The Aussie has just hit a new four-month high of 93.20 US cents amid some strong buying coming out of Europe.
Anyway, that's all from us for today - thanks for reading this blog and posting comments.
The Australian dollar has just jumped above 93 US cents again, boosted by some early European buying.
The Aussie is currently fetching 93.03 US cents, slightly below the four-month peak of 93.08 US cents it touched early Saturday morning.
Miners supported the market, with BHP rising 0.4 per cent, Rio gaining 0.9 per cent and Fortescue soaring 2.4 per cent. The big banks were mixed: ANZ and NAB posted small gains while CBA and Westpac slipped slightly.
Here are the biggest winners and losers among the top 200:
Qantas changed the earning rates for its popular frequent flyer program in part because the steep fall in the price paid for discount fares over the last decade raised the relative cost of its points offering, says the airline’s loyalty head Lesley Grant.
She made the comments at a closed-door lunch in Sydney with members of popular online forum The Australian Frequent Flyer from around the country. The function came ahead of a broader national roadshow which will include speeches to state-based chambers of commerce to help promote the new Aquire loyalty program for small and medium enterprises.
“Face-to-face member interaction is a key part of our Qantas Loyalty strategy which is why we are also gearing up to do another national roadshow in July this year,” Grant said after the lunch. “We get critical input and really worthwhile suggestions on how we can continue to improve the program to better suit members. It’s also really important for us to be able to explain program changes and benefits such as the new Aquire program.”
As a result of the changes to the Qantas frequent flyer program announced last month, the minimum number of points earned in discount economy on short routes like Sydney-Melbourne has fallen to 800 from 1000. However, customers buying more expensive flexible fares will receive 1200 points rather than 1000 under the old system.
The sharemarket has closed slightly lower, unable to hang onto the small gains posted in late trade.
The benchmark S&P/ASX200 index slipped 3.1 points, or 0.1 per cent, to 5410.6, while the broader All Ords lost 6.9 points, also 0.1 per cent, to 5409.2.
Among the major sectors, materials rose 0.5 per cent, financial closed flat and industrials shed 0.9 per cent. IT fell 0.7 per cent, while gold jumped 1.7 per cent.Back to top
The chance of an El Nino weather event developing in 2014 now exceeds 70 per cent, the Bureau of Meteorology says, raising the prospect of damaging floods and droughts across the globe.
"It is now likely (estimated at a greater than 70 per cent chance) that an El Niño will develop during the southern hemisphere winter", from May-July, the bureau said.
"Although the El Niño-Southern Oscillation (ENSO) is currently neutral, surface and subsurface ocean temperatures have warmed considerably in recent weeks, consistent with a state of rapid transition."
An AMP-linked adviser has warned the financial advice system is rigged against consumers because big companies have a bias towards pushing their own products.
This bias towards in-house products reduces competition and may result in savers paying over the odds for investment products, Rhys Wood, a director of financial planning at Elite Wealth Solutions, has argued. Elite Wealth Solutions is licensed by listed wealth company AMP.
In a damaging submission to the Murray Inquiry into Australia's financial system, Wood says that the high costs of regulatory compliance have prompted many planners to obtain a practising licence through a large institution, which in turn supplies products for advisers to recommend.
"The most pressing issue within the advice industry is the existence of bias within the advice process," says Wood in his submission.
"Given that many of these Australian Financial Services Licence (AFSL) holders are owned and operated by institutions that supply the financial products recommended to retail advice clients, AFSL holders develop approved product lists which virtually exclude all other products from providers who compete with the parent company," says Wood.
Solar projects totalling tens of millions of dollars are at risk after the Abbott government launched a review into its renewable energy targets.
First Solar, the company building the southern hemisphere’s biggest solar plant, said it was reconsidering its future investment plans for Australia, citing increased policy uncertainty.
About $90-$110 million worth of projects have been put on hold, First Solar vice president for business development Jack Curtis said.
‘‘We don’t have a great line of sight as to where the next round of projects are coming from, largely as a function of the uncertainty in the policy backdrop,’’ Curtis said.
