Stocks end near the day's lows, led down by Fortescue which lost 14% on reports the miner is asking its lenders for debt relief.

5.23pm: That's all for today, folks. Thanks for reading this blog and posting your comments.

Here's our evening wrap.

4.48pm: The dollar also reacted to the late drop in Fortescue and other iron ore miners, falling to as low as $US1.0446, from $US1.0487 around 3pm. Looks like there may have been some overseas selling.

4.35pm: BBY analyst Mike Harrowell says ‘‘the penny was dropping’’ among investors about the precarious position Fortescue is in:

  • If Fortescue was in breach of its covenants, all of close to $9 billion in gross debt could fall due immediately.
  • Once you’re in breach of your [covenant] ratios, all debt is payable.

Morningstar analyst Mathew Hodge also said the market had become acutely aware of the stress the iron ore miner was under:

  • Fortescue is in a place where bad thing’s can happen quickly. They really need the iron ore price to go up – and that’s out of their hands.
  • If the iron ore price goes up to $US120 [a tonne] we’ll wonder what all the trouble was. If it hangs around at $US100, there’ll be trouble.

Credit rating agency Standard & Poor’s this week joined Fitch and Moody’s in expressing a negative credit opinion on Fortescue, and warned it could breach its debt covenants unless iron ore prices rebounded to $US120 a tonne.

4.17pm: Fortescue's 14 per cent drop was the biggest drag on the ASX200, shaving 3.4 points off the benchmark index. Other stocks that weighed on the index:

  • Wesfarmers (-1.3%) took 2.1 points off the index
  • Westpac: (-0.7%) - 2.05 points
  • CSL: (-1.3%) - 1.2 points

4.15pm: Weighing on the market was a late slide in the materials sector, down 0.7 per cent, after a report that Fortescue is asking its lenders for debt relief.

Financials and energy were both down 0.4 per cent, while telcos rose 0.5 per cent.

4.12pm: The market has closed just above the day's lows. The S&P/ASX200 index fell 21.9 points, or 0.5 per cent, to 4339.4, while the broader All Ords fell 23.3 points, or 0.5 per cent, to 4359.8.

4.06pm: Arab Bank Australia treasury dealer David Scutt says a lot of traders moved into the Fortescue stock in recent days, attracted by its volatility.

"I wouldn't say exactly that it's been a lot of long-term investors that have moved into the stock," he says. "I would say it's a lot of traders have moved into the stock and once (the AFR report) came out, everyone has dumped it at once."

Scutt noted that yesterday's rally in Fortescue was driven by short-covering.

3.57pm: Other iron ore miners are also heavily down:

  • Fortescue: -14%
  • Arrium: -13%
  • Atlas Iron: -7%
  • Gindalbie Metals: -5.9%

3.55pm: Fortescue shares have really fallen off a cliff this afternoon, down as much as 15 per cent:

3.44pm: Rapid urbanisation in China is expected to continue to drive the demand for Australian iron ore exports for decades to come.

‘‘In 2010, China constructed more residential floor space than the entire dwelling stock in Australia,’’ Reserve Bank of Australia (RBA) researchers say.

‘‘This high level of construction follows two decades of strong growth, during which the amount of annual floor space completed more than doubled.

‘‘As a consequence, China’s increased appetite for raw materials has resulted in a significant increase in Australian commodity exports, especially for iron ore and coking coal.’’

3.36pm: Mind you, the news from China isn't that great for iron ore prices today:

Price offers for imported iron ore in China dropped by $US2-$US4 per tonne today, according to industry consultancy Umetal, after the benchmark 62-per cent grade fell 2.1 per cent to $US98.10 a tonne yesterday, Reuters reports.

"There's still so much supply of steel out there and demand is really slow," said an iron ore trader in Shanghai.    

"There are expectations supply of raw steel could rise again because a lot of the small- and medium-sized steel mills that closed for maintenance weeks ago have now restarted production."

China's crude steel output dropped a modest 1.7 percent to 58.7 million tonnes in August from a year earlier, government data showed on Tuesday. For January-August, output is up 2.3 percent at around 482 million tonnes.

