That’s it for Markets Live today.
You can read a wrap-up of the action on the markets here.
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See you all again tomorrow morning from 9.
Shares suffered their biggest daily drop in a month as the local market posted a broad based sell-off after following Wall Street lower early, with banks leading the decline.
The benchmark S&P/ASX 200 Index tumbled 69.7 points, or 1.3 per cent, on Monday to 5358.9, while the broader All Ordinaries Index also lost 1.3 per cent to 5353.6 with all major sectors affected by the slide.
Local stocks fell at the open after equity markets in the United States and Europe fell heavily on Friday night. Market weakness around Asia in the afternoon pressure applied further pressure.
The negative sentiment in US markets continued to extend to locally listed internet and biotechnology stocks, which were the worst-performing sub sectors. Carsales.com fell 3.5 per cent to $10.08 while CSL lost 1.9 per cent to $67.28.
A stronger dollar continued to apply extra pressure to shares. At the local close the Australian dollar was buying US93.87¢ up from US93.79¢ at Friday’s local close.
A sell-off in the big banks weighed heavily on the market. Commonwealth Bank of Australia shed 1.1 per cent to $76.51, while National Australia Bank dropped 1.3 per cent to $34.88. Westpac Banking Corporation and ANZ Banking Group each lost 1.5 per cent to $34.15 and $33.34 respectively.
Nickel miner Western Areas was the best-performing stock in the ASX 200, climbing 5.3 per cent to $3.96 with nickel futures trading at their highest price in more than a year due to concerns a ban on Indonesian exports will limit supply.
And here are the best and worst performing stocks in the ASX 200 today.
Coca-Cola Amatil suffered the biggest falls, plunging another 7 per cent. The company's debt was downgraded by Standard & Poor's today.
Magellan and Platinum bore the brunt of the risk-averse investor who seem happy to lock in profits on the fund managers as the environment for global equities takes a bit of a turn for the worse.
Western Areas was the best of the only 16 stocks that finished in the black.
Best and worst performing stocks in the ASX 200 at the close.
The market started in a hole and then just kept on digging, with banks doing most of the damage in a 70-point drop in the ASX 200 to 5358.9.
The All Ords was also 1.3 per cent lower to 5353.6.
Westpac and ANZ dropped 1.5 per cent, NAB 1.3 per cent and CBA 1.1 per cent. Staying in the financials sector, QBE plunged 3.7 per cent after announcing a strategic review of its US operations, which just screams "writedowns".
BHP joined the 169 names in the top 200 to record losses, trading 0.7 per cent lower, while Rio finished 1.3 per cent down.
Defensive stocks weren't protected, with consumer staples like Wesfarmers 1.3 per cent down and Woolies 1.1 per cent down.
Telcos were the best performing corner of the market, only down 0.1 per cent, after Telstra added 0.4 per cent, while Singtel was flat.
Concerns about China's growth is expected to cap gains in the Australian dollar, which is teetering at five-month highs.
The Aussie is steady today, fetching a touch under 94 US cents. Traders are eagerly awaiting the release of China's first quarter GDP data on Wednesday which is expected to have significant weight on the currency.
CBA currency strategist Peter Dragicevich said the figures were expected to be in line with Chinese manufacturing activity data, which has underwhelmed so far this year.
If that's the case, Mr Dragicevich expected the Aussie to take ''some heat off the Aussie''.
''But we don't expect it to fall too far,'' he said.
''Fundamentals domestically look like they've start to pick up, so that should keep the Aussie pretty well supported.''
The RBA releases its minutes from its March meeting on Tuesday and Mr Dragicevich expected officials would continue to talk up the transition of the economy away from mining-led growth and refrain from jawboning the Aussie.
''We don't think the RBA look to explicitly talk down to strength in the currency.
''We have seen a bit of a bounce back in Australian commodity prices since early March, so that will provide some comfort to the RBA.
''That's one thing they've been stressing over the last year, is the divergence between the Aussie and the terms of trade. So the lift recently that we've seen in the Aussie has been supported by those commodity prices.''
