Australian shares jumped on Friday, following a rise on Wall Street, while Twitter shareholders have sued billionaire Elon Musk, accusing him of manipulating the price of the company’s shares.
Key points:
- The ASX 200 has been down more than 3% since the beginning of the month
- Retail sales rose 0.9% to an all-time high of $ 33.9 million in April, according to ABS data
- Elon Musk pledged an additional $ 6.25 billion in equity funding to fund his takeover of Twitter
The ASX 200 index closed up 1.1 percent, to 7,183 points.
The Australian dollar was trading at 71.27 US cents, after a moderate 0.4% rise at 4.30pm EST.
In local news, Telstra has paid $ 11 million to more than 67,000 customers for taking too long to connect or repair landline services and failing to absorb the cost itself. The stock price of the telecommunications company rose 0.5 percent.
Ten of the 11 sectors of the ASX traded higher, with energy and discretionary consumption earning the strongest 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 (+ 3.1pc). 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 performance was the artificial intelligence company Appen, which saw its shares fall 20.9%. It was after the company said that its former suitor Telus International abruptly withdrew its $ 1.2 billion takeover bid, hours after the proposed purchase was announced.
“Market manipulation”
In its court documents, Twitter investors alleged that Elon Musk saved $ 156 million by not revealing that he had bought more than 5 percent of Twitter on March 14th.
The allegation is that Mr. Musk continued to buy shares after that and finally revealed in early April that he owned 9.2 percent of the company, according to the lawsuit filed Wednesday, local time. to the San Francisco Federal Court.
“By delaying the disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter shares at an artificially low price,” said investors, led by Virginia resident William Heresniak.
They asked to be certified as a class and to be awarded an unspecified amount of damages.
Not even Mr. Neither Musk nor his attorney responded immediately to requests for comment. Twitter declined to comment.
Investors also said that the recent fall in Tesla shares has put Musk’s ability to finance its Twitter acquisition in “significant danger” as it has pledged its shares as collateral to secure the loans it needs. to buy the company.
Tesla shares traded around $ 713 on Thursday afternoon, up above $ 1,000 in early April.
Earlier this month, the Wall Street Journal reported that the timing of the disclosure of its stake by Musk had already triggered an investigation by the U.S. Securities and Exchange Commission (SEC).
The SEC requires any investor who acquires a stake of more than 5% in a company to disclose its holdings within 10 days of exceeding the threshold.
And investors have also said that the public criticism of Mr. Musk told the company, including a May 13 tweet that the purchase was “temporarily suspended” until Twitter showed that spam bots accounted for less than 5 percent of its users – an attempt to reduce it further. plus the share price.
Musk has pledged an additional $ 6.25 billion in equity funding to fund his Twitter offer, a signal he is still working on to complete the deal.
Retailers get a holiday boost
Australian retail sales hit record highs in April as consumers spent heavily on holidays, although rising inflation and rising interest rates are steadily lowering purchasing power.
Data from the Australian Bureau of Statistics (ABS) on Friday showed retail sales rose 0.9 per cent in April to a record $ 33.9 billion.
Sales increased an intoxicating 9.6% year-over-year, although part of this was due to higher prices.
“High food prices have been combined with rising family spending over the April holiday season, as more people travel, dine and hold family reunions,” said the quarterly statistics director. ‘economics of the ABS, Ben James.
Politicians expect households to dive into savings to continue consuming even as real incomes fall.
Australians have accumulated about $ 272 billion in additional savings during the pandemic and are only sitting on bank deposits worth a record $ 1.26 trillion.
This is one of the reasons why 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 rise since 2010, and to mark more increases in advance.
Markets are betting that RBA will raise interest rates to 0.6% in June and reach 2.5% by the end of the year.
If they are right, this will be one of the most aggressive hardening cycles on record and will add more than $ 600 a month in average mortgage payments.
This would come as the cost of everything from healthcare to gasoline, education and housing construction is rising.
Consumer price inflation is already at a 20-year high of 5.1% and is expected to reach 6% this year.
Telstra informed ACMA of its own breach of industry compensation rules. (ABC News: Chris Gillette)
Telstra’s $ 11 million compensation bill
Telsta has admitted that a computer error caused the company to not accept responsibility for compensating customers within 14 days on more than 67,000 occasions between 2017 and 2021.
Industry rules say that telecommunications companies that do not meet deadlines for landline connections and repairs have 14 days to assess whether they will accept responsibility.
Telstra reported the matter to the Australian Communications and Media Authority (ACMA) and said it had always intended to return the money to customers, but that it had taken too long to do so.
“We found a computer problem that meant that several customers had not received their Customer Service Guarantee payments when they should have done so,” a company spokesman said.
“After that, we took a deeper dive into our systems to check CSG payments, and this identified a number of other cases where payments had not been made when they should have been made.
“We handle millions of customer transactions a week, but obviously this is not the experience we want to offer our customers … we’re in the process of improving the system to better automate payments.”
In addition to paying $ 11 million in compensation, Telstra has committed to enforcing a lawsuit to improve its payment assessment solution and to report regularly on compliance with compensation rules for two years.
ACMA President Nerida O’Loughlin said Telstra had disappointed its customers.
“Telstra knows it has had a problem with its internal systems and processes, discovered through its T22 business strategy … the company has self-reported this and other recent breaches,” he said.
“It is critical that Telstra address these long-standing issues in the construction of new systems and processes and, when required, compensate its customers for historic breaches of telecommunications rules.”
“Aggressive” type climbs.
Overnight in New York, the S&P 500 gained 2 percent and finished at 4,058 points. The Nasdaq Composite rose 2.6% to 11,740, while the Dow Jones index rose 1.6% to 32,640.
Weekly, U.S. markets are well on their way to breaking their longest streak of losses in decades, during which the benchmark S&P plunged 14.1% and took it a surprising distance from being confirmed. as a bear market.
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The minutes of the May meeting of the Fed, published on Wednesday, local time, showed that most of its officials supported rate hikes of 50 basis points each in June and July to combat high inflation.
However, the US central bank also indicated that it could stop interest rate hikes in September.
“The Fed has pledged to offer a couple of half-point rate hikes to the Jackson Hole Symposium, and that has eliminated the risk of aggressive hardening in the short term,” said OANDA analyst Edward Moya.
At current levels, all three US indices are poised to reach 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.
“It’s like in the winter you want to slow down, not shut them down, to stay in control and avoid suffering.”
In the oil markets, Brent crude oil futures rose 3.2% to $ 117.62 a barrel.
Cash gold fell marginally to $ 1,849.65 per ounce.
ABC / Reuters / AAP
Posted May 26, 2022 May 26, 2022 Thursday, May 26, 2022 at 9:33 PM, updated yesterday at 6:44 AM Friday, May 27, 2022 at 6:44 AM