Before we sign off for today, here are the key market points you need to know this evening:
- The ASX200 slumped 1.2 per cent to close at the day's low
- The dollar jumped to $US1.0364, 80 euro cents and 99.4 yen
- The yield on the three-year government bond jumped to 3.14%
- The Nikkei rallied 1.1%, while the Shanghai Comp slid 0.1%
- Gold is slightly lower at $US1587, WTI oil slips to $US92.23
- Wall Street futures are flat, while FTSE100 futures are slighly higher
- 'Spectacular' jobs growth in February
- Risks remain for departing Myer CEO
- Tinkler grilled over failed Blackwood deal
- 'Unhelpful': Westpac chair slams government
- slow day
More bribery charges have been laid against former executives of a Reserve Bank subsidiary.
Former Note Printing Australia chief executive John Leckenby and three colleagues have been accused of bribing public officials in Nepal’s central bank between October 2001 and April 2003.
Leckenby, 68, Barry Brady, 64, Peter Hutchinson, 62 and Steven Wong, 57, were charged with conspiring to offer a benefit to another person with the intention of influencing a foreign public official in a bid to obtain or retain business with the Nepal Rastra Bank.
Losses in the big miners weighed heavily on the market, with BHP losing 2.3 per cent, Rio down 2.25 per cent and Fortescue plunging 6.1 per cent.
Macquarie Private Wealth's Martin Lakos says the underperformance of the materials sector is related to the slowing down of the mining investment boom but that these stocks should recover:
- We starting to get a sense of a rotation out of the high-yield defensives and into growth areas. We’re expecting resources to recover in the second half of this year.
- They actually have the potential to become more profitable because they don’t have the costs associated with the investment programs they had in place.
- We have (an iron ore price of) $US120 - $US130 in our models, when it recovered from $US85 to $US150, we thought it was overdone, but there had clearly been quite a significant amount of restocking by the Chinese, that seems to be slowing now.
- But that’s still hugely profitable for the likes of Rio and BHP, when their averages costs are in that $US45-$US55 range, not withstanding a headwind of other costs, but they’re still very profitable at those $US120 levels for iron ore.
- My guess is that BHP and Rio would want price stability and are happy to increase the volume and their ability to deliver.
The materials sector led the falls, plunging 2.2 per cent, while financials lost 1.1 per cent and energy fell 1.2 per cent. The IT sector was the only one to buck the trend, rising 0.3 per cent.
The share market has closed at the day's lows. The benchmark S&P/ASX200 dropped 60.2 points, or 1.2 per cent, to 5032.2, while the broader All Ords lost 60.6. points, or 1.2 per cent, to 5043.8.
And another one speaking at a lunch today: Westpac chairman Lindsay Maxsted has slammed Julia Gillard’s minority government as ‘‘unhelpful’’ to business and says it should share some of the blame for the low levels of business confidence and investment.
In a sign of the poor relations between Labor and corporate Australia, Maxsted accused the government of ignoring the needs of business in its approach to developing policy.
‘‘The minority government in Canberra has been unhelpful for business over the last few years,’’ he told a business lunch in Sydney, the same day the ABS reported the biggest number of new jobs created in 12 years. ‘‘It’s not a government which is user-friendly for business it’s not a government which goes out of its way to understand business.
‘‘It certainly doesn’t work on a basis of understanding that to drive the economy, and to do some of the pet projects which are very good pet projects.... you actually need to work with business to get the right policy settings.’’
Journalist and author Debi Marshall is the latest wordsmith to be served a subpoena by the lawyers of billionaire Gina Rinehart.
Ms Rinehart allegedly wants a copy of all recordings and notes of interviews made on or after September 5, 2011, between Ms Marshall and John Hancock and Bianca Rinehart - her estranged children. Ms Marshall used the research for her unauthorised biography of the mining magnate, ‘‘The House of Hancock: The Rise and Rise of Gina Rinehart’’ published last year.
The author said she was served subpoena papers last week but had nothing to offer Ms Rinehart.
Ms Rinehart’s lawyers this week also served a subpoena against one of Fairfax Media’s senior journalists, Adele Ferguson, over sources used in another unauthorised biography of the billionaire.
