ASX 200 Live Today - Thursday, 26th June

Welcome to our live ASX coverage for Thursday, June 26. We’re excited to be trialing this new format. Expect a high volume of posts pre-market and more periodic updates throughout the day. Be sure to refresh manually for the latest updates — and let us know how we can make it even better.

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ASX 200 flat for a second straight session

[4:15 pm] Signing off – The S&P/ASX 200 slipped 8 points (-0.1%), settling into another subdued session following Tuesday's 0.95% surge. With no major catalysts and a lackluster lead from Wall Street, the market lacked clear direction. Breadth tilted slightly negative, with 102 of the index's constituents closing lower, and VanEck's ASX Equal-Weight ETF dropping 0.91%.

Wednesday's cooler-than-expected Australian inflation data, combined with easing oil prices, pushed bond yields lower, with the Australian 10-year government bond yield falling for a sixth consecutive session to a near nine-month low of 4.125%. The market remains in a holding pattern, hovering close to record highs, as it awaits further clarity on Trump's looming 9-Jul reciprocal tariff deadline, central bank interest rate outlooks and corporate earnings.

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Light & Wonder nears three-month high

[3:09 pm] Light & Wonder shares have gained 13.6% in the last two sessions, trading at levels not seen since 2 April.

A Nevada District Court denied Aristocrat's motion to force Light & Wonder to hand over its hold and spin math models from 2021 onwards. Without access to these models, Aristocrat will struggle to demonstrate that its trade secrets were used in other Light & Wonder games beyond Dragon Train.

Light & Wonder will probably still face financial penalties given the previous court injunction specifically against the Dragon Train game. However, the dispute now appears more contained to the specific Dragon Train title rather than potential widespread contamination across Light & Wonder's portfolio.

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Gold prices stabilise but miners slip

[2:52 pm] Gold prices are trading near breakeven at US$3,335/oz on Thursday after bouncing 0.31% on Wednesday. However, prices are down 1.1% for the week as the Israel-Iran truce reduced demand for safe-haven assets.

While gold prices have stabilised over the past two sessions, gold miners like Northern Star and Evolution continued their sharp pullback, likely reflecting the decline in geopolitical risk premium.

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Coffee prices hit year-to-date low

[2:04 pm] The rare non-ASX related post, but worth noting given coffee's wild ride this year.

Coffee was one of the best performing commodities earlier this year, surging 33% by early February. However, prices have since collapsed 30% from that peak to seven-month lows, giving back all their earlier gains.

This should provide some relief to coffee drinkers, though it will likely come in the form of flat prices rather than further increases. Despite the recent selloff, coffee prices (Arabica futures) remain up 27% over the past twelve months.

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Xero continues to recoup losses

[1:50 pm] Xero is currently trading 4.8% lower to $184.83 despite opening 7.8% lower after raising $1.85 billion at $176 a piece.

Here are a few more takeaways from brokers.

• Goldman Sachs maintained Buy rating, target unchanged at $205, believes deal aligns with Xero’s US-focused 3x3 strategy, expects short-term product integration to boost retention, views syndication as low-cost growth vector, and sees scale as critical for US success.

• Morgan Stanley maintained Overweight rating, target unchanged at $225, sees strategic merit in owning US payments platform, confident in long-term revenue scale-up, flags cultural/tech integration risks, considers price fair for growth upside, expects leverage to moderate with FCF.

• UBS maintained Buy rating, target unchanged at $215, notes clear alignment with underpenetrated A/P market, sees syndication as indirect route to SMEs, views Melio’s customer profile as synergistic, considers FY28 targets ambitious but credible.

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Lithium stocks surge

[12:18 pm] Lithium stocks have been pushed aggressively higher, with a bellwether name like Pilbara Minerals opening just 0.8% higher, now up 8.8%.

The catalyst for such a move remains unclear, a few things to note include:

• Chinese lithium futures currently up 0.72% to 61,240 yuan a tonne

• A massive cargo ship carrying ~800 EVs and lithium batteries capsized in international waters, according to USA Today

• New-car registrations in Europe rose 1.9% in May to 1.11 million units, driven by strong EV and hybrid vehicles, Bloomberg reported last night

• Ongoing Fastmarkets conference had a few interesting presentations, including a comment about "Pessimism in the lithium sector is at an all-time high, with analysts predicting oversupply through 2029/30. However, they underestimate how low prices drive exponential demand growth—beyond EVs, into energy storage (BESS), trucks, aircraft, and even the emerging Low Altitude Economy in China. Investors have a rare opportunity to enter the market at cyclical lows before our projected supply deficit hits in 2026."

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Droneshield up more than 25% in two days

[12:02 pm] Droneshield has gained another 6.7% to $2.29, this follows a 19.8% gain on Wednesday after the company announced its biggest single order ($61.6m) from three standalone follow-on contracts from the European military.

Bell Potter upgraded its target price this morning, from $1.50 to $2.60, citing its "ability to rapidly fulfill a contract of this size is a key competitive advantage in the defence sector and a reflection of the company’s significant inventory investment over the last 18-months."