The government had planned to source 41,000 gigawatt hours from renewable sources by 2020, or 20 per cent of total supply in that year. But that is being questioned after the government appointed former Reserve Bank board member and global warming sceptic Dick Warburton to head the review.
The ASX has pushed into positive territory, following regional markets' gains and shrugging off the deepening losses on Wall Street.
The benchmark S&P/ASX200 index is up 3.6 points, or 0.1 per cent, at 5417.3, while the All Ords is flat at 5415.7.
Leading the rebound are miners, with the materials sector up 0.7 per cent after earlier posting losses. Financials are up 0.1 per cent.
Seeds are being sown for the next financial crisis, Intelligent Investor's John Addis writes:
The best way to avoid another GFC is to ensure banks can fail without infecting the entire system. That means making them smaller. Trouble is, 'too big to fail' banks are now even bigger.
According to APRA, in March 2008 the four biggest banks controlled 67 per cent of total bank assets. By December 2013 that figure had increased to 78.4 per cent. In the United States in 1990, the five largest banks accounted for less than 10 per cent of total industry assets. Now they control 44 per cent.
According to US Attorney General Eric Holder, bankers are also too big too jail because bringing "a criminal charge ... will have a negative impact on the national economy, perhaps even the world economy".
Only in the strange reality field of financial politics do we save the system by keeping the people that destroyed it in their jobs because if we didn't people might lose confidence.
Instead of time behind bars, bankers got free taxpayer money to recapitalise. They made so much that the enormous fines levied on them barely registered.
Before the crisis bankers hoped governments would rescue them; now they know they will.Back to top
Gold has been helped by a dovish Fed and strong Chinese demand, both of which should allow a seasonal rally, Macquarie writes in a note on the precious metal:
- We continue to view that short covering plus M&A activity might lead to the green shoots of a revitalisation of the gold equities in the coming quarter.
- Focus remains on low-AISC producers and developers with advanced projects attractive to producers.
- With the exploration spigot generally turned off, the market will rely on only a handful of well-capitalised juniors to drive the discovery process in the precious metals space. Although there are a number of existing undeveloped assets with resources and exploration upside there have been relatively few new “raw” discoveries in the past few years
Among Macquarie's global top buy candidates are: Goldcorp and Silver Wheaton (senior); Osisko, OceanaGold, Tahoe and B2Gold (intermediate), while sell candidates include Zijin Mining (senior) and the juniors Medusa, St Barbara and Silver Lake.
Gold is trading slightly higher at $US1300 an ounce.
The real reason why ECB chief Mario Draghi is flirting with QE, according to London's Tele:
The official line is that the European Central Bank is considering joining the mass money-printing club because of fears about deflation. In March, eurozone inflation was indeed just 0.5 per cent, on official measures. The underlying motivation for euro-QE, though, is rather different. Financial markets denizens know this, but few are prepared to say it.
Massive losses continue to smoulder on European bank balance sheets. It was the acute danger of clapped-out banks dragging their host governments into bankruptcy that caused systemic panic across eurozone sovereign bonds markets, threatening the entire single currency project, during the summer of both 2011 and, particularly, 2012.
Such alarm bells led to Draghi’s “whatever it takes” speech – a promise the ECB was ready to buy up eurozone government bonds under a scheme called Outright Monetary Transactions. That’s yet to happen and may even be illegal. Various European courts are still thinking about it, having issued a series of technical verdicts kicking the issue into the long grass. But just the breaking of the taboo, the notion the ECB could come to the rescue and hose down a bad situation with printed money, has been enough, for now, to spread calm.
Despite the OMT bluster, the underlying problem remains. Numerous eurozone banks are busted, not only in profligate “Club Med” nations such as France and Italy, but Germany, too. Such banks, though, are too politically-connected to be allowed to fail.
That’s one reason the eurozone elite wants QE; so out-of-thin-air wonga can by used to buy dodgy bank loans, allowing smooth bankers to avoid the realities of their mistakes.