James Packer says politicians should curb their rhetoric on foreign workers during the federal election campaign, saying the current debate damages the nation’s reputation abroad.
The billionaire casino boss also gave Bob Carr his endorsement, saying whoever won the federal election should put the foreign minister in charge of Sino-Australian relations.
‘‘Bob Carr truly understands China and won’t waiver in putting Australia’s interest first,’’ Mr Packer told a business lunch in Sydney.
He said elections were ‘‘important and necessary’’, but could be destabilising and send the wrong messages overseas.
The Australian dollar surged today as startlingly strong jobs data led the market to almost abandon any chance of further rate cuts, sending bonds yields flying to the highest since April last year.
The dollar jumped more than half a cent on the jobs numbers, and has managed to hang on to the gains, currently trading at $US1.0367. It's also buying 80.07 euro cents and 99.6 yen.
"We have seen fresh waves of buying and the high so far sits at $US1.0383 and still looks strong," analysts at Westpac say.
"The $US1.0380/$US1.0400 level is something of a pivot point for the AUD," they add. "So a break above this band of resistance will certainly suggest strong demand and strong momentum."
The upbeat jobs report came on top of a run of generally solid data and sent shockwaves through bond markets.
Yields on three-year government debt shot 19 basis points higher to reach 3.14 per cent, the highest since April last year and the biggest daily increase since July. That was also the first time yields rose well above the 3 per cent cash rate since July 2011.
Likewise, three-year bond futures sank 0.185 points to 96.825, while the 10-year contract lost 0.125 points to 96.320 and flattened the yield curve.
In just the past two weeks, swap rates have slashed the amount of easing implied for the year ahead to just 5 basis points, from 45 basis points.
"While the labour force survey is very volatile, the trend is now clearly improving," notes Scott Haslem, chief economist at UBS. "Overall, the stronger data is consistent with our non-consensus view that the RBA cash rate has troughed."
Our market has come under increasing pressure with our miners seemingly under attack today, despite the US markets’ spectacular jump in retail sales while hitting its ninth consecutive day gain in a row, CMC Markets trader Ben Taylor notes:
- Australia’s main export iron ore is coming under increasing pressure from US dollar strength and Chinese demand fundamentals as the Chinese government acted to curb investment in their property sector. The changing dynamic is set to slow Chinese steel production and constrain demand for iron ore.
- The market is acting like we are in for a sustained retreat in iron ore after its higher charge since Christmas. Investors favour taking recent profits at these elevated levels in the miners while waiting for stabilisation in our market before jumping back in.
- Today’s jump in job numbers further compounded the selling pressure as the market reduces its expectations for further local interest rate cuts during the year.
The bad blood among television broadcasters over the government’s media reforms continues with Ten’s soon-to-be chief executive, Hamish McLennan, demanding answers from its regional partner Southern Cross Media over its merger talks with Nine Entertainment.
“It is now obvious to everyone that Southern Cross Media’s intention is to merge with Nine Entertainment, but Southern Cross Media remains silent,’’ he said in a prepared statement today.
‘‘Its shareholders have a right to know if the company’s directors are meeting their continuous disclosure obligations. Its shareholders have a right to know how detailed and advanced the discussions between Nine and Southern Cross Media are, and what has been discussed with the Government.”
Aurora Oil & Gas says it will offer $US250 million ($244.27 million) in unsecured notes due in 2020.
The company said it intended to use the proceeds from the offering to fund the acquisition of $US117.5 million ($114.81 million) of assets related to its February 28 purchase in the Eagle Ford shale area of Texas.
Aurora is planning to drill between 45 and 50 wells in 2013, and has a planned annual capital expenditure of between $US430 million and $US465 million ($420.15 million and $454.35 million).
The notes will be issued by a wholly owned subsidiary of Aurora, and they will be guaranteed by the parent company and each of the subsidiaries of the issuer.
With an election looming, billionaire James Packer warned both sides of politics against xenophobic messages that affect Australia’s standing in the region that will define our future: Asia.
In a speech to the Asia Society today, Mr Packer warned of the ‘‘destabilising’’ effect elections can have in the way it can ‘‘send the wrong message’’ overseas.
