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Markets Live: Miners push market down

Mining shares have once again led the market lower as concerns over the global economic recovery continue to hit China's demand for industrial metals.

4.52pm: Markets Live has come to an end for another day, thanks for being with us, make sure to join us again tomorrow from 9.30am.

Click here for a full wrap of today's session.

4.47pm: Of the worst performers for the day many were miners, but here's a look at all the notable winners and losers in the ASX's top 50 companies:


4.31pm: European stock index futures signalled a drop on Wednesday, tracking losses in US and Asian shares after comments from a Fed official raised doubts over the efficiency of the latest stimulus measures, and on signs Spain's economic crisis is worsening.

Futures for Euro STOXX 50, for London’s FTSE, for Germany's DAX and for France's CAC were down 0.7-1.1 per cent.

In the US, futures for the Dow Jones and S&P500 indexes were up 0.06 and 0.08 per cent respectively.

4.24pm: It was a mixed day for blue chip stocks, here's a snapshot of how they performed today:

  • BHP: -1.2%
  • Rio: -2%
  • ANZ: -0.24%
  • CBA: +0.11%
  • NAB: -0.63%
  • Westpac: -0.08%
  • Fortescue: -0.28%
  • Woolworths: +1.14%
  • Wesfarmers: +0.23%
  • Telstra: +0.52%

4.15pm: The materials and energy sectors were once again the drag on the market, both lost 1.1 per cent. Financials dropped 0.2 per cent and gold miners lost 0.5 per cent. Defensive stocks such as health and telecommunications bucked the trend, adding 1.5 and 0.5 per cent respectively.

4.12pm: The market has closed lower for the third session in a row. The benchmark S&P/ASX200 lost 11.3 points, or 0.3 per cent, to 43.61.6, while the broader All Ords fell 13 points, or 0.3 per cent, to 4382.5.

4.04pm: The Australian dollar struggled today, weighed by weak Asian stocks with investors looking for excuses to take profits on long positions.

But investor caution benefited government bonds which jumped to two-week highs. Three-year contract rose 0.06 points to 97.580 and a sustained break above key resistance of 97.600 would target 97.717, the 61.8 per cent retracement of the June-August decline.

The 10-year contract leapt 0.07 points to 97.010, nearing major resistance of 97.044.

Australian bonds have been major beneficiaries of a global yield hunt, particularly from central banks and sovereign funds drawn to the nation's pristine triple A rating.

The dollar fell prey to profit-taking, slipping to a two-week low of $US1.0345, from $US1.0381 in early trade. It briefly touched a high of $US1.0462 after weak short positions were squeezed.

3.52pm: Hard on the heels of warning that the future of its Phosphate Hill project in Queensland is in doubt, Incitec Pivot has shelved a planned $600 million ammonium nitrate plant for Kooragang Island, off Newcastle.

 The decision follows rising concerns about the impact of slowing demand for coal in overseas markets slowing new mine development in the Hunter Valley, coupled with a blow out in construction costs. Much of the plant's output would have been used to make explosives for the mining industry.

"The decision on whether to proceed with the development has been deferred for at least two years, reflecting the anticipated reduction in demand for ammonium nitrate and the high cost of construction in Australia. At this time, the project has not met [Incitec Pivot's] strict financial hurdles," it said in a statement to the Australian Stock Exchange.

3.41pm: As we approach the end of trade, here's what CMC Markets senior trader Tim Waterer had to say about the day's movements:

  • With central bank stimulus euphoria already seeming but a distant memory, the last thing traders needed to hear was a dissenting voice against the merits of QE3. Throw in a dose of renewed Spanish fears and we have all the ingredients needed for financial markets to be back in an all too familiar risk-off frame of mind. 
  • The negative undertones infusing the market this week have given rise to defensive assets, particularly as there seems to be a vacuum of any positivity after the latest round of central bank easing announcements. 
  • It was another far from spectacular performance from the Australian sharemarket, with mining stocks again being the achilles heel of the broader market as negativity over global growth prospects persist. Traders appear to be lacking compelling reasons to buy in the current environment and this is causing the drift lower on the ASX200 index this week. 

3.32pm: Technology entrepreneurs and Atlassian founders Mike Cannon-Brookes and Scott Farquhar have ousted one-time mining billionaire Nathan Tinkler from the No.1 spot in BRW's Young Rich in a stark demonstration of the changing fortunes of Australia's mining elite.

Tinkler relinquishes the mantle of the wealthiest young Australian for the first time since 2009 following a dramatic collapse in his wealth from $1.13 billion this time last year to just $400 million.