RBS currency strategist Greg Gibbs said the domestic company was performing stronger-than-expected, thanks to a buoyant housing market, which had in turn supported the Aussie.
Mr Gibbs said the potential for significant growth in residential construction this year and strong house prices had boosted confidence, which was helping offset fears on slowing growth in mining investment.
QBE Insurance Group has confirmed that it is undertaking a strategic review of its US-based middle market business, leaving all options open including a possible sale of the unit.
Investors are worried: the stock is down 3.8 per cent to $11.97 today.
That’s because the announcement has raised analysts’ suspicions that the $1.2 billion paid for the US insurer Winterthur will lead to write downs, according to CMC Markets chief strategist Michael McCarthy.
The review was foreshadowed in February, during the company's full-year profit results, and comes after news reports surfaced that QBE might be considering selling the business.
"We are well advanced in implementing remediation work which will allow QBE's North American business to return to profit," QBE chief executive John Neal said in a statement.
"As part of this process, we continue to assess options for various components of the US business, including the US middle market business," he said.
The review will include "a continuing focus on improving the profitability of the middle market business, consideration of opportunities to increase scale and support for our business partners, refining the business strategy and operating model and exploring options for a potential sale of all or part of the middle market business."
Coca Cola Amatil’s credit rating has been cut from A- to BBB+ by Standard & Poor’s in a fall from grace for a credit that has always been one of the local market’s strongest names.
"The downgrade reflects our opinion that mounting competition and margin weakness in Coca Cola Amatil's Australian business have weakened [its] operating performance to levels below our expectations for the previous 'A-' rating," Standard & Poor's credit analyst May Zhong said.
In previous years CCL’s cost of funds was so low that it would raise debt at below the rate the banks would offer on term deposits.
CCL's shares are 7 per cent lower today to $9.07.
The Federal Court has ruled that supermarket giant Woolworths breached undertakings made to the regulator this year that limited it to a standard discount of 4 cents per litre off petrol.
Last year the ACCC reached a deal with Woolworths and Coles that limited discounts on shopper dockets earned at supermarkets to 4 cents per litre.
However, both chains quickly introduced new schemes that allowed shoppers to up their discounts by spending money at the petrol station convenience store with a Woolworths scheme allowing shoppers to boost the fuel discount to 8 cents per litre.
The ACCC immediately reacted to enforce its undertakings, with the court, in its judgment on Monday, ruling it as a breach of its deal with the regulator.
The ACCC had alleged that Woolworths’ initial 4 + 4 cents fuel discount offer was conditional on Woolworths supermarket purchases and breached its undertaking from last year because the discount was only available to a customer who has made a qualifying supermarket purchase.
From 10 March 2014, after the proceedings had commenced, Woolworths introduced a new offer so that the 4 cent discount for purchases of $5 or more in the petrol station was available without a supermarket purchase, although it could also be used in conjunction with the 4 cent discount offer on qualifying fuel purchases.
It took action to defend its offer, asking the court to declare at the time that its ‘‘stacked’’ 8 cent per litre discount offer met with the undertakings it made to the ACCC in December.
Breached ... Woolworths new shopper dockets not help up in court. Photo: Glenn Hunt
Santos chief executive David Knox has voiced confidence in the future of Australia’s nascent shale gas sector, despite others cautioning that the US boom in the fuel is unlikely to be replicated elsewhere.
Addressing a CEDA function in Adelaide, Mr Knox said that from Santos’s work so far in unconventional gas in the Cooper Basin, he was optimistic about the future for commercial production, although acknowledged it may take some time to come up with the optimal combination of technology.
“I’m confident we will be able to do it when we apply the right technology, and it will probably take a few years to unlock that,” Mr Knox said.
He said Santos had brought two vertical shale wells into production, and had two other horizontal wells it would test for production this year.
But speaking at the same event, international energy expert Professor Paul Stevens said various factors such as property rights that differed between the US and elsewhere meant the success the sector has seen in the US made it unique.
