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Markets Live: ASX achieves seventh-straight gain


That's it for Markets Live today.

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shares up

Australian shares have closed at a new six-year high, notching up a seven day winning streak as the big four banks lifted the index and investors reacted to a mixed bag of June quarter company updates.

The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both added 0.2 per cent on Thursday, to 5585.2 points and 5576.8 points respectively, as local shares took muddled cues from offshore. Major equity markets in the United States, Europe and Asia were mixed.

If the market gains on Friday it will mark the longest consecutive run of gains in almost one year.

UBS has trimmed its year-end target for the ASX 200 from 5700 points to 5625 points based on subdued expectations ahead of the August reporting season when most companies deliver final full-year results for the 2014 fiscal year.

“Expectations for aggregate earnings per share growth in FY14 now stands at 13 per cent, year-on-year, compared to 14 per cent about six months ago,” UBS Australian equity strategist David Cassidy said.

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market close

The S&P/ASX 200 Index has closed 11 points higher to 5587.8 points.

Winners and losers at the close
Winners and losers at the close 

RISE (refugees, survivors and ex-detainees) has cut ties with National Australia Bank in its capacity as a banking customer because the non-profit says that one of NAB's investment arms traded in Transfield Services stock.

RISE objects to Transfield's detention centre contracts. NAB responded that it had not directly invested in Transfield for its own benefit, according to the RISE statement. "[NAB] said that the decisions to invest in Transfield were not taken by NAB itself, but rather by investment managers who were bound to act solely based on financial considerations." RISE went on to say that was not justification enough.

"We have reached the view that it is untenable to stay with a bank that cultivates an 'ethical' image but involves itself financially with policies that degrade the mental and physical well-being of persecuted people. We have therefore ended our own involvement with NAB."


Some analysis on Newcrest from Malcolm Maiden:

Newcrest has handled its latest writedown announcement much more skilfully than it did a year ago when it was engulfed by a disclosure debacle, but the news about its giant Lihir gold mine is still not good.

After being engulfed in a disclosure debacle in June last year that resulted in it paying penalties of $1.2 million, Newcrest has kept a tight lid on its latest writedown announcement.

The group put new internal disclosure processes in place after last year’s crisis, which centred on selective briefings the company gave to stockbroker analysts.

One of them imposes a two-week "blackout" period leading up to regular results and reports, and any special events that the company’s new disclosure committee considers market-sensitive.

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shares up

The ASX is currently ahead 0.2 per cent today, putting it on track to notch up its 7th consecutive session of gains to equal the market's longest winning streak in a year.

Shares last rose for seven consecutive sessions over the Easter holiday period in April.

The last time shares rose for more than seven sessions without a breather was the rally at the end of the 2013 financial year, when the market gained for the 15 sessions in a row up to and including August 1, 2013.


Hazelwood Resources has responded to the ASX's inquiry about its share price surge.

It believes the buying is because of references in the media to a resource upgrade at one of its projects and positive outcomes at another project in Vietnam.


Dry weather is likely to persist across eastern Australia for the next three months, the Bureau of Meteorology (BOM) said on Thursday, exacerbating stress on cattle and adding to concerns that wheat yields could suffer in the world's third largest exporter.

The chance of below median rainfall between August and October is greater than 60 per cent in northern Queensland, southern New South Wales and most of Victoria, the BOM said.

The dry outlook threatens wheat production across the Australian east coast, analysts said.


Over at, Jonathan Shapiro has this report on the shale gas revolution:

The opportunity that gushed from technological innovation that some argue as more profound than the internet may have passed investors by, according to Chad Padowitz, the chief investment officer of Melbourne-based global equities fund Wingate.

Those chasing the dream today may be left with nothing more than empty holes and empty pockets. Padowitz, who has recently returned from a field trip to Texas, says the US energy sector sees a “tipping point where production growth must slow, and the existing inventory of declining wells will exceed the growth rate of new wells and production”.


AGL Energy will be able to take over Macquarie Generation after the competition watchdog decided not to fight the sale of two NSW government-owned power stations.

The Australian Competition and Consumer Commission (ACCC) opposed AGL Energy's $1.5 billion offer in March, saying it would substantially lessen competition in the electricity market.

The sale would free up more money for "critical infrastructure" across NSW, state Treasurer Andrew Constance said.

As well as selling the plants, the government hopes to raise $20 billion by selling 49 per cent of the electricity distribution infrastructure, commonly called the "poles and wires".

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world news

Saudi Arabia is keeping as much as $40 billion of foreign investor capital waiting as it decides which institutions can participate in the Arab world's biggest stock exchange.

