Markets Live: ASX200 rallies above 4400
Australian shares close at a 10-day high, helped by data showing China's manufacturing at a 13-month high as well as the declaration of a ceasefire on the Gaza strip.
5.37pm: That's all from us here at blog central, thanks for joining us on the ride, we'll be back tomorrow from 9.30am, we hope to see you then.
5.25pm: David Jones chair Robert Savage will retire from the board at the end of this year, he announced late on Thursday afternoon, a day before the company's general meeting.
He will retire as chair and as a non-executive director effective December 31. He has been chair for nine years and a non-executive director for 13 years.
Peter Mason will become chair in the new year.
5.10pm: The market eased slightly from intraday levels that were about 1.3 per cent higher, which showed there were still enough negative economic issues to stop traders pushing prices further, says CMC Markets sales trader Ben Taylor:
- We did have quite a lot of optimism to start the day but there are still some pretty big issues we need to get through.
- The US fiscal cliff obviously is a consideration and the euro zone and IMF meetings going on need to be taken into account. I think the market is wary.
- Bond market yields ae heading up, suggesting financial market participants are pessimistic about the economy.
4.55pm: The Australian dollar received a lift against its US counterpart from encouraging Chinese manufacturing data, and scaled eight-month peaks against the yen on expectations of more policy action in Japan.
The Aussie rose to $US1.0390, from $US1.0363 in early trade and powered up to 85.78 yen, its strongest since early April, to last fetch 85.69.
The move higher was underpinned by an upbeat reading of China's manufacturing activity with HSBC's China flash Manufacturing PMI for November rising to a 13-month peak. The figure was seen as a further sign of economic recovery in the world's second-largest economy.
That, combined with renewed hopes of a Greek loan deal, helped sentiment and sent shares rallying across Asia.
4.33pm: Ausdrill has flagged poor December half earnings on the back of the downturn in the iron ore sector, coupled with flooding in Burkina Faso, which has interrupted drilling activities.
Earlier, it had said full year revenue would grow 15 per cent, although now it is estimating a 20 per cent rise even with the purchase of Best Tractor Parts.
There will also be $15 million of one-off costs which will hit earnings in the year. As a result, the shares were pushed to fresh two-year lows in late trading before closing flat at $2.45.
4.20pm: All the major sectors posted gains, Telecommunications added 1.8 per cent, consumer staples jumped 1.1 per cent and both materials and financials rose 0.9 per cent.
4.12pm: The market has closed stronger higher, the benchmark S&P/ASX200 jumped 43.6 points, or 1 per cent, to 4413.1, while the broader All Ords added 41.7 points, or 0.9 per cent, to 4432.4.
3.52pm: Former foreign minister Alexander Downer has joined Gina Rinehart's Roy Hill Holdings as an alternate director.
Documents lodged with ASIC show that Mr Downer was appointed on November 15 as an alternate director for one of Ms Rinehart's top lieutenants, Tad Watroba.
3.46pm: Telstra is continuing its stellar run of late, hitting new four year highs.
3.29pm: BusinessDay's Michael Pascoe says China's manufacturing is powering on despite the bad press:
Amid all the doomsday headlines generated by the China bears, Chinese industrial production has not faltered. As previously reported here, financial media and commentators have not understood the base effect of China's industrial production growth rate starting from such a high level and just continue to misreport it.
Fortunately, the markets' outlook has moved beyond the misunderstanding, now tending to focus on the broader story that China's economic growth bottomed at "only" 7.4 per cent in the September year. The HSBC flash PMI today printing at 50.4 adds to that story and the misreporting matters less.
In the footnotes to his speech to the Committee for the Economic Development of Australia on Tuesday night, RBA governor Glenn Stevens used his own example of how the greater size of China has made the concern about lower (but still amazingly high) growth rates a little silly.
Stevens put it this way: "In 2003, China's growth in real GDP of 10 per cent added 0.8 of a percentage point to global GDP. If China's growth in 2013 is 7 per cent, that will add a full percentage point to global GDP."
3.13pm: Finance Minister Penny Wong insists the federal government is sticking to its budget surplus strategy despite figures suggesting it’s falling short of the target.
Monthly financial statements for July and August released last Friday showed a budget deficit of $7.4 billion, compared an earlier expectation it would $7 billion by end August.