“When you apply these characteristics in other parts of the world it doesn’t look so promising for the moment,” Professor Stevens said.
Mr Knox also defended the move toward gas exports from Australia’s east coast, despite the resulting increase in domestic gas prices.
Gold stocks are back in vogue, with miners of the precious metal rising 25 per cent more than the ASX’s biggest companies this year.
But doubts linger about how much further the rally can go.
Gold prices hit a three-week high, rising 0.6 per cent to $US1328.30 an ounce, on Monday amid increased fears about tensions between Russia and Ukraine.
So far gold prices have bounced about 10 per cent this year compared with the S&P/ASX 200 Index rising 1.4 per cent.
ANZ head of commodity research Mark Pervan attributed much of the gains to a steep sell-off among gold exchange-traded funds (ETFs), which sold about 30 per cent of their holdings late last year as US bond yields hit 2 1/2 year highs.
''So gold prices came off about 25 per cent last year,'' Mr Pervan said. ''But that's completely unwound now. We have seen a fair bit of momentum taken out of the US bond markets.''
Bond markets rallied amid increased speculation US would soon raise interest rates as the Federal Reserve hit full throttle on tapering its asset buying program. But all has not gone to plan this year, with a wave of poor US economic data and the Fed suggesting it might not be as eager to trim its stimulus.
However, while the gold price has bounced thanks to ''opportunistic buying'' from India and China, Mr Pervan said ETF holdings ''haven't really taken off''.
Instead, he said there has been a swing back into equities, after ETFs knocked the momentum out of the gold equity markets for much of the past decade.
Gold stocks (gold line) have massively outperformed both the strong gold price (white) and the weak ASX 200 (green).
Illustration: Michael Mucci.
It's often said we pay a lot for superannuation. But how much? Well, research firm Rainmaker estimates Australians paid $18.6 billion in fees for their retirement savings to be managed last financial year.
That is equivalent to $1075 for every adult in the country, including those who don't even have super.
It's the same amount that was paid out last year by Medicare, which provides free or subsidised healthcare services to the entire population. And just like Medicare costs, super fees are likely to swell, with the total super pool tipped to triple over the next two decades.
Funnily enough, business groups don't complain about this cost burden as they warn about growth in government spending on social services. That's hardly surprising - super is a significant source of corporate profits.
But thankfully, the issue should come under serious scrutiny in the financial system inquiry being led by former Commonwealth Bank boss David Murray.
As submissions from the Reserve Bank and Treasury highlight, ours is one of the most expensive private pension schemes in the world.
The RBA cites Organisation for Economic Co-operation and Development figures on pension funds' operating expenses as a share of total assets.
In the RBA's graph, Australia's cost ratio was third-highest among OECD countries, behind Spain and Mexico.
QBE has confirmed a strategic review of its struggling US based middle market business.
Chief executive John Neal said the company was well on the way to constructing a plan to return the US business to profit.
‘‘The review will include a continuing focus on improving the profitability of the middle market business, consideration of opportunities to increase scale and support for our business partners, refining the business strategy and operating model and exploring options for a potential sale of all or part of the middle market business," Mr Neal said.
The middle market represents around $US900 million in gross written premium.
QBE shares are down 3.4 per cent at $12.15.
Sheesh, what a day. The bears are gathering some steam and losses on the benchmark ASX 200 index have accelerated into the afternoon.
As the chart shows, the index is through the 30-day moving average and approaching the 50-day MA.
The ASX 200 is through the 30-day (pink line) and now approaching 50-day (green line) moving average.
US jobless claims may have dropped to their lowest level since 2007, at 300,000, but Morgan Stanley economists reckon that Easter gift won’t last for long.
‘‘Over the past several years, jobless benefits have jumped by an average 20,000 during the week that includes Good Friday, and have fallen by an average 23,000 three weeks later. Assuming a repeat, this year the jump in jobless claims will come in the week ending 19 April.’’
