It's been a big week for Markets Live, but now we must bid you adieu. Have a fantastic weekend, we'll see you bright and early Monday morning.
Iron ore rose to two-week highs, setting course to end the week with its biggest gain in more than a month, as traders snapped up forward cargoes hoping demand from top buyer China will perk up ahead of the Lunar New Year break in February.
Higher domestic steel prices are also spurring interest in iron ore, backed by a decline in inventories and optimism that the Chinese economy is on the road to recovery after a seven-quarter slowdown.
Benchmark iron ore with 62 per cent iron content gained 0.4 per cent to $US118.40 a tonne on Thursday, according to Steel Index, the highest since November 23.
Some positive news for blue chip stock holders today:
- BHP: +1%
- Rio: +0.4%
- ANZ: +0.7%
- CBA: +0.9%
- NAB: +1%
- Westpac: +1.1%
- Fortescue: +1.3%
- Woolworths: +1.1%
- Wesfarmers: +1%
- Telstra: +0.2%
Economists at the International Monetary Fund have compiled figures backing the view that the Australian dollar is becoming a more important reserve asset for central banks.
‘‘The IMF’s new data-set provides fresh insights into central banks’ debt holdings,’’ Commonwealth Bank currency strategist Joseph Capurso said in a report on Friday.
‘‘It also reveals central banks’ preferences for reserve currencies because advanced economy sovereigns issue debt in their local currency.
‘‘Central banks asset allocation decisions are important influences on financial markets because they are amongst the world’s largest investors,’’ Mr Capurso said.
Here's a quick run through of all the important business events next week: Business Calendar.Back to top
The market has closed higher, the benchmark S&P/ASX200 jumped 42.45 points, or 0.9 per cent, to 4551.8, while the broader All Ords added 40.17 points, or 0.9 per cent, to 4555.9 points.
Village Roadshow will sell its distribution centre in Sydney which currently handles more than 36 million DVDs.
Village Roadshow said its subsidiary, Roadshow Films, had entered into an agreement to sell its distribution centre to Technicolor Distribution, a subsidiary of the Technicolor Group headquartered in France.
‘‘The sale will lead to a profit on disposal for the Village Roadshow group in the 2013 financial year of $6.5 million before tax,’’ the company said in a statement.
After the sale, Village Roadshow expects to incur a reduction of just under $2 million in its ongoing earnings.
Most markets around the region have enjoyed a nice bump up today:
- Nikkei(Japan): flat
- Shanghai: +1.2%
- Taiwan: +0.1%
- South Korea: +0.3%
- Singapore: +0.9%
- New Zealand: +0.5%
Corporate lawyer Alison Lansley has been appointed to the board of the $37.4 billion national broadband network (NBN).
Communications Minister Stephen Conroy and Finance Minister announced today Ms Lansley’s position on NBN Co’s board will be for three years.
Senator Conroy says Ms Lansley has had more than 30 years of experience as a corporate lawyer and company director.
‘‘Her appointment will deepen NBN Co’s legal expertise and she will make a great contribution to the board,’’ he said in a statement on Friday.
Current board member Terrene Francis has also been reappointed for three years.
Rare earths miner Lynas will face the Malaysian Court of appeal this month to fight another application to stop it operating its new plant in Malaysia.
The group known as Save Malaysia Stop Lynas has obtained a hearing in the Malaysian Court of Appeal on Friday December 19.
The appeal is against the Kuantan High Court’s earlier refusal to grant a stay against Lynas’ temporary operating licence, Lynas said in a statement.
Lynas says there is currently no injunction or stay preventing the company from carrying out its operations at its Malaysian plant.Back to top
UBS’s economics team offers some lessons from the last time the cash rate was at 3 per cent (in mid-2009, at the peeak of the GFC):
- the economy today is in much better shape than it was the last time the cash rate was at per cent
- the RBA was willing to ‘stare down’ a further sharp rise in unemployment (& modest drop in inflation) after it had reached this record low of per cent
- the factors that led the RBA to hold (and eventually tighten) were better economy-wide confidence, housing and equity markets (which have already seen some improvement this time), despite ongoing weak GDP growth at the time.This suggests further moves lower in the RBA’s cash rate – if they come – may not necessarily be early next year, as seems consensus, UBS says.