Senator Wong said on Thursday the monthly budget outcomes so far were consistent with the mid-year budget review released in October.
2.54pm: Silicon Valley remains the world's most attractive spot for technology start-ups with other locations around the world catching up, according to a recent report.
Silicon Valley-based start-ups raise, on average, a third more capital than those in other areas, the report, conducted by research firm start-up Genome and funded by Spanish group Telefonica, said.
2.45pm: With the last hour of local trade fast approaching, here's what markets around the region are doing:
- Nikkei(Japan): +1.1%
- Shanghai: -0.5%
- Taiwan: +0.3%
- South Korea: +1%
- Singapore: +0.7%
- New Zealand: +0.6%
2.26pm: Bluescope Steel shares are sharply higher, enjoying strong buying on the back of an investor day on Wednesday focussing on its steel building unit, which prompted some analysts to slap a ''buy'' on the stock this morning.
Bluescope bought Butler in 2004, giving it a strong position in the prefabricated steel buildings market, which typically supplies production plants for global corporations.
In a note to clients this morning, Deutsche Bank said there is ‘‘significant upside potential’’ from the division, given the company outlined to analysts plans to double annual revenue to $3 billion by fiscal 2015, with a 5.5 per cent pretax profit margin.
Bluescope is the biggest winner on the ASX200 today, with shares up 10 per cent to 49½ cents.
By contrast fellow steelmaker Arrium is among the biggest losers on the ASX200, having dropped 1.4 per cent to 71 cents.
2.14pm: Coal traders in China have defaulted on at least three Australian thermal coal shipments in recent weeks, trade sources say, pressured by a dip in regional prices and high stocks in the world's top coal importer.
While analysts and traders said it was unlikely to signal the start of a wave of cancellations in deals, the defaults could put pressure on prices after signs of a revival earlier this month.
Australia's Newcastle spot thermal coal index has fallen as much as 30 per cent since the start of 2012 to a year-low of $81 a tonne, although prices have rebounded this week to about $84 largely in line with firmer oil prices.
"Prices might come off slightly but I don't think the defaults are going to prompt a sharp fall in domestic and regional prices like what happened in June," said a coal analyst, who asked not be named due to company policy on talking to the media.
1.52pm: BusinessDay’s Colin Kruger has this to say about the unsuccessful push by some Woolworths investors to have the retailer place restrictions on the 12,000 pokie machines it controls:
The defeat was never in doubt ... but victory was probably never the intent of the investors. What they did achieve was to put Woolworth's board under its most intense examination to date to justify why Australia's largest supermarket operator needs to also be our largest owner and operator of poker machines. Whatever the board says in public, it is a damaging association for the company and a major distraction from its core business, according to one investor.
Read more here:
1.22pm: Shares in Australia's Lynas Corp soared 10 per cent after the Australian rare earths producer said it expected production to start at its long-delayed Malaysia processing plant within days.
Lynas said about 100 containers of rare earths concentrate had arrived at the Lynas Advanced Materials Plant in Kuantan and it planned to begin operations "over the coming days".
The plant has been mired in controversy, with repeated judicial challenges by locals and environmentalists worried about potential health risks.
Lynas shares rallied 10.3 per cent to 69.5 cents, but are still well below levels above $1.50 at the start of the year.
1.16pm: The Australian and New Zealand dollars scaled eight-month peaks against the yen on expectations of more policy action in Japan, while encouraging Chinese manufacturing data saw the Aussie reach a session high, as mentioned in that last post, of $US1.0401.
1.11pm: The Aussie dollar cheered the China PMI numbers. It was trading at $US1.038 just before the data was released and climbed to $US1.0401 just after.
12.59pm: More on the Chinese PMI data, which indicates that growth in the manufacturing sector is accelerating for the first time in 13 months.
‘‘November's flash reading of HSBC manufacturing PMI bounced back to expansionary territory for the first time in 13 months, confirming that the economic recovery continues to gain momentum towards the year end," Qu Hongbin, chief China economist at index sponsor HSBC, said.
"However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery."
12.55pm: CommSec market analyst Juliana Roadley had been looking for good news from the Chinese data.
"At the moment, everything is looking rosie’’ she'd dsaid, before the data was released.