Not a great day for Coke and cheese - CCA and Bega Cheese are the worst performers today. Coke has received a mixed but mostly negative review by analysts after their Friday earnings update shocker (see post at 11:10).
Asset managers Henderson and Magellan are among the worst performers in the ASX 200 so far.
Sirius Resources and Western Areas are the best performers, with Ten Network enjoying some rare time in the sun.
Pacific Brands is also among the better performers, perhaps off the back of conjecture around more merger activity in the retail space.
Best and worst performers in the ASX 200 around midday.
Sticking with David Jones, the South Africa’s Woolworths bid has put some much needed fizz into the local retail sector, notes the AFR's Street Talk column.
It is interesting that electronics retailer JB Hi-Fi also had a good week with shares in the Sydney company finish almost 6 per cent higher. (The shares have eased 0.8 per cent lower today to $20.47.)
There are observers who believe a local or foreign predator could be running the ruler over the $2 billion company, which has shrugged off malaise affecting the sector.
A cashed-up Wesfarmers is the most logical Australian predator given there would not be competition issues. The Perth conglomerate could spend $7 billion, according to UBS analysis, and has enjoyed success with retail by turning around the Coles supermarket chain. JB Hi-Fi, of course, is in better condition than Coles before Wesfarmers came along.
JB Hi-Fi shares are up 49 per cent over the past year, easily outperforming rival Harvey Norman (33.6 per cent) and the wider consumer discretionary index (15.5 per cent).
Despite these gains it trades at a P/E of 16 times – about the same as Harvey Norman (which has been the subject of private equity approaches in the past).
Woolworths (the Australian version) tried – and failed – to do a deal with JB Hi-Fi back in 2008. Both sides could not agree on price while Woolies CEO at the time, Michael Luscombe, did not get on with then JB Hi-Fi boss Richard Uechtritz.
Woolies had a less than pleasant experience in electronics retailing with Dick Smith, which it sold for a big loss to private equity firm Anchorage in 2012. It seems unlikely it would want to test the waters again.
Woolworths Holdings chief executive Ian Moir has already identified three sites for new, smaller David Jones stores in Australia, and says his investors are now getting over their initial shock at the size of the deal.
Mr Moir has returned to South Africa to meet shareholders to detail his transformative $2.15 billion takeover bid for David Jones and admitted investors were initially surprised.
But he claimed investors have quickly appreciated its strategic and financial sense.
Shares in Woolworths listed on the Johannesburg Stock Exchange fell by 7.5 per cent when investors heard the news of its plans to swallow up Australia's second-biggest department store, but bounced back 2 per cent the following day.
Mr Moir is already examining ways to expand David Jones.
He said David Jones' ''village-style'' store in Melbourne's Malvern - which is one-third the size of a normal David Jones store - was a model that Woolworths would roll out further.
''I think we see three obvious [sites] within the next couple of years,'' he said. ''I believe we can get to double digits in time - but it's going to take time.
David Jones's shares are steady at $3.93.
Ian Moir. Photo: Nic Walker
The devastation of US biotech stocks last week - The NASDAQ Biotech Index fell more than 20 per cent – burst a contemporary stock market bubble.
In the grand scheme of bubbles however, biotech stocks was fairly modest.
This chart from the always excellent chief investment strategist at Bank of America/Merrill Lynch, Michael Hartett, shows a history of recent asset price bubbles measuring the length of time that the bubbles run for and the gains in price.
The most notable bubble, by a long way, when measured by the duration and the scale of gains, was the run-up in Japanese stocks through to 1987.
Notable bubbles through contemporary history (no tulips). Source: BoA/Merrill Lynch.
Top 20 shorted stocks. Source: CBA
Cochlear, UGL and Monadelphous are the top three most shorted stocks on the ASX, according to CBA analysis of ASIC data.
“A stock being among the top 20 shorted stocks sends a strong signal that the market is concerned about the stock, especially when the short position exceeds double digits,” write the CBA analysts. “Entering the top 20 or exiting the top 20 is also a strong signal to the market.”