The inventory of finished steel products among major Chinese steel producers stood at 12.9 million tonnes at the end of June, 34 per cent more than the same period a year ago, according to data compiled by Bank of America-Merrill Lynch.

3.32pm: FMG shares now down 5.2%, so the drop hasn't ended for the stock. Rio, though, remains up about 0.6% for the day, so the issue does look contained mostly to Fortescue.

3.30pm: Fortescue shares are extending their slilde and are now down about 4.5%. News like the following won't help:

Fortescue Metals has asked its lenders to waive all its debt covenants for the next 12 months, sources with knowledge of the situation have told the Australian Financial Review, sister publication of this blog.

(Here's the link.)

The proposal was foreshadowed in a call with lenders on Friday, and put to them in writing early this week, the AFR reports:

If the banks were to reject Fortescue’s request to waive all loan covenants across all the facilities, Fortescue could find itself unable to draw down any further debt on its existing banking lines.

It is understood the company hopes to have the waivers in place by the end of the December quarter.

3.25pm: Back to more prosaic matters: UBS is saying there is little likely fallout for BHP Billiton and Rio Tinto's overall earnings from the Queensland government's hike in mining royalties.

Still, EBIT earnings from the QLD coal divisions of both mining giants will take a hit in the order of 11% in the 2013 financial year.

UBS, meanwhile, doesn't expect the federal government to raise any MRRT (mining) tax from Queensland because of the wafer-thin margins that many of the state's coal mines now generate.

3.20pm: Nor is the Chinese leadership transition something entirely locked in:

China’s state-run media reported on Vice President Xi Jinping’s activities for the first since September 1, signaling the Communist Party may be countering speculation his absence would disrupt a transfer of power.

The official Guangxi Daily reported today that Xi, who is forecast to become China’s next president and general secretary of the 82 million-strong party in a leadership change later this year, joined other top Chinese officials in sending condolences to the family of a party member who died on September 6. The story was also posted on the Communist Party’s website. (The cadre in question was 102 - a reminder of how long some of those old revolutionaries can last.)

“It is a sign by the top leadership to reassure the world that nothing excessively bad or disruptive has happened to Xi Jinping,” said Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong. “Of course this doesn’t allay people’s suspicions about whether he will be a physically fit general secretary.”

(May be a bit of stretch, but Chinese authorities this week pulled the plug on two days into a five-part TV documentary on Lin Biao, once the anointed successor to Chairman Mao Zedong. Reports on Chinese leadership chaos apparently not so welcomed just now, even if the events are 41 years old.)

3.12pm:As noted earlier, the Fed, ECB and China are all expected to act to prop up growth in their regions. That's the view of investors, but China may yet disappoint:

Massive stimulus measures would hurt China’s long-term growth and the government’s hesitation in making “bold moves” to support the economy is pragmatic, the official Xinhua News Agency wrote in a commentary, as Bloomberg reports.

“Many have expected the government to announce an aggressive plan, similar to the 4-trillion-yuan ($600 billion) stimulus package issued in 2008, to keep the economy from stalling for a second time,” Xinhua writer Liu Jie wrote in the commentary published yesterday. “However, a massive stimulus plan is not only unlikely, but would be detrimental to the country’s sustainable growth.”

China’s policy makers have refrained from easing monetary policy since cutting interest rates in July and fiscal support has been limited to tax cuts, encouraging loans to some industries and small companies and accelerating infrastructure project approvals. Premier Wen Jiabao said this week the country has “full confidence” it will meet this year’s economic targets.

“All they do now is just to boost confidence,” as they are “sanguine” about growth, Joy Yang, Hong Kong-based chief economist for Greater China at Mirae Asset Securities, wrote in a note today. “Concrete plans, actions may have to wait until the new government takes over.”

3.05pm: One stock that's had a good week or so, is Fairfax Media. The stock rose 6.9% yesterday and recovered from an earlier loss today to be about 3% higher in recent trading.

