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Markets Live: Banks offset mining losses

Australian shares have closed slightly higher, as falls in some mining shares cancelled out gains made in the financial sector.

4.45pm: That's all from us here at Markets Live, we've enjoyed your company, we'll be back tomorrow from 9.30am.

Stay tuned for a full wrap of today's session.

4.43pm: Here's a look at the best and worst performers on the ASX200 today:


4.40pm: Arrium Limited has raised its iron ore export forecasts for the coming year, as it continues its campaign to fend off a takeover bid from a foreign consortium.

The steel and iron ore producer hosted investors on a site tour today, and took the opportunity to update guidance for its iron ore exports.

Arrium had previously forecast iron ore exports of about 8 million tonnes for the year to June 30, 2013, but today said that could be as high as 9 million tonnes per annum.

4.28pm: Blue chip shares were mixed today, but all the big banks finished higher:

  • BHP: -1.3%
  • Rio: +0.4%
  • ANZ: +1
  • CBA: +1
  • NAB: +0.8%
  • Westpac: +1.6%
  • Fortescue: -2.3%
  • Woolworths: +1.2%
  • Wesfarmers: flat
  • Telstra: -0.3%

4.20pm: European stock index futures pointed to a higher open on expectations that US economic numbers might surprise on the upside and the European Central Bank could provide some hints about Spain's likely bailout request.

Futures for Euro STOXX 50, London’s FTSE, Germany's DAX and France's CAC were 0.2 to 0.4 per cent higher.

In the US, futures for the Dow Jones and S&P500 indexes were both up 0.3 per cent.

4.16pm: Financial stocks led the way, adding 1 per cent, property trusts rose 0.7 per cent and consumer staples was up 0.5 per cent. Gold miners were down 1.2 per cent and materials shares also fell 0.8 per cent.

4.12pm: The market has closed higher, continuing its push near 14-month highs. The benchmark S&P/ASX200 added 13.8 points, or 0.3 per cent, to finish at 4452.4, while the broader All Ords rose 13.9 points, or 0.3 per cent, to 4472.7

3.55pm: The tax office says it will improve its auditing process so that businesses doing the right thing are not targeted.

The Australian Taxation Office (ATO) was responding to a review by the inspector-general of taxation Ali Noroozi, who looked at the way the ATO investigates businesses that don’t report their taxable income.

The ATO today agreed with recommendations that it promote better record keeping and accurate reporting of income.

It also agreed to improve its risk identification processes so that compliant businesses are excluded from audits.

The ATO considers the cash economy as a major tax integrity threat, involving an estimated 1.4 million businesses.

3.42pm: Morgan Stanley reiterated its call for gold, silver and copper to outperform other metals as investor demand and central-bank buying bolsters bullion and supply constraints benefit the raw material used in wires.

“Central bank policies ensure conditions remain favourable for continued price appreciation for both gold and its cheaper proxy, silver,” analysts Peter Richardson and Joel Crane wrote in a report today. The bank expects gold to average $1,683 an ounce this year, rising to $1,853 in 2013

3.35pm: As we enter the last half hour of trade, here's what CMC Markets sales trader Ben Taylor said about the day's movements.

  • The Australian market has had a run higher today after the retail spending figure came in worse than expected increasing the expectations of a Melbourne cup day interest rate cut. 
  • The poor Australian retail sales figure comes on the back of terrible manufacturing and service sector PMI results, weak trade data and falling expectations for inflation. Current interest rate futures are predicting a rate cut in November and I tend to agree with them believing there is a high likelihood that the RBA would err on the side of caution and cut rates in November to ensure domestic growth is supported.
  • The effect of the worse than expected retail sales figure saw the Aussie dollar take a sudden dive before recovering all of its move lower. Despite today’s Aussie dollar rebound I believe risk still remains to the downsize as the RBA shows an easing bias.
  • Banking stocks have done the majority of the heavy lifting today as they attempt to explain to the public the disconnect between their cost of funds and the Reserve Bank’s cash rate movements. Higher domestic deposits offset the risk of offshore funding and therefore the banks may not feel comfortable dropping rates by the full 25bp when international disturbances have the ability to spike their borrowing costs. Talk of upgrades to some branches and plans to develop new banking applications has excited the sector.

