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Despite dipping on Friday, shares posted a gain for the week, propelled higher by some surprisingly good Chinese manufacturing and Australian jobs data.
On Friday, the S&P/ASX 200 Index lost 0.4 per cent, while and the broader All Ordinaries Index shed 0.3 per cent in quiet trade. Still, over the week, the S&P/ASX 200 and the broader All Ords both added 0.5 per cent, to end the week at 5445.1 points and 5429.1 points respectively.
Meanwhile,Wall Street is so boring at the moments that even a massively important US World Cup football match can't push trading volumes any lower.
The Wall Street Journal reckons that " the broad slowdown in trading activity is due to much more than the World Cup; it's part of a growing trend of low volume across Wall Street."
That's probably just as well, as the World Cup theory does assume that most Wall street traders are in fact, soccer mothers.
India's new prime minister Narendra Modi has announced a plan to help deal with inflation amidst potential food shortages as a result of the drier than usual monsoon season.
As well as setting up water an electricity contingency plans, he also wants to bring in a new plan to crack down on "hoarders and black marketeers," which includes setting up special courts to deal to dispense quick justice.
The ten up and ten down from the ASXBack to top
ASIC is not backing calls for a royal commission into the CBA scandal.
But Australian Securities and Investments Commission chairman Greg Medcraft played down the need for a commission, saying there had already been a number of submissions and inquiries into the scandal.
''There has been significant opportunities for people with evidence to present to this inquiry, and there is now the financial system inquiry,'' Mr Medcraft said.
''So there have been a lot of opportunities to look at these matters.''
"If you spend resources here, you don't spend them somewhere else."
Shinzo Abe has a reputation for being kind of reformer of Japan's economy, however, his resolve in tightening up Japanese public finances will likely not be helped by the latest consumer spending figures that show spending is down 8 per cent in may compared to a year earlier.
This is substantially more than the 2 per cent expected by analysts, and will no doubt increase pressure on the government to continue along its stimulatory path of the last two decades
Michael West lifts the lid on Glencore’s tax bill, with Australia’s largest coalminer paying almost no tax over the past three years despite generating $15 billion in income.
Australia's largest coalminer, Glencore, paid almost zero tax over the past three years, despite income of $15 billion, as it radically reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas.
At up to 9 per cent, the interest rates on these $3.4 billion in loans were double what the company would have had to pay had it simply borrowed the money from the bank.
As it was claiming tax breaks in Australia on these inflated interest payments, the secretive Swiss-based multinational actually increased its lending to other related parties interest free. This may include its executives.
Street Talk in The Australian Financial Review notes that UBS analysts reckon ANZ Banking Group needs to beef up its balance sheet and reintroducing a discounted dividend reinvestment plan may be the best way to go about it.
The analysts have walked through five ways ANZ could get its tier one capital ratio up to 9 per cent, from 8.33 per cent, which is where the analysts reckon investors want to see the big banks.
UBS's five options include:
(1) Sell-down Asian Partnerships, eg Panin Bank
(2) Restrict RWA growth out of Asia
(3) Ration credit growth in Australia
(4) Cut the dividend payout ratio to the lower end of its 60-70 per cent band
(5) Apply Dividend Reinvestment Plan (DRP) discounts for the next few halves
UBS said selling down the Asian partnerships may not be possible in the near term because of price expectations. It said restricting Asian or Australian credit growth would be inconsistent with ANZ's Asian growth targets and not ideal for a big Australian bank.
The broker also said cutting the dividend payout ratio would not be popular with retail shareholders.
Which leaves the discounted DRP, a method successfully used through the credit crisis.
"ANZ generally has a DRP participation rate of around 20%," UBS told clients. "However, when a discount of 1.5% was offered between 2H09 [the second half of 2009] and 2H11 the DRP participation ratio rose to around 40%.