The biggest weekly increases in shorting positions over the week to April 4 were Singtel (Optus), up 122 per cent, BC Iron, up 101 per cent, and iiNet, up 52 per cent, report the CBA analysts.
Biggest falls were in shorting interests were in Kingsgate Consolidated (down 54 per cent), Independence Group (38 per cent lower) and GUD (down 28 per cent).
Telstra could be paid over $98 billion by NBN Co over the next 55 years for infrastructure leases and other fees, according to a report in industry publication CommsDay.
The article said a May 2013 Goldman Sachs analysis for NBN Co showed the government-owned company building the national broadband network would be forced to pay $98.2 billion in nominal pre-tax profits to Telstra between financial years 2011 and 2067.
According to the draft document cited by Commsday, $88 billion of this would be from infrastructure leases for Telstra assets like underground ducts, which are needed for the construction of the NBN.
NBN Co's payments would grow to $1 billion per year in financial 2019 from $400 million per year in the year ending June 30. The company would be paying Telstra $2.9 billion per year by 2067.
Though Telstra has characterised its existing deal with NBN Co as offering $11.2 billion in net present value through infrastructure lease and other payments, the exact fees owed to the telecommunications company have never been released.
The then-Coalition's broadband plan was forecast to add an extra 20 per cent, or $2.4 billion, onto the value of Telstra's plan because the company would be able to keep using its hybrid fibre coaxial network, Commsday reported.
Following a 15 per cent downgrade on Friday, Coca-Cola Amatil shares had their biggest fall in 23 years, but it looks like some analysts see value in the struggling beverages conglomerate.
Credit Suisse’s Larry Gandler has upgraded his rating from underperform to outperform, with a new 12 month target price of $11. It should be noted that prior to Friday’s $54 million downgrade, Coca-Cola shares were trading around $11.40.
‘‘The situation is that the overall business is experiencing modest erosion on the top line which we believe is rectifiable with up-weighted investment and improved on-trade execution,’’ Mr Gandler said.
‘‘We feel that so much of Coca-Cola Amatil’s Australia beverage problems are due to a transitional period at Coca-Cola where previous management became focused upon the exit door and short-term outcomes.’’
We here at Markets Live note below that views are mixed in Coca-Cola, with the majority of analysts changing their view on where the company’s share price will be heading.
Looking across the housing markets of NSW, Victoria, Queensland and Western Australia, which last year were responsible for 90 per cent of housing starts, CIMB surveyed 40 of Australia’s top 100 home builders to gauge emerging trends and get ahead on published indicators.
60 per cent of respondents said sales were average, while 40 per cent said good. CIMB said sales are a good indicator of future housing starts. 50 per cent of those surveryed said sales were the same as six months ago, but 30 per cent said sales were down.
‘‘Others noted that the decline in rental yields removed a key tailwind for new home sales,’’ CIMB said.
‘‘While builders’ views are more subdued than they have been in previous surveys, it is worth stressing
that most expected a moderation of growth rather than a correction in activity levels. On average, builders expected housing starts to increase by 5 per cent in 2014.’’
CIMB said that there were prospects for improvement across the building materials sector but that most of the upside was already priced in.
On the AUD, NAB Research’s Ray Attrill notes that Friday’s CFTC (futures) market data showed that the AUD speculative positions flipped to net long through Tuesday (+3.3k from -4.9k).
This is the first time traders have been net long the local dollar since the week of May 7, 2013 (see chart).
“If this is symptomatic of the broader trading community, there is no longer an overhang of short AUD positioning and this suggests that as when the USD finds its feet, downside moves in the AUD should be easier to come by,” writes Attrill.
Traders are more negative than positive on the Aussie dollar for the first time in about a year. Source: NAB.
Shares have followed their offshore lead and sunk early, with the big banks and miners continuing their declines.
The ASX 200 is trading 19 points lower, or 0.4 per cent, 5409.3, to 5409.3, while the All Ords is down a similar amount to 5403.1.
