ASX set for flat open; tech slides further

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Key Points

  • ASX futures are up 4 points, or 0.1 per cent.
  • US tech stocks capped off their worst week since March on Friday.

Evidence clobbers opinion for Macquarie’s fixed income king

Jonathan Shapiro

Almost five years ago to the day, Macquarie’s head of fixed income Brett Lewthwaite took the stage in front of a packed audience of financial advisers.

He had a tough act to follow. Star fund manager and headline act Hamish Douglass had just outlined to the Portfolio Construction Forum why we were in the midst of a bond bubble as he branded the “lower for longer” thesis “absurd”.

But Lewthwaite was not swayed. There was simply too much debt in the system to support higher interest rates. The chances of a sustained inflation outbreak were slim to none. Yields were going nowhere but down.

Brett Lewthwaite’s evidence-based approach to fixed-interest investment has worked well for Macquarie.  Rhett Wyman

Five years later, it is fair to say the bond guy won that debate.

The lucrative consolation for Douglass, which he recognised at the time, was that investments in consumer staples and tech stocks – would be bid up further in a low rate world.

Read the full story at afr.com.

Frydenberg tells Rio Tinto to hire Australian CEO

Jennifer Hewett

Treasurer Josh Frydenberg has told the chairman of Rio Tinto that the company’s next chief executive should be Australian along with the majority of its directors.

Treasurer Josh Frydenberg wants an Australian CEO at Rio Tinto. Alex Ellinghausen

The rare high-level political intervention in a corporate appointment comes after pressure from institutional investors led the London-based board to force the exit of CEO Jean-Sébastien Jacques and two senior executives over the detonation of the Juukan Gorge caves in the Pilbara.

The Treasurer phoned Rio chairman Simon Thompson on Friday to express his strong views.

“Rio Tinto is one of the great companies of the world with a proud Australian history,” Frydenberg told The Australian Financial Review. “With the vast majority of its revenue coming from Australia, it is fitting to once again see an Australian as CEO along with the majority of the board.

“It was a constructive conversation.”

Read the full story at afr.com.

Hyperbole abounds, but tech shows no sign of quitting

Vesna Poljak

The wild ride of GM-backed hydrogen truck developer Nikola from Tesla challenger to Wall Street laughing stock within the space of a week has all the hallmarks of a ring-the-bell moment for technology.

Even so, experts say it would be premature to call the end of the technology supercycle.

Electric vehicle maker Nikola was sent tumbling on Friday. 

Wall Street fell for a second consecutive week, and tech sealed its biggest weekly loss since March on Friday in a session that would have ordinarily been dominated by the US consumer price index rising for a third straight month.

Australian stocks are on track for a flat start to Monday, up just four points according to futures prices.

Nikola founder Trevor Milton failed to refute claims by short-seller Hindenburg Research that the company was an “intricate fraud”, which included revealing that its concept truck was filmed rolling down a hill and not driving, as a video had purported to show. The Financial Times subsequently verified the ruse with its own reporting.

Read the full story at afr.com.

BHP, Rio soar in US trade; US techs slide

Here are the weekend market highlights:

  • AUD +0.4% to 72.84 US cents
  • On Wall St: Dow +0.5% S&P 500 +0.1% Nasdaq -0.6%
  • In New York: BHP +2.9% Rio +5% Atlassian -1.2%
  • In Europe: Stoxx 50 +0.1% FTSE +0.5% CAC +0.2% DAX -0.1%
  • Spot gold -0.3% to $US1940.55/oz
  • Brent crude -0.5% to $US39.88 a barrel
  • US oil +0.2% to $US37.39 a barrel
  • Iron ore +1.8% to $US128.37 a tonne
  • 2-year yield: US 0.13% Australia 0.21%
  • 5-year yield: US 0.25% Australia 0.37%
  • 10-year yield: US 0.67% Australia 0.91% Germany -0.48%

Read Timothy Bell’s Before the Bell here.

Good morning

Good morning and welcome to Markets Live for Monday.

This blog is not intended as investment advice.

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