The former billionaire has splurged massive sums of money on a wide range of investments and is believed to have spent up to $300 million on a stable of racehorses with limited success in winning major races.

Click here for the full story.

3.26pm: As iron ore prices slip under $US104 per tonne, the miners are leading the market down for the third day in a row. Here's how they have performed so far this week:

  • BHP: -1.95%
  • Rio: - 3.89%
  • Fortescue: - 1.94%

3.12pm: Standard and Poor’s has become the second ratings agency to downgrade South Australia, cutting its long-term credit rating for the state from AA+ to A, but affirmed the A-1+ short-term rating.

‘‘The rating action reflects our view that revenues across the forward estimates will be weaker than reflected in the 2012 budget, due to a lower GST pool than forecast, as well as weaker conveyance duties from 2014,’’ the agency said.

‘‘While we expect that some cost savings will be achieved, we anticipate that there will be slippage in expenditures, contributing to worse-than-anticipated budgetary performances.’’

Moody’s recently downgraded South Australia’s debt rating from AAA to AA1.

3.05pm: Why eurozone exit is an option for Germany, Martin Wolf writes in the FT:

The ECB, Germans realise, will not remain a reincarnated Bundesbank. Once again, we are reminded that the eurozone is set to be a miserable marriage.

Might a separation, however disruptive, be better?

2.56pm: Hard on the heels of warning that the future of its Phosphate Hill project in Queensland is in dout, Incitec Pivot has shelved a planned $600 million ammonia nitrate plant for Kooragang Island, at Newcastle.

The decision follows rising concerns about the impact of slowing demand for coal in overseas markets slowing new mine development in the Hunter Valley, coupled with a blow out in construction costs.

The move comes as a feasibility study is being finalised on plans for a new ammonia plant to be built in the US which is aimed at taking advantage of cheap gas prices there.

Incitec shares are up 1.5 cents at $2.885, slightly below the day's high of $2.90.

2.44pm: China's Huawei Technologies, which was banned from tendering for work on Australia's $38 billion broadband network, is not seriously considering an immediate float in Australia, two sources familiar with the company's plans said.

The sources, who spoke on condition of anonymity, said a local stock market listing was among long-term options for the Australian arm.

"The first priority is to see if a research and technology centre can be set up in Australia. A local listing is among options over the next 5-10 years," one of the sources said.

2.34pm: It's been another tough day for the materials sector, here's a look at the best and worst performers among the top 50 companies on the ASX:

2.17pm: Forget retail, consider how the online threat will affect other industries – and create opportunities for nimble entrepreneurs, writes blogger Tony Featherstone.

Click here for the full story.

2.10pm: Macquarie Bank could have its first female CEO, BusinessDay's Michael West does some digging on one of the top candidates for the top job - Shemara Wikramanayake.

It was barely noticed at all when Macquarie shifted $4.74 billion out of one division into another the other day. Only the Wall Street Journal picked up the story, though it proffered no explanation for the latest asset shuffle.

Insiders at the bank, however, saw the move as further evidence that Shemara Wikramanayake is firming as a successor to chief executive Nicholas Moore. The 51 year-old Wikramanayake runs Macquarie Funds Group, and that’s where the money was headed, along with another 20 staff.

“MFG contributes upwards of 30 per cent of (Macquarie’s) earnings and the head of MFG is one of those tipped to succeed (Nicholas Moore),” one source told BusinessDay. “Although being female, sub-continental, non-white and human, (it) would be a complete cultural overhaul and (is) unlikely to happen,” the source quipped.

Click here for the full story.

1.57pm: An elections court in Brazil has ordered the arrest of Google's most senior executive in the country after the company failed to take down YouTube videos attacking a local mayoral candidate.

Google is appealing the order, which follows a similar decision by another Brazilian election judge. In that case, a judge found another senior executive responsible for violating local election law. That decision was overturned last week.

The legal challenges underline broader questions about Google's responsibility for content uploaded by third parties to its websites, such as an anti-Islam video that sparked a wave of protests and violence in the Muslim world.

1.49pm: The Commonwealth Bank will move its Melbourne HQ after it signed a 10-year lease for 9000 square metres of premium office space in Walker Corporation's $1.5 billion Collins Square development.

CBA's new office space, a five star green-rated building at the Docklands end of Collins Street, is due to be completed in mid-2013.

The bank will move 800 staff from its current headquarters on the corner of Bourke and Elizabeth Street.

