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Markets Live: RBA holds, ASX trims loss


The Australian share market has ended lower for a second day, but trimmed losses after the RBA held rates steady.

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That's all from us here at Markets Live, thanks for being with us, we hope to see you again tomorrow from 9.30am.

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

Here's what you need to know this afternoon:


  • The ASX200 drops 0.5%, posting a second day of losses
  • The dollar slips below $US1.0400, last buying $US1.0404
  • The Nikkei is down 1.5%, Hang Seng minus 1.6%, but Shanghai up 0.2%
  • Wall Street futures are about 0.2% higher; FTSE100 futures up 0.3%
  • Gold is up 0.1% at $US1675.7, while WTI oil is down 0.1% at $US96.08



  • US factory orders December: 1.8% rise expected
  • Eurozone retail sales December: -0.5m/m; -1.4%y/y expected


  • Retail sales December: 0.3% rise expected
  • Primary Health Care (HY): Net profit - 69m; Div: 6c
  • REA Group (HY): Net profit: 50.9m; Div: 16.1c

Earnings forecasts are consensus or courtesy of Goldman Sachs

The dollar is currently trading at $US1.0404, still well off the day's highs of $US1.0458 after the dovish RBA statement. It's also buying 96.1 yen and 77.2 euro cents.

Here's how the blue chips did today:

  • BHP:-1.7%
  • Rio: -1%
  • ANZ: +0.3%
  • CBA: -0.6%
  • NAB: -0.9%
  • Westpac: -0.1%
  • Woolies: +0.5%
  • Wesfarmers: +1.1%
  • Telstra: -0.85%
  • Macquarie: -4.1%

Most sectors ended lower, with materials and energy both shedding 1.1 per cent, financials down 0.3 per cent and industrials off 0.7 per cent. Consumer staples bucked the trend, rising 0.8 per cent.

The sharemarket has ended lower, closing in the red for the second day. The benchmark S&P/ASX200 index fell 24.8 points, or 0.5 per cent, to 4882.7, while the broader All Ords lost 26.5 points, or 0.5 per cent, to 4902.6.

Our market has managed to claw its way back from this morning’s heavier early losses to post only modest falls following the RBA ‘no change’ interest rate decision and statement which noted that rates have room to be cut if needed, says CMC Markets trader Ben Taylor:

  • The RBA’s dovish tone provided scope for further interest rates cuts if necessary to support demand given growth is likely to be below trend and inflation consistent with targets.
  • Thursdays expected rise in unemployment mixed with the RBA accommodative stance on monetary policy means we may see the Aussie dollar retest its recent lows.
  • Nervous investors who have made recent gains in equities are keen to hold onto these hard earned wins. It seems ever man and his dog is now calling for a selloff before domestically we continue to climb the wall of worry
  • A domestic low interest rate environment mixed with an improving macro picture is what has got equity investors excited up to this point.

Macquarie shares are still one of the biggest losers of the day, falling 4.1 per cent to $37.13 after the bank's investor briefing disappointed.

‘‘The difference in profit forecasts is the strength and timing of recovery in capital markets, a higher tax rate ... and the impact of a number of one-off positive fiscal year 2012 items in corporate not repeating in fiscal year 2013,’’ Morningstar analyst David Ellis says.

Credit Suisse analysts are more upbeat in their assessment of Macquarie’s trading update, saying there were ‘‘more positives than negatives’’.

‘‘A balanced overall statement by Macquarie still gives scope for fiscal year 2013 guidance to be upgraded or exceeded,’’ they write in a note to clients.

The RBA certainly remains dovish, Michael Pascoe writes (and makes it clear which side he stands on in the doves v hawks debate):

Stevens makes clear that the RBA is willing and has room to trim rates further if the world turns nastier or the local economy doesn’t respond to what’s already been done – his statement is more relaxed than previous efforts about the inflation outlook thanks to the softening labour market and firming unemployment rate. But the board is not in a hurry.

New global shocks aside, your next interest rate cut is more likely to come from your local bank manager than the Reserve Bank board, but Australia’s economic health in the next financial year seems to be resting on the less-than-robust reed of housing construction.

A roll call of Australia’s business, sporting, political and entertainment elite have paid tribute to the life of David Coe, the former executive chairman of Allco Finance Group.

More than 1200 mourners turned up at Sydney Grammar School today for a memorial service for the man they referred to as ‘‘Coey’’, including the former prime minister John Howard, Australian cricket captain Michael Clarke, star spin bowler Shane Warne, film star Russell Crowe and INXS guitarist Kirk Pengilly.

Former Wallaby great Michael Lynagh told the mourners that the financier had a vast network of friends, and an ‘‘amazing ability to make them all feel important’’.

The turnout for the memorial for Mr Coe was noticeable for the vast cross-section of people from Australian society, encompassing areas such as sport, business, politics and the arts.

Here's the whole article

Is the RBA board in its latest constellation more dovish or more hawkish? Here's what the experts say:

Update on the dollar. It's taken a serious dive since the release of the RBA decision, slipping to $US1.0394, a long way below today's high of $US1.0457.