‘‘The banks are following the gains out of the US and the energy sector is getting a lift from the oil price. Even with the ceasefire, the oil price is still moving higher ... $US87.70 a barrel is a pretty good level compared to what it was a few days ago.’’
12.50pm: BREAKING NEWS The Chinese PMI data is out and it's gone up to 50.4 from 49.5 after failing to hit 50 all year. The dollar has spiked on the news, rising to $US1.0398. It had hovered around the $US1.0380 mark for most of the morning.
12.43pm: Miguel Audencial, a sales trader at CMC Markets say the local market is doing well today - the SX200 index is up more than 50 points - thanks to good news on the Hamas/Israel conflict and hopes of deals on Greece and the US fiscal cliff.
Investors are also anticipating some good news from China later on, Mr Audencial said:
The all-important HSBC Flash Manufacturing PMI for China will be released later this afternoon. The index has failed to reach 50 so far this year. A figure in expansion territory has the potential to stretch the gains in the Australian equities market further today.
12.24pm: As well as the extraordinary general meeting on its pokies involvement, Woolworths has been holding its annual general meeting, where chief executive Grant O’Brien has told shareholders that the company is maintaining its expectations of a rise in annual net profit of 3 per cent to 6 per cent.
‘‘I have been pleased with the start of the 2013 financial year and our guidance remains unchanged despite the instability of consumer confidence and some uncertainty in global financial markets,’’ he told the company’s annual general meeting in Adelaide.
Woolworths shares have performed well today, putting on 27 cents - 0.9 per cent - to $28.75.
12.15pm: Now for more from Myer boss Bernie Brookes who's been speaking at a business event in Sydney and has been talking up the benefits of a pre-Christmas interest rate cut.
He said Myer was expecting a flat to slightly positive Christmas, and an interest rate cut would give the department store ‘‘a bit of a kick’’ heading into the traditionally busy trading period. Mr Brookessaid he would "love to see a December rate cut":
We think the environment warrants a December rate cut and so we will keep our fingers crossed that the Reserve Bank decides to cut interest rates when the December announcement is made. If we can get a couple of interest rate decreases to try and kick start some of the economy and compensate for mining coming back, to me it is going to help retail trade in general and certainly going to help Myer.
Myer shares are up, along with the rest of the market today, rising 5 cents - 2.54 per cent - to $2.15.
12.02pm: Things can't be too bad over here if new workforce data from across the Tasman is to be believed.
According to Statistics NZ’s International Travel and Migration Survey, released today, more than 10,000 manufacturing workers and more than 13,000 builders left New Zealand during the past three years.
New Zealand's Greens say most of them came here. Co-leader Russel Norman says: "If companies do look to hire, they are finding many of the skilled workers have left for Australia.’’
11.50am: More on the breads and spreads supplier Goodman Fielder, which is holding its AGM in Sydney.
Managing director Chris Delaney said the company’s business improvement program, Project Renaissance, was producing its targeted cost savings and operational efficiencies.
‘‘We are right on time in delivering that $100 million, and we continue to be confident in our ability to deliver the full $100 million over the strategic plan,’’ Mr Delaney told shareholders.
Shares in Goodman Fielder are up 2.6 per cent, at 59½ cents.
11.47am: The stock market might be up, but the dollar is lower after two days of decline. Reports are due out later that may show the global economy is struggling to recover, which is sapping demand for assets linked to growth.
The dollar has maintained a drop from yesterday against most of its major peers before the purchasing managers index that economists say will indicate the euro area’s services and manufacturing industries shrank for a 10th month.
US figures next week are forecast to reveal a drop in demand for durable goods.
“We haven’t really seen any stabilisation as far as the euro-zone economies go,” said Mike Jones, a currency strategist at Bank of New Zealand.
“The PMI data will feed through to risk appetite and investor confidence, which is important for high-beta currencies” such as the dollar, he said.
In recent trade The dollar was at $1.0378 after dropping 0.4 per cent in the previous two days to $1.0369.
11.37am: An hour and a half into the day and the markets are still advancing, with the the All Ordinaries index is 45.2 points higher, or 1.0 per cent, to 4435.9, while the benchmark S&P/ASX200 is 48.1 points higher, or 1.1 per cent, to 4417.6.
Rochford Capital director Derek Mumford said Australian shares were being driven up by some positive news overseas.
“We are seeing a follow-through from the US equities markets, which were up last night on very low volume. There’s also some positive sentiment as far as the Greek settlement goes,” he said.