Fairfax, though, remains about one-third lower for 2012 - even if it has gone about six trading days without a loss. (And yes, Fairfax is the publisher of Markets Live.)

2.57pm: Iron ore stocks aren't doing so well today. As noted earlier, China import prices fell back overnight to below the $US100 mark.

Arrium - formerly known as OneSteel - was down as much as 13% for the day. It's trimmed its loss to 9.3% to 53.5 cents. Still, Arrium is the worst performer among the top 200.

Fortescue shares are also off, losing 3% to $3.335.

2.42pm: And so to recap, here's what is expected from the Fed meeting overnight:

The US Federal Reserve appears set to launch a third round of unconventional monetary stimulus later today while signaling that a weak US economy may warrant ultra-low interest rates for at least another three years, Reuters reports.

Not everyone believes the Fed will embark on another bond-buying spree, and plenty of doubts remain about the likely efficacy of such a move.

But Fed Chairman Ben Bernanke has made clear the central bank will not sit idly by while unemployment, currently at 8.1 per cent, remains so far above levels consistent with a healthy economic recovery.

Many economists are confident the Fed's policy-setting Federal Open Market Committee will deliver a third round of quantitative easing, or QE3. On median, they see a 60 per cent chance, according to a Reuters poll.
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The FOMC will announce its decision at about 12:30 p.m. (2.30am Friday morning, AEST) at the close of a two-day meeting. (Click here for the full story.)

2.30pm: Gold is little changed with investors awaiting a key Federal Reserve policy decision that may come a day after a German court ruling in favour of a eurozone rescue fund sent bullion to its highest since the end of February.

The market is buzzing with hopes that the Fed will announce another round of quantitative easing, known as QE3, at the conclusion of a two-day policy meeting on Thursday.

"If we do see a QE3 announcement, gold is likely to race through $1US800 an ounce," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.

"But we also need to realise that the marginal effect of quantitative easing will diminish and it will be too optimistic to expect gold to break above $US1850 even if QE3 is announced."

Spot gold is little changed at $US1731.59 an ounce by off a near six-month high of $US1746.20 hit on Wednesday after a German constitutional court handed down a ruling in favour of the eurozone's rescue fund.

2.13pm:  More on jobs... long-term unemployment edged up to a seven-month high in August, AAP reports.

The number of people continuously classed as unemployed - jobless, looking for work and ready to start - for a year or more was 125,600 during that month.

The seasonally adjusted figures from the ABS show that number was the highest since January, when the total came in at 128,500.

Since then, long-term employment had edged down to 114,700 in May before rising again. As a proportion of the available labour force - the way the official unemployment rate is measured - the latest reading works out to be 1.0 per cent, where it’s been since dipping to 0.9 per cent in May.

This measure fell as low as 0.6 per cent, the lowest for decades, on a number of occasions in 2007 and 2008 before the global financial crisis undermined the demand for labour.

2.06pm: One of Australia’s leading economic forecasters says it is shocked and disappointed at how poorly Australia’s non-mining sector is performing at a time it should be offsetting a slowdown in the resources sector.

BIS Shrapnel recently predicted in a report that mining investment would peak in 2014 but other sectors would then take over as the primary drivers of growth.

However the pace of recovery in the non-mining sector was a worry, with companies in survival mode and economic output and profit growth compared to the resources industry the top problems, BIS Shrapnel’s chief economist Dr Frank Gelber has told a business conference in Melbourne.

The industries in the most trouble are manufacturing, information media and telecommunications, which are contracting in size and posting losses.

‘‘By now we should’ve seen a spread of broadening investment beyond the mining sector because we stopped investing in non-mining areas when the GFC hit,’’ Dr Gelber says.

‘‘It’s mostly bad, if you take out mining, the rest of the economy is weak."

1.57pm: The construction sector has posted the biggest drop in employment over the past year, a fall of 70,200 or 6.7 per cent.

The seasonally adjusted figures from the Australian Bureau of Statistics are based on a survey in the middle month of each quarter.

They show the number of people employed in construction in August was 978,300 - 8.5 per cent of the employed workforce compared to 9.2 per cent a year before.

The next biggest fall was in public administration and safety, a public sector-dominated area, recording a fall of 48,400 or 6.6 per cent.

1.47pm: Asian markets are trading mixed ahead of the end of a US Federal Reserve meeting that dealers increasingly expect will see a new round of stimulus.

Regional firms linked to Apple are also mixed after the US giant unveiled the iPhone 5 in California, with some analysts giving it a lukewarm response.

Tokyo has risen 0.46 per cent by the break, Hong Kong has added 0.16 per cent and Seoul is 0.10 per cent higher. Shanghai is off 0.17 per cent.

1.30pm: "Whether they (the US Fed) come out with a new program or extend in some older programs or decide whether to leave rates on hold is a really big thing for the market," Juliana Roadley, a market analyst at Commonwealth Securities, tells Reuters.

"That's why the market's nervous. There's no true indication on why the market should be selling off today but they're all a bit quiet ahead of that. I think major investors just don't want to get in ahead of this major announcement.’’

1.19pm: Oil prices are higher this afternoon as tensions sparked by the killing of the US ambassador to Libya and a German court ruling on a eurozone bailout fund helped boost prices.

However, signs of a weaker demand for energy in the United States thanks to a rise in stockpiles put a cap on gains, analysts say.

New York's main contract, light sweet crude for delivery in October, is up eight cents to $US97.09 a barrel, while Brent North Sea crude for the same month is up 12 cents to $US116.08 a barrel.

1.10pm: More overseas news and a battle for dominance in Asia's lucrative beer market has broken out with a Thai tycoon making a $6.8 billion bid for a Singapore conglomerate, throwing into doubt Dutch giant Heineken's expansion in the region.

Thai Beverage (ThaiBev) and its partner TCC Assets have offered $Sg8.7 billion to take over Singapore's Fraser and Neave (F&N), the parent of Asia-Pacific Breweries (APB), maker of Tiger Beer and other popular brands.

The two firms, controlled by Thai billionaire Charoen Sirivadhanabhakdi, say they are offering $Sg8.88 per share for the 70 per cent of F&N shares they do not yet own.

F&N asked for a trading halt in its shares after the Thai bid was announced.

The all-cash offer came two weeks ahead of a September 28 shareholders' meeting called by the F&N board to approve Heineken's $Sg5.6 billion offer for its 40 per cent stake in APB, which has 14 breweries across the region.

Heineken already owns 42 per cent of APB and a takeover would give it a major advantage in the Asian market, where beer consumption is booming as sales fall in mature markets such as Europe.

1.02pm: Britain's BAE Systems and Airbus-owner EADS say they are in advanced talks to create an industry giant that will overtake rival Boeing in sales and contend with defence cutbacks in Europe and the United States.

The proposed deal, the biggest since a 2000 pan-European merger created EADS under joint French and German control, could kick-start a wave of consolidation in the sector, as companies vie for shrinking defence budgets.

Linda Hudson, chief executive of the US arm of BAE Systems, says the deal made sense given the downturn in US and European defence spending, but will also insulate the combined company against the inevitable cycles of the aerospace sector.

"It's a win-win proposition for both companies in this environment," Hudson has told Reuters.

12.48pm: Among the indices, miners are down 0.2%, financials are down 0.4% and energy stocks are down 0.5 per cent. Telcos are still the best performers (and the only sector not in red) to be up 0.8%.

12.36pm: IG Markets institutional trader Chris Weston says the dollar has risen along with other risk assets and the euro. It's now at $US1.0487.

‘‘There’s probably a bit of relief since the Dutch elections have finished up without any issue,'' he says.

'‘Traders are probably also taking up positions before the FOMC meeting.’’

Pro-European parties were handed a significant victory at the Dutch elections on Wednesday (European time), including a win for prime minister Mark Rutte. The FOMC meeting was a crucial event for global markets, with expectations that quantitative easing will be announced.

‘‘I wouldn’t be surprised to see some weakness in the Aussie dollar going into it, because expectations are pretty high that we are going to get an open-ended asset purchase taking place,’’ he says.

12.24pm: Fortescue's share price fall is roughly in line with Chinese iron ore prices. They dropped back below the $US100 a tonne mark, or about 2.1%, at yesterday's fix.

The lower iron ore and (quarterly) coal price aren't dragging on the Aussie dollar. It's continued to edge higher, back towards the $US1.0507 mark reached at about 8pm, AEST, yesterday.

The dollar's worth $US1.049, 81.5 yen, 81.2 euro cents and just over 65 pence in recent trading.

12.18pm: Stocks are clawing back some of their losses, and are down about 0.25% on the day.

Major stocks include:

BHP up 0.15% (despite the coal price cut)
Fortescue is off 2.2%
Rio is up 0.4%
Banks are all down, with Westpac off about 0.4% the biggest decliner of the top four.

12.08pm: One small economic item is out today - consumer inflation expectations. The reading for September came in at 2.4%, the same as in August - which implies no real shift in the outlook for price changes.

The reading dropped to 2.3% in June, which is the only month lower this year. There's probably a small influence from the number on the RBA's outlook. At the moment, investors are continuing to view the prospect of another interest rate cut next month as a bit more than a 50-50 chance.

(We noted earlier this week that the RBA seems to prefer Melbourne Cup Days over other first Tuesdays of the month to shift interest rates. The central bank has acted on each of the past six Cup Days...will they make it seven?)

11.50am: A bit more on the coal price talks, particularly in light of the fact that energy stocks are among the bigger drags on the market today.

The well-connected Tex report out of Tokyo says 'it seems' the hard coking coal price discussions have reached an agreement between BHP Billiton (and its partner, Mitsubishi) and Nippon Steel. Queensland-sourced coal will be shipped at $US170 (free on board) per tonne for the December quarter.

The new price is a hefty $US55 (24%) fall per tonne from the previous three months, and comes just two days after the Queensland state government raised its royalty take on coal mining.

"The reason why the price of hard coking coal drastically dropped is because the demand for coking coal has been dwindling worldwide due to the economic crisis in Europe and the slowdown in China’s economic growth," Tex reports. "Especially, China whose crude steel production reached a ceiling due to economic slowdown has been restricting the import of coking coal from Australia, etc. after (the northern) summer."

11.44am: Leaving aside telcos, basically every sub-sector of the market is lower today, with energy stocks down 0.8%, consumer stocks 0.6% and financials down 0.4%.

11.37am: Central bank action - or inaction - is the theme of this week.

We've had New Zealand leaving its official lending rate at record lows this morning, and now South Korea just announcing the same. The latter unexpectedly held interest rates steady to further assess the effect from moves around the world to battle the prolonged crisis in Europe and cooling demand elsewhere, Reuters reports.

Also in the region, expectations that the US Federal Reserve will launch another round of bond buying this week are fueling speculation that China also may ease policy soon to shore up its cooling economy.

But analysts say investors who bet on quick action from the People's Bank of China could be disappointed, with only an outside chance that it would follow the Fed's lead with more monetary easing of its own any time soon.

The best markets could hope for would be a further cut in banks' reserve requirement (RRR), but the odds against such an imminent move or even an outright interest rate cut are high as a recent flare-up in property and consumer inflation overshadows the urgency of policy easing.

Moreover, unlike the 2008/09 global crisis, China's labour market is still holding up well in part due to wrenching economic and demographic shifts, Reuters notes.

11.22am: Yesterday evening (our time) we had Germany's Constitutional Court clearing the way for that nation's support for the eurozone bailout fund.

Today we have one other flutter of uncertainty removed about the euro, with the re-election of Holland's Prime Minister Mark Rutte early today claimed victory in Wednesday's general election.

Preliminary results gave Rutte's centre-right Liberals 41 seats in the 150-member lower house, a slender two-seat lead over the centre-left Labour Party on 39 seats, with 90 per cent of votes counted.

"Tomorrow I will take the first steps leading to the formation of a cabinet," Rutte said on Dutch television, but declined to comment on which parties he would approach to be in a coalition.

11.17am: Network Ten shares have extended their slumping, touching the record low of 36 cents again today.

The company has lost more than half its value this year, although the shorters are pulling back. Only about 7.9 per cent of the stock is being held as 'short interest'.

Part of the stock's slump may be renewed focus on its poor ratings, such as this item on BusinessDay late yesterday: Ten's worst result since the 1990s.

11.09am: Reuters has now followed up to say talks are ongoing between BHP and the Japanese steelmakeers...and there is no agreement yet on coal prices.

10.59am:On the commodity price speculation front:

Top global coking coal exporter BHP Billiton won't comment on a report that it has agreed to a 24 per cent cut in coking coal prices to Japanese steelmakers for October to December, Reuters reports.

To be sure, BHP shares are flat at present, at $32.85, so investors aren't yet convinced.

Anyway, the reported 24 per cent cut matches the steep fall in spot coking coal prices, which have slumped to about $US165 a tonne for the key steel-making fuel, amid an unexpected slowdown in demand from China and weaker steel output around the region.

Japan's Nikkei reported yesterday that Japanese steelmakers and BHP had agreed to set prices at $US170 a tonne for the December quarter, which the newspaper said was the lowest level since the quarterly pricing system was adopted two years ago.

10.47am: Myer shares, meanwhile, have turned south - and instead up being up 2% or so, they are now down as much as 4% to $1.77. Just trying to pin down what was said on the analyst conference call to sour the mood.

10.43am: Bit of news of Sigma.

Drugs wholesaler and pharmacy support services provider Sigma Pharmaceuticals has boosted its dividends to shareholders despite a small drop in first-half profit, AAP reports.

Sigma’s net profit in the six months to July 31 was $26.1 million, down 2.1 per cent from $27.9 million in the previous corresponding period.

The drop was a result of reforms to the pharmaceutical benefits scheme (PBS) and investments in the growth of Sigma’s business, the company said.

Sigma, which is behind pharmacy retail brands Amcal, Amcal Max and Guardian, declared a fully franked interim dividend of 2 cents per share, up from 1.5 cents at the same time in the previous year.

Investors, though, aren't so chuffed. They have sent the stock down as much as 2.5 cents, or 3.6%, to 66.5 cents.

10.38am: Back to matters Myer:

RBS Morgans investment adviser Todd Kerslake said the Myer result was "a little better than expected."
 
"You've had some pretty ordinary news out of retail of late," he said. "Even though their profit dropped, their profit margins have improved which is always good for the company."

"I don't think Christmas is going to be cancelled this year," he said. "It's been a tough six months for them and they've managed to hold their ground."
 
Mr Kerslake said Myer's decision not to provide 2013 guidance was of no surprise.
 
"If you don't know there is no point in trying to guess," he said.

10.34am: Worth noting in an aside that Samsung Electronics, Apple's biggest rival, has barely budged in trading in Seoul this morning.

Samsung shares are up 0.5 to 1.301 million won. There is no 'short interest' information available on this stock.

Samsung's market value is about 191,900,000,000 won, which looks a bit smaller in $A at about $163 billion. The shares are up about 23% in 2012 - not bad, but only about a third the advance of Apple.

10.28am: We Market Livesters, though, can't really avoid the iPhrenzy around Apple's handset launch, so here goes our offering:

Apple's shares we know ended the day up just 1.4% to $US669.79 after the launch, bringing the company's market value to $US628 billion. The stock is up a remarkable 65 per cent so far in 2012.

Despite the hype and the chance of disappointment around the latest Apple offering, just 1.45% of the stock is held as 'short interest' according to Bloomberg.

10.14am: Banks are providing the main drag, with the sector off 0.5%, and individual stocks, such as ANZ (off 0.7%) and CBA (off 0.3%) lopping the most off the index. Wesfarmers is also among the main drags, losing 0.7%.