Another reason the ECB wants QE is that both the US and UK have printed money like crazy and, as a result, the dollar and pound have fallen against the euro, making eurozone exports less competitive.
Regional markets have trimmed their early losses as investors shake off worries the recent losses on Wall Street could turn into a fully-fledged market correction.
- Japan (Nikkei): -0.7%
- Hong Kong: +0.9%
- Shanghai: +1.3%
- Taiwan: +0.1%
- Koea: +0.2%
- ASX200: -0.2%
- Singapore: +0.4%
- New Zealand: -1%
‘‘Equity valuations have peaked and markets will trade nervously going forward,’’ says Nikko Asset Management chief global strategist John Vail. There is ‘‘accelerating deterioration of China’s economy and financial system and subpar US and Japanese economic growth.’’
Australia isn't the only country in which foreign ownership of airlines is a sensitive issue.
The European Commission has launched a formal investigation into Etihad Airways - one of the major shareholders in Virgin Australia - over its strategy of buying stakes in carriers across Europe. Delta Air Lines, which bought a 49 per cent stake in Virgin Atlantic, is also under investigation.
The concerns relate to whether the non-European carriers are effectively controlling their European investments despite the minority stakes. It is a similar argument to the one that Cathay Pacific is using as an attempt to block Qantas from setting up Jetstar Hong Kong, although in that case it relates to whether control will reside in Hong Kong or Australia rather than foreign ownership issues.
In order to operate as a European carrier, an airline must be more than 50 per cent owned and "effectively controlled" by a European Union member state or EU citizens.
Etihad owns stakes in Germany's airberlin, Air Serbia, Ireland's Aer Lingus and Etihad Regional (formerly Switzerland's Darwin Airline) in Europe. It is reportedly examining an increase of its stake in airberlin to 49.9 per cent from 29 per cent and is also conducting due diligence on the possible purchase of a stake in ailing Italian carrier Alitalia.
Apple is sitting on more cash than numerous countries, including Australia, the following chart by US Trust and courtesy of Business Insider shows.
“Amid a world of uncertainty, one thing is without question: Most US corporations have plenty of capital at their disposal,” BI quotes US Trust’s Joseph Quinlan:
- Indeed, capital is in abundance among America’s largest nonfinancial companies, with Moody’s noting that US firms were sitting on some $US1.6 trillion in cash at the end of 2013, a 12 per cent increase from a year ago.
- The latest figure is nearly double the level of 2008, signalling the extent by which US firms have built out their cash positions over the post-crisis period.
- Putting that number into perspective, the cash hoard of corporate America (eg, financials) is greater than the total international reserves of Japan, the second-wealthiest nation in the world, with foreign exchange reserves of $US1.2 trillion. Only China has more cash in the safe — almost $US4 trillion.”
Back to top
Dragons don't come cheap, says Foxtel. The pay-TV operator has defended its exclusive deal to broadcast the highly anticipated new season of fantasy blockbuster Game of Thrones, saying it was showing the program quickly and affordably, and it hoped most people would "do the right thing" by not downloading it.
The exclusive deal has angered many local fans who were able to watch previous series through iTunes, Quickflix and Google Play but must now wait until Foxtel stops airing the series and buy it in full.
Foxtel's broadcast of the first episode of season four was watched by 315,000 viewers, a good result for its Showcase channel but leading to suggestions that many Australian fans were downloading the program.
In the US, the average audience was 8.2 million viewers with repeats, with Torrent Freak reporting more than one million downloads. Game of Thrones has been the world's most pirated show for two years running, according to file-sharing network TorrentFreak. Per capita, Australians are among the biggest pirates.
In February, Foxtel extended an olive branch to the show's fans by adding the HBO show to its online streaming service, Foxtel Play. The $35 monthly price for Foxtel Play rises to $50 a month after three months.