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Small caps making moves

[11:00 am] Here are the top small caps ($200m to $1bn market cap) winners and losers in early trade.

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Top gainers and losers in early trade

[10:30 am] Here are the top S&P/ASX 200 gainers and losers in early trade.

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Difficult to be negative on Austal: Citi

[10:26 am] Austal shares have rallied an extraordinary 93% year-to-date and 146% in the past twelve months. Despite the strong run, Citi says its difficult to be negative on the stock in the near-term due to:

• Planned increases in defence spending in the US (FY26 proposed budget of $47bn for shipbuilding) and Australia

• The increased potential of a takeover offer from Hanwha

• Reduced execution risk after launch of first T-AST vessel in the US

• Potential near-term finalisation of Australia Strategic Shipbuilding Agreement (SSA), potentially leading to ~A$4B in contracts for Landing Craft Medium (18 ships) and Heavy (8 ships)

The analysts upgraded the stock to "Neutral/High Risk" from "Neutral, target priec up to $6.10 from $4.09.

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Xero hovering $179

[10:18 am] Xero shares opened around $179, trading 1.7% above the $176 capital raising price — a relatively positive start given the circumstances.

Citi analysts maintained their Buy rating and $210 target price following their analysis of the Melio acquisition. They view the deal as strategically sound, enhancing Xero's control over US market economics by bringing a core component of its 3x3 strategy in-house while strengthening the payments offering.

The acquisition's growth potential centers on Melio's syndication network, recently launched with partnerships including Fiserv. Citi expects this network to accelerate Xero's US accounting customer acquisition through expanded banking channels.

Xero's FY28 revenue guidance points to significant upside, with Citi forecasting greater than 15% upgrades to consensus revenue on a pro-forma basis including synergies. Free cash flow of approximately $850 million appears neutral to slightly positive, though FCF per share faces around 5% dilution due to margin compression.

While Citi acknowledges potential near-term share price weakness from the high acquisition multiple and margin dilution, they see long-term benefits from scale advantages and US brand investment amortisation. The margin impact is negative, with Melio's 19% gross margin and negative 60% FCF margin to dilute Xero's impressive 89% gross and 24% FCF margins.

However, there are encouraging signs of operational improvement. Melio's transaction margin has already strengthened from 7% to 20%, with further increases anticipated as the business matures.

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UBS' take on Australian inflation data

[10:04 am] Australia's monthly inflation indicator for May eased to 2.1% year-on-year, down from 2.4% in April and below market expectations of 2.3%. Here are some of the key takeaways from UBS:

• Core Inflation Trends: Trimmed mean CPI slowed to 2.4% year-on-year (lowest since Nov-21) from 2.8% and CPI excluding volatile items eased to 2.5% year-on-year from 2.9%.

• Q2 CPI Projections: UBS models suggest Q2 headline CPI at 2.30% year-on-year, above RBA’s 2.1% forecast and trimmed mean CPI tracking at 2.73%, slightly above RBA’s 2.60% forecast.

• RBA Policy Outlook: Market prices >90% probability of a 23 bps rate cut on 9 July, driven by RBA’s dovish May-25 communication, despite Q2 CPI tracking above RBA forecasts.

• Economic Context: Q1 GDP was weaker than what the RBA expected, but stagflationary dynamics persist with strong unit labour costs, wage income, and a tight labour market

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Xero completes $1.85bn placement

[9:45 am] Xero has successfully completed its $1.85 billion institutional placement at $176 per share (9.4% discount to its $194.21 close on 24-Jun).

Some of the key takeaways from E&P analyst Paul Mason (yesterday) include:

• Strategic Fit: Aligns with Xero’s 3x3 strategy and Melio’s syndication network (35% of revenue) with partners like Fiserv, CapitalOne, Gusto, and Shopify seen as a key differentiator.

• Potential Synergies: Opportunity to cross-sell Melio into Xero’s base, enhancing payments earnings, possible broader distribution of Xero’s accounting software via partners like Fiserv/Clover.

• Market Opportunity: Payments address a wider US SME market (~24m businesses), including those avoiding cloud accounting due to cash economy preferences, unlike Xero’s core product.

• Valuation and Financing: Acquisition at 13.4x EV/Revenue multiple on Melio’s US$187M revenue (loss-making business).

• Financial Impact: Melio’s losses pause Xero’s operating leverage, US$70m revenue and US$20m cost synergies expected by FY28, aiming for Rule of 40 (~31 including SBP).

• Analyst View: Neutral rating with $186 target, the acquisition price seen as high but justified if strategic synergies are achieved.

Source: ASX Announcement | Company page: Xero (XRO)

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Aurizon cuts EBITDA guidance, leadership realignment

[9:41 am] Aurizon has cut its FY25 adjusted EBITDA guidance to $1.57 billion vs. prior estimates of lower end of $1.66-1.74bn. This represents a 7.6% downgrade at the midpoint, largely driven by:

• Network volumes on Central Queensland Coal Network to be ~10m tonnes below regulatory assumption, leading to revenue under-recovery.

