Live updates: ASX hits record high on open due to optimism about US economy, Myer tanks

 Myer is (by far) the worst performing stock on the All Ords today.

By 11am AEST, its share price had plunged 10.3% to 78.5 cents.

And its shares have been going downhill for a while.  Since 2010 (when it was worth as much as $3.67), Myer’s shares have lost 79% of their value!

The department store chain’s latest financial results did not inspire confidence.

Its full-year sales fell 3% due to “challenging macroeconomic conditions” and the closure of its stores in Brisbane, Frankston and Werribee.

(Keep in mind, the latest ABS data shows retail sales across Australia rose 2.3% over the past year, and the price of consumer goods lifted 3.8% in the year to July).

Myer’s annual net profit dropped 26% to $52.6 million due to “challenging trading conditions, inflationary cost pressures” and the “underperformance” of its fashion brands sass & bide, Marcs and David Lawrence.

On the plus side, the company attracted 706,000 new members to its ‘Myer One’ loyalty program in the 12 months to July — and most of them were under the age of 35.

So the hope (for Myer) is that these young customers get big pay rises in the years ahead and remain loyal customers.

After news earlier this week that Harvey Norman was being hit with a class action by Echo Law over alleged junk warranties, another firm Maurice Blackburn has just announced it is launching another filing against the retailer.

The action concerns the same ‘product care’ warranties as the other class action and covers everyone who bought Product Care in Australia, in a store or online, between 20 September 2018 and 19 September 2024 (when the class action was filed in Court). 

Here’s what Maurice Blackburn had to say:

The class action alleges that Product Care was of little benefit or value to purchasers, because it almost never covered any fault in the goods.  Product Care only covers faults where the goods fail to operate and the customer is not entitled to a replacement under the Australian Consumer Law.  Under the Australian Consumer Law, customers have very broad and strong rights to a replacement or refund for faulty goods, especially if the goods stop working.

The class action also alleges that Harvey Norman, Domayne and Joyce Mayne were selling Product Care illegally, because it is a financial product and they did not have an Australian Financial Services Licence, which is required in order to sell financial products.

In response, Harvey Norman issued this note to the ASX this morning, defending its actions:

“HNHL considers that each of HNHL and Yoogalu has complied with all relevant laws at all times and each intends to defend the proceedings vigorously.”

The Australian share market has hit a new high in early trade, following Wall Street and renewed optimism about the US economy.

The S&P/ASX 200 rose 0.48% to 8231 points at about 10:25am AEDT.

Most sectors are in positive territory, with gains led by utilities, basic materials and education:

These are the top and bottom movers on the ASX 200:

More from senior business correspondent Peter Ryan now who is helping us digest the US rates news and what it could mean for Australia.

Listen to his latest analysis here:

And now a guest post by friend of the blog and our Senior business correspondent Peter Ryan, who has this interesting report:

Woolworths has rejected pressure from some investors that the supermarket giant needs to sell off Big W and its struggling supermarket division in New Zealand.

Responding to the ABC’s request for comment, a Woolworths spokesperson came back with this emphatic on-the-record comment:

“We have no plans to sell BIG W or our NZ supermarkets business”

In addition, the spokesperson said both Big W and New Zealand Food had been through “a challenging year” where “value-conscious customers” were “cross-shopping and trading down”.

However, Woolworths says both businesses have made “good progress on their transformation plans” demonstrated by improved customer scores.

Woolworths has a new chief executive in Amanda Bardwell who has replaced Brad Banducci who had less than a stellar year after being criticised for briefly walking away from a Four Corners interview on allegations of price gouging in the supermarket sector.

Ray David of BlackWattle Investment Partners has been leading the push for the Big W selloff saying investors want to simply the company in a back-to-basics approach.

He spoke earlier today to Patricia Karvelas on Radio National Breakfast.

Woolworths shares have fallen 4.2% since the beginning of the year, while shares from its arch rival Coles have risen by more than 19%.

Myer has reported a 28% fall in its full-year net profit to $43.5 million, citing falling sales, restructuring costs and impairments to its fashion brands Sass & Bide, Marcs and David Lawrence.

Total sales fell 2.9% to $3.2 billion, compared to the previous financial year, which it attributed to the closure of some stores and “challenging macroeconomic conditions”.

Myer’s executive chair Olivia Wirth said on the FY24 full-year results:

“Today’s result reflects the challenging macroeconomic environment for Australian retailers.”

Ms Wirth said there were “significant opportunities for growth”

“We are laser-focused on improving our profitability, performance and shareholder returns. We have commenced a comprehensive strategic review to increase Myer’s profitability and drive sustainable earnings growth. Our objective is to identify opportunities to deliver a step-change in Myer’s market position and generate strategic and financial benefits.”

The department store is currently looking in to buying a range of fashion and apparel brands from Solomon Lew’s Premier Investments.

Yesterdays jobs data revealed 47,500 positions were added to the economy and the number of unemployed people declined by 10,500.

 Reserve Bank officials have recently said Australia’s labour market probably needs to “loosen” a bit further before the economy is back into better balance and inflation is under control.

But ABS data shows Australia’s labour market is still operating very close to recent historical tightness. Jobseekers are reporting intense competition for roles. 

Here’s David Chau‘s report:

It’s that time of day when many of us are thinking about one thing: coffee (and the weekend!)

But in the past year the price of beans has increased by 56%, hitting a 13-year high of $US2.60 per pound.

The Business host Alicia Barry spoke to Joe Taweel from the Australian Coffee Traders Association about the challenges the industry is facing.

But, for you and I, there is some good news: Mr Taweel says although the price of beans hasn’t hit the ceiling yet, it’s unlikely significant increases will be passed on to Australian consumers because of stiff competition in the sector.

The impacts of the US rate cut continue to reverberate.

Michelle Grattan writes that Reserve Bank Governor Michele Bullock “might need her flak jacket” when she fronts the media next Tuesday, with the US decision putting pressure on Australia to follow suit:

The question most people have is: what do US rate cuts mean for Australia? And luckily, our colleague Gareth Hutchens has all the answers:

The US central bank’s long-awaited cut to interest rates came with a warning – and concern about a slowing US economy fueled falls on global markets yesterday.

Catch up on last night’s Finance Report with Dan Ziffer:

Good morning and welcome to the ABC’s markets blog.

The local share market is set to open higher today after US stocks surged.

The S&P 500 and the Dow reached record highs at close, following the Federal Reserve’s interest rate cut yesterday. The cut – at the high end of expectations – and the comments from the central bank that inflation seemed to be getting under control gave markets confidence.

Fed Chair Jerome Powell said the US economy remained strong and the central bank would decide on the appropriate pace of future rate cuts.

James Ragan, Director of Wealth Management Research at D.A. Davidson said:

“The Fed has sanctioned a pretty strong economic picture here, and so we’re just seeing the money flow back into some of the sectors that have perhaps underperformed so far this quarter”

Techs surged as did bitcoin, and gold moved towards a record.

Tesla was up over 7%, and Apple and Meta were both up almost 4%. Nvidia jumped 4%.

The Australian dollar is buying just over 68 US cents.

ASX 200 futures: +0.4% to 8282 points

Australian dollar: -0.03 at 68.12 US cents

S&P 500: +1.69% to 5713 points

Nasdaq: +2.51% to 18013 points

FTSE:+0.91% to  8328 points

Spot gold: +1.08% to $US2586/ounce

Brent crude: +1.67% to $US74.88/barrel

Iron ore: +3.5% to $US93.9/tonne

Bitcoin:-0.03% to $US63034

Prices current around 7:20am AEDT.

Live updates on the major ASX indices: