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Markets Live: China data fails to lift ASX

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That's all from us here at blog central, we hope you've enjoyed the week, we sure have.

Have a great weekend.

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

Before signing off, make sure you catch up on the week that was with Michael Pascoe.

To watch this video, please turn off the auto-refresh.

The Australian dollar hovered close to multi-month highs against its US counterpart, underpinned by a healthy HSBC PMI reading of China's December manufacturing activity.

The Aussie fetched $US1.0536, from $US1.0527 early, having climbed a three-month high of $US1.0585 this week. It was set to post a 0.5 per cent rise for the week.

Here's a snapshot of how blue chip stocks performed today:

  • BHP: +0.2%
  • Rio: +0.4%
  • ANZ: -0.1%
  • CBA: +0.6%
  • NAB: flat
  • Westpac: flat
  • Fortescue: +1.4%
  • Woolworths: -0.2%
  • Wesfarmers: +0.2%
  • Telstra: -0.2%

Among the sectors, gold miners jumped 1.4 per cent, materials added 0.4 per cent and financials rose just 0.1 per cent. Consumer discretionary shares fell 1.1 per cent and energy lost 0.6 per cent.

The market has closed flat, the S&P/ASX200 added just 0.3 points to 4583.1, while the broader All Ords inched up 2.2 points to 4595.1.

ANZ's delay in passing on the RBA's rate cut has helped the bank net a greater amount through saved interest income than its rivals, BusinessDay's Glenda Kwek notes:

For 2012, ANZ is estimated to have generated about $111 million in additional revenues as it delayed passing on rate cuts following the RBA's four reductions.

According to JPMorgan analyst Scott Manning in a report published in BusinessDay on Monday, each of the major banks ‘‘makes somewhere in the order of $2 million each day that it does not pass on the rate cut’’.

For this month, the bank was estimated to net about $25 million in interest income in passing on the rate cut 17 days after the RBA announcement.

Nine Entertainment made a $972 million loss last financial year ending June 30 as the media group headed for collapse.

In financial reports just released to the corporate regulator, Nine confirmed its dire financial condition at the time with a $783 million write down on the value of its assets last year.

This means the company recorded asset impairments totalling more than $1.5 billion over two years.

Click here for the full story.

GPT Group has said it will pursue a proposal to buy Australand's commercial and industrial assets, as it believes it’s in the best interests of Australand’s and GPT’s security holders.

This was in response to news this morning that Australand had rejected any advances from GPT which lodged an ''indicative'' offer earlier this week.

In a short statement issued this afternoon, GPT says its proposal is in line with its strategy, announced in June 2012, to increase its portfolio exposure to office, logistics and business parks and achieve a more balanced sector weighting.

In 2013, ANZ expects economic growth to remain moderately below trend and labour market conditions to soften further, while the balance of risks suggest interest rates will continue to edge lower.

  • Recent monthly gains in house prices across most capital cities suggest house prices have passed their floor. Supportive housing demand/supply fundamentals, improved housing affordability and increased housing sales in recent months foreshadow moderate increases in house prices on average in 2013.   
  • Lower house prices and interest rates, combined with rising household incomes have improved housing affordability over the last two years. In the absence of strong growth in house prices, the economic outlook should drive further improvement in housing affordability in 2013.
  • Dwelling construction remains weak and well below our estimates of underlying housing demand. While recent increases in building approvals suggest we are in the early stages of a cyclical rebound in residential construction, the current cyclical upturn will most likely be subdued compared to previous cycles.
  • Strong population growth combined with weak housing construction is driving underlying market pressure on existing housing stock. These forces are adding downward pressure to rental vacancy rates and foreshadow solid growth in rents in 2013.  

Investors who lost money through the $3 billion collapse of Storm Financial are suing the Bank of Queensland (BoQ) over its role in the group’s demise.

Lawyers acting for the investors filed a statement of claim in the Federal Court on Friday as part of a class action which aims to recoup some of their losses.

The bank said the amount of the claim had not been quantified.

ANZ has just announced it will cut its variable interest rate for mortgages by 20 basis, to 6.4 per cent, effective December 21.

Last week, the RBA lowered the official cash rate by 25 basis points to 3 per cent, hitting the record lows last seen during the GFC.

Chinese labour arbitrators have ruled against the father of a Foxconn worker brain-damaged in a factory accident in southern China, in a case that puts more attention on the labour practices of Apple Inc's largest contract manufacturer.

The case involves Zhang Tingzhen, a 26-year-old engineer who had nearly half his brain surgically removed after surviving an electric shock in October 2011.

His plight came to light after it was reported that Taiwan firm Foxconn had sent telephone text messages to his family telling them it would cut off funds for his treatment and other expenses if they did not remove him from hospital in Shenzhen city and submit him for a disability assessment 70 km away in Huizhou, where the company says he was hired. 

His father, Zhang Guangde, took Foxconn to the arbitration office in October this year insisting that his son was hired in Shenzhen and not Huizhou, where factory wages and compensation levels are substantially lower.

Foxconn has said that wages for engineers are the same in Huizhou and Shenzhen, but since compensation for injuries varies between locations, the company would make up any difference.

In official documents seen on today, the Shenzhen labour dispute arbitration committee ruled against the father. It said the company had produced a contract dated August 4 2011, showing that the young engineer was hired by its Huizhou facility.

Google has collated its annual top searches, and among the most popular this year for small business relate to making money, working from home and winding up a business.

But there were also a few surprises.


The dollar has made up a bit of ground thanks to the Chinese PMI data, after falling a third of a US cent overnight.

The dollar rose from $US1.0511 just after noon to a high of $US1.0538 on the news that the HSBC Flash Manufacturing PMI had risen to 50.9, a 14-month high.

Speaking this morning ForexCT head of research Steven Dooley said the Chinese would drive the Australian dollar during the afternoon session but predicted that the focus from now on would be US political discussions about the fiscal cliff.

‘‘Everyone knew that we were going to get some more quantitative easing from the Fed. Once we got that announcement there was no where really left to go. Now quantitative easing is behind us the only real thing for markets to focus on now is the fiscal cliff,’’ he said. It’s going to build to a crescendo at the end of the year.

 

The Motley Fool’s Scott Phillips has been seeking investment advice from an unusual source - William Shakespeare:

Although not a particularly successful investor, the Bard left us with some turns of phrase that investors would do well to embrace. All the glisters is not gold for instance:

"We're tempted to throw caution to the wind and go for the ride. And by the time the market has surrendered to this ‘new truth’, we're ever closer to the painful end. You know what happens next. If it seems too good to be true, it probably is. Since Shakespeare's time, that's been good advice.’’

Read the full story here

While the market is still trading relatively flat, it did enjoy a slight bump up at 12.45pm, on the news that China's manufacturing sector growth had hit 14-month highs.

Macmahon Holdings’ shares have dropped significantly after resuming trade following an $80.7 million capital raising and sale of its construction business.

Shares in the mining contractor were 8.1 per cent lower at 20.50 cents, after earlier sliding as much as 19.3 per cent to 18 cents.

The stock had last traded at 26.5 cents before going into a trading halt on Monday.

Two days later it announced the capital raising, the sale of its construction arm to Leighton Holdings for $16.3 million, and downgraded its full year earnings guidance.

CBA economist Michael Workman had some interesting thoughts about the week ahead as we wrap-up for Christmas:

  • The markets should be in “wind‑down” mode. Data releases are petering out in the run‑up to the Christmas‑New Year break. The only potential problem for financial markets is in the US, where the political impasse continues. Negotiations over the “fiscal cliff”, on past evidence, could exceed the deadlines, causing dislocation and uncertainty in financial markets until a deal is achieved. The Fed chairman, Ben Bernanke, indicated during the week that the Fed will not be able to offset the negative effects on economic growth if negotiations are not successful.
  • In Australia, the markets will have the RBA December Board minutes to analyse. The reasons for cutting the cash rate in December, to 3.0%, following the no move in November could be illuminating. The ABS will also release updated June quarter population data. Any shift in population growth trends could be important for groups involved in housing markets around the country. Western Australia’s annual population growth is running at 3%, compared to the national figure of 1.4%. The next major data releases will be RBA credit on 31 December followed, in the second week of January, by international trade, retail trade and building approvals.

The HSBC Flash Manufacturing PMI, which measures growth in China's manufacturing sector has risen to 50.9, a 14-month high.

A figure above 50 indicates that growth is accelerating, while one below 50 shows slowing growth.

Here's a nice feature on speculation surrounding a takeover at Ten Network:

For buyers as diverse as Rupert Murdoch’s eldest son and rural broadcaster Southern Cross Media Group, there’s no cheaper media target in Australia than Ten Network Holdings.

Click here for the full story.

An influential Chinese government think tank has warned that the country's economic imbalance has reached an alarming level and urged the government to undertake bold reforms to sustain economic growth.

The Chinese Academy of Social Sciences, a ministry-level research institute and key advisory body, said the index of imbalance hit 0.6173 this year. The index lies between zero and one, with perfect balance at zero and imbalance worsening as it approaches one.

Click here for the full story.

More from the OECD, the organisation has recommended Australia broaden the base of the GST and considering increasing its relatively low rate and scrap a number of state taxes.

‘‘Tax reforms, including a lower corporate tax rate, a broader resource rent tax and more efficient state taxes would facilitate ongoing structural adjustments,’’ the Paris-based institution said.

The GST rate has remained at 10 per cent since it was introduced in mid-2000, and fresh food, education and health products are exempt from the consumption tax.But the OECD said the base should be broadened and the rate increased.

In exchange, state taxes should be rationalised, such as reducing or removing conveyance duties, while it says subsidies to first-time buyers should be cut.

The Australian government has sold $600 million of July 21, 2017 Treasury bonds.

The Australian Office of Financial Management (AOFM), which conducts bond auctions on behalf of the government, said the bonds were sold for a weighted average yield of 2.84 per cent.

The sale attracted bids totalling $2.805 billion, giving a coverage ratio of 4.68.

As we approached midday, here is a look at how blue chip stocks are going today:

  • BHP: -0.2%
  • Rio: -0.3%
  • ANZ: flat
  • CBA: +0.5%
  • NAB: +0.5%
  • Westpac: -0.1%
  • Fortescue: -0.8%
  • Woolworths: +0.1%
  • Wesfarmers: +0.6%
  • Telstra: +0.4%

The OECD has given Treasurer Wayne Swan the green light to delay the budget's planned return to surplus this financial year if the economy deteriorates more than expected.

The Paris-based institution also said the Reserve Bank may need to make further cuts in official interest rates – already at record lows of 3 per cent – if the outlook worsens further.

Click here for the full story.

Shares in Caltex Australia have leapt in early trade after the oil refiner said it expects a return to profitability thanks to stronger sales of its petrol products.

Caltex shares were 73 cents, or 3.9 per cent, higher at $19.66.

The company said on Friday it expects its operating profit in calendar 2012 to be in the range of $145 million to $165 million, on a replacement cost basis.

Replacement cost basis excludes the effect of changes in the world oil price, and reflects the company’s underlying performance.

After tax profit on a historic cost result basis in 2012 - which will be its statutory result - is expected to be between $45 million and $65 million, up from a $714 million loss in 2011.

And still they rise. Shares in AJ Lucas are now 25 per cent higher. They've hit the frackpot, indeed.

The first Test between Australian and Sri Lanka has started in Hobart. The Aussie are batting and Ed Cowen is already back in the pavilion - caught at mid on after miscuing a pull shot. Warner is on 12, Hughes is on 7. Aussies are 1/27. 

Check out the live cricket blog with Rohan Connolly.

Shares in troubled APN News & Media dived in early trade after the company warned of a dramatic slump in full year earnings.

APN released a trading update after the stock market closed yersterday, warning weak advertising markets would slice its underlying net profit for calendar 2012 by more than a third. 

APN, which owns regional newspapers and radio stations across Australia and New Zealand, shares sank by nine per cent in early trade on Friday. The stock was 1.5 cents, or 4.8 per cent, lower at 30 cents a short while ago.

CBA hit a new all-time high in early trade - $61.74. That values the company at $99.4 billion. The bank's equities have had a strong year, rising from $47.50 on March 8 to this morning's fresh peak. It has added 25.34 per cent over 2012.

A welcome pre-Christmas arrival:

The ASX200 and the All Ords are sitting 0.3 per cent higher as we near the end of the first hour of trade. Leads heading into the session were certainly softer than that. RBS Morgans client adviser Bruce Smith said the banks, as well as stocks such as Telstra and Woolworths, were proving attractive to investors given their healthy dividends.

‘‘I think people are stating to get more confident about transitioning their savings out of cash, where they are getting probably almost three per cent now, and putting into stocks like Woolworths, Wesfarmers, the banks and Telstra,’’ Mr Smith said.

‘‘It’s that sentiment of continuing to chase yield and feeling more and more comfortable about having funds invested in those sorts of companies.’’

In a couple of hours' time we get HSBC's flash manufacturing PMI for December - 12.45pm to be exact. Arab Bank's David Scutt tweets:

The competition watchdog has approved plans by Qantas to more closely integrate its operations with that of its low-cost airline Jetstar.

In a draft ruling, the Australian Competition and Consumer Commission (ACCC) has approved coordination between Qantas and its Jetstar operations in Australia, Singapore, Vietnam, Japan and yet-to-be-approved venture in Hong Kong on passenger and cargo services.