‘‘If I can urge our political leaders across all parties to keep in mind when it comes to the issue of foreign and domestic affairs the rhetoric we casually throw around is keenly followed throughout the region,’’ Mr Packer said.
‘‘Some of the recent public debate does not reflect well on any of us. Even worse it plays on fears and prejudices and is completely unnecessary. We are all better than that. To succeed in China and Asia we must be better than that,’’ he said.
Investors are reacting well to Myer's $87.9 million half-year profit. The department store's shares are up 5.5 per cent to $3.06 and have enjoyed a reasonable good run over the last few months.
And as we mention it, the Tinkler hearing has resumed after the lunch break, with Paddy Manning tweeting the latest:
Back on stand, Tinkler admits on day of July 12 vote he had "no definitive plan" on how to pay Blackwood $28.4m within a week— Paddy Manning (@gpaddymanning) March 14, 2013
For those of you who haven't been following BusinessDay's Paddy Manning while he was in the NSW Supreme Court covering the questioning of Nathan Tinkler on the liquidation of his private company Mulsanne, here's a cracker story he's filed on the matter.
And make sure you follow Paddy for all things Tinkler as well as energy, food and agriculture business.
Former coal billionaire Nathan Tinkler says he expected Singapore-based commodities trader Noble Group would pay $25 million to $30 million for his three-quarter share of a royalty stream from the Middlemount coal mine in Queensland, allowing his private company Mulsanne to complete the purchase of shares in Blackwood.
But Mr Tinkler in the NSW Supreme Court today told lawyers for the liquidator of Mulsanne the verbal arrangement, between himself and Noble’s Will Randall, was never documented - although in hindsight “I certainly I wish I had done that”.
On May 6, 2012, Mulsanne signed a share purchase agreement to pay $28.4 million for 94.7 million shares in Blackwood at 30 cents a share by July but Mr Tinkler said after the due date had passed Noble Group came back and offered half the previously discussed valuation for the Middlemount royalty.
Equity prices are falling amid signs that the RBA has finished its easing cycle, following better-than-expected jobs data, says BBY institutional dealer Anson Rosewall.
"Although the market initially ticked up on the jobs data, the Australian dollar and Australian bond yields rallied quite sharply and that’s the market telling you that the RBA is unlikely to ease any further, and that the next rate move might be to the upside either late this year or early next year," Mr Rosewall said.
"The most significant thing about the bond market today is that all Australian bond yields are now above the cash rate for the first time since 2011. So it’s a very strong signal that the RBA is unlikely to ease any further."
Mr Rosewall added that major gold miners were down sharply as the spot gold price moved lower, pulling down gold mining equities in the US overnight.
At the same time, iron ore prices also fell sharply overnight, causing shares in miners such as Fortescue to drop by 6 per cent on the ASX this afternoon.
Concerns were also growing that Australian banks' equities, which have led much of the rise on the ASX200, would be subject to a pullback, Mr Rosewall said.
The ASX200 is down 43.3 points, or 0.9 per cent, to 5049.1.
The Australian Office of Financial Management (AOFM) has sold $1 billion of Treasury notes that mature on June 7 2013.
The AOFM, which conducts bond auctions on the behalf of the government, said the notes were sold for a weighted average yield of 2.97 per cent.
The sale attracted bids that totalled $4.13 billion, giving a coverage ratio of 4.13.
Virgin Australia has urged the competition regulator to stop Qantas and Emirates from forming an alliance on the trans-Tasman route unless there are benefits to the flying public.
Australia’s second-largest airline has told the regulator that the ‘‘claimed public benefits’’ of the Qantas-Emirates alliance did not extend to routes between Australia and New Zealand.
‘‘Whilst their may be public benefits that arise in relation to flights to Europe, it is not clear that there are material public benefits from the Qantas-Emirates alliance on the Tasman,’’ it said in a submission to the regulator.
‘‘If there is a competition issue on the Tasman, the commission should consider excluding it from the authorisation of the Qantas-Emirates alliance rather than imposing conditions.’’