"People attack our business model [of bundling] ... while there will always be people who say, 'We'd like to get this bespoke', $35 a month is not a huge amount of money," Foxtel spokesman Bruce Meagher said. "Yes, there is a price-tag ... but HBO has to be remunerated. At about $7 million an episode, dragons don't come cheap."
Game of Thrones: what's all the fuss?
Don't know the difference between a Lannister and Stark? Don't worry you're not the only one, but it's never too late to dive into the show.
The Bank of Japan has refrained from adding extra stimulus as officials assess the blow from an April 1 sales-tax increase projected to trigger a one-quarter economic contraction.
Governor Haruhiko Kuroda and his board kept a pledge to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen per year, the central bank said in a statement today, as forecast by economists.
The central bank is expected to add more stimulus by July to help drive inflation closer to a 2 per cent target and to strengthen the economy ahead of another possible tax increase next year.
The challenge for Kuroda will be to avoid any perception of incremental policy steps, an approach he has vowed to avoid.
‘‘I expect the BoJ to add expansive policy between May and July,’’ Yasuhide Yajima, chief economist in Tokyo at NLI Research Institute, said before today’s decision. ‘‘The economy will slow down and price increases will be sluggish from April to June because of the sales-tax hike.’’
Japanese stock futures extended losses after the central bank issued its statement. The Nikkei was down 1.1 per cent at the midday break, but futures point to further losses.
Yes, Japan will benefit more than Australia in the trade agreement - but that is a good thing, writes Michael Pascoe.
Make no mistake, Japan is the big winner from the slight reduction in agricultural trade barriers announced with so much fanfare from the Prime Minister's captive travelling trade troupe. And that's a perfectly good and very desirable thing.
There's also a strong chance that much of the immediate advantage Australia should enjoy won't last long.
Other beef exporters will be hot on the heels of our most favoured nation status – stand by for American trade negotiators to target the Australian beef tariff level as they seek their own deal. They've never stopped working on a better deal for themselves.
The immediate reaction to the announcement of a handshake deal seems to be close to that which greeted Chamberlain's waved piece of paper on return from Munich.
But a little perspective can be healthy.
Write-downs at the nation’s top 50 share market-listed companies fell 33 per cent, to $28 billion, in the latest reporting season, as mining giants found their feet in the post boom environment, and the big banks posted record profits.
But the patchy results of the 41 companies outside these two sectors reflects the latent challenges in the domestic economy. KPMG analysis for the AFR shows profit before tax at the 41 companies that are not big banks and miners fell 15 per cent, to $36 billion, for the six months ended December 31 2013, the worst result since December 2009.
Revenue and operating cash flow for this group also fell.
“The mining sector has reported a recovery of revenues against the peak in the mining boom but this is being achieved through large production increases at much lower prices and at lower margins,” KPMG analysis shows.
Over three-quarters of S&P ASX50 companies are using alternative measures of financial performance, or “underlying profit” figures, to explain and smooth out volatility in their books.
In the vast majority of cases the non-statutory results are higher than the audited numbers, resulting in a 23 per cent accounting discrepancy.
It seems Rupert Murdoch isn’t the only media magnate that Clive Palmer is jousting with at the moment. The controversial Queenslander is also testing the patience of Perth billionaire Kerry Stokes over relations between their neighbouring iron ore interests in the Pilbara.
Stokes’ ASX-listed mining company Iron Ore Holdings is being frustrated by Palmer’s Mineralogy on two fronts, with the latter preventing the former from using both road and port infrastructure in two different scenarios.
The road issue is forcing the two parties to negotiate directly, with IOH wanting to build 70km of private road on a section of Mineralogy’s land to allow it to improve efficiencies by running the sort of large trucks that cannot be used on civilian roads.
Mineralogy is refusing to allow the road to be built, and the two parties have taken the dispute to the Warden’s Court in Western Australia, which handles mining disputes.
A verdict from the warden is expected later this month. But the disputes don’t end there.
IOH has been planning to export its iron ore through a small port that will be built several hundred metres east of where Citic Pacific exports magnetite concentrate from Mineralogy’s land.Back to top