Markets Live: Banks lead rally

It's been at entertaining day, but it's time to say adieu. We hope to see you bright and early again tomorrow for another edition of Markets Live.

Click here for the full wrap of the day's session.

Ratings agency Standard & Poor's remained cautious about Japanese Prime Minister Shinzo Abe's policies to stimulate growth and end deflation, and maintained its negative outlook on Japan's debt.

The ratings agency said in a statement today that it will take time to determine whether Abe's policies will be effective.

The measures could eventually lead to a reflation in Japan's economy, but public finances are likely to remain weak even if the government goes ahead with its plan to raise the 5 per cent sales tax, the ratings agency said.

S&P reaffirmed its AA minus rating on Japan and maintained a negative outlook, meaning there is at least one-in-three chance of a downgrade in the coming fiscal year.

Here's what you need2know this Monday evening:

Markets

  • ASX200 finished up 0.6% at 5063.4
  • AUD fetching $1.0294
  • Nikkei is up 2.1%, Hang Seng is down 0.2%, Kospi is down 0.1%
  • Gold at $US1614.04, Gold at $US95.62
  • Wall Street futures are flat, FTSE up 0.2%

News

Overnight

  • US markets closed for President's Day holiday

Tomorrow

  • Asciano: Est FH profit $171.27 million
  • Australian Infrastructure Fund
  • Arrium: Est FH profit $207.33 million
  • Coca-Cola Amatil: Est FH profit $310.43 million
  • Monadelphouse Group: Est FH profit $78.7 million
  • Southern Cross Media: Est FH profit $44.3 million

For those who are curious, here are the best and worst performers on the ASX200 today:

Among the sectors, financials and consumer staples jumped 1.1 per cent, consumer discretionary added 0.9 per cent and health rose 0.6 per cent.

Materials finished down 0.2 per cent and telecommunications slumped 1.2 per cent, however Telstra, the sector's largest stock, was trading ex-dividend.

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shares up

The market has finished higher, buoyed by strong gains in the financial sector, despite the country's largest banks, CBA, trading ex-dividend.

The benchmark S&P/ASX200 rose 29.5 points, or 0.6 per cent, to 5063.4, while the broader All Ords gained 28.3 points, or 0.6 per cent, to 5082.9.

We've mentioned BlueScope Steel quite a few times in the blog today, and with good reason.

Here's chief executive Paul O'Malley talking about the company's results and its plans for the future.

Video courtesy of BRR media.

Amcor has released a statement regarding reports of job losses in both its Victorian and Queensland businesses:

Nigel Garrard, Managing Director Amcor Australasia, confirmed today that Amcor would make changes to its Beverage Closures business in Victoria as part of a program to realign its Australian operations to the challenging conditions facing all Australian manufacturers.

The Thomastown manufacturing site is anticipated to close mid-year, resulting in approximately 80 redundancies, and changes at the company’s North Laverton site will see a further 17 redundancies.

“Significantly increasing cost pressures and the continued strength of the Australian dollar have made it impossible for these sites to remain competitive.”

“While I regret that these changes will see a number of co-workers leave the business, we must transform our Australian operations in order to remain a viable business for the long term.”

gold

Gold has rebounded from a six-month as bargain hunters resurface and jewellers in China return to the physical market after the Lunar New Year holiday, but a firm US dollar is likely to limit the upside.

Gold is up $US5.18 an ounce to $US1614.24 after falling to around $US1598 on Friday, its weakest since August. Friday's loss marked bullion's biggest one-day drop since December.

In Hong Kong, premiums for gold bars rose to as high as $US1.70 an ounce to the spot London prices from $US1.50 last week, reflecting a surge in buying interest from jewellers, says Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. But he doubts whether the buying interest will last.

"The strong (US) dollar is the major point. Sentiment is not bullish for the time being, even though we see there's tension in North Korea," says Leung.

shares up

Despite sharemarket heavyweights Commonwealth Bank and Telstra both trading ex-dividend today, down 1.8 per cent and 1.2 per cent respectively, the ASX200 continues to drive into the black.

The ASX200 is currently up 24 points, or 0.5 per cent to 5057.9 and is on target for another fresh four-and-half year high.

The financial sector is one of the major reasons behind today's upward move, up 0.9 per cent. Westpac is leading the pack, currently accounting for 11.05 points on the ASX200. While CBA is responsible for the biggest lag on the market, 7.76 points.

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Bluescope shares have surged today, up 16.3 per cent, after the company announced earlier today it had cut its first half loss to $12 million, down from $530 in the corresponding period during the previous year.

Its share have more than doubled since the middle of 2012.

Amcor will cut about 300 jobs at three manufacturing sites in Victoria and Queensland, blaming the high value of the Australian dollar and increasing cost pressures.