1.43pm: Here's a look at how some of the major markets around the region are performing - all down:

  • Nikkei (Japan): -1.71%
  • Shanghai: -0.43%
  • Taiwan: -0.86%
  • South Korea: -0.57%
  • Singapore: -0.62%
  • New Zealand: -0.34%

1.24pm: Health stocks are strongly higher today. The sub index is 1.1 per cent while most other are trading in the red. Here's the leading companies:

  • Ramsay Health: +1.98%
  • Resmed: +1.69%
  • CSL: +1.1%
  • Sonic Healthcare: +1%
  • Ansell: +0.84%

1.10pm: In her lunchtime column today, BusinessDay's Adele Ferguson picks up on the disinterest shown towards the share market by retail investors recently. And she says next week's rates decision could help kick things along:

The hope is that if interest rates fall, investors will heighten their interest in high-yield defensive stocks such as listed property trusts and Telstra, giving stockbrokers some fees as they struggle under their own structural changes.

The latest Reserve Bank Financial Stability Review noted that the appetite of Australian households to save remained strong this year. It said the saving ratio averaged about 9.5 per cent of disposable income for the past few years, which is well above its level of five to 10 years ago.

1.03pm: One from the small biz desk. Falling profits across the small business sector have resulted in companies struggling to pay their bills and many to keep trading while insolvent, according to a major debt collection agency.

Or in other words: profits are falling, businesses are hanging on when they shouldn't be, and that causes other businesses to fall over too. Full story.

12.48pm: Casino operator Crown has made no changes to its executive pay policy despite the threat of a board spill in the event of another shareholder backlash.

Four of the company’s six senior executives received a larger pay package in the 2011/12 financial year, and all base salaries rose or remained the same as in 2010/11.

Crown’s executive pay report for the 2010/11 financial year received a 55 per cent ‘no’ vote from Crown shareholders, and a ‘no’ vote of at least 25 per cent against the 2011/12 report would result in the majority of board positions being vacated and put up for re-election.

12.41pm: The Australian dollar remnains more than half a US cent lower after angry protests in Madrid reignited concerns about Europe’s sovereign debt woes.

ForexCT head of research Steven Dooley said the Spanish riots added to a string of negative news from the euro zone, including a disagreement between France and Germany over a proposed banking union.

‘‘I think it’s generally part of a growing concern about Europe,’’ Mr Dooley said. Mr Dooley said speculation about October’s Reserve Bank of Australia (RBA) interest rate decision would be the main driver of the local currency’s movements for the rest of the week.

12.33pm: Bell Potter senior adviser Stuart Smith said the local market was trading in low volumes, with less than $1 billion turnover by value by 11.30am.

‘‘That’s really paltry volume,’’ Mr Smith said. ‘‘There has been a bit of switching from the low-dividend payers to the high-dividend payers, in other words sell BHP and buy Commonwealth Bank, this morning.’’

BHP was down 61 cents, or 1.83 per cent, at $32.64 despite the London Metal Exchange index finishing higher in overnight trade.

12.11pm: The number of jobs advertised on the internet last month has fallen sharply over the year.

The Department of Education, Employment and Workplace Relations’ internet vacancy index is down 17.4 per cent over the 12 months to August, showing declines in all occupations and jurisdictions.

The largest drop was in the ACT where ads fell 21.4 per cent, followed by Victoria with a 20.5 per cent decline. However compared to July the number of job ads was largely unchanged at about 192,000, representing a seasonally adjusted 75.4 index points.

11.58am: “What’s happening in Europe has made investors nervous and they want to take risk off the table,” Hans Kunnen, chief economist at St George Bank has told Bloomberg.

“News out of Europe was unsettling and doesn’t provide a positive outlook. Investors reacted to that by selling off equities and selling off the Aussie dollar.”

11.47am: The permit for Gunns’ contentious northern Tasmanian pulp mill is likely to be offered for sale by receivers winding up the failed timber company.

Green groups in the state celebrated what appeared to be the demise of the $2.3 billion Bell Bay project when it was announced Gunns had entered voluntary administration on Tuesday.

But administrator PPB Advisory says the licence could still be alive if a buyer can be found.

‘‘I’d imagine the receivers will make an assessment on the economics of each of the big buckets of assets - the forestry, the sawmills and the pulp mill - and they would obviously explore the market in terms of where that value might sit,’’ PPB’s Daniel Bryant has told ABC radio.

11.41am: Here's an analysis piece on a group who don't tend to get too much sympathy in the debates about online shopping: retail landlords.

11.33am: Apologies to anyone who has posted a comment that hasn't appeared on this blog. We're having a few technical issues which we hope will be resolved soon.