Myer chief executive Bernie Brookes looks to have entered a purple patch for the nation's biggest department store just as his board begin to seriously consider succession planning to replace the long serving and popular CEO, writes BusinessDay's Eli Greenblat.
Speaking to analysts and the press this morning, Mr Brookes was cautious and conservative in describing the more upbeat and bullish trading environment that has emerged over the last six months, but certainly seemed to suggest the worst was over.
He reeled off a list of positive signs that were bolstering the department store's sales trajectory - property prices not declining, sharemarket up, superannuation accounts stronger, low interest rates and good employment figures - that were feeding into a positive consumer psyche.
That was underlined today when new Australian Bureau of Statistics data showed Australia recorded the strongest jobs growth in more than a decade in February, as the unemployment rate remained at 5.4 per cent.
To be sure, Myer's first half and second quarter sales were only up 1.7 per cent and 2.1 per cent respectively, but that needs to be put into context of the last two years when sales dropped through the floor as shoppers turned away from the stores and decided to shove their discretionary cash in the bank.
China is moving to further tighten supervision of bank loans to local government financing vehicles (LGFVs) this year, the official Shanghai Securities News reported on Thursday, citing unidentified sources.
In draft guidelines, the China Banking Regulatory Commission (CBRC) has told banks to keep outstanding loans to LGFVs this year unchanged from the level at the end of 2011, which was around 9.1 trillion yuan, the newspaper said.
The regulator has also reiterated that banks should be prudent in buying bonds issued by LGFVs and bans lenders from guaranteeing such debts, the report said.
However, the regulator would continue to support lending to provincial governments as well as unfinished projects.
Here's how markets around the region are performing:
- Nikkei(Japan): +0.1%
- Shanghai: +0.2%
- Taiwan: -0.2%
- South Korea: -0.7%
- Singapore: -0.2%
- New Zealand: +0.7%
The Australian federal government agency that assists businesses with their exporting activities does not believe the United States will sink back into recession because of its sharp budget spending cuts.
The Export Finance and Insurance Corporation (EFIC) expects a revival in the private sector of the world’s largest economy will offset the fiscal drag from the so called ’sequester’ which saw billions of dollars of spending cuts automatically introduced on March 1.
It cites in its monthly World Risk Developments report off-setting factors to the sequester as; lean business inventories, a marked strengthening of household balance sheets, a recovery in housing and improved credit availability.
‘‘Together these are giving the private sector an impetus that should more than offset the headwinds from the sequester,’’ EFIC chief economist Roger Donnelly said in a statement.
However, the US economy does face another fiscal cliff in May when the debt ceiling must be raised again.
‘‘But another round of brinkmanship similar to the one in August 2011, which cost the United States its AAA rating, seems less likely,’’ Mr Donnelly said.
Some more on jobs: this chart shows that employment growth in recent months has been dominated by part-time jobs:
"Full-time employment rose 18K in February while part-time employment jumped a sharp 54K. In trend terms, full-time employment fell 2K in the month, not a sign of a strong labour market," says ANZ economist Justin Fabo.
Stocks are in free fall at the moment, with the ASX200 down 0.8 per cent. Not much relief from the jobs market there.
Mining stocks are really being pounded, with the materials sector down 2 per cent, same as both BHP and Rio.
Whew! The biggest job creation in almost 12 years – that’s if you believe the data, CommSec chief economist Craig James cautions:
- Clearly it is difficult to believe that over 70,000 jobs were created in one month and there no doubt will be some correction in the March numbers.
- But we do believe the estimate of the unemployment rate, steady at 5.4 per cent. A raft of companies has been telling us that it is hard to attract and retain the right workers.
- It is just that a small number of listed companies reporting job cuts dominate the headlines rather than the raft of small and medium-sized firms that are getting on with business and hiring new workers.
The market says goodbye to rate cuts (in this cycle): expectations for an April rate cut are down to just 4 per cent, while bets on another rate cut over the coming 12 months have fallen to around 30 per cent, their lowest in years.
Some economist comments on the jobs growth, which we hear is the strongest in 12 years:
CBA chief economist Michael Blythe:
"It always pays to be suspicious of big moves in either direction. Clearly the labor market is remaining in pretty good shape which suggests the economy over all is travelling nicely as well. It adds to the case the Reserve Bank has done enough and with improving trends like this, we think they'll remain on the sidelines over the rest of 2013."