3.18pm: Something lighter from the small business desk: 

How does a company build its brand into a household name? Three well-known companies reveal their secrets.

3.07pm: Gold is not an asset you can assess in terms of yield. Its ''dividend'' derives from something else entirely. It is a pure currency hedge. And not against just any old peso, rial or dong. Gold is the undollar, the US dollar's shadow, and on that basis it is not in a bubble at all.

The current gold bull market did not begin with the global financial crisis; it began in 2001 after the Nasdaq tech crash. Why then? Because that was the moment the US dollar became unstable enough for all and sundry to see it.

Click here for the full story.

3.00pm: The Queensland government says the Great Barrier Reef would be protected from the environmental consequences of a planned bauxite mine.

Resources firm Cape Alumina Limited has resumed planning for a bauxite mine on a wildlife preserve at Cape York.

The revival of the plans comes only a day after a study by the Australian Institute for Marine Science found that coral cover in the Great Barrier Reef had halved since the mid-1980s.

Cape Alumina’s plans to build a bauxite mine at Pisolite Hills, in an area named after environmental campaigner Steve Irwin, were shelved by the previous Labor government in 2010.

2.35pm: Some more on Billabong and the reported pull-out of bidder TPG: City Index chief market analyst Peter Esho says Billabong may have been too optimistic in its guidance assumptions provided to TPG.

"There was never really a formal bid on the table and given the absence of break fees and costs (outlined), TPG not proceeding wouldn't surprise me at all," he says.

Also, in the current climate, TPG may be able to find other opportunities to focus on that made a Billabong buy-out less attractive, Esho says.

2.29pm: An Australian industry pension fund has joined the chorus of US and UK funds planning to vote against Rupert Murdoch's re-election to the News Corp board at its annual meeting in the wake of the phone hacking scandal.

Industry fund First Super, which controls $1.7 billion in funds, will vote its shares in support of the removal of the News Corp chairman and against the election of four directors including his sons James and Lachlan.

In a statement, First Super chief executive Graeme Russell said First Super supports a "more independent" News Corp board, with an independent chairman.

"Open, transparent, representative governance is well overdue at News Corp. The interests of minority shareholders have too often been compromised" Mr Russell said.

2.20pm: Former Gunns chief executive Greg L'Estrange has described the fallen timber giant's internal company processes as a compliance nightmare.

In his first comment since administrators and receivers were called in last week and he was sacked, Mr L'Estrange told a court today his hardest task as CEO was getting proper processes in place.

"It's not a company with a culture of complying with policies," Mr L'Estrange said. "Transparency was the most difficult part of my job."

2.14pm: Billabong shares have now entered a trading halt. 

2.11pm: As you can see, Billabong shares are struggling after it was reported that TPG may be considering pulling out of a takeover bid for the company.

2.03pm: BC Iron chief executive Mike Young has told the Sydney Mining Club to expect firmer prices for iron ore once the Chinese leadership transition is completed.

After spending most of 2012 in a range between $US150 and $US130, iron ore prices have slumped below $US90 per tonne in recent weeks, and have settled around $US104 per tonne in recent days.

Mr Young said the slump was “a bit of a blip”, and daily prices were highly volatile because they were based on a very small number of trades.

Despite gloomy forecasts that a steel surplus in China will keep iron ore prices anchored at low levels, Mr Young said he expects to see a “return to more sustainable prices” within months.

“After we get through this leadership transition we will see some stability come back into things,” he said, in reference to next month’s imminent change of leadership within the ruling Chinese Communist Party.

Mr Young said BC Iron was looking to Brazil for acquisition opportunities.

1.52pm: A resounding 'no comment' was Billabong's response to questions about the AFR report that TPG is no longer interested in buying the retailer.

But get ready for the stock to go into a trading halt while they draft a press release.

It's not the first time speculation has been swirling around that TPG is about to pull the plug on its Billabong bid. Rumours last surfaced two weeks ago when Bain Capital decided to pull out of the bidding.

1.34pm: Retail Food Group has asked its shares be suspended from trading ahead of a planned capital raising and changed the terms of its purchase of the Crust Gourmet Pizza Bars franchise system.

In a statement to the Australian Securities Exchange, RFG, the company behind brands such as Brumby’s Bakeries, Donut King, and Michel’s, requested it shares be suspended as it undertook a capital raising involving institutional and sophisticated investors.