11.24am: Mixed returns among the banks so far today:

  • CBA is 0.25% higher to $55.45
  • ANZ is 0.2% lower to $24.51
  • NAB is 0.08% higher to $25.60
  • Westpac is 0.37% lower to $24.45

11.18am: Here’s something that has the potential to rattle Asian markets. Chinese Foreign Minister Yang Jiechi stressed his country's claim to disputed islands with his Japanese counterpart, Koichiro Gemba, in New York on the sidelines of the UN General Assembly, Xinhua news agency reports today.

Xinhua's brief report said Yang reiterated China's "solemn position on the issue of Diaoyu Islands, which have been China's sacred territory since ancient times".

11.11am: Malaysian casino operator, Genting, has confirmed that its listed Singapore division sold its 4.8 per cent stake in Aussie casino operator Echo Entertainment.

In a statement to the ASX late last night Genting said it sold its 39.6 million shares at $3.00 each, representing a small loss on the investment.

There has yet to be any word on where the shares have ended up with Genting’s listed Hong Kong operation which said last week that it still intends to lift its stake in Echo above the current 10 per cent cap if the regulators give it permission. 

11.04am: Local shares have climbed off their early lows. Both the All Ords and the ASX200 are now down 0.3 per cent after slipping more than 0.5 per cent shortly after the open.

10.57am: Takeover target Alesco Corporation has placed its shares in a trading halt as it holds fresh talks with predator DuluxGroup about its $210 million bid.

Alesco requested the trading halt today, saying it wants Dulux to consider a proposal regarding the long-running takeover battle.

‘‘This proposal, if accepted by DuluxGroup, includes the possibility of an additional fully-franked dividend of up to 27 cents per share for all shareholders as part of the offer,’’ Alesco said.

10.53am: Seven West chief executive and former Woodside boss Don Voelte has joined the board of oil and gas explorer Nexus Energy.

The appointment of Mr Voelte as non-executive chairman is part of a board restructure at Nexus, which owns prospective projects in the Gippsland Basin off the coast of Victoria and the Browse Basin off the coast of Western Australia.

Four Nexus directors have stood down as the company focuses on new strategies to realise the value of its assets.

10.48am: The Aussie dollar is down following the unrest in Spain, says a local analyst.

‘‘What’s happening in Europe has made investors nervous and they want to take risk off the table,’’ said Hans Kunnen, chief economist at St. George Bank Ltd.

‘‘News out of Europe was unsettling and doesn’t provide a positive outlook. Investors reacted to that by selling off equities and selling off the Aussie dollar.’’

The Australian currency fell as much as 0.3 per cent to $US1.0359, the weakest since September 11, before climbing back to $US1.0364 in recent trade.

10.42am: Cameron Securities client adviser Adrian Leppinus said Australian shares had followed the US lead to open lower.

‘‘Resources are getting a bit of a hit at the moment,’’ he said. ‘‘There’s still a bit of negative sentiment around them and that’s keeping the market back a bit.’’

10.38am: The big miners are a long way behind the general market:

  • BHP is 1.35% lower to $32.80
  • Rio is 2.32% lower to $52.72
  • Fortescue is 1.28% lower to $3.47

10.35am: Now for the early gainers on the ASX200:

  • Sundance: +6%
  • Intrepid Mines: +4.12%
  • Saracen Mining: +3.49%
  • FKP Property: +3.49%
  • James Hardie: +1.88%
  • CSL: +1.28%

10.28am: Lynas shares are down heavily in early trade after the a Malaysian high court put on hold until October 4 its temporary licence to operate a controversial rare earth plant. Lynas says the decision will not delay production.

The company confirmed the decision of the court in the Malaysian eastern city of Kuantan, near where the plant has been built, but said it plans to strongly reassert its rights at the next court hearing. More to come.

10.23am: Looking at the fall in the SingTel share price, Bloomberg reports that Temasek Holdings, Singapore’s state-owned investment company, is cutting its stake in Southeast Asia’s biggest phone operator by selling shares worth as much as $1.3 billion.

Temasek is offering 400 million shares in Singapore Telecommunications Ltd. (ST), representing a 2.5 percent stake, at between S$3.20 and S$3.25, according to terms obtained by Bloomberg News. The shares closed trading in Singapore yesterday at S$3.33. Temasek has an option to increase the offering by 100 million shares, according to the term sheet. 