Ben Taylor of CMC Markets says the RBA’s dovish tone provides scope for further interest rate cuts if necessary. As far as the sharemarket goes, he says:

A domestic low interest rate environment mixed with an improving macro picture is what has got equity investors excited up to this point. These underlying factors still remain intact however what will help us keep the current equity gains and potentially expand on them is strong evidence of earnings momentum.

NSW property reporter Toby Johnstone writes that the decision by the Reserve Bank to leave the cash rate unchanged has found the most unlikely of supporters - real estate agents. He writes:

Following a strong start to the property year, agents across Sydney have said cutting rates in February would have been unnecessary.

The chief executive of Starr Partners, Douglas Driscoll, said while a cut would have been "another jab in the arm ... demand is very high, consumer confidence has improved so I actually think that it's not needed".

I wonder if their Melbourne counterparts feel the same way. More here.

Ben Jarman, economist at JP Morgan, said offshore improvements had given the RBA scope to play a wait-and-see game.

"But when they talk about the domestic economy, there's not too many new themes there. They still note that all the things that they expect to rise in the place of mining investment are not quite hitting their stride yet," he said.

"The themes haven't changed enough for me to really think that they're done for this cycle. It still looks like we've got some further easing to go. We've got them next going in May with a 25 basis point cut. We think it's going to take a little longer for the softness in the domestic data to give them enough evidence to go again."

The ASX200 has trimmed the day's losses following the RBA decision, but not drastically. It added seven points to 4890.8 in the minutes after the decision, hitting its intraday high. Small cheer.

Su-Lin Ong of RBC Capital Markets calls it a ‘‘balanced statement’’.

"There's still some caution in there but there's definitely a discussion that the global outlook is getting better, and that's consistent with what other central banks are saying.

"Offsetting that to a degree is some caution on the domestic economy side, that growth will be a little below trend, inflation is well behaved, giving scope to ease policy.

"It's clear that the easing bias is still there, particularly the well-behaved inflation outlook.’’

A bit more from Glenn Stevens:

The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.

The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

Update on the dollar. The currency was trading at $US1.0443 at 2.29pm, just before the Reserve Bank of Australia’s decision was announced, and fell to $US1.0423 about 8 minutes after the decision.

From the RBA statement on its decision:

Global growth is forecast to be a little below average for a time, but the downside risks appear to have abated, for the moment at least. The United States has so far avoided a severe fiscal contraction and financial strains in Europe have lessened considerably over recent months. Growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs recently of stabilisation. Some commodity prices have firmed over recent months.

The RBA has held rates steady at its Feb meeting today. Rates remain on hold at 3 per cent.

A quick look at the Aussie ahead of the rates call. It's currently up about a fifth of a US cent on today's open to $US1.0439. Should hold there if the RBA meets expectations and keeps rates steady.

The ASX200 remains about half a per cent lower. Info tech stocks are still leading the market down, followed by the energy sub index. Here's the sector-by-sector scoercard:

  • Info tech: -2.12
  • Energy: -1.34%
  • Telecoms: -1.10%
  • Materials: -1.03%
  • Industrials: -0.56%

Consumer staples is the only one which has kept its head above water today - up 0.9%. 

Just 20 or so minutes now to the February rates decision. A quick reminder on where the betting stands - most pundits are tipping no change. Just four of 28 respondents to a Bloomberg survey reckon they'll cut to 2.75 per cent from 3 per cent. The interest rate futures market gives a 25 basis point cut an almost 1 in 5 chance, or 18 per cent,to be precise.

We'll know which they're gonna jump soon.

Weakness in the global economy will persist for years and emerging markets may face an exodus of capital when major economies begin to reverse accommodative monetary policy, Mexico's central bank governor Agustin Carstens said today.

"We should be prepared to further face an environment where weaknesses and vulnerabilities persist for a while - and I am talking years, not just months," Carstens said in a speech in Singapore.

He said a "perfect storm" might be forming in emerging markets as a result of massive capital flows going into some emerging economies as well as the strong advanced economies.

Hans Kunnen, chief economist at St George, says today’s official house price data for the December quarter show a recovery across most capital cities. In a note, he writes:

The rise in house prices appears to be attracting the interest of investors. In the year to December, lending for investor housing was the most rapidly growing sector of credit, rising 5.5%.

As the economic cycle turns, we expect further gains in house prices. The populations of cities continue to rise and home building activity has been subdued. Interest rates are close to historical lows and consumer sentiment has picked up. Incomes are up and jobs continue to be created. All this should flow into the housing market over time.

BusinessDay’s Lucy Battersby reports that the Future Fund will soon decide whether it will keep investing in the tobacco industry, the managing director revealed at a portfolio update earlier today.

The regular quarterly update showed the fund’s investments returned 12.8 per cent in 2012, increasing the portfolio from $73 billion to $82.4 billion.

This was one of the fund’s best performances and a significant improvement after returning just 2.1 per cent in the twelve months to June 2012. It also boosted the average annual return since inception in May 2006 to 5.4 per cent.

Meanwhile the fund has reacted to government calls for it to stop investing in tobacco companies. Managing director Mark Burgess said the board’s governance committee has been debating and analysing the tobacco investments and was expected to make a decision in the ‘‘early part of this year’’.

