Australian shares rose on Friday, following a surge on Wall Street, while Twitter shareholders sued billionaire Elon Musk, accusing him of manipulating the company’s share price.
- The ASX 200 is down more than 3% since the start of the month
- Retail sales rose 0.9% to a record high of $33.9 billion in April, according to ABS data.
- Elon Musk pledged an additional $6.25 billion in equity financing to fund his Twitter acquisition
The ASX 200 index closed 1.1 percent higher at 7,183 points.
The Australian dollar was trading at 71.27 US cents, after a moderate gain of 0.4 percent, at 04:30 pm AEST.
In local news, Telstra has paid more than 67,000 customers $11 million for taking too long to connect or repair fixed-line services and not absorbing the cost itself. The telecommunications company’s share price rose 0.5 percent.
Ten of 11 sectors on the ASX traded higher, with energy and consumer discretionary posting the biggest gains.
Some of the best performing stocks today were Pointsbet (+16.4pc), Paladin Energy (+4.2pc), Liontown Resources (+3.1pc), Pilbara Minerals (+3.6pc), Webjet (+2.4pc) and Flight Center. (+3.1 personal computer).
On the other hand, CSR (-4.7pc), Incitec Pivot (-4.1pc), Champion Iron (-1.2pc), and Nine Entertainment (-1.8pc) suffered heavy losses.
The worst performer was artificial intelligence firm Appen, whose shares fell 20.9 percent. It was after the company said its former suitor Telus International abruptly withdrew its $1.2 billion takeover offer, hours after the proposed purchase was announced.
In their court documents, Twitter investors alleged that Elon Musk saved himself $156 million by not disclosing that he had bought more than 5 percent of Twitter before March 14.
The allegation is that Musk continued to buy shares after that, eventually revealing in early April that he owned 9.2 percent of the company, according to the lawsuit, filed Wednesday local time in San Francisco Federal Court. .
They asked to be certified as a class and to be awarded an unspecified amount of damages.
Neither Musk nor his attorney immediately responded to requests for comment. Twitter declined to comment.
Investors also said the recent slide in Tesla shares has put Musk’s ability to finance his Twitter acquisition in “great jeopardy” as he has pledged his shares as collateral to secure the loans he needs to buy the company.
Shares of Tesla were trading around $713 on Thursday afternoon, down from $1,000 in early April.
Earlier this month, the Wall Street Journal reported that the moment Musk revealed his involvement had already triggered an investigation by the US Securities and Exchange Commission (SEC).
The SEC requires any investor who buys more than a 5 percent stake in a company to disclose their holdings within 10 days of crossing the threshold.
And investors also said Musk’s public criticism of the company, including a May 13 tweet that said the purchase was “temporarily on hold” until Twitter proved that spam bots accounted for less than 5 percent of its users. , amounted to an attempt to further reduce the share price.
Musk has pledged an additional $6.25 billion in equity financing to fund his Twitter bid, a sign he is still working to complete the deal.
Retailers get a holiday boost
Australian retail sales rose to record levels in April as consumers spent heavily over the holidays, although rising inflation and rising interest rates are steadily sapping purchasing power.
Data from the Australian Bureau of Statistics (ABS) showed on Friday that retail sales rose 0.9 percent in April to a record $33.9 billion.
Sales were up 9.6 percent from a year earlier, though some of that was due to higher prices.
“High food prices were combined with higher household spending during the April holiday period as more people travel, dine out and host family gatherings,” said ABS director of quarterly economic statistics Ben James.
Policymakers expect households to draw on savings to continue consuming even as real incomes decline.
Australians amassed around $272 billion in extra savings during the pandemic and alone have bank deposits worth a record $1.26 trillion.
This is one of the reasons the Reserve Bank felt confident enough to raise interest rates by a quarter of a percentage point to 0.35 percent this month, in the first hike since 2010, noting more increases in the future.
Markets are betting the RBA will raise interest rates to 0.6 percent in June and peak at 2.5 percent by the end of the year.
If they’re right, that will be one of the most aggressive tightening cycles on record, adding more than $600 a month in payments to the average mortgage.
That would come as the cost of everything from health care to gasoline to education to home construction is rising.
Consumer price inflation is already at a 20-year high of 5.1 percent and is expected to hit 6 percent this year.
$11 million offset bill from Telstra
Telsta has admitted that a computer error caused the company to fail to take responsibility for compensating customers within 14 days on more than 67,000 occasions between 2017 and 2021.
Industry rules say telcos that miss fixed line connection and repair deadlines have 14 days to assess whether they will accept liability.
Telstra self-reported the matter to the Australian Communications and Media Authority (ACMA) and said it had always intended to refund customers, but had taken too long to do so.
“We encountered an IT issue that meant a number of customers hadn’t received Customer Service Guarantee payments when they should have,” a company spokesperson said.
“Following this, we took a deeper dive into our systems to verify CSG payments, and this identified a number of other cases where payments had not been made when they should have been.
“We deal with millions of customer transactions on a weekly basis, however this is clearly not the experience we want to give our customers… we are in the process of improving the system to better automate payments.”
In addition to paying $11 million in compensation, Telstra has made an enforceable commitment to improve its payment screening solution and regularly report on its compliance with compensation rules for two years.
ACMA President Nerida O’Loughlin said Telstra had defrauded its customers.
“Telstra is aware that it has had an issue with its internal systems and processes, discovered through its T22 business strategy…the company has self-reported this and other recent violations,” it said.
“It is critical that Telstra address these long-standing issues in building new systems and processes and, where required to do so, compensate its customers for historic breaches of telecommunications rules.”
Aggressive rate hikes
Overnight in New York, the S&P 500 gained 2 percent to close at 4,058 points. The Nasdaq Composite rose 2.6 percent to 11,740, while the Dow Jones Industrial Average rose 1.6 percent to 32,640.
On a weekly basis, US markets are on track to snap their longest losing streaks in decades, during which the benchmark S&P plunged 14.1 percent and put it within striking distance of being confirmed as a bear market.
Minutes from the Fed’s May meeting, released on Wednesday local time, showed most Fed officials support rate hikes of 50 basis points each in June and July to combat high inflation.
However, the US central bank has also indicated that it may pause its rate hikes in September.
“The Fed has committed to delivering a couple of half-point rate hikes until the Jackson Hole Symposium, and that has removed the risk of aggressive tightening in the near term,” said OANDA analyst Edward Moya.
At current levels, all three US indices are poised to post their biggest weekly gains since mid-March.
“If the Fed is too aggressive, it will stifle inflation but it will also stifle economic growth,” said Sam Stovall, chief investment strategist at CFRA Research.
In oil markets, Brent crude futures rose 3.2 percent to $117.62 a barrel.
Spot gold fell marginally to $1,849.65 an ounce.
Aware , updated