Markets Live: Highest close since September 2008

That's all for today - thanks everyone for reading. We'll be back tomorrow morning at 9am.

Here's the evening wrap of today's session.

Mining powerhouse Rio Tinto has reported a net loss of $US2.99 billion - the first in its history - dragged down by well-flagged impairments against its aluminium and Mozambique coal assets.

After one-offs, Rio’s underlying earnings exceeded expectations, reporting underlying earnings of $US9.3 billion in 2012, above the consensus of analyst estimates of $US9.1 billion.

Click here for the full story.

Here's what you need2know this Thursday evening:

Markets

  • The ASX200 jumped to its highest close since September 2008, finishing at 5036.9
  • The dollar inched up to $US1.0352
  • The Nikkei is up 0.44%, Kospi is up 0.2%, Chinese markets closed
  • Spot gold relatively flat at $US1645.80, while WTI oil was lower at $US97.12
  • Wall Street futures minimally flat, while FTSE100 is also pointing to a flat open

News

Overnight

  • US retail sales
  • France GDP
  • German GDP

Tomorrow

  • ANZ quarterly update
  • DUET earnings report
  • Sims Group earnings report
mining

Rio Tinto is set to post second-half earnings in 30 minutes. The miner is expected to report a 49 per cent plunge in second-half profit to $US3.93 billion.

Excluding big writedowns, though that would still leave full-year profit at $US9.08 billion. Iron ore is expected to make up close to 90 per cent of earnings, with losses expected in aluminium and diamonds.

Rio shares rallied 2.3 per cent in anticipation of a good result.

And here are the best and worst performers for the day on the ASX200:

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Among the sectors, materials surged 1.9 per cent, energy gained 1.2 per cent and consumer staples added 0.5 per cent. Health finished down 1 per cent and gold miners lost 1.1 per cent.

The market has closed higher, fuelled by strong results from Wesfarmers and a healthy boost from the mining sector. The S&P/ASX200 had its highest close since September 2008, jumping 33 points, or 0.7 per cent, to 5036.9, while the broader All Ords rose 32.7 points, or 0.7 per cent, to 5057.2.

BusinessDay's Paddy Manning has gathered together some extra information on CITIC's purchase of a 15 per cent stake in Alumina.

Deutsche Bank’s head of mining research Paul Young said the deal was ‘‘mildly value dilutive,’’ reducing Deutsche’s valuation of the company by about 3c per share to $1.39, but would add to earnings, cutting Alumina’s interest expense by $US30 million a year. 

While Deutsche welcomed the deal and reiterated its ‘‘buy’’ recommendation on Alumina, Mr Young said alumina fundamentals were improving ‘‘rapidly’’ and noted: ‘‘existing shareholders were not given the opportunity to participate in the deal’’.

‘‘Furthermore, spot alumina prices are now only just starting to rise and debt covenants had been cleared out to 2015, so the placement may be slightly premature’’.

Mr Young said both bauxite and alumina prices were likely to rise further as Chinese demand improved.
PhillipsCapital analyst Lawrence Grech said CITIC’s deal with Alumina ‘‘just goes to show you how much money they really needed. Alumina was in need of capital and they’ve got it. That’s a positive. Does it change the underlying (profit) margins of its business? The answer is, not in the short term.’’

mining

Queensland coal explorer Cuesta Coal says it has received approval to explore tenements in which it has a joint stake with a company controlled by Gina Rinehart’s Hancock Prospecting.

QCI (Galilee), a wholly owned subsidiary of Hancock Prospecting, will be able to earn up to a 51 per cent interest in the Snake Creek Joint Venture for its two-stage, $3 million investment.

Cuesta Coal has a portfolio of thermal and coking coal exploration prospects within the Bowen, Surat and Galilee basins in Queensland.

The company’s core projects are on 11,000 square kilometres of exploration ground.

Cuesta shares are flat at 13 cents.

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This one from BusinessDay's Michael Pascoe went up quite late yesterday, but it's definitely still worth a read.

Consumer sentiment jumps, there’s a surge in advertising for get-rich-quick spruikers, the newsletter peddlers are turning from fear to greed – with the surge in bull, it really might be a bull market.

The February Westpac-Melbourne Institute consumer sentiment index published today is up a sharp 7.7 points to a healthy 108.3, its highest level in 26 months.

Maybe this rise is a little too sharp to mean as the demographic breakdown of the survey shows the biggest impetus came from those aged 18 to 24 (up 32 per cent), sales/clerical staff (also up 32 per cent) and those with a household income of between $20,000 and $40,000 (up 9.6 per cent). So poor, young shop assistants might be feeling chipper with the January sales behind them.

The Institute’s trend measurement smooths out the spike to show a more modest 1.4 per cent rise for a still-reasonable score of 104.5, up 6.5 per cent on this time last year. Fewer scary headlines about North Atlantic economic crises, lower interest rates, a rising stock market and some firmer housing prices seem to be doing their trick.