At a record low of 3 per cent, the RBA may choose to sit for a time and assess whether the cuts so far, over time, help the non-mining economy recover fast enough to contain unemployment.
While work in the nude day may be restricted to those who work from home, it hasn't stopped the small business team from having a good laugh today. Click here.
Looking forward to 2013, HSBC chief economist Paul Bloxham had some interesting comments on the outlook for Australia's housing sector:
- Australia’s housing sector has been one of the key areas held back as the economy contracted to make way for the mining expansion. The key driver of this, in our view, was the above neutral interest rates the RBA kept in place through 2011, as well as the fairly hawkish rhetoric they espoused through this time.
- The historical relationship between the housing construction cycle and mortgage rates implies that we should expect housing construction to pick up solidly from here. We have in mind that housing construction will continue contribute to GDP growth in Q4 2012 and will make a solid contribution to growth in 2013.
- There are also signs that housing prices are beginning to rise, with prices up by 2.2% in the past seven months, after having fallen by 7% in the previous 18 months. With around 90% of Australian mortgages at variable rates, the below average RBA cash rate has already had a substantial impact on household income flows and this typically supports the housing market.
- Given the declines in housing prices in 2011 and early 2012, some catch-up in housing prices over the next couple of years would not be unreasonable, given continued solid household income growth. Indeed, housing prices would need to rise by around 9% in each of the next two years if we are to maintain the average pace of house price growth that has been apparent since the end of Australia’s 2002-03 house price boom. That is, for housing price growth to average 4% over the five years to end-2014 – which is its recent average pace and broadly in line with household income growth – housing prices would need to rise by 9% a year for the next two years, given the price falls in 2011-12.
The last of Ten’s billionaire investors have backed the struggling broadcasters second capital raising in six months.
It is understood that Ten investor Gina Rinehart has fully participated in the institutional component of the $230 million capital raising.
Underwriters were this afternoon running final tallies on the institutional component of the raising.
Shares that have not been picked up by institutional shareholders will be redistributed. It is understood, however, that buyers are in line and the word from institutions is that no major blocks of shares are being distributed - a signal that Mrs Rinehart has taken up her entitlement.
Banksia debenture holders will get a maximum of 65 cents for every dollar they invested with the regional non-bank lender, receivers confirmed on Friday morning.
An initial payment of 20 cents for every dollar was also made on Friday morning, with the remaining money to be handed out by June 30 next year. The receivers, McGrathNicol, have now completed their investigation into why Banksia Securities Limited collapsed. A full report is available for debenture holders on the McGrathNicol website.Back to top
This one's getting plenty of traction today: James Adonis asks, has consumerism gone too far?
Electricity retailer AGL Energy is seeking a stay on a foreshadowed move to reduce power costs in South Australia in the new year, a judge has been told.
AGL wants to challenge a draft price ruling by the Essential Services Commission of South Australia (ESCOSA), contending it wrongly exercised its power to review prices due to special circumstances.
ESCOSA has determined that businesses and households on AGL’s price-regulated standing contract should get an eight per cent cut in 2013, worth about $160 to the average household.
More from the Myer AGM this morning, chairman Paul McClintock chimed in on a current bugbear of many traditional retailers - the $1000 GST free threshold for purchases made on foreign online retail sites.
Addressing shareholders, Mr McClintock said the company was frustrated by the GST loophole that existed and which provided an advantage to foreign retailers against local retailers.
Held in Myers iconic and historic mural hall in its flagship Melbourne store, shareholders were told sales in the first quarter reflected a modest improvement in consumer sentiment However he warned political uncertainty and extra costs such as the carbon tax and flood levy hurt consumer sentiment.
Arab Bank’s David Scutt offers a 140 character poser on today’s ASX action:
Don't want to put the mocker on what has been a good session for the #xjo but +1% out of nothing a tad strange. We'll find out at the close— David Scutt (@David_Scutt) December 7, 2012
There's a feeling that today's rises on the markets have come as investors became more confident now that this week's mountain of economic data is out of the way.
‘‘I wonder with a number of national data hurdles cleared, if those investors who’ve been buying dividend returns are back in the market today,’’ said Michael McCarthy, chief market strategist at CMC Markets.
‘‘It looks like investors are showing more confidence."