Markets Live: Big banks lead the way

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A gold nugget with an estimated value of more than $300,000 has been unearthed near Ballarat, in Victoria’s west.

An amateur prospector found the nugget weighing 177 ounces or 5.5kg with a metal detector just outside Ballarat in a popular area for prospecting.

BHP bought 100,000 tonnes of the raw material on the spot market, a move traders said was rare and likely triggered by Wednesday's decline in prices which was the steepest in over 13 months.

The recent rally in iron ore prices, which have risen to 15-month highs, is a boon for miners such as BHP but the rapid surge has taken the market by surprise and turned off many Chinese buyers, triggering a decline in prices from late last week.

BHP purchased the cargo of 62-per cent grade Australian iron ore fines for February delivery at $US145.50 a tonne via the GlobalOre trading platform on Wednesday, traders said.

"This is very unusual. Maybe BHP wants to support prices because there's no reason for it to buy the cargo, it's a producer," said an iron ore physical trader in Shanghai.

The fact that the cargo is not for immediate delivery adds weight to the argument that BHP is seeking to support prices, traders said, although some market participants believe BHP's move was likely due to supply issues.

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

Among the sectors, financial and energy stocks both jumped 0.5 per cent, consumer discretionary rose 0.8 per cent and consumer staples gained 1 per cent. Materials traded relatively flat, down less than 0.1 per cent.

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The market has finished higher, the benchmark S&P/ASX200 added 18.2 points, or 0.4 per cent, to 4756.6, while the broader All Ords rose 14.7 points, or 0.3 per cent, to 4779.7.

Foreclosure activity in the United States was at a near six-year low in December and declined over the entire year as the housing market continues to recover after foreclosures peaked two years ago.

But a build-up in backlogs, brought about in part by tougher rules for lenders to foreclose, could see new spikes in foreclosure activity this year, according to a report by RealtyTrac released on Thursday.

"Although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book-ended by two discrete jumps in foreclosure activity," said Daren Blomquist, vice president at RealtyTrac.

There were about 2.3 million foreclosure filings on 1.8 million properties in 2012. That represents a decline of 3 percent on the year before and a drop 36 percent on a peak of 2.9 million properties in 2010.

India’s aviation regulator says it has instructed Air India to ground its fleet of Boeing Dreamliners following similar orders from authorities in the United States and Japan.

‘‘We have asked Air India to ground all six Dreamliners after getting an advisory from the FAA (US Federal Aviation Administration) citing safety concerns,’’ Arun Mishra, the director-general of civil aviation, said on Thursday.

Boeing’s troubled next-generation model has suffered a series of glitches that have prompted investigations by aviation regulators in Japan and the United States, although Boeing insists the plane is safe.

The big banks are once again a driving factor for the market today, making up four of the top six movers for the day.

Combined, Westpac, ANZ, NAB and CBA account for an 8.75 point upward push on the ASX200.

The RBA sold $752 million of Australian dollars on a net basis on the spot foreign exchange market during December, central bank data shows.

The RBA manages the forex needs of the government, which may need foreign currency, say, to buy military hardware or pay for embassy wages, and that makes up the vast bulk of its spot transactions in any month. The RBA sold $780 million for foreign currency on behalf of the government in December.

The RBA also transacts with other central banks and institutions and had been taking on more foreign currency from July to October, in what analysts assumed was a modest attempt to lessen upward pressure on the Australian dollar.

However, those flows have now slowed. In December it bought just $46 million of foreign currency, the smallest amount since January 2011. That was down from $117 million in November and a peak of A$482 million in October.

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dollar

The dollar has lost some more ground on the weak jobs numbers, briefly dipping below $US1.05 and currently trading at $US1.0506.

Today’s data ‘‘underscores much of the economic weakness from last year’’, says Westpac currency strategist Jonathan Cavenagh. ‘‘I wouldn’t be surprised to see a bit more of a correction in the Aussie ... but I still think dips will be well-supported.’’

It has also dropped 0.7 per cent to 92.80 yen, extending its 1.2 per cent decline in the previous two days.

The market's focus will now turn to Chinese fourth-quarter GDP figures, out tomorrow, which are expected to show 7.8 per cent annual growth.

‘‘In the very, very short term, there’s a risk to the downside for the Aussie,’’ says Thomas Harr, head of Asia local markets strategy at Standard Chartered in Singapore. ‘‘That said, I think the theme is still that we have a China recovery, which is very important for Australia.’’

Volumes are starting to pick up again on the market, with 630 million shares traded so far; well above the moving 15-day average of 450 million, but still lower than the 1 billion-plus shares traded in the sessions before Christmas.

Acting Employment Minister Kate Ellis has blamed an increase in the national unemployment rate on Queensland’s conservative government.

Queensland’s unemployment rate rose to 6.2 per cent while the national rate climbed to 5.4 per cent, the Australian Bureau of Statistics reported on Thursday.

The unemployment rate in Queensland stood at 5.5 per cent when the Liberal National Party’s Campbell Newman came to power in March 2012.