Telcos are the only sector higher - by 0.4 per cent - while consumer discretionary names are down 0.7 per cent. Gold miners are 0.1 per cent down despite gold trading higher.
QBE Insurance Group may be looking to sell its $1.2 billion mid-market North American insurance business, Winterthur, as the global insurer continues its efforts to fix its troubled US division.
UK-based The Insurance Insider cites sources suggesting QBE may be looking to offload the business, seven years after the insurance giant made the acquisition under the watch of former acquisition-hungry chief executive Frank O’Halloran.
The report suggested QBE was interviewing advisers ahead of the speculated sale, including Bank of America Merrill Lynch and Willis Capital Markets. QBE declined to comment .
The market speculation comes after QBE boss John Neal said in February that the insurer had spent a fair bit of time last year conducting in-depth analysis around the US property and casualty market.
QBE’s middle-market operation, which sits within the property and casualty division of the business, contributed about $880 million of gross written premium or revenue to the group.
The shares of the following companies have been put in a trading halt this morning:
- Australian Pharmaceutical Industries: expects to make an announcement to the market in relation to the carrying value of its assets as part of the process of finalising its half year results now scheduled to be released on 30 April 2014.
- Red 5: requested pending the release of an announcement regarding the status of the cease and desist order on the Siana gold project.
- Bathurst Resources: requesting this trading halt so that it may undertake a competitive bookbuild as part of a placement (currently expected to be 10-12% of its capital at a discount of 15-20%), the processes for which were commenced overnight but which will not be completed by 10am this morning.
Market manipulation appears to be rife on the Australian sharemarket when compared to other major markets around the world, according to the country's leading market researchers.
The dramatic price spikes which occur just before the markets close at 4pm – the strongest proxy of market manipulation – are being used to boost bonuses for rogue fund managers, the researchers claim.
The dramatic price movements occur in the last 15 minutes of trading each month, quarter and end of financial year and most likely relate to fund managers lifting their trading results which are measured on the key dates.
"They are getting money in all the time but instead of buying it every day they save it and buy it at the last minute to drive more demand," chief executive of the federal government-backed Capital Markets Co-operative Research Centre, Michael Aitken, told The Australian Financial Review.
For example, on December 20 last year, $23 million was traded in the last 15 minutes for just three stocks, Village Roadshow, Ocean Gold and REA, most likely delivering a healthy Christmas bonus to the rogue fund managers.
On Friday, $23 million in trading occurred for the same three stocks over the entire day.
The contrasting fortunes of two of the US’s biggest banks — JPMorgan Chase and Wells Fargo — at first glance point to the ascendancy of Main Street over Wall Street.
On Friday, JPMorgan reported an 18.5 per cent slump in first-quarter profit, hurt by steep revenue declines in its once-vaunted trading machine.
In contrast, first-quarter earnings at Wells Fargo, less dependent on such Wall Street profit generators, rose 14 per cent, fuelled in part by a surge in auto lending and loans to corporations.
And the wrenching sell-off in US high-growth technology and biotech shares could leave investors braced for more than a minor pullback when earnings pick up speed this week.
First-quarter earnings estimates have fallen sharply as many companies have blamed the brutal winter for weak outlooks.
With high-valuation stocks under pressure, earnings could be subjected to even more investor scrutiny than usual.
"There's scepticism among investors about the outlook, and we're getting into the first-quarter earnings season, so you're going to see some positioning," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
Profit growth for S&P 500 companies now is projected at just 0.9 percent in the first quarter from a year ago, down from a January 1 forecast for 6.5 percent growth, Thomson Reuters data showed.
This week, 54 S&P 500 companies are scheduled to report first-quarter earnings, compared with 29 last week.
Earnings are expected from such high-profile names as General Electric, Johnson & Johnson, Goldman Sachs, Google and IBM.
A move into blue chips is one trend emerging after the market's slide, which pushed the Nasdaq down on Friday to close below 4,000 for the first time since Feb. 3.
