 --> 00:00:52,739 Michael Thompson: day down 1. 2% to close at 7, 130 points. 16 00:00:53,010 --> 00:00:56,880 Michael Thompson: Consumer discretionary stocks were hit hardest. They're the companies which 17 00:00:56,880 --> 00:00:59,730 Michael Thompson: will feel the effect of higher interest rates on consumers 18 00:00:59,730 --> 00:01:04,260 Michael Thompson: most. Industrials fell, so too financials, healthcare and telcos. In 19 00:01:04,260 --> 00:01:07,979 Michael Thompson: fact, 19 of the top 20 stocks ended lower. The 20 00:01:08,039 --> 00:01:11,519 Michael Thompson: only one in the black was Fortescue Metals. On to 21 00:01:11,520 --> 00:01:14,340 Michael Thompson: story number two now, and the head of the ACTU, 22 00:01:14,340 --> 00:01:19,709 Michael Thompson: Sally McManus says, Qantas is " gaming the system," by using 23 00:01:19,709 --> 00:01:24,000 Michael Thompson: loopholes in industrial relations laws that allow companies to pay 24 00:01:24,000 --> 00:01:27,659 Michael Thompson: staff on labor hire contracts less than those that they 25 00:01:27,660 --> 00:01:32,580 Michael Thompson: directly recruit. Research conducted by the ACTU found Qantas has 26 00:01:32,580 --> 00:01:37,319 Michael Thompson: split its cabin crew workforce across 14 companies and contractors, 27 00:01:37,319 --> 00:01:40,650 Michael Thompson: which the union group says drives down wages and conditions 28 00:01:40,650 --> 00:01:44,490 Michael Thompson: for workers. McManus says Qantas is " the poster child for 29 00:01:44,490 --> 00:01:48,509 Michael Thompson: gaming the system," to meet the KPIs of executives. Qantas 30 00:01:48,570 --> 00:01:51,150 Michael Thompson: has rejected the union's claims that its use of labor 31 00:01:51,150 --> 00:01:53,460 Michael Thompson: hire is part of a concerted effort to drive down 32 00:01:53,460 --> 00:01:56,849 Michael Thompson: wages and conditions. The national carrier says it has different 33 00:01:56,849 --> 00:02:01,200 Michael Thompson: cabin crew arrangements across Qantas, Jetstar, and QantasLink for both 34 00:02:01,200 --> 00:02:04,320 Michael Thompson: domestic and international plus cabin crew who live and work 35 00:02:04,320 --> 00:02:06,690 Michael Thompson: in places where it flies like New Zealand and the 36 00:02:06,690 --> 00:02:10,830 Michael Thompson: UK. Story number three, the share price of ASX, the 37 00:02:10,830 --> 00:02:15,270 Michael Thompson: company that is, tumbled 11% today after the group said 38 00:02:15,480 --> 00:02:18,179 Michael Thompson: it faced much higher capital spending as it tries to 39 00:02:18,179 --> 00:02:22,529 Michael Thompson: upgrade its clearing and settlement infrastructure. The company outlined its five- 40 00:02:22,529 --> 00:02:27,360 Michael Thompson: year strategy, including near term situational challenges. Chief Executive Helen 41 00:02:27,360 --> 00:02:31,889 Michael Thompson: Lofthouse says it includes much needed technology upgrades. It'll keep 42 00:02:31,889 --> 00:02:36,448 Michael Thompson: its near three decade old CHESS trading system running until 43 00:02:36,450 --> 00:02:41,219 Michael Thompson: 2032 as it struggles to find a replacement. Remember, ASX 44 00:02:41,219 --> 00:02:44,280 Michael Thompson: spent seven years building an alternate to CHESS. It was 45 00:02:44,280 --> 00:02:46,650 Michael Thompson: meant to start in 2020, but it never got off 46 00:02:46,650 --> 00:02:49,858 Michael Thompson: the ground and it's now been abandoned. That saga resulted 47 00:02:49,860 --> 00:02:52,829 Michael Thompson: in the Reserve Bank and ASIC both criticizing the company 48 00:02:53,130 --> 00:02:56,190 Michael Thompson: because it has spent so much on systems