10.20am: To the early sliders on the ASX200:

  • Lynas: -5%
  • Gryphon Minerals: -3.93%
  • Singapore Telecom: -3.83%
  • Ausdrill: -3.67%
  • Gindalbie Metals: -3.33%

10.14am: Losses are being led by miners, with gold stocks following closely behind:

  • Metals & miners: -1.5%
  • Energy and industrials: -0.4%
  • Gold: -1.1%
  • Financials: -0.3%

10.11am: In early trade, the All Ordinaries index is 21 points lower, or 0.5 per cent, to 4374.5, while the benchmark S&P/ASX200 is 22.3 points lower, or 0.5 per cent, to 4350.6.

On the ASX 24, the December share price index futures contract was down 26 points at 4,359, with 6,127 contracts traded.

10.05am: Early take - stocks down 0.3 per cent as markets open.

9.55am: Australian bond futures prices are higher in the wake of the angry protests in Madrid against the Spanish government’s austerity measures.

Westpac global head of interest rate strategy Russell Jones said the protests pushed US stock markets lower overnight as investors sought safety in bonds. He said the trend was likely to continue during Wednesday’s Asian session.

‘‘It’s worrying. We’re used to seeing unrest in Greece, but Spain is a much bigger economy and a much bigger deal in terms of stability in Europe,’’ he said.

At 8.30am, the December 10-year bond futures contract was trading at 97.015 (implying a yield of 2.985 per cent), up from 96.935 (implying a yield of 3.065 per cent) on Tuesday. The December three-year bond futures contract was at 97.600 (2.400 per cent), up from 97.510 (2.490 per cent).

9.50am: The Aussie dollar was recently trading at $US1.0363, down from $US1.0426. According to BK Asset Management managing director Kathy Lien, violent protests in Spain pushed the Australian dollar, a barometer of global investor confidence, lower overnight.

‘‘There is a good chance we could see further weakness in the Australian dollar over the next 12 to 24 hours,’’ she said.

She said the currency had a lot of support around the 103.80 US cent mark due to pre-established trading positions and was likely to fall sharply if it broke below that level.

‘‘We could see a deeper side down to 102 or 103 US cents.’’

9.45am: A quick look at commodities. Gold and oil were lower, but China iron ore was unchanged at $US103.70 a metric tonne. The big miners lost ground in US trade. Rio was down 2.68 per cent and BHP lost 1.9 per cent.

9.42am: The good US economic data was not enough to spark a rally on Wall Street. In fact, concerns about Europe, Spain in particular, and strong criticism of the Federal Reserve's latest monetary stimulus from Philadelphia Fed President Charles Plosser pushed stocks lower.

"I believe that increasing monetary policy accommodation is neither appropriate nor likely to be effective in the current environment," Plosser told the CFA Society of Philadelphia and the Bond Club of Philadelphia at an event hosted by the Philly Fed.

9.38am: European markets, however, posted gains on some strong economic data from the US. US home prices continued to rise in July, the latest evidence that the recovery in the housing market is on track, data showed on Tuesday. As well, consumers' moods improved in September, with confidence jumping to its highest level in seven months as Americans were more optimistic about the job market and income prospects.

9.35am: Looking at Europe first, doubts about the eurozone's commitment to fighting the debt crisis intensified when Germany, the Netherlands and Finland issued a joint declaration that appeared to unravel much of what was agreed at the last European summit in June, when EU leaders paved the way for the direct recapitalisation of problem banks.

9.32am: Not even some good news on US housing and consumer confidence could assauge the fears among US investors overnight about the situation in Europe. The result was the worst day for the S&P500 since June and strong negative leads for local shares today. We'll have a look at some of the details in moment.

For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

  • The SPI was 33 points lower at 4352
  • The $A was trading at $US1.0384
  • In the US, the S&P500 lost 1.04% to 1441.79
  • In Europe, the FTSE100 added 0.36% to 5859.71
  • Gold lost 0.2% to $US1760.25 an ounce
  • WTI crude oil lost 56 US cents to $US91.37 a barrel
  • RJ/CRB commodities index added 0.25% to 306.71

9.30am: Good morning all. Welcome to the Markets Live blog for Wednesday.

Contributors: Thomas Hunter, Jens Meyer, Peter Litras

This blog is not intended as investment advice

BusinessDay with agencies

Malaysian casino operator, Genting, has confirmed that its listed Singapore division sold its 4.8 per cent stake in Aussie casino operator Echo Entertainment.
In a statement to the ASX late last night Genting said it sold its 39.6 million shares at $3.00 each, representing a small loss on the investment.
There has yet to be any word on where the shares have ended up with Genting’s listed Hong Kong operation which said last week that it still intends to lift its stake in Echo above the current 10 per cent cap if the regulators give it permission.


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