No timeframe was given for when the stock would resume trading.

1.28pm: The AFR reports that TPG, which was looking to buy Billabong, is thinking about withdrawing from the sale process. According to the AFR report, TPG was concerned with some things it found during its due diligence on the surfwear retailer.

1.21pm: More on Billabong. The company's shares dived lower and turnover spiked at about 12.20pm. They fell as low as $US1.02 at 12.40pm, but they're now back to $US1.075. More soon.

1.19pm: Aussie stocks have just retreated from a fresh intraday high. The ASX200 touched 0.38 per cent higher a short time ago, but has since slipped back to a gain of 0.3 per cent.

1.15pm: Billabong shares are down almost 20 per cent - down 25 cents top $1.065. More shortly.

1.06pm: Here’s an ANZ view on the building approvals data from earlier today:

Looking through the monthly volatility in approvals data, in trend terms house approvals increased for the third consecutive month - after decreasing for 29 months since December 2009 - while flat/unit/townhouse approvals were lower in the month for the first time since January 2012.

Combined with a re-acceleration in population growth, the broad national trend weakness in dwelling approvals is driving further tightening of housing market balance pressures and should be of increasing concern to policy makers. 

12.47pm: After giving up all of the morning's gains around the time of today's retail sales and building approvals data, Aussie stocks are now pressing towards a fresh intraday higher. Markets are back to a gain of 0.2 per ecfnt and looking higher.

12.42pm: Qantas shares have eased 1.25 cents to $1.2175 after it and Emirates said it was no longer seeking interim authorisation from the competition regulator for their proposed alliance.

The decision to drop the request follows Virgin Australia and its alliance partners, Singapore Airlines and Air New Zealand, urging the Australian Competition and Consumer Commission to block the granting of interim approval for the Qantas-Emirates tie-up. Full story.

12.36pm: In case you missed them earlier, here's the full story on retail sales and here's the full story on building approvals.

12.33pm: IG Markets analyst Cameron Peacock said many investors were in a consolidation phase after recent gains on the market.

‘‘The resources sector is like a weight around the market’s ankles today,’’ he said.

BHP Billiton had dropped 53 cents to $32.90, Rio Tinto was down 52 cents to $53.20 and Fortescue had lost 3.5 cents to $3.49.

However, the major banks were all higher. ANZ was up 24 cents tot $25.29, after announcing plans to spend up to $1.5 billion on new mobile banking apps and upgrades of its branches in a bid to attract more customers.

12.29pm: Shares, meanwhile, have rebounded but not dramatically. The ASX200 is back to about 0.1 per cent higher. The benchmark index rose to a gain of 0.2 per before giving it all back by 11.30am.

12.25pm: Back to the cars data for a moment. Small cars and utes continue to dominate the sales charts with four small cars (Mazda3, Hyundai i30, Toyota Corolla and Cruze) and three utes (HiLux, Mitsubishi Triton and Nissan Navara) in the top 10. Here are the top selling cars for September:

  1. Mazda3 - 4276
  2. Toyota HiLux - 3479
  3. Hyundai i30 - 3144
  4. Toyota Corolla - 3133
  5. Holden Commodore - 2532
  6. Mitsubishi Triton - 2326
  7. Toyota Camry - 2267
  8. Holden Cruze - 1951
  9. Nissan Navara - 1812
  10. Mazda CX-5 - 1809

12.20pm: As we await the decisions of the big four banks about the levels of the borrowing rates, ANZ Australia chief executive Philip Chronican said the bank would stick to its 10-month old process of setting lending rates on the second Friday of each month.

‘‘Our cost of funds doesn’t change on the first Tuesday of the month when the Reserve Bank moves its cash rate. We fund ourselves through a range of term deposits or even wholesale funds,’’ Mr Chronican said today.

‘‘We’re trying to create a gap between the Reserve Bank’s move. Sometimes when the Reserve Bank moves its cash rate down, long term rates go up, sometimes long term rates go down.

‘‘We want to give the market time to settle and see how our rate structure works."

12.14pm: The Aussie dropped to its lowest level in almost a month as the data added to expectations the Reserve Bank of Australia will reduce borrowing costs for a second-straight meeting in November to bolster growth.