The Australian dollar is higher, supported by optimism about the local economy and the possibility of the euro zone getting more economic stimulus.
At 7.00 AEST on Monday, the local unit was trading at 93.90 US cents, up from 93.75 cents on Friday.
Over the weekend, European Central Bank (ECB) president Mario Draghi said he might have to take action if the euro rises any further.
OM Financial senior client adviser Stuart Ive said the possibility of a lower euro zone interest rate or economic stimulus from the ECB was a key focus for currency markets.
"He's indicated that the ECB is ready to act and the euro has opened 50 points lower (against the US dollar) and the Aussie is considerably higher against the euro," Mr Ive said from Wellington.
The Australian dollar is at 67.83 euro cents, up from 67.47 on Friday.
Last Thursday, the Australian dollar rose past 94.50 US cents after it was reported that the local unemployment rate for March fell of 0.3 percentage points to 5.8 per cent.
The currency had a bit of a fall on Friday but, Mr Ive said, the positive outlook for the Australian economy will continue to give the local currency support.
"Since the start of this year, the economic data for Australia has been slowly getting better," he said.
"The employment data last week certainly surprised the markets, so that's two good numbers on the trot. It's always good news when that happens.
"It shows there is a bit of strength coming through on the Australian economy and that will always underpin the Australian dollar."
A Melbourne based miner is the focus of the global mining industry this morning, after Chinese-owned miner MMG finally completed the $US5.85 billion ($6.22 billion) purchase of Glencore Xstrata's Las Bambas mine.
Despite being listed in Hong Kong, MMG's headquarters are on Melbourne's Southbank, and the purchase of Peru's Las Bambas mine in Peru ends a long saga that has drawn out the completion of the merger between Glencore and Xstrata.
Chinese authorities had refused to approve the Swiss merger unless Las Bambas was sold to Chinese entities, in a bid to prevent the merged entity dominating the copper market.
MMG will buy Las Bambas in a joint venture with other Hong Kong groups Guoxin International and CITIC.
The money will be sourced through both equity and debt, with assistance from the China Development Bank.
The transaction will also help resolve other deals, with PanAust's desire to purchase Glencore's 80 per cent stake in the giant Frieda River mine in Papua New Guinea also unable to proceed until the Las Bambas issue was resolved.
ASX listed Highlands Pacific has a 20 per cent stake in Frieda River.
Local stocks are poised to open lower after extended losses on Wall Street and iron ore took a dive.
Here's what you need2know:
- SPI futures down 14 points to 5406
- AUD at 93.81 US cents, 95.35 Japanese yen, 67.81 Euro cents and 56.15 British pence at 6am AEST
- On Wall St (on Friday), S&P500 -1%, Dow Jones -0.9%, Nasdaq -1.3%
- In Europe, Euro Stoxx 50 -1.2%, FTSE100 -1.2%, CAC -1.1%, DAX -1.5%
- Spot gold inches higher to $US1318.42 an ounce
- Brent oil down 0.1% to $US107.33 per barrel
- Iron ore falls 1.9% to $US116.90 per metric tonne
- LME three-month copper up 0.2% to $US6670 a tonne
What's on today:
- Australia credit and debit card lending
- US retail sales, business inventories tonight at 10:30pm AEST
Stocks to watch:
- RBC Capital Markets has maintained an “outperform speculative risk” call on Senex Energy with a $1.15 price target
- Deutsche Bank has a sell recommendation on Treasury Wine Estates and a 12-month price target of $3.20 a share after a read-through of Constellation’s results
- Morningstar has a “hold” recommendation on no-moat rating Seven Group Holdings. “Our fair value remains at $9.00. Seven Group’s shares are undervalued with the market becoming increasingly concerned about the dissimilar nature of the businesses and investments.”
- Coca-Cola Amatil cut to neutral vs overweight at JP Morgan
- Echo Entertainment cut to neutral vs outperform at Credit Suisse
- Spotless Group will start marketing its $1 billion IPO this week: AFR