JPMOrgan economist Tom Kennedy:
"Obviously the employment change is quite good, beating market expectations by a fair way coming in at 71,500 jobs in February. But it's not as good as the headline suggests, a lot of those jobs are in part-time employment. Although in saying that it is good enough to see our jobless rate remain flat at 5.4 percent, which obviously is a good result for the broader economy."
Macquarie senior economist Brian Redican:
"It's spectacular employment growth that was reported for February. With that kind of employment growth, obviously policy makers would be feeling pretty comfortable with the current policy settings."
And while we're with Twitter, here's some more from BusinessDay's Paddy Manning (@gpaddymanning) who's busily tweeting away from the NSW Supreme Court where Nathan Tinkler is facing questions:
Liquidators counsel Newlinds SC frustrated notes given by Tinkler to his lawyers have apparently not been provided to the court. 1/2— Paddy Manning (@gpaddymanning) March 14, 2013
< blockquote class="twitter-tweet">
Some notes appear to have been "cut off at the pass" says Newlinds ... "If someone's been clever here we'll get to the bottom of it". 2/2
— Paddy Manning (@gpaddymanning) March 14, 2013
Tinkler offered his wife's substantial homes in Newcastle and Brisbane as security for a loan to fund the Blackwood transaction— Paddy Manning (@gpaddymanning) March 14, 2013
The reactions to the jobs surprise are flowing in on Twitter:
The death knell of further easing in Australia was just rung.Employment +71,500 in Feb, 7 x stronger than consensus.— Glenn Maguire (@AsiaSentry) March 14, 2013
< blockquote class="twitter-tweet">
Seriously, mostAussie economists need to geta grip and embrace reality
— adam carr (@AdamCarrEcon) March 14, 2013
Aust jobs +71,500 in Feb with part time +53,700 and full time +17,800. Jobless 5.4%. Take that pessimists!— Craig James (@craigjamesOZ) March 14, 2013
monthly employmentvolatile but this is ridiculousgreat news if employment does not drop 70000 next month bad news re productivity— David Bassanese (@DavidBassanese) March 14, 2013
Here's the development over the past months:
Unemployment rate (per cent, seasonally adjusted)
February: 5.4 per cent
January: 5.4 per cent
New jobs added
Some more details: the economy added 17,800 full-time jobs and added 53,700 part-time jobs, taking the net gain to 71,500.
The participation rate, which is the percentage of people working or looking for work, increased from 65 per cent to 65.3 per cent.
The dollar is soaring on the jobs data, jumping about half a cent to $US1.0357.
The jobless data is in, and what a surprise: 71,500 new jobs created, unemployment rate remains at 5.4 per cent.
Another tweet by Paddy Manning from the Tinkler hearing:
Tinkler expected to pay for the $28.4m Blackwood share placement by selling the Middlemount royalty to Noble Group— Paddy Manning (@gpaddymanning) March 14, 2013
Getting ready for the February jobs data, which is due in about six minutes. Expectations are for the economy to have created 10,000 new jobs and a small uptick in the unemployment rate to 5.5 per cent, from 5.4 per cent in January.
The dollar is hovering just above $US1.03 and the market is seeing a 16 per cent chance of a rate cut in April.
Japanese stocks are up in early trade, with the Nikkei rebounding from a two-day slide, as better-than-expected U.S. retail sales bolster confidence in the global economy and the lower house prepares to vote on Bank of Japan nominees. The Nikkei 225 is up around 0.7 per cent.
Sigma’s decision to settle a class action brought by shareholders has dragged down its full year profit by more than 60 per cent.
The drugs wholesaler and pharmacy support services provider’s net profit for the year to January 31 slumped to $18.7 million, from $49.2 million the previous year.
The result was affected by legal expenses related to its $57.5 million settlement of a class action brought by shareholders. The case was brought against the owner of the Amcal and Guardian pharmacy chains in 2010 by shareholders seeking damages from alleged non-disclosures by Sigma.
Excluding those costs, Sigma’s net profit rose 4 per cent to $52.3 million.
