Following falls on Wall Street overnight, the ASX200 closed 0.34% lower today as miners and property stocks weighed on the index.
Materials was the worst-performing sector today, losing 1.95%. BHP (ASX:BHP) and Rio Tinto (ASX:RIO) each fell by more than 2% and gold miners were also weak.
The Property sector was also hard hit, dropping 1.61%, led by losses from Mirvac Group.
Mirvac disappoints
The Real Estate Investment Trust dropped as much as 12% after providing a disappointing earnings report and weak guidance.
Mirvac reported a 338% increase in its annual statutory loss — at $805 million — largely due to a decline in the value of its office portfolio. However, revenue was up 54% to $3 billion, with an operating profit after tax of $552 million — down 5% from FY23.
The company’s guidance for fiscal 2025 was down 13% year-on-year and below expectations, due to lower expected commercial trading profits and residential earnings.
eToro market analyst Josh Gilbert said: "Higher net interest costs are hurting the business, jumping by 61% from last year, with the RBA keeping rates at the highest level we’ve seen for a decade.
"Property developers in general are facing a challenging period marked by higher interest rates, which are contributing to increased debt costs. Record-high real estate prices have helped weather the storm, but this growth is slowing.
"Despite these headwinds, Mirvac's diversified portfolio, which includes commercial and industrial properties, could provide some stability. The company’s ongoing projects and strategic acquisitions might offer long-term growth potential, even if the residential market slows in the short term."
Qantas cuts Joyce’s pay
Qantas Group fell 1.93% to $5.855 today amid news that the airline is cutting former CEO Alan Joyce’s 2023 pay by almost $9.3 million as it commits to implementing all 23 recommendations from its governance review.
The embattled airline has spent months considering Joyce’s bonuses, which the board withheld following a string of controversies. Joyce won’t cry poor though, he’ll still pocket $14.3 million and is still in line for a 2024 top-up, including salary and bonuses.
Current CEO Vanessa Hudson will also have her short-term bonuses reduced by 33%.
The pay cuts took into account a $120 million lawsuit with the Australian Competition and Consumer Commission and the imminent decision of the Federal Court concerning penalties for the illegal outsourcing of ground handling workers.
RBA “will not hesitate” to lift rates
Speaking at the Rotary Club of Armidale, RBA governor Michele Bullock emphasised that the central bank “will not hesitate” to increase interest rates further if necessary to prevent inflation from becoming “persistently high”.
Bullock reinforced the RBA’s cautious stance on monetary policy following discussions of a potential rate hike at this week’s board meeting.
“On balance, the Board decided to keep interest rates on hold, judging that such an outcome would still meet the Board’s mandate to balance its inflation and employment objectives,” Bullock said.
She also highlighted the Board’s commitment to addressing inflation risks, saying, “But the Board remains vigilant with respect to upside risks on inflation and will not hesitate to raise rates if it needs to. I know this is not what people want to hear. But the alternative of persistently high inflation is worse. It hurts everyone.”
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