Market snapshot: ASX edges higher, Bathla secures funding lifeline, Trump leans on Fed

Market snapshot

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By Stephen Letts

ASX 200: +0.2% to 9,022 points (live values below)

ASX 200 (Friday): -0.2% to 9,006 points

Australian dollar: flat at 72.06 US cents

Asia: Nikkei +1.0%, Kospi +3.8%

Wall Street: S & P 500 -0.4%, Dow -0.5% Nasdaq -0.3%

Europe (Friday): Dax +0.2%, FTSE flat, Eurostoxx 600 +0.3%

Spot gold: -0.1% to $US4,425/ounce

Oil: Brent futures +0.6% to $US92.84/barrel, WTI futures +0.7% to $US92.14/barrel

Iron ore (Friday): +0.4% to $US99.95 tonne

Copper (LME Friday): +1.0% to $US14,363/tonne

Bitcoin: +0.6% to $US80,351

10-year bonds: US 4.78%, Aust 5.19%

Prices current at around 10:15am AEST

Live prices on the major ASX indices:

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Bathla secures two-week funding lifeline, staff stood down

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By Stephen Letts

The collapsed property developer has been given a very short-term financial lifeline to keep it operating.

The developer's administrator, Teneo Australia, said it had secured a two-week funding arrangement which has been agreed to by five key lenders.

The final documentation of the deal, which is still confidential, is expected to be completed later today.

However, the deal comes at the expense of 213 staff who were stood down as construction on a number of projects was halted this morning.

Administrator Stephen Longley said the funding would enable Bathla Group to maintain limited operations for a further two weeks while the administrators work with the broader lender group to secure a longer-term funding solution.

"Our immediate priority has been to secure sufficient short-term funding to maintain a minimum viable operating structure," Mr Longley said.

"The arrangements agreed today allow us to provide the central support required for construction to continue on projects associated with the lenders participating in the funding package.

"Significant work remains to secure the funding required to progress and ultimately complete all projects currently under construction. We will continue to work closely with lenders and other key stakeholders to pursue those arrangements."

Bathla stands down staff as creditors work on $5m lifeline

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By Stephen Letts

As administrators and creditors of collapsed property developer Bathla scramble to secure funding to keep the business running in some form, the first staff stand-downs are occurring.

There are reports this morning that about 200 have been stood down as administrator Teneo meets with creditors.

The key creditors, which include Centuria, Ray White Capital and Hong Kong's PAG, are trying to pull together a loan of up to $5 million to keep the business going until at least the end of the month.

Bathla's collapsed last month with more than $3.4 billion in debt.

At the time, it was operating around 45 construction sites with more than 2,500 yet-to-be-completed apartments.

ASX 200 opens higher

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By Stephen Letts

The ASX 200 has edged higher in early trading.

At 10:12am AEST, the ASX 200 had gained 0.2% to 9,021 points.

ASX earnings upgrade 'a flash in the pan': J.P. Morgan

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By Stephen Letts

With the dust settling on the ASX's August reporting season, J.P. Morgan's equity team has taken a deep dive into the results and has come away disappointed.

The investment bank's Australian equities chief strategist, Jason Steed, said the high hopes earlier in the year had turned out to be merely "a flash in the pan".

"Post February's results season, we declared a thaw in Australia's long, dark earnings winter. August has put paid to that thesis, with the earnings outlook souring and most sectors going into reverse," Mr Steed wrote in a research note to clients.

"Through the course of the season, only Healthcare generated upgrades, albeit from a depressed base."

Mr Steed said Australia stands alone across developed markets in recording negative revisions over the past month; all headline indices are in the red — ASX 200 (-1.4%), ASX 50 (-1.3%) and Industrials (-0.7%).

"Looking forward, earnings growth remains buttressed by the mid-caps, where we estimate the 3-year CAGR (compound annual growth rate) will come in at 11.1%. Our largest companies (ASX 20), however, are set to generate a pedestrian 4.9% over the next three years," he said.

Here's the J.P. Morgan scorecard:

The upgrade/downgrade ratio deteriorated through the season. The proportion of companies generating upgrades, at 22%, slid below the long-run average, while earnings downgrades climbed to 43%.

Notable earnings upgrades: Ramsay Healthcare +6%, Super Retail Group +7%, Virgin Australia +12%, Mineral Resources 14%.