"This led to a significant boost in capital generation. From pure economic theory it may seem illogical for a bank to over-pay its dividend then offer shareholders a discount to give it back. However, franking credits have value to shareholders and we are conscious of the need to pay these out over time."
UBS said it expected a 1.5 per cent DRP discount for the next two dividends.
Commonwealth Bank economist Diana Mousina is forecasting next week's retail trade number for May to show a 0.2% fall in spending due to weather‑related impacts."The general perception is that the large decline in consumer sentiment post‑Budget will translate through to a commensurate decline in retail trade," she says.
"But, consumer sentiment has actually been a poor guide to near‑term changes in retail trade. Consumer sentiment and retail trade growth move in similar patterns over the long‑run because both indicators respond in a similar way to changes in the economic environment. In our view, near‑term changes to retail trade will be little affected by the Federal Budget.
"The key impact on household spending is disposable income growth. Budget‑related measures that affect households start (on average) in 2016."
Data shows that the largest fall in confidence was among middle ($60K‑$80K household income per annum) and high‑income earners (over $100K household income per annum).
"This is inconsistent with the general view that the 2014‑15 federal budget impacted particularly the low income earners," Mousina says.Back to top
HSBC is calling the next cash rate increase in first quarter 2015 rather than fourth quarter 2014 and expects the cash rate to be 3.5 per cent by the end of 2015, compared with its low point of 2.5 per cent.
Paul Bloxham, HSBC's chief economist for Australia and New Zealand, said that there's been a loss of momentum since the first quarter with new building approvals falling, and growth in retail sales and housing price growth slowing.
"With a trend improvement in the labour market still underway and housing prices still rising we expect the RBA is unlikely to deliver any further rate cuts. However, we now see them on hold for longer than we previously expected. We expect the cash rate to remain on hold for the rest of this year, with rates then expected to rise in Q1 2015."
Nearly $480 million has been wiped off the value of Australian retailers since the May budget was delivered, as the confession season produces a number of high-profile corporate downgrades and raises fears of more to come.
More than half a dozen retailers including Kathmandu Holdings, Pacific Brands, Super Retail Group, The Reject Shop, toy wholesaler Funtastic, footwear chain RCG Group and Noni B have downgraded earnings forecasts in the past month.
Most retailers have blamed unseasonally warm weather and a scary federal budget for consumers tightening their purse strings despite the appeal of historically low interest rates, which are supposed to make households feel better about spending.
St George Bank has revised its Australian dollar forecasts to 93 US cents by the end of this year and to 91 US cents by the end of next year.
It says that USD strength is unlikely to materialise in a hurry and excess liquidity around the world combined with an appetite for risk will help keep the AUD elevated.
"We expect the RBA to start its tightening cycle before most of the G10 economies, keeping interest-rate differentials supportive of the AUD."
The environment is more likely to shift unfavourably for the Australian dollar when the US Federal Reserve gets closer to tightening monetary-policy settings next year."
Here are the movers on the ASX today
Bloomberg reports that Bank of England Governor Mark Carney is like an "unreliable boyfriend' according to British parliamentarian and member of the Treasury parliamentary select committee, Pat McFadden.
Meanwhile, the Bank of England's Financial policy committee has recommended that a package of "graduated and proportionate" be introduced to settle the housing market without knocking the recovery.
The new rules recommended were:
• Banks have to ensure no more than 15% of their mortgage book is given to people borrowing more that 4.5 times their income - a mortgage to income ratio.
• Banks will also have to 'stress test" new mortgagees on their ability to repay the loan in the event of a three percent interest rate rise.
We await Governor Carney's decision with interest. The Bank of England's FInancial Stability Report 2014, is out.Back to top
Tatts Group shares are up 4.8 per cent after winning the first round of a lengthy legal battle against the Victorian government for compensation over the loss of its gaming licences, while rival Tabcorp is down 6.3 per cent today after its claim was dismissed.
Both gaming and wagering companies lifted strongly ahead of the finding as speculation built they would be successful in winning compensation from the state government over cancelled licences.