The managing director of Amcor Australasia, Nigel Garrard, said in a statement today that ‘‘Amcor would take steps to realign its Australian operations to the challenging conditions facing all Australian manufacturers, resulting in approximately 300 redundancies’’.

Shares are up 3 per cent to $9.185.

Here's a change of pace from our Executive Style team, some marketing companies in the US have begun to employ people on the basis of their Twitter form, which they say gives a much better read on applicants than a carefully compiled resume.

Click here for the full story.

asian markets

Global conflict over currency policy has emerged as a new key risk to South Korea's financial system whereas concerns about the Chinese and US economies have abated, a Bank of Korea survey found today.

Household debt, measuring more than 1.5 times the average annual disposable income and ranking among the heaviest in the world, continued to top the list of five biggest risks facing the country's financial system, the survey showed.

In the survey of 90 financial market participants including senior executives and fund managers who were asked to pick more than one item each, 82.2. per cent chose household debt as the biggest risk, while categorising it as medium-term.

Exchange-rate conflict, prompted by expansionist monetary policies adopted by some advanced countries to energise their economies and reducing the value of their currencies, followed with 57.8 per cent of the respondents seeing it as a risk factor.

Compared to the previous survey published in August last year, household debt remained as one of the five risks facing South Korea's financial system but currency conflict made its first appearance, the Bank of Korea said in a statement.

Complaints mainly from emerging-market economies have piled up over Japan's recent moves to sharply expand its already ultra-loose monetary policy, which resulted in a dramatic fall in the value of yen against most currencies.

The South Korean won has risen around 6 per cent against the Japanese yen this year after having posted a 23 per cent surge last year, raising concerns that exports to key markets may struggle amid a delayed recover

National Australia Bank’s quarterly Small and Medium Enterprise (SME’s) survey showed both confidence and trading conditions fell in the final three months of 2012.

National Australia Bank (NAB) said the decline in confidence and conditions occurred across small and medium business in all categories, though conditions were weakest in businesses with an annual turnover between $2 million and $3 million.

‘‘The deterioration was broadly based across all SMEs, though smaller firms continued to underperform their larger counterparts,’’ it said.

‘‘The deterioration in activity reflected declines in profitability and employment, while trading conditions were unchanged.’’

Click here for the full story.

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asian markets

Chinese shares are trading flat on their first day after the Lunar New Year holidays. The Shanghai Composite Index is little changed, with advancers and decliners almost evenly split.

‘‘Stocks will play catch-up with the region after a one-week break,’’ says Zhang Haidong, an analyst at Tebon Securities. ‘‘China’s shares will continue to rally because the economy is still recovering as seen in January economic data and there is sufficient liquidity. There may be some impact on consumer staples today because of weak Lunar New Year sales.’’

shares up

Some more on Bluescope's results and share rally: "We've seen a result without any write-downs," BBY analyst Mike Harrowell says:

  • The shares are trading below net tangible asset value, and the US steelmakers trade historically have traded at 0.9 times book during periods of low earnings.
  • We would expect to see its shares trade up to around $6 a share, as long as the growth profile is intact.
  • Bluescope's net tangible asset backing is $6.86, although closing this gap would depend on no further asset write-downs.
quote

The common, everyday passenger car was the odd man out in January with sales of 4WDs (sports utility vehicles) and work vehicles (like buses, utes, trucks and panel vans) both at record highs over the year but passenger car sales falling short of new highs, CommSec chief economist Craig James notes:

  • Aussie consumers continue to switch away from cars to 4WDs while Aussie businesses continue to update fleets in line with needs, acquiring more trucks and utes.
  • In just three years, 4WDs have jumped from around 20 per cent of all new vehicles sold to almost 28 per cent. One in every four vehicles sold is now a 4WD or sports utility vehicle.
  • Aussies seem to like their higher driving positions, size and flexibility of seating arrangements. And even a few love the versatility to access different road surfaces.

Bluescope Steel has shifted its focus to pursuing growth opportunities from restructuring its operations after heavy write-offs and losses over the past four years, which included closing one of its two blast furnaces.

"The major restructuring is done and (is) being implemented," the company's managing director Paul O'Malley told journalists when discussing the group's first half performance.

In the six months to December, Bluescope posted a net loss of $12 million, while forecasting a small profit for the second half, which holds the prospect of a break even performance for the full year

"We expect to be profitable at this very low point in the market," Mr O'Malley said of the group once the restructuring is completed. "We have to change our focus to increase sales, increase new product implementation."

Bluescope's shares have rallied 14 per cent today.

Shares in nib have dropped 3 per cent after the private health insurer reported a fall in first half net profit as claims rose more than forecast.

The company’s net profit for the six months to December 31 fell 5 per cent to $36.29 million from the corresponding period.

Higher than forecast year-on-year claims costs, an increasing contribution to the industry’s risk equalisation scheme (up 9.5 per cent) and one-off ambulance levy expense have impacted the company’s first half gross margin,’’ nib said.

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