• Take-or-Pay not triggered in three of four major systems, deferring $50m of FY25 earnings to FY27 via revenue cap process.

• Provision for impairment of trade debtors increased by ~$50m in 2H25 for Bulk customer debts, with recovery efforts ongoing.

The revised guidance represents a 4.8% miss against Macquarie's June 2025 forecast of $1.65bn FY25 EBITDA. The analysts pointed to persistent weakness in coal volumes during April and May as the primary culprit. "April/May coal volumes are still hurting. This creates a drag, albeit it is one off in nature," the broker noted. However, concerns extend beyond temporary disruptions, with analysts expressing skepticism about the company's strategic direction: "We still struggle to see enough evidence the bulk strategy is delivering."

Despite these operational headwinds, Macquarie sees some support from valuation, noting that "the yield of 6-7% should support the share price."

The guidance downgrade poses particular risks for Aurizon given its profile as a defensive, income-oriented stock. Any pressure on the company's dividend outlook could trigger forced selling from income-focused investors and funds who rely on consistent distributions.

In addition, Bulk and Containerised Freight combined under one Group Executive to drive synergies and streamline operations. Key management changes include:

• George Lippiatt appointed Group Executive Bulk and Containerised Freight.

• Gareth Long appointed acting CFO and Group Executive Strategy.

• Anna Dartnell, Group Executive Bulk, to depart Aurizon.

Source: ASX Announcement | Company page: Aurizon (AZJ)

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GenusPlus lifts FY25 guidance

[9:20 am] Power and communications infrastructure provider GenusPlus lifted its FY25 EBITDA growth guidance to be between 28-32% vs. prior guidance of at least 20%.

The company said the upgraded guidance, recent contract wins, full-year contributions from acquisitions, a robust orderbook, and growing industry tailwinds underpin management’s confidence in the business’s sustained growth and resilience in the current market, with strong prospects for FY2026 and beyond.

The announcement also noted a recent contract award with Arc Infrastructure to support the Level Crossing Upgrade and Renewals Project, estimated at approximately $20 million.

Overall, a strong upgrade but its worth noting the stock has rallied 13% in the past month and 43.5% year-to-date.

Source: ASX Announcement | Company page: GenusPlus (GNP)

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Civmec acquires naval shipbuilding company

[9:10 am] Civmec has entered into a binding agreement to acquire Luerssen Australia for $20 million cash, funded entirely from existing cash reserves.

Luerssen is a specialist naval shipbuilding company headquartered in WA, with operations located in South Australia. The move strength's the company's shipbuilding capability, supporting defence industry growth.

The announcement did not contain any earnings figures or guidance impact. Though not the largest acquisition, relative to Civmec's $530 million market cap.

Source: ASX Announcement | Company page: Civmec (CVL)

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Powell's second day of testimony

[9:05 am] Fed Chair Powell's second day of testimony before Congress added little new insight, with comments consistent with prior remarks.

• Trade and Rate Cuts: Suggested future trade deals could prompt consideration for rate cuts.

• Tariff-Driven Inflation: Reiterated that “all” forecasters expect significant inflation increase due to tariffs, though effects may be short-lived.

• Stagflation Monitoring: Noted no current signs of stagflation but the Fed is monitoring the risk.

• Economic Outlook: Economy on solid footing; tariff impacts on inflation uncertain, supporting a wait-and-watch policy stance.

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Citi's Economic Surprise Index hits 10-month low

[9:00 am] Citi's Economic Surprise Index dropped to its lowest level since September 2024 due to recent disappointing economic data, including:

• Labor Market Weakness: US June consumer confidence labour market differential fell to 11.1 points, the narrowest since March 2021, the four-week moving average for initial jobless claims hit the highest since August 2023 and continuing claims near the highest since November 2021

• Housing Sector Concerns: May housing starts and permits underperformed, existing home sales slowest since 2009

• Corporate Spending Caution: Business executive surveys from Axios, JPMorgan and the Richmond Fed Index showed declining capital expenditure expectations

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What's driving stocks?

[8:58 am] Major US benchmarks finished mostly lower amid a relatively uneventful session outside of surging tech/AI stocks.

• Israel-Iran ceasefire continues to hold and reports have emerged about the lack of Iranian energy infrastructure damage from US airstrikes over the weekend

• Market increasingly focused on looming 9-Jul reciprocal tariff deadline

• Sources suggest the US is nearing trade deals with several key trading partners including Japan, South Korea and Vietnam

• FedEx – often viewed as an economic bellwether – tumbled 3.2% after the company said its profit for this quarter will be worse than expected and declined to offer a full-year guidance due to Trump's trade war and soft demand

• Nvidia surged 4.3%, though there were no major catalysts besides a broker (Loop Capital) upgrade

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Good morning!

[8:40 am] S&P/ASX 200 futures are down 37pts (-0.43%) after a mixed session on Wall Street, with the Nasdaq closing at fresh record highs while the Equal-weight S&P 500 Index slumped 0.72%, suggesting poor breadth.

If you’re new to the blog – catch up quick via today’s Morning Wrap./