Tatts Group, which was seeking $590 million, jumped 4.4 per cent on Thursday to $3.12, while Tabcorp Holdings, which was seeking $750 million, lifted 6.2 per cent to $3.60.
CIMB strategists had this to say in a note to clients this morning:
"The ruling by The Supreme Court of Victoria in favour of Tatts Group and against Tabcorp is not, we expect, the last time a Court will have the opportunity to pass judgement on these cases. Given the significant sums at stake, we expect appeals all the way to the High Court of Australia and another 3-4 years until a final resolution is reached. During that time period, we expect wagering earnings in both companies to decline significantly in response to the structural changes taking place in the market and reiterate our cautious stance on TAH and TTS."
Adele Ferguson says a leaner, meaner ASIC is long overdue:
A corporate regulator with increased powers to identify crooks and come down hard on them is something this country needs.
Australians also need to have their trust in financial planners restored given they are the foot soldiers who influence where much of our $1.8 trillion retirement savings are invested.
ASIC has been operating in its current form for more than 20 years and so it was about time it was given a thorough review of how it is going, including its culture.
The market has opened modestly higher, with smaller companies out-performing their larger counterparts.
At around 10:15am AEST the S&P / ASX 200 was ahead 0.1 per cent at 5471.3 points, while the broader All Ordinaries was up 0.2 per cent at 5459.4 points.
In terms of sector performance, telecommunications, consumer staples, and mining were all up more than 0.3 per cent.
CBA is flat amid reports of a possible pending Royal Commission in to bad advice, while the rest of the big four banks are lower.
Among the big miners BHP and RIO are both about 0.5 per cent higher.
Tatt’s Group has jumped 4.8 per cent, while Tabcorp Holdings is down 6.3 per cent in response to divergent outcomes from the Supreme Court of Victoria
STW Communications has jumped another 5 per cent at the open following Thursday’s acquisition news.
New Zealand's trade balance has come in above market expectations, as the Kiwi economy continues to hum along.
The trade surplus is $285m up from expectations of $250m. It is worth 6.2 per cent of exports according to Statistics New Zealand.
The value of exported goods rose to $4.6 billion in May 2014, up $528 million (13 per cent) compared with May 2013, Statistics New Zealand said today.
The continued growth of exports to China has resulted in the two-way trade of goods (exports plus imports) reaching $20.1 billion for the first time in the year ended May 2014, said Statistics New Zealand.
New Zealand has had a free trade agreement with China since 2008.
More investors plan to ramp up on commodities over the next 12 months after years of pessimism toward the sector, betting that the Iraq conflict will push oil prices higher while other commodities prices advance in volatile trade, a Credit Suisse poll showed.
The Swiss bank said it found a favourable view developing toward commodities at a conference in New York this week, when it surveyed 350 investors, including institutions, hedge funds, family offices, mutual funds and corporate firms.
A year ago, the bank said most investors at a similar Credit Suisse conference expressed reservations on commodities.
"The majority of attendees continue to be underweight or neutral commodities," the bank said in its latest poll.
"However, when asked 'What do you expect your level of investment to be over the coming 12 months?', 42 per cent of respondents said 'overweight,'" Credit Suisse said, up sharply from the 19 per cent who expressed such optimism in 2013.
Commodities have had a mixed year, with oil and gold prices moving higher lately after being rangebound for months.
The 19-commodity Thomson Reuters/Core Commodity CRB Index is up 11 per cent on the year, after strong first-quarter gains in energy prices. The S&P 500 index is up just 6 per cent.
Credit Suisse said 30 per cent of the investors it surveyed expected benchmark Brent crude oil to trade at $US120 a barrel and above over the next year, marking a high since April 2012.
On Thursday, Brent settled down 0.7 per cent at $US113.21 a barrel. A week ago, it hit a nine-month high of $US115.71 on fears that fighting in Iraq could split the country and hurt oil exports.Back to top