‘‘The ACCC considers that the coordination is likely to result in public benefits to consumers by increasing the likelihood of additional Jetstar flights and destinations in Asia, and providing increased online connections for consumers,’’ ACCC chairman Rod Sims said in a statement.

Qantas shares are flat in early trade.

The worst performed companies on the ASX200 include:

  • Macmahon Holdings: -12.56%
  • APN News & Media: -4.76%
  • Acrux: -3.72%
  • Goodman Fielder: -2.79%
  • Fairfax: -2.78%
  • Lynas: -1.71%

Now for the early gainers on the ASX200:

  • Caltex: +4.07%
  • Intrepid: +3.92%
  • Oceanagold: +3.57%
  • Transpacific: +3.55%
  • Seek: +2.29%

Shares in AJ Lucas are almost 20 per cent higher after Britain decided to allow shale gas exploration to resume but under tighter rules.

As we report here, that’s great news for Australian mining services outfit AJ Lucas, which has a big stake in Cuadrilla, the UK's only shale gas player.

Shale gas has helped transform the US energy market, lowering gas and coal prices, and offers Britain, Europe's biggest gas user, a means of switching to greener energy while bolstering its falling natural gas production.

The company’s stocks have added 15 cents today to 91 cents.

Consumer discretionary stocks are lower - 0.5 per cent - followed by gold and metals and mining - down 0.4 per cent. Energy stocks are off 0.3 per cent.

On the plus side, consumer staples are and financials are 0.3 per cent higher and telecomms have added 0.1 per cent.

Stocks are flat early on. The All Ordinaries index is 2.3 points higher, or 0.1 per cent, to 4594.2, while the benchmark S&P/ASX200 is 3.1 points higher, or 0.1 per cent, to 4585.9.

IAG shares could be in the spotlight today after the insurer finally sold off its troubled UK car insurance business, although the underwriter has taken a $240 million loss on the sale reflecting the knock-down prices for assets there.

IAG sold its Equity Red Star unit to private equity firm Aquiline Capital Partners for £87 million ($130 million).

However IAG warned it was expected to book a loss of about $240 million over financial 2013, including a $160 million loss in the first half on the price tag and exposure to some pension liabilities.

In the second half of financial 2013, IAG is expected to book a further $80 million loss mostly on foreign currency exposure to the insurer’s reserves as the sale is completed. Full story.

Some analyst rating changes for today:

  • APN News & Media cut to neutral at CIMB
  • Macmahon Holdings raised to hold at Argonaut Securities
  • Macmahon Holdings upgraded to neutral from sell at UBS
  • Fairfax raised to overweight at Commonwealth Bank
  • Boral raised to buy from underperform at Bank of America-Merrill Lynch
  • Coca-Cola cut to hold from buy at Deutsche Bank
  • Wesfarmers cut to neutral from buy at UBS
  • Iluka Resources cut to sell at Deutsche Bank 

And something on the some of the background politicking going on in the US over the cliff:

AMP's Shane Oliver take on the overnight news from the US:

A quick update on cliff negotiations.

‘‘It’s going to be a bumpy ride until we see some type of deal on the fiscal cliff,’’ said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc.

‘‘Speeches and speculation are the drivers of the market right now. I’m hopeful that we’ll see a resolution, but the politicians seem to be going a different tune.’’

US House Speaker John Boehner repeated his insistence that President Barack Obama’s budget proposal is ‘‘anything but’’ balanced and accused the president of being ‘‘not serious’’ about cutting spending.

Obama said the negotiations are ‘‘still a work in progress.’’ The deadlock in talks to avoid more than $600 billion in tax increases and spending cuts will start taking effect in January unless Congress averts them. Obama and Boehner were scheduled to meet late on Thursday (local time) at the White House.

So it remains a case of stay tuned.

 

Local stocks are looking at a down start today thanks, apparently, to the continuing standoff over the US budget. More on that soon. For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets numbers:

  • SPI futures are 7 points lower at 4583
  • The $A is lower at $US1.0513
  • In the US, the S&P500 was 0.63% lower at 1419.45
  • In London, the FTSE100 rose 0.27% to 5929.61
  • China iron ore added $US1.40 to $US126.40 a metric tonne
  • Gold fell $US2.32 to $US1694.87 an ounce
  • WTI crude oil fell $US0.35 to $US86.42 a barrel
  • Reuters/Jefferies CRB index was flat at 295.19

 

Good morning folks. Welcome to the Markets Live blog for Friday.

This blog is not intended as investment advice

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

BusinessDay with agencies

 

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