And there’s another harder-to-manage indicator of an outbreak of optimism: the get-rich-quick spruikers seem to be on the rise again and the tone of investment newsletter peddlers is changing from selling fear (“The market is about the crash and the economy is cactus”) to greed (10 top stocks to make you money”).

Click here for the full story.

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BusinessDay's Mal Maiden has put together a nice analysis of the ACCC's investigation into the supermarket duopoly.

Australian Competition and Consumer Commission chairman Rod Sims' disclosure that the competition regulator has escalated an investigation into the two big supermarket chains over possible anti-competitive behaviour towards suppliers is a watershed moment.

The competition regulator can demand that information be supplied to it in the formal investigation it is now running, so allegations that the supermarket misuse their power in their dealings with suppliers will finally be thoroughly examined. It it may in time come to be seen as the point at which the enormous power of the two retailing giants finally began to be reined in.

When Sims says that the Australian Competition and Consumer Commission is now investigating whether the "major supermarkets" breached competition law in their dealings with suppliers he is talking about Woolworths and Wesfarmers-owned Coles, the two chains that dominate grocery retailing in Australia.

Click here for the full story.

The Bank of Japan kept monetary policy steady and raised its assessment of the economy on Thursday, as the yen's recent declines and budding signs of recovery in global demand offer some relief to the export-reliant economy.

"Japan's economy appears to be bottoming out," the central bank said in a statement announcing its policy decision.

BOJ board member Ryuzo Miyao proposed continuing the BOJ's policy of keeping interest rates virtually at zero until the central bank's target of 2 per cent inflation is in sight. His proposal was voted down 8-1.

Wesfarmers has confirmed that an internal investigation is underway that will examine whether the nation's second-biggest supermarket chain is engaging in improper predatory and anti-competitive behaviour.

Managing director Richard Goyder confirmed the internal investigtation during a press conference for Wesfarmers half year results, after the head of the competition watchdog launched a blistering attack on the supermarket industry last night.

‘‘We are doing our own investigations and obviously the ACCC is doing its and we will just let it all unfold,’’ Mr Goyder said

After being up as much as 17 per cent earlier today, shares in Alumina are currently up 9.6 per cent to $1.32. As reported earlier, this has been caused by China's Citic Resources Holdings purchasing a 15 per cent stake in the aluminium producer.

Well it looks like the carbon and mining taxes haven't treated shares badly, says Stephen Korkoulas.

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Valentine's Day hasn't rubbed off (sorry) on the share price of Ansell, the condom to gloves maker, with the shares down another 27 cents, or 1.7 per cent, to $15.76, but off its low of $15.64, following its sharp sell-off yesterday on disappointing December half earnings.

Earnings a share for the half fell to 42 cents from 49.3 cents hit by squeezed margins which has raised questions about the company's growth profile. The poor numbers drove yesterday's 97-cent sell-off.

With plenty of cash on the balance sheet, it has flagged a buy-back of up to three million shares over the next 12 months.

But since shares usually continue falling for several weeks at least in response to poor numbers, the company just may bide its time before stepping in to soak up excess scrip on the market.

The shares had won favour earlier on the back of acquisitions, which boosted hopes of strong growth, which have now been dashed.

banks

Westpac is tipped to benefit most from the widening in profit margins from mortgage lending that underpinned the Commonwealth Bank’s latest $3.78 billion earnings result.

As investors await the next big bank profit when ANZ Bank updates its quarterly earnings report on Friday, market analysts say the CommBank’s bumper result on Wednesday suggests other lenders are also reaping the benefits of their home loan pricing decisions.

Westpac has a particularly heavy weighting towards domestic retail banking. Its share of the home loan market, at 23.5 per cent, is second only to CBA’s.

Westpac shares are up 0.4 per cent to $28.58.

With the story of the day, thus far, being Wesfarmers and it's strong earnings report, we thought we'd show you this nice graphic of its performance over the last 12 months.

Optus' result includes a $30 million one-off charge from restructuring during the quarter, the company’s parent SingTel said.

The restructure included 305 job cuts in the three months to December, trimming Optus’ workforce to 8,764.

The company has cut its workforce by 962, or 9.9 per cent, in the last 12 months, company accounts show.

Excluding the impact of restructure costs, Optus made an underlying net profit of $181 million in the three months to December, up from $177 million in the prior corresponding period.

Revenue fell 5.7 per cent from the previous corresponding period to $2.28 billion, and that followed a 4.2 per cent revenue decline in the second quarter.

eco news

The federal Treasury expects the economy to grow around trend during the next two years, but warns risks remain from a fragile global economy.

A Senate estimates hearing in Canberra today was told that as resource investment peaks over the next year, strong growth in commodity exports, continued growth in household consumption and some pick-up in dwelling construction and non-mining investment were expected.

However, nominal growth - the dollar value of gross domestic product (GDP) - will be below trend because of a decline in the terms of trade and as domestic price pressures remain subdued.

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