Mr Mumford said the market was also awaiting data from China on its manufacturing sector.
“Obviously there are a lot of things going on in Australia, but the bigger issues seem to be outside our borders in the US, China, Japan and Europe.”
11.25am: It's hard to imagine too many sombreros being tossed skywards, but tequila makers are reportedly celebrating the news that Australia will ban imports of the drink that don't originate in Mexico.
The Tequila Regulatory Council of Mexico said that Australia joined Russia and Thailand in giving Mexico the protected designation of origin for the drink. Council director Ramon Gonzalez said the decision means that Australia will remove at least 10 "pseudo-tequilas" from the market in January.
"It is a big step to allow the industry to have a market totally free and clean of unfair competition in Australia," he said.
The council says 18 Mexican companies exported almost 825,000 litres of tequila to Australia last year.
11.20am: It's not a good time to be in the printing game, with more bad news coming today from the printing and publishing business PMP, which has annouunced it will close its Sydney plant that produces the White and Yellow Pages phone directories.
PMP today said its Chullora print plant in Sydney’s west would close next June, because of falling demand for printed phone books.T
he majority of Chullora employees would likely be made redundant, the company said.
‘‘The change in print volumes reflect changing consumer needs, which is an inevitable step in response to the realities of the digital marketplace,’’ PMP chief executive Peter George said in a statement.
The redundancies are likely to cost the company about $11.5 million between June and October 2013.
PMP shares have leapt on the news - rising 5.6 per cent - 1 cent - to 19 cents.
11.14am: Stocks are also soaring in Tokyo, with the broad Topix index jumping 1.2 per cent. For the week, the gauge is set for gain a 5.3 per cent.
11.09am: The ASX200 is extending its early gains and is now up 1.1 per cent. All sectors are firing, with materials up 1.2 per cent, energy rising 1.5 per cent and financials gaining 0.9 per cent.
11.02am: Shares in Goodman Fielder are soaring after the food and ingredients company said it would review its dividend policy at the half year and was aiming to cut its cost base by $100 million by 2015.
Goodman shares rose to a high of 62.5 cents, up nearly 8 per cent, and last traded up 6.9 per cent.
10.48am: The retailers are higher with the general market:
- Myer: +1.43%
- Westfield: +0.43%
- DJs: +0.83%
- Harvey Norman: +0.55%
- Wesfarmers: +1.31%
10.40am: Here's the full story on the Woolies AGM.
10.36am: IG Markets strategist Stan Shamu said the Australian market had been nudging the 4400 mark for most of the week, after heavy falls in early November.
‘‘That is now the key level to look out for in the near term, should the market manage to hold on to its early gains,’’ he said. With no local economic data scheduled for release on Thursday, many investors would be watching manufacturing data out of China later in the day for some direction.
‘‘Of course, if we get a strong reading, this would help support the notion that China has stabilised and lift risk assets in Asian trade,’’ Mr Shamu said.
10.33am: Stocks are heading towards and 1 per cent gain in early trade. Both the All Ords and the ASX200 are 0.9 per cent higher and heading north. The ASX200 is now back above 4400, the first time since 13 November.
10.30am: Myer chief executive Bernie Brookes says the Click Frenzy online sales promotion was a big success.
Myer doubled its online sales during the Click Frenzy promotion, despite the website crashing due to a flood of users trying to log on, Mr Brookes said on Thursday.
‘‘Sure the website crashed. It crashed on the night, but it worked bloody well yesterday (Wednesday) and it gave us some tremendous sales,’’ Mr Brookes told an Australian Retailers Association breakfast in Sydney.
10.27am: The list of worst-performed companies on the ASX200 is a mixed bag:
- APN: -1.72%
- Ten: -1.67%
- Navitas: -1.57%
- Macquarie Atlas: -1.57%
- St Barbara: -1.17%
- Virgin: -1.09%
- Pacific Brands: -0.84%
10.25am: Billabong is leading the ASX200 higher in early trade - up 5.99 per cent. Here are the other early gainers:
- Boart Longyear: +5.46%
- Intrepid: +5%
- BlueScope: +4.89%
- Linc Energy: +4.58%
- Medusa Mining: +3.85%
- Goodman Fielder: +3.45%
10.18am: Looking now at how the sectors on the Asx200 are performing, all are higher:
- Energy: +1.30%
- Materials: +0.99%
- Industrials: +0.98%
- Consumer staples: +0.94%
- Info tech: +0.85%
- Telecoms: +0.7%
10.12am: The Australian share market has opened more than half a per cent higher. The benchmark S&P/ASX200 index was up 28.9 points, or 0.7 per cent, at 4398.4, while the broader All Ordinaries index was up 27.1 points, or 0.62 per cent, at 4417.8.