‘‘We’ve been seeing a string of relatively weak data from Australia,’’ said Thomas Harr, head of Asia local markets strategy at Standard Chartered, Singapore. ‘‘The risk for the Aussie is still to the downside.’’

The local unit fell 0.2 per cent to $1.0192 a few minutes ago after earlier touching $1.0182, the lowest since September 6.

12.09pm: Here are the top 10 companies on the ASX200 shortly after midday:

  • BlueScope: +4.6%
  • Flexigroup: +3.75%
  • Emeco: +3.03%
  • FKP Property: +2.86%
  • Investa: +2.75%
  • Whitehaven: +2.52%
  • Cardno: +2.48%
  • Commonwealth Property: +2.42%
  • QBE: +2.27%
  • Linc Energy: +2.19%

12.05pm: Building approvals and retail spending might be soft but people are still buying new cars, especially SUVs.

Sales of new vehicles in Australia were up a healthy 9 percent in September, compared to the same month last year, led by hefty gains in sports utility and commercial vehicles, industry data showed on Thursday.

The Australian Federal Chamber of Automotive Industries VFACTS report showed total vehicle sales in September were 94,627, compared to 86,819 in the same month last year.

Sales were up 1.1 per cent on August in original terms, while adjusting for seasonal factors left sales up 3.2 per cent for the month, VFACTS said. Sales of sport utility vehicles extended their barnstorming run with a rise of 20.7 per cent on a year earlier. 

11.59pm: A day after it was forced to shut down Melbourne’s two busiest road tunnels due to a computer malfunction, CityLink operator Transurban says it is looking to hike the cost of peak-hour tolls.

Melbourne’s CityLink tunnel network was forced to close early yesterday morning, causing the average 120,000 vehicles that use the roads everyday to be re-routed into city gridlock.

Speaking at the company’s annual general meeting this morning, Transurban chairman Lindsay Maxted said he regretted the closure yesterday, but defended the company’s overall performance.

‘‘Yesterday’s tunnel outage was completely unacceptable for all concerned. However, your board believes yesterday’s events are a truly exceptional circumstance - the first such event in 13 years of operations.’’

More to come.

11.54am: David De Garis, senior economist at the National Australia Bank, says today’s data won;t discourage the RBA board from further rate cuts:

"There was a partial bounce back for department store sales but the data has a soft tinge, maybe that's just the run-off of the government cash payments.

"The data highlights a defensive consumer and it's keeping the door open for further easing from the Reserve Bank."

11.49am: Here's the CBA's Michael Blythe on the building approvals and retail sales data:

"On the retail front we've sunk back into that general torpor that was there before the government cash handouts a few months ago.

"So clearly a pretty soft result for that part of consumer spending at least and there doesn't seem to be much risk of an interest rate led boom breaking out there just yet.

"Building approvals are still a soft result overall, although volatile medium-high component has driven the increase this month, but the underlying trend still looks very soft and one that says rate stimulus is only working through the economy very slowly."

11.46am: Stocks have bounced back into positive territory - just. Both the All Ords and the ASX200 now breaking even for the day.

11.40am: The dollar has sunk to a fresh intraday low on the data release. In recent trade, the local unit was buy $US1.0194, surpassing the overnight low of $US1.0196.

11.37am: Here's the raw numbers for the building approvals data:

Total dwellings           12,046 (August)   11,325 (July)
Priv excluding houses   4,596                  3,735
Priv sector houses       7,314                  7,350

11.34am: The ASX has dropped into negative territory briefly on the news, handing back all of a 0.2 per cent gain since 11am.

11.32am: Looking at the actual retail numbers, Australian retail spending rose 0.2 per cent in August,falling short of the 0.4 per cent gain expected.

Australian residential building approvals rose 6.4 per cent in August, more than the 4.7 per cent expected in a Bloomberg survey.

11.30am: Today's data is out: retail sales are slightly weaker than expected but still positive. Building approvals are stronger than expected, but are down more sharply than expected for the year.

The Aussie fell to $US1.0207 on the releases but is now back to $US1.0217

11.21am: Qantas and Emirates have dropped their request for the competition regulator to allow them to plan and negotiate their proposed alliance over the coming months but the Australian airline has still pushed ahead with changes to its international route network.