Notable earnings downgrades: JB Hi Fi -5%, Endeavour Group -10%, Seek -11%, Life360 -14%.

One area where upgrades abounded was in showering investors with dividends.

"The income-centric nature of the Australian market, thanks in part to franking, means that boards are very reluctant to cut dividends even in a softening earnings environment," Mr Steed said.

"This mindset was on show through the course of the season, with DPS (dividend per share) upgrades above the historical average and downgrades well below."

Super heavyweight bout: Labor vs One Nation

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By Stephen Letts

Labor and One Nation are back in the ring this morning, boxing on about One Nation's policy to divert a portion of super back into pay packets.

Treasurer Jim Chalmers has accused One Nation of wanting to "end superannuation as we know it" by allowing renters or mortgage holders to access some of their super early.

"It's now beyond doubt that any Coalition government with One Nation in it will cut your super. This means less money and less economic security for millions of Australian workers," he says.

"Every time One Nation is asked to support the financial interests of Australian workers, they oppose the financial interests of Australian workers. By ending super as we know it, by making Australian workers poorer as a consequence … this is exactly why One Nation poses an unacceptable and dangerous risk to Australian workers."

One Nation Treasury spokesman Barnaby Joyce says he can't see why the government would have an issue with One Nation's proposed superannuation plan.

"This is not a seismic shift in administration. It's a change in attitude; that if you're doing it tough, you get some of your own money back," he argued at a press conference in Sydney this morning.

"What we are doing here is giving people back some of their own money from the future, not taking it out of their current balance, but [out of] some of their own money in the future. And what we have to realise [is] that superannuation is not a national asset. It's individuals' asset," he says.

Oil higher in early trade

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By Stephen Letts

The key global oil price benchmarks have risen in early trade in response to another round of tit-for-tat attacks in the Strait of Hormuz over the weekend.

At 8:50am AEST:

Brent crude futures: +0.5% to $US96.78/barrel

West Texas Intermediate crude futures: +0.7% to $US92.16/barrel

Trump leans on Fed to cut rates

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By Stephen Letts

While we've been posting this morning about how the stronger-than-expected US jobs figures were putting pressure on the Fed to raise rates, certainly a proposition supported by bond traders, not everyone agrees.

US President Donald Trump was a noted dissenting voice in a Truth Social post, arguing that the data points to a rate cut.

While it's regarded as the first time Mr Trump has publicly leaned on his freshly minted Federal Reserve chair, Kevin Warsh, the president renewed his calls for lower interest rates, saying the FOMC (Federal Open Market Committee) should "get smart" and "be patriots for a change".

He then suggested, in a bit of a leap of logic, that if rates weren't cut, he'd order a halt to trading with any country running a surplus with the US, a course of action that was even "better than tariffs". Hard to imagine anything being better than tariffs, but there you are.

Here's the president's post (caps and grammar are his own):

"Great jobs number just announced, breaking all estimates (except mine!) by double and triple — And you haven't seen anything yet! EMPLOYERS ADDED 162,000 JOB IN AUGUST. Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago! A STRONG COUNTRY MEANS A LOWER INTEREST RATE — IT'S A BETTER CREDIT…Very simple! We should have the LOWEST RATE of any country in the World, like "the old days." Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE! LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged "the President" has an absolute right to do. ITS BETTER THAN TARIFFS! The Fed Board, with its great new leader, must get smart — BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!" President DONALD J. TRUMP

Mr Trump later told reporters that the (Fed Funds) rate should be "one percent or half a percent" that he has a right to put tariffs on countries like Switzerland, that the US has effectively taken over Iran and that there are no mines in the Strait of Hormuz.

Aussie dollar to hold near 72 US cents this week: CBA

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By Stephen Letts

The Aussie dollar is expected to stay at about 72 US cents this week, according to CBA's FX strategy team.

In a morning note, CBA's senior currency strategist Christina Clifton said the Australian/US cross rate should remain steady, but a stronger-than-expected US core CPI reading will push AUD/USD back down to near 0.7150 later in the week.

"AUD/USD touched the highest since May last week on broad-based USD weakness. AUD/USD can remain near 0.7200 for most of this week, especially if Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter and Deputy Governor Andrew Hauser signal the need for another interest rate hike after the stronger-than-expected July CPI (Tuesday)," Ms Clifton said.