On the ASX 24, the December share price index futures contract was up 31 points at 4412, with 5310 contracts traded.
10.07am: Early take - local stocks 0.3 per cent higher as markets open.
10.02am: As well as Woolworths, other well-known companies holding AGMs today include Woolworths, Orica, AWE, Paladin, Goodman Fielder and Sonic Healthcare.
9.55am: News Corp Chairman and Chief Executive Officer Rupert Murdoch sold all of his nonvoting Class A shares in the company, retaining his voting stake.
Murdoch sold 418,631 shares on Nov. 20 for $US23.87 to $US24.01 each for a total of more than $US10 million, according to a filing to the Securities and Exchange Commission.
The sale was for estate-planning purposes, according to a person with direct knowledge of the situation who asked not to be named because the matter is sensitive.
Murdoch still holds the company’s largest voting stake, with 40 per cent of Class B shares. That control makes it difficult to enact board changes that differ from his wishes. Prince Alwaleed bin Talal, a friend of the Murdoch family, owns an additional 7 per cent of voting shares.
9.51am: There is no local economic data of note out today, but at 12.45pm we get the HSBC flash manufacturing PMI for November. Wall Street is closed overnight tonight for the Thanksgiving holiday.
9.47am: Some analyst rating changes for this morning:
- Ramsay Healthcare raised to overweight at Morgan Stanley
- Cardno Ltd rated new hold at Deutsche Bank
- Programmed Maintenance cut to hold at Moelis & Company
- Insurance Australia Group cut to underperform at BofA-Merrill Lynch
- Virgin cut to underweight at Morgan Stanley
- Adelaide Brighton raised to overweight from neutral at JPMorgan
9.44am: Oil and gas company Santos expects its production to rise in 2013 as new projects come online. In a presentation to investors, the company repeated its forecast for production in calendar 2012 to be within a range of 51 million barrels of oil equivalent (mmboe) to 55 mmboe.
Chief financial officer Andrew Seaton said production in 2013 was expected to rise to a range of 53 mmboe to 57 mmboe. Production would be influenced by continued strong production from Santos’ base business and the start-up of the Fletcher Finucane project off the coast of Western Australia in the second half of 2013, he said.
9.40am: More on the Woolworths pokies vote. Just 2.5 per cent of votes were in favour, with the remainder cast as open votes.The resolution sought to impose one dollar betting limits and revenue limits of $120 an hour per machine.
It would also have limited Woolworths to operating gaming machines for a maximum of 18 hours a day. The Woolworths board had urged shareholders to vote against the resolution.
‘‘The debate today is around a motion that will apply only to Woolworths in isolation, without delivering a broader social benefit to the community who would continue to have access to unrestricted machines,’’ chairman James Strong told the meeting before the vote.
9.38am: In breaking news, a majority of Woolworths shareholders have opposed a move to restrict the operation of poker machines by the supermarket giant.
More than 200 Woolworths shareholders, led by social activist group GetUp!, were seeking to impose limits on the more than 200,000 gaming machines operated by the retailer through its hotel business.
At an extraordinary general meeting in Adelaide on Thursday, more than 95 per cent of shareholders voted against GetUp!’s resolution.
9.36am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- SPI futures are 25 points higher at 4406
- The $A is higher at $US1.0363
- In late trade in the US, the S&P500 was up 0.16% to 1389.99
- In Europe, the FTSE100 rose 0.07% to 5952.03
- China iron ore was flat at $US120.60 a metric tonne
- Gold fell $US1.70 to $US1728.20 an ounce
- WTI crude oil rose 42 cents to $US86.78 a barrel
- Reuters/Jefferies CRB index was flat at 296.51
9.34am: Good morning folks. Welcome to the Markets Live blog for Thursday.
This blog is not intended as investment advice
BusinessDay with agencies