The decision to drop the request follows Virgin Australia and its alliance partners, Singapore Airlines and Air New Zealand, urging the ACCC to block the granting of interim approval for the Qantas-Emirates tie-up.

Qantas and Emirates had wanted interim authorisation to begin planning for their alliance, including information sharing on issues such as marketing campaigns and transitions of IT systems. The airlines are still seeking approval for their planned alliance.

But independent of interim authorisation from the ACCC, Qantas has revised its route network to fly to Europe via Duba rather than Singapore. It will enable passengers to book flights through its new hub in Dubai for travel from next March.

Qantas shares are down 0.8 per cent, while Virgin is trading flat.

11.12am: The first US presidential debate between Barack Obama and Mitt Romney has begun. Follow our live blog to find out who lands the first blow.

11.01am: With the price of China iron ore on hold while China is on holidays, coal for power stations is set to end its longest slump in seven years as producers reduce output, raising the prospect of price increases just as colder weather in the northern hemisphere boosts fuel demand.

Thermal coal at the Australian port of Newcastle, the benchmark for Asia, may rise to more than $US100 a metric ton in the three months ending December 31, from $US84.25 a ton as of September 28, according to UBS.

Macquarie Group predicts prices will average $US98 for the rest of the year while Bank of America and Wood Mackenzie forecast the fuel will cost $US92.

10.57am: The so-called Aussie has climbed against the greenback, rallying from an almost one-month low touched yesterday, ahead of figures that may show retail sales and building approvals increased in August.

‘‘The Australian economy is still looking much better than other parts of the world,’’ said Andrew Salter, a strategist ANZ. ‘‘We still think the Australian dollar should appreciate.’’

The Aussie added 0.1 per cent to $1.0220 after touching $1.0196 yesterday, the lowest since September 6.

10.52am: Shares in Mayne Pharma Group have entered a trading halt this morning after BusinessDay reported that it was expected to tap investors for a capital raising as early as today to fund the acquisition of a US healthcare company.

Mayne this morning requested its shares be halted, pending the release of an anouncement by Monday, 8 October.

Sources with knowledge of the transaction said Mayne's capital raising and debt issue will be used used to pay for the purchase of the US-based pharma development company Metrics Inc. 

10.47am:  Oil and gas explorer Drillsearch Energy has made a $118 million takeover offer for fellow explorer Acer Energy.

Drillsearch and Acer each own exploration assets in the Cooper Basin in South Australia, and Acer also has assets in the Bass Straight. Drillsearch has offered 25.5 cents for each Acer share, well above Acer’s last traded price of 19.5 cents.

10.44am: The big banks are all higher and well ahead of the general market:

  • CBA is 0.5% higher to $56.28
  • ANZ is 0.72% higher to $25.23
  • NAB is 0.85% higher to $26.17
  • Westpac is 0.87% higher to $25.38

10.39am: Woolworths shares have risen 0.6 per cent to $29.08 after it was revealed the retailer was expected to hold on to its lucrative pub portfolio as its prepares a $1.2 billion property spinoff of up to 70 supermarkets. More here.

10.35am: The ASX200 hit an early peak of 0.2 per cent, with financials reaching a gain of almost of 0.7 per cent. Here are some of companies leading the financial sub index higher:

  • FKP Property Group: +4.9%
  • Mirvac: +2%
  • Commonwealth Property Office Fund: +1.93%
  • Investa Office Fund: +1.89%
  • QBE Insurance: +1.67%
  • Platinum Asset Management: +1.1%

10.29am: And now for the early sliders on the ASX200:

  • Mirabela Nickel: -4.55%
  • Alacer Gold: -2.11%
  • AWE: -1.46%
  • Newcrest: -1.35%
  • Woodside: -1.31%
  • Fletcher Building: -1.01%

10.26am: Here are the best performed companies on the ASX200 in early trade:

  • FKP Property: +6.12%
  • BlueScope: +3.45%
  • Lynas Corp: +2.92%
  • Saracen Mining: +2.91%
  • Nufarm: +2.36%

10.19am: Financials are leading the market higher - up 0.58 per cent. Here's how the other sub indices are performing:

  • Consumer staples: +0.52%
  • Info tech: +0.29%
  • Health: +0.26%
  • Consumer disc.: +0.24%
  • Energy: -0.73%
  • Telecoms: -0.24%
  • Materials: -0.21%

10.13am: In early trade, the All Ordinaries index is 8.4 points higher, or 0.2 per cent, to 4467.2, while the benchmark S&P/ASX200 is 8.7 points higher, or 0.2 per cent, to 4447.3.