On the plus side, Telstra - perhaps lifted by the Apple iPhone5 launch frenzy - is adding the most to the index, rising all of 0.3%.

10.12am: ASX200 is down 14.6 points, or 0.3%, 4346.7 points at the open (as you can view above).

The All Ords is off 13.5 or 0.3% too, at 4369.6 points.

10.08am: More on the wider market in a moment, but Myer shares are higher in early trading. They are up as much as 4.5 cents, or 2.4%, to $1.89 - despite posting a drop in annual profit.

9.58am: Also in local news this morning, the competition watchdog says it has some concerns about Kerry Stokes’ Seven Group acquiring pay TV operator Consolidated Media.

The Australian Competition and Consumer Commission (ACCC) has not yet issued a ruling on the proposed deal however, and has invited further submissions from market players. Seven Group applied to the ACCC for clearance to make a takeover offer for Foxtel and Fox Sports co-owner ConsMedia in response to a takeover offer for ConsMedia from Rupert Murdoch’s News Ltd.

Seven Group already holds a 25.3 per cent stake in ConsMedia.

9.55am: Some analyst rating changes for today:

  • Reject Shop cut to 'underperform' at Credit Suisse
  • Brambles downgraded to 'neutral' from buy at UBS
  • James Hardie rated new 'buy' at Williams Financial Group

9.53am: Department store Myer's profits dropped 14.3 per cent in the year to July, while total sales sagged 1.3 per cent to $3.19 billion, the company reported this morning.

The retailer reported a fall in full-year profit to $139.3 million, excluding one-off items, amid difficult trading conditions. The retailer’s sales for the year to June 30 also fell but only by 1.3 per cent to $3.1 billion, compared to 2010/2011. Full story.

9.51am: After posting a record two-day gain, the price of China iron has slipped back below $US100, losing $US2.10 to $US98.10. But the big miners posted gains on Wall Street overnight. BHP added 0.34 per cent and Rio gained 0.81 per cent.

9.48am: All eyes now turn to the US Fed, which is expected to announce measures to battle the sluggishness of the US economy.

"The Fed clearly wants to do more," said Nick Sargen, a former San Francisco Fed economist, now at Fort Washington Investment Advisors in Cincinnati. "The economy is looking lackluster, and the Fed has said all along that they feel it’s almost immoral that the unemployment rate is as high as it is."

Two rounds of bond purchases totaling $US2.3 trillion have failed to breathe life into the labor market, which Bernanke said last month is a "grave concern". That means policy makers will probably announce a new open-ended plan tied to a sustained improvement in the economy rather than specify an amount of purchases and an end-date, according to 32 of the 73 economists in a Bloomberg survey. Twenty-two expect a fixed duration and amount.

9.45am: Looking a bit more closely at the German court decision, the Constitutional Court cleared the way for the country to ratify the eurozone's new bailout fund and budget pact but insisted the German parliament have veto powers over any future increases in the size of the fund.

The court set two main conditions for the treaties to go ahead.

It said German liability in the rescue fund must be limited to 190 billion euros, the share set out in the current ESM treaty, and that any increase in that amount would require prior approval by the Bundestag lower house of parliament.

9.42am: Euro markets and Wall Street posted small gains overnight after a German constitutional court cleared the way for Germany to ratify the bailout find. Investors greeted the news, which was expected, with polite applause rather than exuberance. Local stocks are in for a flat to lower start.

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

  • SPI futures are 5 points lower at 4359
  • The $A is lower at $US1.0467
  • In the US, the S&P500 rose 0.2% to 1436.56
  • In Europe, the FTSE100 fell 0.17% to 5782.08
  • China iron ore lost $US2.10 to $US98.10
  • Gold fell $1.80 to $US1733.10 an ounce
  • WTI crude oil fell 30 cents to $US96.87 a barrel
  • Reuters/Jefferies CRB index rose 0.25% to 315.70

9.41am: Good morning folks. Apologies for the late start. Welcome to the Markets Live blog for Thursday.

This blog is not intended as investment advice

BusinessDay with agencies