Its shares are up nearly 3 per cent.
Some more from Nathan Tinkler at the NSW Supreme Court, where BusinessDay's Paddy Manning is on watch:
Nathan Tinkler in court for Mulsanne Resources examination - standing room only and no chair even for him!— Paddy Manning (@gpaddymanning) March 14, 2013
Lonsec senior client adviser Michael Heffernan said a strong rise for Myer shares was a highlight of an otherwise lacklustre open to the day’s trading.
The retailer posted a better than expected first half profit of $88 million.‘‘The market has greeted it particularly well,’’ Mr Heffernan said.
‘‘Given the equanimity of world markets last night, we were going to be in the green when we started. and Myer has added a bit of fuel to the fire.’’
Nathan Tinkler has been spotted entering the NSW Supreme court precinct, ahead of a public examination by the liquidator of Mulsanne Resources.
Mr Tinkler walked from Hyde Park into his barristers chambers on Macquarie Street. He is summonsed to appear to answer questions from the liquidator about a $28.4 million debt Mulsanne owed to Blackwood Corporation, and flew in from his home base of Singapore, after an attempt to prevent the examinations as an "abuse of process" was dismissed on Tuesday.
Mr Tinkler faced being held in contempt of court if he failed to appear at today's 11am hearing before registrar Jennifer Hedge, and could have been issued with an arrest warrant. As a director of Mulsanne, Mr Tinkler could also be found personally liable for its debts.
Back in town ... Nathan Tinkler. Photo: Nick Moir
BusinessDay’s Peter Ker reports that the price of iron ore could be in the early stages of a sustained retreat, with the benchmark price for Australia's most lucrative export slipping to its lowest point of 2013.
While still at historically strong levels, this morning's price of $US139 per tonne was the lowest since Christmas eve.
It was also more than $US4 lower than Wednesday's quoted price and close to $US20 lower than the prices being paid for iron ore three weeks ago.
For more than a month, pundits have been predicting the price would return to somewhere between $US100 and $US120 per tonne, with most saying the price rally seen over the Christmas and New Year period was unsustainable.
Chinese authorities last week expressed concerns that big miners like BHP Billiton, Rio Tinto and Vale have manipulated the price back to high levels which render much of China's steel industry unprofitable.
The outlook is grim. Photo: Reuters
And to the sliders on the ASX50:
- Fortescue: -3.78%
- Iluka: -2.53%
- Rio: -1.69%
- Asciano: -1.4%
- BHP: -1.31%
- Crown: -1.28%
Now for some of the early winners on the ASX50:
- Aurizon: +1.26%
- Wesfarmers: +1.13%
- Sonic Healthcare: +1.12%
- Woolies: 1.11%
- Coke: +1.07%
- Lend Lease: +0.98%
A bit more on the Myer shares. The current price - $3.04 - is not far off the 52-week high, also set this morning, of $3.08.
That represents a 40.74 per cent gain since the start of 2013, and a 100 per cent gain on its year low of $1.52, set in late June. When they hit $3.08, the shares were at their highest levels since May 2011.
Sector by sector on the ASX200, materials are weighing on the market:
- Materials: -1.05%
- Health: +1.03%
- Info tech: +0.84%
- Consumer staples: +0.81%
- Consumer disc: +0.29%
Here's a few thoughts from Myer boss Bernie Brooks on today's profit result. The company did not provide any financial guidance for the second half of the year.
‘‘We are very cautious about the second half, but there are some good signs from a consumer point of view,’’ Mr Brookes told reporters.
‘‘Interest rates are low and unemployment levels are low, and that certainly makes people spend a little bit more.
‘‘The equity markets have improved, and that also gives people a little bit more confidence, particularly in regards to superannuation.’’
But he warned there were still factors keeping consumers cautious.
‘‘We have an election coming up, we have issues in regard to what might happen on a macro basis with US debt, so there are a number of issues that still make a consumer susceptible,’’ Mr Brookes said.
In early trade, the All Ordinaries index is 7.3 points higher, or 0.1 per cent, to 5111.7, while the benchmark S&P/ASX200 is 8.4 points higher, or 0.2 per cent, to 5100.8.