10.05am: Australian shares are flat in early trade - both the All Ords and ASX200 are less than 0.1 per cent  higher.

9.54am: Interestingly, the interest rate futures market gives another 25 basis point rate cut in November a 78 per cent chance, according to Credit Suisse.

9.49am: Australian bond futures prices are slightly lower, but trading in a narrow range.

At 8.30 AEST, the December 10-year bond futures contract was trading at 97.155 (implying a yield of 2.845 per cent), down from 97.180 (2.820 per cent). The December three-year bond futures contract was at 97.700 (2.300 per cent), down from 97.730 (2.270 per cent).

Despite a rate cut from the Reserve Bank of Australia (RBA) and some weak trade data this week, the Australian bond market appeared to be in a sluggish mode, Nomura rates strategist Martin Whetton said.

‘‘Bonds did very little overnight,’’ he said.

‘‘We’ve got some data today - that will either reinforce the concern that the economy is slowing down, or they’ll be a bit better, and we might get a bit of a sell-off in bonds. Either way, the market seems to be stuck in a bit of a range.’’

9.46am: Pharmaceutical company Mayne Pharma Group is expected to tap investors for a deeply discounted $60 million capital raising as early as today to fund acquisition of a US healthcare company.

The capital raising and debt issue will be used to pay for the purchase of the US-based pharma development company Metrics Inc., sources with knowledge of the transaction said. At $100 million, the purchase price would be almost double Mayne's market capitalisation of $55 million. Full story.

9.45am: Some analyst rating changes from late yesterday:

  • Flexigroup rated new 'buy' at Deustche Bank
  • Tiger Airways cut to 'sell' at Phillip Capital
  • Macquarie Atlas raised to 'outperform' at Macquarie
  • Commonwealth Bank raised to 'neutral' at Macquarie

9.41am: There are a couple of key piece of economic data out today. Both are due at 11.30am:

  • ABS building approvals for August - A Bloomberg survey expects a 4.7% rise for the month, up from a 17.3% fall in July. The year-on-year result is expected to show a 14.3% slide in building approvals
  • ABS retail trade for August - A Bloomberg survey expects a 0.4% rise for August, turning around a 0.8% drop in July

9.38amBorrowers remain on bankwatch this morning as the big four consider how much - if any - of Tuesday's rate cut to pass on. Here's a story getting a lot of interest from readers today. Peter Martin writes that Australian banks have form when it comes to failing to pass on rate cuts in full and over-egging rate rises.

A study in the prestigious Economic Record has found Reserve Bank rate rises have ''a much larger and more instantaneous impact on the mortgage rate than rate cuts''. The size of the difference is shocking. Full story.

9.34am: For a comprehensive look at today's business news, check this morning's need2know. Here are this morning’s key market links:

  • The SPI was 13 points higher at 4448
  • The $A was trading at $US1.0214
  • In the US, the S&P500 added 0.36% to 1450.99
  • In Europe, the FTSE100 lost 0.28% to 5825.81
  • Gold added 0.1% to $US1776.18 an ounce
  • WTI crude oil lost $US3.75 to $US88.14 a barrel
  • RJ/CRB commodities index 0.63% to 311.26

9.32am: Local stocks are set to open higher after Wall Street rose on some better data. The Aussie is holding steady after losing about 1.5 US cents since Tuesday's decision by the RBA to cut official interest rates. Here’s how ANZ economists summed up the overnight action in a note this morning:

Markets were generally quiet overnight ahead of the US payrolls data and ECB and BoE policy meetings over the next two days. This was despite some better-than-expected US data overnight. Equities were mostly a little higher and ‘core’ bond yields little changed but oil fell sharply after a US Department of Energy report showed US oil production at high levels.

9.30am: Hi everyone. Welcome to the Markets Live blog for Thursday.

Contributors: Thomas Hunter, Jens Meyer, Richard Hughes, Max Mason

This blog is not intended as investment advice

BusinessDay with agencies


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