Markets Live: Miners lead rebound

Another edition of Markets Live has now come to an end. Thanks for reading and comment, we hope to see you again tomorrow from 9am.

Click here for a full wrap of the day's session.

shares up

Another takeaway from the Deutsche Bank end-of-earnings-season briefing was their analysts’ view on the Australian share market’s recent rally.

Mr Morgan, the bank’s head of research sales, believes that two of the key sectors - banks and resources - were ‘‘just about right’’ at this time and that it would be hard to see further capital appreciation.

At the same time, he said some investors were still underweight in equities.

Mr Baker, Deutsche’s head of equity strategy, said he thought the ‘‘great rotation’’ - a move from bonds to equities - was yet to happen and that the price-to-earnings ratio for companies could get higher.

If you are interested in looking at P/E numbers on the share market over the past few years, check out the Reserve Bank’s statistics here.

What you need2know this Wednesday evening:
Markets
  • ASX200 added 0.7% to 5036.60
  • Dollar is slightly lower at $US1.0218
  • Nikkei is down 0.5%, Shanghai is up 0.3%, Kospi is up 0.4%
  • Gold is at $US1611.20, WTI oil is at $US92.61
  • Wall Street futures are flat and FTSE futures are up 0.1%
News
Reporting tomorrow
  • Aurora Oil & Gas: est $45.06 million (FH2) profit
  • Challenger Financia: est $221.40 million profit
  • Harvey Norman: est $103.87 million profit
  • Perpetual: est $24.40 million profit
  • Treasury Wine Estates: est $41.13 million profit
  • Woolworths: est $1.158 billion profit

And blue chips for the day:

  • BHP: +0.9%
  • Rio: +0.7%
  • ANZ: +0.4%
  • CBA: +0.8%
  • NAB: +0.3%
  • Westpac: -0.1%
  • Fortescue: -0.2%
  • Woolworths: +0.2%
  • Wesfarmers: +0.9%
  • Telstra: +0.4%

Here's a look at the best and worst performers for the day on the ASX200:

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All the major sectors posted gains today. Materials rose 0.8 per cent, energy jumped 1 per cent and consumer staples gained 0.7 per cent.

shares up

The market has closed higher, clawing back some of yesterday's losses. The benchmark S&P/ASX200 added 33 points, or 0.7 per cent, to 5036.6, while the broader All Ords rose 31.3 points, or 0.6 per cent, to 5053.1.

Qantas has left the door open to broadening its alliance with Emirates to include ground handling and support services but is willing to exclude them from the present deal to allay concerns from unions.

With just four weeks to go before the alliance is due to be launched, Qantas has sought to make clear that the focus of the alliance is on their flying operations, and that the two airlines have not begun any talks or planning about operations such as ground handling, catering or aircraft engineering.

‘‘There are no current plans for coordination [for non-flying operations such as catering] in Australia at this time,’’ it said in a submission to the Australian Competition Consumer Commission.

eco news

The reporting season’s almost over. So what can we take away from it?

For one, Deutsche Bank says their analysts have upgraded the earnings of over half of companies - the highest proportion in three years.

Deutsche Bank’s head of equity strategy, Tim Baker, said dividends were surprising to the upside. While net profit after tax have been fairly flat for the first-half of the 2013 financial year, dividends were up 1.3 per cent.

In terms of industrial earnings, the growth has come from defensives, with cyclicals - which are dependent on the ups and downs of the economic cycle - not moving.

But Mr Baker said there was more faith that cyclical earnings, such as the building materials sector (on the back of a housing recovery), would pick up.

The main disappointments have been second-tier resources stocks, which were less able or willing to cut costs like their bigger counterparts, and mining services companies, which have been hit by their clients’ cost-cutting, Deutsche Bank’s head of research sales, Glenn Morgan, said.

Looking ahead, Mr Morgan said there are no major macroeconomic shocks on the horizon that are expected to derail the global recovery.

mining

A controversial Malaysian plant run by rare earths miner Lynas has produced its first products for sale.

The Lynas Advanced Materials Plant began production in November, after long delays caused by legal action brought by opponents to its operation, who are concerned about pollution and possible health threats.

Lynas mines rare earths - metallic elements used in products ranging from digital televisions, mp3 players and fluorescent light bulbs - from Mt Weld in Western Australia.

Lynas said the processing plant in Malaysia had produced its first rare earths products for customers.

The company’s shares were up 6.8 per cent to 62.5 cents.

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asian markets

With just under three quarters of an hour left in trade, here's how markets around the region are performing:

  • Nikkei(Japan): -0.7%
  • Shanghai: +0.3%
  • Taiwan: +0.2%
  • South Korea: +0.3%
  • Singapore: +0.3%
  • New Zealand: +0.9%

Materials giant Boral has sought a court injunction to stop threatened construction union blockades from spreading to major Melbourne building sites.

Boral says the Construction Forestry Mining and Energy Union (CFMEU) has threatened to block a number of major projects to which it supplies concrete, including the City West Water Treatment Plant project at Werribee.

