Appen's appeal falls as Telus drops deal, Travel stocks continue to fly: ASX up 0.9% at noon

Market Reports

by Melissa Darmawan

Travel stocks are stronger for a second straight day as Australian shares rally on the back of a strong lead from Wall St. A batch of upbeat earnings reports with several retailers upgrading their revenue outlook seems to have renewed investors’ appetite for risk, while news in the M&A space has also grabbed some attention as companies reposition themselves in their respective sectors.

For now, the buying mood looks to be offsetting recession concerns as investors ponder if US stocks have bottomed. Share prices have been punished of late, leading to oversold conditions. With US equity futures flat at the time of writing, Wall Street’s major indexes are on track to snap their eight-week losing streak.

Beijing’s month-long Covid-19 outbreak continues to weigh, with 29 new cases recorded for Thursday amid mounting concerns from within China’s government about the economic impact of its zero Covid policy.

Locally, resources stocks are leading the gains alongside consumer discretionary and information tech, with these sectors up between 1.4 and 1.8 per cent. Consumer staples, healthcare, and communication services are being less helpful to the bullish tone, with each up only marginally on the day.

Rio Tinto (ASX:RIO) is up 2.2 per cent to $113.17, with BHP’s (ASX:BHP) 2 per cent gain to $43.45 nearly matching it. Fortescue Metals (ASX:FMG) continues its decline after its almost 4 per cent fall yesterday. Shares are trading 0.5 per cent lower to $19.82

Flight Centre (ASX:FLT) shares are flying - up 3.6 per cent to $20.49 - while Webjet (ASX:WEB) has added 3.8 per cent to $6.05. Sentiment in the sector has been helped by bullish revenue outlooks from US Southwest Airlines and JetBlue Airways, although rising inflation eating away at consumer spending remains a concern.

Little surprise that Appen (ASX:APX) is the day’s worst performer to this point, with the shares falling more than 20 per cent to $6.42 on news that Canadian IT firm Telus had abandoned its $1.2 billion takeover offer only hours after first announcing it to the market.

M&A is the theme of the session with several other companies posting updates.

US investment giant Battery Ventures has thrown its hat in the takeover ring for Infomedia (ASX:IFM), making it three parties now interested in the digital media company. With Infomedia already working through a $639 million offer from American private equity giant TA Associate, Battery Ventures has upped the ante with a $1.75 per share cash non-binding, conditional offer, valuing IFM by over $657 million. As you might expect, Infomedia (ASX:IFM) shares have soared 5.3 per cent to $1.70.

Property settlements platform PEXA (ASX:PXA) unveiled that its data and analytics business PEXA Insights has agreed to buy up to 25 per cent in Elula, an Australian artificial intelligence tech firm. The value of the deal has remained behind closed doors. Shares are down 0.7 per cent to $15.01.

SA-based transport and travel business Kelsian (ASX:KLS) is selling its UK bus operations for $35 million to reposition its value in the market. Shares are 1.6 per cent higher to $7.55.

Meanwhile, Virtus (ASX:VRT) has dropped its transaction implementation deed with CapVest after Deloitte said - in light of BGH’s revised offer earlier this week - that its offer was not in the best interests of shareholders.

At noon, the S&P/ASX 200 is 0.9 per cent or 64 points higher at 7,170.

The SPI futures are trading at a 68-point premium.

Local economic news

Australian retail turnover in April rose 0.9 per cent to hit another record level and was up 9.6 per cent on an annualised basis, according to the Australian Bureau of Statistics.

The strength in retail turnover was being driven by spending across the food industries. High food prices have combined with increased household spending over the April holiday period as more people are travelling, dining out and holding family gatherings.

Company news by Lauren Evans

Tech company Novonix (ASX:NVX) announced that Trevor St Baker has retired from the board, and will leave immediately. Shares are trading 0.8 per cent higher at $3.77.

Sayona Mining (ASX:SYA) has completed its $190 million placement to fund the North American Lithium operation in Québec, Canada. Shares are trading 3.4 per cent higher at 21 cents.

XTEK’s (ASX:XTE) HighCom Armor Solutions business has received a new purchase order from an international customer valued at $46.8 million. Shares are soaring over 34 per cent to 43 cents.

Newcrest Mining (ASX:NCM) said it has identified gold-copper targets and high-priority soil. The IGO Paterson Farm-in project detected seven copper and gold anomalies, three air core anomalies and four soil anomalies. Shares are trading 1.1 per cent higher at $24.90.

Battery and materials company Talga (ASX:TLG) has announced significant increases in its Swedish natural graphite mineral resources, with Vittangi Graphite boosted by 54 per cent. Shares are trading 7.7 per cent higher at $1.40.

Commodities and the dollar

Gold is trading at US$1,850.66 an ounce.
Iron ore is 1.6 per cent lower at US$131.25 a ton.
Iron ore futures are pointing to a rise of 3.68 per cent.
One Australian dollar is buying 71.17 US cents.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, Australian Bureau of Statistics

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