in coming 49 00:02:56,190 --> 00:02:59,550 Michael Thompson: years. ASX will lower its payout ratio next financial year. 50 00:02:59,788 --> 00:03:03,720 Michael Thompson: The bottom line, ASX needs to spend hundreds of millions 51 00:03:03,720 --> 00:03:06,630 Michael Thompson: of dollars in coming years to get itself back on 52 00:03:06,630 --> 00:03:09,450 Michael Thompson: track. On to story number four, and the boss of in 53 00:03:09,480 --> 00:03:13,049 Michael Thompson: Incitec Pivot has stepped down amid tensions over plans to 54 00:03:13,049 --> 00:03:17,519 Michael Thompson: split the company's explosives and fertilizers division. Jeanne Johns has 55 00:03:17,520 --> 00:03:19,740 Michael Thompson: led the group for five years and has been pushing 56 00:03:19,740 --> 00:03:22,889 Michael Thompson: the demerger plan. Now she's left the business. The company 57 00:03:22,889 --> 00:03:26,608 Michael Thompson: first floated plans to split its explosives and fertilizer business 58 00:03:26,700 --> 00:03:29,700 Michael Thompson: back in 2019, but called off the idea in 2020 59 00:03:29,700 --> 00:03:34,500 Michael Thompson: after a strategic review. Incitec revived the plan in 2022 60 00:03:34,500 --> 00:03:37,140 Michael Thompson: saying it wanted to spin off its fertilizer business into 61 00:03:37,140 --> 00:03:40,470 Michael Thompson: a separate listed company, arguing it would help realize the 62 00:03:40,470 --> 00:03:43,619 Michael Thompson: full market valuation of both sides of the company's business. 63 00:03:43,860 --> 00:03:46,500 Michael Thompson: But the plan has never been fully supported by major 64 00:03:46,500 --> 00:03:51,120 Michael Thompson: shareholders and its most recent half year earnings disappointed. Incitec Pivot's 65 00:03:51,120 --> 00:03:54,810 Michael Thompson: share prices down nearly 20% so far this year. And 66 00:03:54,810 --> 00:03:57,960 Michael Thompson: finally, story number five, a rush of takeovers and a 67 00:03:57,960 --> 00:04:01,050 Michael Thompson: lack of new floats means the Australian share market will 68 00:04:01,050 --> 00:04:05,639 Michael Thompson: shrink this year for the first time since 2005. Big 69 00:04:05,639 --> 00:04:08,639 Michael Thompson: mergers, particularly in the resources sector, will contribute to a $43, 70 00:04:08,639 --> 00:04:13,290 Michael Thompson: 000,000 shrinkage in the market this year, and that's the 71 00:04:13,290 --> 00:04:16,440 Michael Thompson: first time it's gone backwards since 2005 according to a 72 00:04:16,440 --> 00:04:19,380 Michael Thompson: report in the Financial Review. Sydney Airport and Crown Resorts 73 00:04:19,380 --> 00:04:22,889 Michael Thompson: were both taken private last year while Newcrest Mining is 74 00:04:22,889 --> 00:04:25,829 Michael Thompson: on the verge of leaving the bourse. Companies being taken 75 00:04:25,830 --> 00:04:29,339 Michael Thompson: over by foreign players or private equity isn't unusual of 76 00:04:29,339 --> 00:04:32,279 Michael Thompson: course, but normally there's a list of initial public offerings 77 00:04:32,279 --> 00:04:34,950 Michael Thompson: to backfill the exchange. But since the start of last 78 00:04:34,950 --> 00:04:38,070 Michael Thompson: year, there's been only one float worth more than a $ 79 00:04:38,070 --> 00:04:41,279 Michael Thompson: 100,000,000. And that's it for the afternoon report for Tuesday, 80 00:04:41,279 --> 00:04:44,698 Michael Thompson: the 6th of June 2023. Sean Aylmer and I will 81 00:04:44,700 --> 00:04:47,189 Michael Thompson: be back tomorrow morning for the Wednesday edition of Fear 82 00:04:47,190 --> 00:04:49,620 Michael Thompson: and Greed. I'm Michael Thompson. Enjoy your evening.