The regulator will publish rules next month allowing participation for the first time by qualified foreign financial institutions starting in the first half of 2015, the Capital Market Authority said on its website Tuesday. The announcement sent the benchmark Tadawul All Share Index to its highest level since May 2008.

The world's biggest crude exporter is opening one of the most restricted major stock exchanges as King Abdullah pushes to diversify the economy from oil and create new jobs. Entry to MSCI Inc.'s benchmark emerging-markets index could mean $40 billion of inflows to Saudi stocks, said Rami Sidani, the head of frontier markets investing at Schroder Investment Management in Dubai. Buying shares may be restricted initially to long-term institutional investors, according to Shuaa Asset Management.

"They have been very clear about what they are looking for, which is very large institutional investors, sticky money with long investment horizons," Amer Khan, a senior executive at Shuaa in Dubai, which oversees more than $300 million in assets, said by telephone Tuesday. "They have seen what happened during the financial crisis and they want to limit hot money."


MH17 the musical? A gameshow, play or movie based on the horrific plane crash? As appalling as that sounds this could actually happen as it looks the Malaysia Airlines tragedy is about to become the centre of a local trademark stoush.

Less than one day after the doomed Malaysian Airlines flight MH17 crashed into fields in eastern Ukraine killing all 298 passengers aboard, a mysterious company in Kuala Lumpur applied to the Australian Trade Marks Office to have the term ‘‘MH17’’ trade marked.

According to documents obtained by Fairfax Media, Remit Now International has applied for a trademark for ‘‘MH17’’ for Class 41 services which covers a huge swathe of usages including films, online games, game shows, video games, plays, musicals, magazines and educational texts.

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Every now and then you read something truly terrifying in a seemingly innocuous analyst report.

This is today's, from Credit Suisse's Damien Boey and Hasan Tevfik:

"It would only take 100bps" - [1 percentage point] - "of rate hikes to bring the debt-servicing ratio back to GFC highs, which we view as unsustainable."

That's their take on the Reserve Bank of Australia and the interest rate outlook and part of the reason why they think if the RBA did raise, the peak would be below 3.5 per cent. Right now rates are at 2.5 per cent.

Borrowers can't afford rate rises like they used to because mortgages are bigger in dollar terms.


Mortgages are bigger
Mortgages are bigger 

Australian house prices aren't overvalued yet, but negative gearing tax breaks have added almost 9 per cent, or $44,000, to current average house prices, financial group Moody's Analytics has reported. 

While properties aren't currently overvalued, there are "worrying trends” that could come back to bite homebuyers when interest rates rise as rents and incomes have failed to keep pace with surging property prices, the report cautions.

Moody’s compared house prices with long term valuations – taking into account rents, income and the costs associated with borrowing, including interest rates and other charges - to assess whether the 10 per cent year on year rise in house prices in Australia's eight largest cities means property prices were overvalued.

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Negative gearing has enhanced house prices
Negative gearing has enhanced house prices 
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Macquarie Group shares are down a solid 2 per cent today, with the market cold on the investment bank's trading update.

Here is the outlook.

Key business forecasts
Key business forecasts 
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The Australian dollar hit a three-week high on Thursday after a closely watched survey showed activity in China's factory sector in July expanded at its fastest pace in 18 months.

Activity in China's factory sector expanded at its fastest pace in 18 months in July, a preliminary HSBC survey showed, as a raft of government stimulus measures kicked in.

The Aussie rose as high as US94.8, from around US94.4 just before the survey was released. 

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Chinese manufacturing rose to an 18-month high in July.

HSBC's flash purchasing managers index came in at 52.0, compared with the 51.0 that economists were expecting according to a Bloomberg survey.

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Credit Suisse has downgraded Iluka Resources to underperform from neutral after the miner's disappointing sales results and cuts to mineral price forecasts.

Its price target is now $8.50 from $9 and sum of the parts has taken a massive blow to $6.90 from $8.50.

"We continue to wait for a price recovery to make Iluka attractive," the broker says.

New sum of the parts valuation.
New sum of the parts valuation. 
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Bank of America-Merrill Lynch is more positive on G8 Education, raising its price target to $6.60 a share with a buy.

The broker thinks that G8 can achieve a 10 per cent-plus increase in 2015 earnings before interest and tax with a 1 per cent improvement in occupancy forecasts and 2 per cent increase in cost savings.

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Timpetra Resources has sold 80 per cent of its stake in Saracen Mineral Holdings leaving it with no debt but it is unlikely to pay a dividend "in the near term".

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