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Elon Musk sued by Twitter investors for 'market manipulation', ASX follows Wall Street higher

Elon Musk allegedly tried to drive Twitter shares lower to buy the company at a reduced price. (Reuters: Dado Ruvic/File)

Australian shares jumped on Friday, after a surge across Wall Street, while Twitter shareholders have sued billionaire Elon Musk, accusing him of manipulating the company's share price.

The ASX 200 index closed up 1.1 per cent, to 7,183 points.

The Australian dollar was trading at 71.27 US cents, after a moderate 0.4 per cent gain, by 04:30pm AEST.

In local news, Telstra has paid $11 million to over 67,000 customers, for taking too long to connect or repair landline services and not absorbing the cost itself. The telco's share price rose 0.5 per cent.

Ten of 11 sectors on the ASX traded higher, with energy and consumer discretionary making the strongest gains.

Some of today's best performing stocks were Pointsbet (+16.4pc), Paladin Energy (+4.2pc), Liontown Resources (+3.1pc), Pilbara Minerals (+3.6pc), Webjet (+2.4pc) and Flight Centre (+3.1pc).

On the flip side, CSR (-4.7pc), Incitec Pivot (-4.1pc), Champion Iron (-1.2pc) and Nine Entertainment (-1.8pc) suffered heavy losses.

The worst performer was artificial intelligence firm Appen, which saw its shares plunge 20.9 per cent. It was after the company said its former suitor Telus International abruptly withdrew its $1.2 billion takeover offer — hours after the proposed buyout was announced.

'Market manipulation'

In their court filings, the Twitter investors alleged that Elon Musk saved himself $US156 million by failing to disclose that he had purchased more than 5 per cent of Twitter by March 14.

The allegation is that Mr Musk continued to buy stock after that and, ultimately, disclosed in early April that he owned 9.2 per cent of the company, according to the lawsuit, filed on Wednesday, local time, in San Francisco Federal Court.

They asked to be certified as a class and to be awarded an unspecified amount of damages.

Neither Mr Musk nor his lawyer immediately responded to requests for comment. Twitter declined to comment.

The investors also said that the recent drop in Tesla's stock has put Mr Musk's ability to finance his acquisition of Twitter in "major peril", since he has pledged his shares as collateral to secure the loans he needs to buy the company.

Tesla's stock was trading at around $US713 on Thursday afternoon, down from above $US1,000 in early April.

Earlier this month the Wall Street Journal reported that the timing of Musk's disclosure of his stake had already triggered an investigation by the US Securities and Exchange Commission (SEC).

The SEC requires any investor who buys a stake exceeding 5 per cent in a company to disclose their holdings within 10 days of crossing the threshold.

And the investors have also said that public criticism by Mr Musk of the company — including a May 13 tweet stating the buyout was "temporarily on hold" until Twitter proved that spam bots accounted for less than 5 per cent of its users — amounted to an attempt to further drive the share price down.

Mr Musk has pledged an additional $US6.25 billion in equity financing to fund his bid for Twitter, a sign he is still working to complete the deal.

Retailers get a holiday boost

Australian retail sales climbed to record highs in April as consumers spent big for the holidays, though surging inflation and rising interest rates are steadily sapping spending power.

Data from the Australian Bureau of Statistics (ABS) on Friday showed retail sales rose 0.9 per cent in April to a record $33.9 billion.

Sales were up a heady 9.6 per cent on a year earlier, though a chunk of that was due to rising prices.

"High food prices have combined with increased household spending over the April holiday period as more people are travelling, dining out and holding family gatherings," said the ABS director of quarterly economy-wide statistics, Ben James.

Policy makers are hoping households will dip into savings to keep consuming even as real incomes go backwards.

Australians built up around $272 billion worth of extra savings during the pandemic and are sitting on bank deposits alone worth a record $1.26 trillion.

This is one reason the Reserve Bank felt confident enough to raise interest rates by a quarter percentage point to 0.35 per cent this month, in the first hike since 2010, and to flag more increases ahead.

Markets are wagering the RBA will raise interest rates to 0.6 per cent in June and reach as high as 2.5 per cent by the end of the year.

If they are right, that will be one of the most aggressive tightening cycles on record and will add more than $600 a month in payments to the average mortgage.

That would come as the cost of everything from health care to petrol, education and home building are on the rise.

Consumer price inflation is already at a 20-year peak of 5.1 per cent and expected hit 6 per cent this year.

Telstra reported its own breach of industry compensation rules to ACMA. (ABC News: Chris Gillette)

Telstra's $11 million compensation bill

Telsta has admitted that an IT error led to the company's failure to accept responsibility for compensating customers within a 14-day time limit on more than 67,000 occasions between 2017 and 2021.

Industry rules says telcos who miss deadlines around landline connections and repairs have 14 days to assess if they will accept liability.

Telstra self-reported the matter to the Australian Communications and Media Authority (ACMA) and said it had always intended to pay the money back to customers, but had just taken too long to do so.

"We found an IT issue that meant a number of customers had not received Customer Service Guarantee payments when they should have," a spokesman for the company said.

"Following this we did a deeper dive into our systems to check on CSG payments, and this identified a number of other instances when payments had not been made when they should have.

"We deal with millions of customer transactions weekly however this is clearly not the experience we want to be providing our customers ... we are in the process of improving the system to better automate the payments."

Along with paying $11 million in compensation, Telstra has entered a court-enforceable undertaking to improve its payment assessment solution and to regularly report its compliance with compensation rules for two years.

ACMA chair Nerida O'Loughlin said Telstra had let its customers down.

"Telstra knows it has had a problem with its internal systems and processes, uncovered through its T22 business strategy ... the company has self-reported this and other recent breaches," she said.

"It is critical that Telstra addresses these longstanding issues in building new systems and processes and, where it is obligated to, compensates its customers for historical breaches of telco rules."

'Aggressive' rate hikes

Overnight in New York, the S&P 500 gained 2 per cent, to end at 4,058 points. The Nasdaq Composite lifted 2.6 per cent, to 11,740, while the Dow Jones index rose 1.6 per cent, to 32,640.

On a weekly basis, US markets are on track to snap their longest losing streaks in decades, during which the benchmark S&P plummeted 14.1 per cent and brought it within striking distance of being confirmed as a bear market.

Alarm bells are ringing over a possible recession.(David Chau)

The minutes of the Fed's May meeting, released on Wednesday, local time, showed a majority of its officials backing rate hikes of 50 basis points each in June and July to combat high inflation.

However, the US central bank also indicated it may pause its rate hikes in September.

"The Fed locked itself into delivering a couple half-point rate increases until the Jackson Hole Symposium, and that has removed the risk of aggressive tightening in the short term," OANDA analyst Edward Moya said.

At current levels, all three US indexes are poised to notch their biggest weekly gains since mid-March.

"If the Fed is too aggressive, they'll choke off inflation but also choke off economic growth," said Sam Stovall, chief investment strategist at CFRA Research.

On oil markets, Brent crude futures jumped 3.2 per cent, to $US117.62 a barrel.

Spot gold fell marginally to $US1,849.65 an ounce.