"However, we expect AUD/USD to ease back to near 0.7150 later in the week if we are right about our above-consensus call for the US core CPI."

If you're planning to travel (or export anything) this week, here are some of the CBA's other calls:

AUD/EUR will set a new year-to-date high above 0.6207 if RBA officials sound hawkish or the ECB is less hawkish than expected.

AUD/GBP will extend its recent uptrend on hawkish RBA remarks.

AUD/NZD could lift to a new year-to-date high above 1.2288 if RBA officials deliver hawkish comments this week.

AUD/JPY will trade around its 50-day moving average of 112.9 this week.

OPEC+ keeps oil output policy unchanged for October

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By Stephen Letts

OPEC+ kept its oil output policy unchanged for October at its Sunday meeting. The producer group said in a statement this morning that it needs to agree on new quotas before deciding on its next output steps.

The meeting of seven core OPEC+ members — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — comes as the Iran war continues to disrupt oil exports through the Strait of Hormuz, limiting OPEC+'s influence over prices and market share.

In August, OPEC+ agreed to a production boost for September, completing a phased rollback of a 1.65 million-barrel-per-day supply cut first agreed in 2023.

Despite the agreed production increases, the group, made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia, still produces far below its targets because of the war.

"OPEC+ currently has very limited power over the physical oil market," Jorge Leon of Rystad Energy said.

"The group can change production targets on paper, but it cannot guarantee that those barrels will be produced or actually reach the market.

"The focus now shifts away from monthly production adjustments and towards the much more consequential debate over 2027."

Reuters

This week: RBA speakers, US inflation, EU interest rates

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By Stephen Letts

Australia:

Mon: Job ads (Aug)

Tue: Consumer sentiment (Sep), RBA commentary from deputy governor Andrew Hauser and asst gov (economics) Sarah Hunter

Thu: Inflation expectations (Sep)

International:

Mon: EU — GDP (Q2)

US — Labor Day holiday (markets closed)

Tue: JP — GDP (Q2)

CN — Trade balance (Aug)

US — Small business optimism

Wed: CN — Consumer (CPI) and producer (PPI) inflation (Aug)

Thu: EU — ECB rates decision

US — PPI (Aug), wholesale inventories (Aug)

Fri: US — CPI (Aug)

Once again, it is quiet on the home front, with the Westpac-Melbourne Institute reading of consumer sentiment (Tuesday) perhaps being the most interesting data point.

Sentiment bounced (but still remained pessimistic in August), largely thanks to mortgagors feeling a rate rise was more remote.

Stronger-than-expected GDP data and a return of chatter about a rate hike may test that mood.

The RBA top brass will be out and about on Tuesday, dealing with that chatter.

Assistant governor and chief economist Sarah Hunter will be at another "fireside" chat, this time atop an AFR property summit.

OHS issues at the ABC sadly prevent open fires in the studio, so deputy governor Andrew Hauser will have to make do with just a normal chat with 7.30 host Sarah Ferguson; hopefully it won't be too chilly.

Looking overseas, the ECB is expected to raise rates by 25 bps (Thursday) with both headline and core inflation running consistently above the target.

On Friday, US CPI could well be crucial in this month's Federal Reserve rate decision. Producer inflation data will be released on Thursday.

Fed governor Christopher Waller has said the September rate decision hinges on next Friday's CPI release.

While expectations are that headline inflation will ease a tad, rising fuel prices are having an impact. So it could be a close-run thing.

Investment bank Societe Generale says that while US headline inflation is expected to slow modestly to 3.3% (year-on-year), it will not be enough to dissuade the Committee from raising rates at its September meeting (much to the president's chagrin).

"Consistent with our revised outlook, we expect this move to mark the beginning of a three-hike cycle, with one rate increase delivered per quarter," Societe Generale said.

Wall Street slips as bond yields rise, ASX treading water

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By Stephen Letts

The three key Wall Street indices slipped on Friday as key jobs data came in stronger than expected, heightening speculation the Fed will raise rates later this month.

S & P 500: -0.4%

Dow: -0.5%

Nasdaq: -0.3%

US non-farm payrolls rose by 162,000 jobs last month against a