Mr Newman’s time as premier has been marked by massive public sector job losses.

‘‘Were it not for the Queensland job losses, the unemployment rate today would have actually fallen to 5.2 per cent rather than slightly rising,’’ said Ms Ellis.

Japan’s 10.3 trillion yen fiscal stimulus may add less than a quarter of the jobs the government predicts, casting doubt on Prime Minister Shinzo Abe engineering a sustained recovery.

Even with more central bank easing, most of the impact of Abe’s spending won’t spread far beyond public works projects, Citigroup says. It estimates that 100,000 jobs will be created, compared with the government’s figure of 600,000. BNP Paribas SA says 150,000.

Abe is returning to a strategy that failed to end Japan’s stagnation over the last two decades even as the nation’s debt burden nearly tripled and extra stimulus spending totaled 80 trillion yen, according to BNP Paribas. Another failure may deepen voter apathy in a political system that has produced seven prime ministers in six years, while adding to the risk of a surge in bond yields.

“Fiscal stimulus is like morphine, because if you want to maintain the same level of effect you have to keep upping the dose,” said Azusa Kato, an economist at BNP Paribas. “Japan has failed to achieve a sustainable economic expansion, and the country’s record proves the strategy is wrong.”

asian markets

Here's how the rest of the region is doing:

  • Japan (Nikkei): +0.3%
  • Hong Kong: -0.2%
  • Shanghai: -1.3%
  • Taiwan: -0.05%
  • Korea: -0.4%
  • Singapore: -0.25%
  • New Zealand: +0.7%

"There's a growing sentiment among investors that international risks have been significantly reduced, particularly after the US made a start on its fiscal negotiations," says Ric Spooner, market strategist at CMC Markets in Sydney.

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ASX

The ASX200 is trading at a 20-month high, bolstered by the big banks and BHP. Rio and Fortescue are trading in the red.

Other noteable gainers are:

  • FKP Property: +6%
  • Iluka Resources: +5.65%
  • Billabong: +5.2%
michael-pascoe_127x127

Well, today's unemployment figure certainly is a surprise, not because it rose to 5.4 per cent but because that was the number predicted by the average market economist - a rare win for the crystal balls, says Michael Pascoe:

The labour force statistics have been notoriously unpredictable in their detail but the broad story remains unchanged: the Australian labour market is soft, as everyone knows, and the unemployment rate is likely to drift modestly higher, as it has, as the number of people of work force age increases, which it is.

Treasury and the Reserve Bank have both forecast the unemployment rate to be around 5.5 per cent by md-year. Mind you, they forecast it would be that by the middle of last year as well - a difficult and complicated beast for everyone to forecast, that labour market.

The reaction by the cooler heads today is that the latest figures are not of themselves enough to make a change to the RBA's outlook.

Here's the whole piece

Boeing insists its 787 Dreamliner is safe after US authorities ordered airlines to stop flying the plane over a fire risk linked to its lithium batteries.

‘‘We are confident the 787 is safe and we stand behind its overall integrity,’’ Boeing chief executive Jim McNerney said in a statement. ‘‘We will be taking every necessary step in the coming days to assure our customers and the travelling public of the 787’s safety and to return the airplanes to service.’’

Japan’s two biggest airlines had already taken almost half the global fleet out of service, but the announcement by the US Federal Aviation Administration (FAA) means 30 of the world’s 50 Dreamliners have now been grounded.

Mineral sands miner Iluka will cut production resulting in job losses after tough trading conditions led to a loss of nearly one-third in revenue in 2012 compared to the previous year.

Iluka’s Eneabba operations in mid-west Western Australia will be idled, costing 65 jobs.Those employees were told on Wednesday and Thursday.

Other operations is South Australia, Victoria and in the US will be idled or operate on reduced rosters. The company blamed difficult economic conditions globally, saying the ageing WA mine had been reactivated in 2011 when demand for zircon and titanium dioxide was high.

‘‘With recent challenging economic conditions globally, demand for these products has reduced,’’ Iluka’s general manager of Australian operations Steve Wickham said in a statement.

gold

If there any readers struggling for inspiration with a script for a heist movie, perhaps one with a bit of Soviet-era backstory, here’s something which may be of interest.

Germany's central bank plans to bring home hundreds of tonnes of gold, part of the reserves it kept in the United States and France during the Cold War for safety from any Soviet invasion.

The Bundesbank's decision to move the bullion stems partly from a desire among some German politicians to keep a direct eye on its condition. The bank also now has space in its own vaults for a metal widely seen as underpinning confidence in the country's economic clout.

Only a third of Germany's nearly 3,400 tonnes of gold, valued at almost 138 billion euros ($US184 billion) are now stored in Frankfurt, with 45 per cent in New York. Germany's gold reserves are second in size only to those of the United States.

"Now, the political security situation has changed because the East-West conflict is over. Considerations to store the gold as far west and as far from the Iron Curtain as possible had to be reconsidered," Bundesbank board member Carl-Ludwig Thiele told reporters.

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