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Australian shares retreated as investors weighed weak US leads and a run on cryptocurrency markets against takeover action.

The S&P/ASX 200 fell 17 points or 0.24 per cent towards its first loss in five sessions.  

Tech stocks sank as a plunge in Bitcoin and other digital tokens weighed on the sector.

Origin Energy surged after a surprise $18.4 billion takeover offer from Canadian asset manager Brookfield and a private equity firm. Fund manager Perpetual rallied on an improved offer from a consortium of investors.

What’s driving the market

The market’s four-session win streak hit a roadblock following heavy falls in the US overnight. Wall Street’s main indices lost between 1.95 and 2.48 per cent as midterm elections delivered fewer Republican gains than expected and a meltdown on cryptocurrency markets accelerated.

Bitcoin fell below US$16,000 a coin for the first time in two years after the world’s largest crypto exchange backed out of a proposal to bail out the second largest. Binance’s withdrawal left on the verge of bankruptcy.

The collapse of the deal sent shivers through the digital token universe. Coinbase sank 9.54 per cent, Riot Blockchain 8.07 per cent and Robinhood 13.76 per cent. Here, blockchain developer DigitalX dropped 6.67 per cent to a five-month low.

“For crypto the likely failure of FTX highlights that there is no lender of last resort in crypto! Unlike in state-issued fiat currencies where central banks play that role. Unsurprisingly, big falls have been seen in the crypto space,” NAB’s head of market economics, Tapas Strickland, said.

US investors were also cautious heading into another potentially explosive inflation report tonight. Core consumer prices are expected to moderate, but not by enough to divert the Federal Reserve from raising interest rates again next month.

“We can take today’s inflation print as a proxy for Fed policy. Another hot report decreases the odds of a slower pace of Fed tightening, likely boosting the dollar whilst weighing on Wall Street, commodities and all other currencies. Whilst a softer inflation report keeps hopes alive that the big hikes are behind us and send the dollar lower,” City Index senior market analyst Matt Simpson said.  

Going up

Origin Energy soared 36.49 per cent to a 21-month high following a takeover offer. Canada’s Brookfield Asset Management and private-equity firm MidOcean Energy gained the support of the board after twice increasing their indicative, non-binding conditional proposal in private discussions with the company.

The revised offer of $9 per share values Origin at $18.4 billion. The board will back the offer if becomes binding following a period of due diligence.     

Perpetual rose 6.5 per cent to $30.98 after knocking back a revised offer from a consortium including Regal Partners and a private equity fund. The consortium raised its indicative offer from $30 per share to $33 per share. Perpetual’s board said the proposal was “not in the best interest of its shareholders”.

An earnings upgrade lifted share registry Computershare 5.62 per cent. The company told today’s AGM it expects full-year margin income to be $280 million stronger than previous guidance, rising to $800 million. Management earnings per share guidance was lifted to around 90 per cent.   

Sandfire gained 4.88 per cent after appointing former South32 commercial officer Brendan Harris as CEO and managing director.  

CSL and Woolworths were the best of the heavyweights, rising 1.32 and 1.11 per cent, respectively. Telstra gained 0.89 per cent, Coles 0.27 per cent and Wesfarmers 0.17 per cent.

News Corp reversed much of yesterday’s double-digit decline, bouncing 8.98 per cent after a restrained US reaction to the media group’s interim result.

Going down

Xero plunged 12.65 per cent to a two-and-a-half year low after reporting a NZ$16.13 million half-year loss and the departure of CEO Steve Vamos. The software firm’s loss blew out by 172 per cent from NZ$5.9 million the previous year despite a 30 per cent increase in revenues. Vamos will be replaced by former Google executive Sukhinder Singh Cassidy.  

PPE provider Ansell sagged 2.69 per cent after warning unfavourable currency movements and lower demand for single-use products mean “downside risk to revenue expectations”. The company reaffirmed earnings guidance but said the full-year result was “more likely to be in the lower half of the range”.

Breville dipped 0.74 per cent after reaffirming it was “on plan” for the year. CEO Jim Clayton told today’s AGM the firm had secured enough inventory for this half, supply chains were improving and costs were trending lower.

Takeover target Pendal Group dropped 7.74 per cent following a revised approach for suitor Perpetual. Pendal announced it would press ahead with a court hearing seeking orders to convene a meeting to implement the deal agreed between the two fund managers.

Woodside Energy fell 2.08 per cent as the energy market continued to give up gains fuelled by speculation about looser Covid restrictions in China. Santos lost 0.65 per cent. Bulk metal majors BHP and Rio Tinto shed 1.68 and 1.11 per cent, respectively.

Other markets

Asian markets chased overnight US losses. The Asia Dow shed 1.07 per cent, China’s Shanghai Composite 0.54 per cent, Hong Kong’s Hang Seng 1.35 per cent and Japan’s Nikkei 0.94 per cent.

S&P 500 futures rebounded seven points or 0.18 per cent.

Oil declined for a fourth session. Brent crude dropped 25 US cents or 0.27 per cent to US$92.40 a barrel.

Gold eased US$3.10 or 0.2 per cent to US$1,710.60 an ounce.

The dollar bounced 0.12 per cent to 64.38 US cents after falling 1.3 per cent overnight.

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