Issue #35 | Caught in the Crossfire

ASX - Top 3 Winners & Losers
Deals Down Under - Eagers' Anti-EV Play
Global Markets - Canberra vs Big Tech
Other News - Aussie Politics, Sport and Culture

The ASX 200 fell 2.9% this week, capping a fourth straight losing session as oil surged to $US108 a barrel, its highest level in almost four months, with Iran and the US digging into a conflict that's choked off normal Middle East energy flows through tanker strikes, missile attacks on US bases and threats to Saudi energy facilities. The oil spike dragged global bond yields sharply higher and lifted the odds of another US Federal Reserve rate rise.

The week’s best performers 

Ingenia Communities (ASX:INA) +8.77%

Ingenia Communities, the land lease communities and holiday parks operator, rallied this week on a run of corporate news. The board rejected a $4.75-a-security takeover approach which undervalued the group, signalling to investors that management thought it was worth more. On top of that, Ingenia unveiled a proposed scrip-and-cash merger with Peet worth up to $2.12 a share, plus $124m of NSW asset sales at book value to fund the development pipeline.

Minerals 260 (ASX:MI6) +7.98%

The West Australian gold developer, Minerals 260, rose 7.98% this week after regulators granted an expanded mining lease covering the entire Bullabulling Gold Project area defined in its pre-feasibility study, removing a key permitting hurdle ahead of the planned final investment decision.  The company also struck a binding deal to buy roughly 367km² of adjoining tenure from Kalgoorlie Mining Associates for $250k cash and $1m in shares, growing its total project footprint to 1,527km², more than ten times the 130km² it started with when it picked up the project in April 2025. That decision is still targeted for Q1 2027, with first production pencilled in for 2028. 

Karoon Energy (ASX:KAR) +5.48%

Karoon Energy, the ASX-listed oil and gas producer, climbed 5.48% this week as Brent crude surged 12.3% to $US108.17 a barrel, its biggest weekly jump since mid-July, after Houthi rebels seized the Red Sea port town of Mocha, threatening the Strait of Bab el-Mandeb that Saudi Arabia has been using to route oil around the blocked Strait of Hormuz. The whole ASX energy sector caught a bid, with Woodside up 3.36% and Santos up 5.05%, but it's a double-edged sword for Australia, since the same oil spike is what's feeding fears of another RBA rate rise.

This week's worst performers

Nine Entertainment (ASX:NEC) -15.85%

The free-to-air broadcaster and the owner of Stan, Nine Entertainment, fell despite extending its Premier League rights to 2033-34 at a below-inflation 3% annual escalator. The market read it as a bigger cost commitment than a coup, with Nine's promised savings (the roll-off of legacy Optus payments and a repricing of inherited subscribers) still unproven and carrying real churn risk. Stan's underlying earnings have doubled to $81m in five years, but investors are cautious that growth can't keep up with rising costs. 

Xero (ASX:XRO) -15.52%

Xero, the cloud accounting software provider, fell 13.33% this week, dropping below $70 for the first time in years after a seventh straight red session. FY26 revenue grew about 31% to NZ$2.8bn, but net profit dropped 27% as Melio integration costs pushed the company into net debt, with US profitability now pushed out to late FY28. Rising rates aren't helping either, hitting growth stocks whose value sits mostly in distant profits. WiseTech also fell 13.27% this week after cutting FY27 guidance, a rough week for ASX software broadly. 

Deep Yellow (ASX:DYL) -14.76%

Deep Yellow, the uranium developer, fell 14.76% this week in what looks like a broader ASX uranium sell-off rather than anything company-specific. Paladin Energy dropped 9.5% after brokers cut production forecasts for its Namibian mine and flagged its Canadian project may need a fresh capital raise, while Boss Energy fell 6.49% on FY27 guidance showing production costs almost 50% higher than this year. Deep Yellow is inherently sensitive to uranium-price sentiment given it's not yet generating revenue. 

When your industry's biggest threat is a wave of cheap, fast Chinese EVs, one way to dodge it is to sell cars no EV maker could ever build. That's effectively the bet Brisbane-based Eagers Automotive, Australia's largest car dealer, just made by agreeing to buy 50% of Zagame Automotive, the Melbourne dealership group that holds the keys to Ferrari, Rolls-Royce, Bentley, Lamborghini, McLaren, Aston Martin and Pagani in Melbourne, plus exclusive Adelaide rights to three of those brands too. Eagers has scale everywhere except luxury, and manufacturers like Ferrari rarely license new dealers no matter the cheque, so buying into someone who already holds those rights is the only realistic way in.

Zagame turned over about $600m in revenue last year on just 4,000 new car sales, and the deal, thought to be worth $100m-$150m, is expected to be immediately earnings accretive for Eagers. What's really being bought is insulation. Ultra-luxury buyers don't cross-shop with BYD, and Ferrari controls its own allocation regardless of what's happening to Audi, whose Australian sales fell 49.7% in August as Chinese luxury EV brand Zeekr posted a monthly sales record.

The catch is that Eagers doesn't fully control its own deal. Ferrari, Rolls-Royce and Pagani all have to sign off on the ownership change before it completes in November, and manufacturers can walk away from a single handshake they don't like. The deal is being publicised as "a partnership, not an exit," with founder Bobby Zagame also staying on to run the business.

For Eagers, it's the latest in a run of consolidation plays, following April's Grand Motor Group stake and its Audi Centre acquisitions, as mainstream dealers scramble for shelter while Ford and Mazda go the other way entirely and start importing Chinese-built EVs themselves.

The White House has accused Australia of "foreign extortion" after the Australian Taxation Office finalised Taxation Ruling TR 2026/2, reclassifying cross-border cloud, software and streaming payments as royalties subject to withholding tax rather than ordinary business profits.

The ruling abandons the OECD's guidelines on business profits, exposing US groups including Amazon, Google and Netflix to reported withholding rates of up to 30 per cent on payments routed through non-treaty jurisdictions, and 10 per cent on those channelled via hubs like Singapore. Because Washington does not recognise the payments as royalties, affected companies cannot claim a matching foreign tax credit at home, raising the risk of double taxation on the same revenue.

The Trump administration has tied the ruling to broader trade tension, with lobbyists warning the Albanese government it risks retaliatory tariffs under a US Treasury framework. Canberra has defended the move as the sovereign right of a domestic regulator to ensure multinationals contribute fairly.

For now, the direct market impact looks limited. Big Tech's scale means Australian revenue is a small share of global earnings, and share price moves for Amazon, Alphabet and Netflix are being driven more by US inflation data and AI infrastructure spending than the ruling itself. Locally, the ASX 200 slid to a six-week low this month, though that weakness has been driven primarily by surging oil prices and bond yields rather than the tax dispute.

The bigger risk is structural. If providers invoke "gross-up" clauses to pass the new withholding cost onto customers, software expenses could rise for Australian businesses, and any US tariff retaliation would widen the fallout well beyond the tech sector.

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