The company alleges in documents lodged in the Victorian Supreme Court that the union made threats to interfere with the performance of Boral contracts, and that if the threats are carried out they will seriously damage the company’s operations.

Boral seeks an injunction ordering the CFMEU to withdraw its threats.

The federal election campaign should breathe new life into a challenging television advertising market, regional broadcaster Prime Media Group says.

While current conditions were difficult, with weak forward bookings as advertisers remained cautious, chief executive Ian Audsley says the poll should give the market a boost.

‘‘We think that the market will improve later in the year with an increase in demand that will be driven, in part, by the federal election in September,’’ Mr Audsley said during Prime’s results presentation on Wednesday.

Prime, which is a Seven Network affiliate and Queensland radio station operator, reported net profit of $44.6 million for the six months to December 31, down 71.4 per cent from the prior corresponding period.

Prime shares are down 0.5 per cent to $1.03.

iron

Iron ore miners Fortescue Metals Group, Atlas Iron and BHP Billiton have evacuated staff and locked down operations in Western Australia as wind gusts strengthen to 230km/hour near the centre of Cyclone Rusty.

Rusty has been upgraded to a category four - the second highest on a strength scale of five.

A cyclone warning has been issued for Pilbara coast including Port Hedland, the nation’s largest iron ore port, where port and rail activities have been suspended.

Wotif has suffered its biggest one-day fall in five years after its first-half profit slid 5 per cent and conceded that it is not ‘‘getting its fair share’’ of the benefits from Australians travelling overseas in record numbers.

The company whose sites include lastminute.com and LateStays increased booking revenue from its core sites in Australia and New Zealand, but it Asian business under-performed.

Wotif posted a 5 per cent fall in net profit to $27.5 million for the first half, which it blamed largely on increased costs from investments in online marketing, web maintenance and staff. Revenue fell 1 per cent to $73.2 million for the half.

Shares in Wotif fell as much as 11 per cent today but have recovered some of the lost ground to be down 7.5 per cent at $5.40 in afternoon trading.

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Small cap property companies should always struggle against their bigger counterparts because of a higher cost of debt and a smaller portfolio, which means less stable earnings streams, small cap column Under the Radar writes:

One of their number, the residential developer Becton, will most likely go bust this week because it hasn't been able to meet its interest obligations to Goldman Sachs.

But lately there are other small caps which are bucking the trend as they transform their earnings to focus on areas of high demand and embark on avenues such as funds management to procure highly prized annuity income streams.

One company Radar has tipped is Ingenia Communities, whose stock is up 36 per cent in 12 months. Under new management, Ingenia has thrown off its baggage as an ING property trust and is now a focused owner and operator of retirement villages.

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Construction spending was flat last quarter as engineering work came off record highs, though a pick-up in home and commercial building could be a sign that lower interest rates are starting to feed through.

Today's figures from the ABS showed construction spending dipped 0.1 per cent in the fourth quarter of last year to $51.8 billion, following an upwardly revised 1.9 per cent increase the previous quarter.

Yet spending on home building rose 1.7 per cent and work on commercial building, from shopping centres to hospitals, increased by 2 per cent.

"The detail is arguably more positive than the headline suggests," say analysts at Westpac. "The better-than-expected upturn in building - residential activity in particular - suggests the required 'rebalancing' in growth drivers towards interest sensitive sectors may be proceeding better and earlier than expected."

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Westpac says the rebalancing in growth may be proceeding earlier than expected.
Westpac says the rebalancing in growth may be proceeding earlier than expected. Photo: Tamara Voninski

Some more from Westfield: as local revenues sag, the mall operator plans to increase investments in the US and UK to take advantage of rising retail demand, co-chief executive Peter Lowy says.

The company expects 60 per cent of its interests in projects to be in the US and UK in about four years, from about 55 per cent now, Lowy says.

Westfield is also on the hunt for a new ‘‘unique’’ market in Western Europe, similar to Milan, where it will next year start building one of the region’s biggest shopping malls.

‘‘You’ll see a bigger increase coming out of the other markets as Australian developments slow down a little bit,’’ he Lowy says. ‘‘What we’re doing in Europe is trying to see if we can find other sites that have the characteristics of Milan, where the customer is underserved but has large amounts of disposable income, and the real estate is in the right place.’’

energy

Australia’s carbon price has now been in effect since 1 July 2012. Yet, with a change of government looking likely after the 14 September federal election, some believe it inevitable that the world’s newest carbon market will not last the distance.

Bloomberg estimates that there is only a 32% chance that Australia’s carbon price will be repealed after the 14 September federal election. The Coalition will have to win a majority in the House of Representatives and control enough votes in the Senate to successfully pass legislation through parliament to rescind the Clean Energy Act.

Current polling suggests that the Coalition will win government and Tony Abbott will become Prime Minister. If he secures a majority of votes in the Senate, the earliest he could rescind the carbon price is H2 2014 after the Senate changes hands on 1 July 2014.

With just over half of the trading day behind us, here's the best and worst performers on the ASX200 so far:

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