Shares have edged higher in early trade - up about 0.1 per cent while markets open.
Ex Dividend today: Milton Corp (MLT); GUD Holdings (GUD); AFIG. ^CJ — CommSec (@CommSec) March 13, 2013
Some details on Myer. The department store retailer made a better-than-expected profit of $88 million in the first six months of its financial year.
Myer made a net profit of $87.9 million in the 26 weeks to January 26, up one per cent from $87.3 million in the prior corresponding period.
Analysts had expected a net profit of about $85 million.
Total sales were $1.73 billion, up two per cent from $1.7 billion in the previous corresponding period.The retailer declared a fully franked interim dividend of 10 cents, the same as in the previous year.
One of the main pieces of economics news has landed, and it's the Myer result:
There's lots of speculation about which way the jobs numbers will go today. Here's one view:
Expect the unexpected with the #unemployment data. History says it'll be around +25k but the current sequence suggests a fall. +9k, 5.5% exp— David Scutt (@David_Scutt) March 13, 2013
In local economics news today, the ABS today releases jobs data for February. A Bloomberg survey of economists expects the national unemployment rate to rise to 5.5 per cent from 5.4 per cent, with the addition of 10,000 jobs. The data is due at 11.30am.
In Europe, markets were down, with Italy slipping 1.74 per cent and Italian bonds rising sharply. Italy had to pay its highest three-year borrowing costs since December at an auction as the political paralysis that triggered a credit rating cut last week sapped demand for the country's debt.
The Treasury also managed to sell 15-year paper, and the 7 billion euros it raised was close to the maximum targeted amount, but investor interest was lower than expected and Italian yields rose on the secondary market after the sale.
"It's slightly disappointing," said Nick Stamenkovic, rate strategist at RIA capital markets.
"Not only did they not manage to raise the upper end of the amount, but the yields are higher and demand is a bit lower, which is a reflection of continued cautiousness by investors given the uncertain political picture."
Here’s IG Markets’ Evan Lucas on the retail numbers from the US:
The figures were nothing short of spectacular, doubling what most analysts had expected, at 1.0% and 1.1% respectively. This jump in retail sales figures is the biggest gain in five months. They are also a prime illustrator of how the US economy is tracking. With retails sales up so strongly, it shows Americans believe job prospects and security is stabilising; US consumers are not daunted by the recent increases in taxes and petrol prices; and they are not concerned by the automatically installed sequestration two weeks ago.
Still in the US, retail sales expanded at their fastest clip in five months in February, the latest sign of momentum for an economy facing headwinds from higher taxes and pricier gasoline.
The solid sales come on the heels of strong gains in employment and manufacturing. But the improvement in the economic picture is likely insufficient to compel the Federal Reserve to reduce its monetary policy support.
"Consumers have been less fazed by the increase in taxes than we expected," said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.
"Because the labor market has been doing a bit better than we were expecting, people are feeling a bit confident and not cutting back their spending."
Retail sales increased 1.1 per cent, the largest rise since September, after a revised 0.2 per cent gain in January, the Commerce Department said on Wednesday. That was well above economists' forecasts for a 0.5 per cent advance.
Looking at the action on Wall Street overnight, US stocks edged up, with the Dow rising for the ninth straight session to another record, buoyed by surprisingly strong retail sales that suggested the economy is gaining momentum.
The Dow Jones industrial average's nine-day winning streak is the longest consecutive run since November 1996.
But trading volume was light. Moves have been muted in recent days as investors consolidate positions after a strong run-up in the first three months of the year. Still, weakness in stocks has been met with buying, which helped propel the market's advance.
For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key markets numbers:
- SPI futures are 2 points lower to 5097
- The $A is softer at $US1.0291
- In New York, the S&P500 added 0.13% to 1554.52
- In Europe, the FTSE100 lost 0.45% to 6481.5
- China iron ore lost $US4.40 to $US139 a metric tonne
- Gold fell fell $US3.30 to $US1,588.40 an ounce
- WTI crude oil fell 2 cents to close at $US92.52 a barrel
- Reuters/Jefferies CRB index lost 0.3% at 294.8