‘‘We have not said we are going to exclude tobacco, we are just thinking about it,’’ he said.

Recapping Macquarie. Shares in Australia’s biggest investment bank have fallen the most in eight months after forecasting full-year earnings below analyst estimates.

The stock dropped as much as 4.5 per cent, the biggest intraday decline since May 18, after the Sydney-based bank cut the outlook for its fixed-income, currency and commodity trading business. Macquarie traded 3.2 per cent lower at $37.50, paring its six-month gain to 49 per cent.

Given that Macquarie’s shares have ‘‘run strongly in recent months, some near-term share price weakness is likely,’’ Deutsche Bank AG analysts led by James Freeman said in a note to investors after the announcement.

The Australian dollar is slightly higher ahead of the Reserve Bank's first interest rate decision for 2013.

Itr's currently buying $US1.0445, 96.5 yen and 77.38 euro cents.

The dollar edged up to $US1.0458 following the release of a smaller than expected trade deficit for Decemver, but quickly dropped back to its earlier level.

Commonwealth Bank currency strategist Joseph Capurso says the reduction in the trade deficit was due primarily to a fall in imports, particularly of capital goods, which includes equipment and machinery used in mining and construction.

‘‘That’s not a particularly good sign for domestic final demand and also that peak in investment that people keep talking about,’’ he says. ‘‘So, the Aussie pretty quickly fell away and has now retraced those gains.’’

Capurso does not expect the dollar to move significantly if the RBA, as is expected, keeps the cash rate on hold at 3.0 per cent. ‘‘I would be surprised if it moves even 20 points (a fifth of a US cent)."

Local shares are down after US and European markets fell sharply overnight, highlighting how fragile investor confidence is amid claims of improper political payments in Spain which sent bond yields there soaring.

CMC Markets chief market analyst Ric Spooner says the situation is a dilemma, with short term investors possibly taking a breather to protect profits after some bad news. The long-term worry was if the Spanish instability dragged on, it could be unsettling for markets.

It seems Australia's turn into the red is a trend around the region:

  • Nikkei(Japan): -0.9%
  • Shanghai: -0.4%
  • Taiwan: -0.6%
  • South Korea: -0.8%
  • Singapore: -0.5%
  • New Zealand: -0.9%

With the RBA announcement coming up this afternoon, here's a nice graphic that has been put together by Canstar. It is tracking the official cash rate against fixed and variable home loans over the last 20 years.

It's looks as though investors are very disappointed with Cochlear's financial results, its shares are currently down 7.9 per cent.

Car sales figures released by the Australian Federal Chamber of Automotive Industries showed total vehicle sales in January were 85,430, compared to 76,783 in the same month of 2012.

Sales were down 10.5 per cent on December, a seasonal dip from a very strong month. Sales last year were the highest on record at 1.11 million, up 10.3 per cent on 2011.

Australians showed no sign of ending their love affair with sport utility vehicles buying 4,459 more of them than in January last year, an increase of 20.1 per cent.

The light commercial market boasted a second month of huge gains with a rise of 43.9 percent, while sales of heavy trucks were up 10.3 per cent, auguring well for business investment.

Some more on Transurban, chief executive Scott Charlton said in a media conference call that while revenue from CityLink was showing "great resilience", traffic levels were subdued compared to those before the global financial crisis.

"We opened Southern Link ... a year ago, so I think you’re seeing the benefit of that Southern Link upgrade still coming through in the traffic," he said.

"These assets are great assets and they are resilient in the downtimes, but I’m still not quite as bullish as the rest of the market.

"I think there’s still some softness around the economy. We’re quite comfortable with our position, but we’re still not seeing the traffic growth [at] where it was pre-GFC days."

There's some more data out: Australian capital city house prices rose 1.6 per cent in the December quarter, after a downwardly revised 0.14 per cent fall in the September quarter. In the year to December, the house price index rose 2.1 per cent.

Economists had expected prices for houses to be flat in the quarter on a weighted-average basis across Australia's eight major cities.

HOUSE PRICES                     Q/Q              Y/Y

  • Weighted average        +1.6             +2.1
  • Sydney                  +2.3             +4.2
  • Melbourne               +0.7             -0.2
  • Brisbane                +0.7             +0.7
  • Adelaide                +0.8             -0.4
  • Perth                   +2.9             +5.6
  • Hobart                  -1.4             -6.1
  • Darwin                  +2.6            +10.1
  • Canberra                +2.1             +0.3


After sunny January are we now getting saggy February? And I don't mean the weather...

IG Markets market strategist Evan Lucas says it's not unexpected that the markets are pulling back after their stellar run:

"The banks have really run up and are finally having a bit of a breather."

On Macquarie's profit update, Lucas says its capital markets businesses continue to experience subdued conditions, adding that is an indication that despite the perception of a bull market, that move was still in its infancy.

The Australian dollar nudged about one-tenth of a cent higher on the trade data and is curerntly trading at $US1.0451.

Australia’s trade deficit narrowed in December, due to a jump in exports.

The balance on goods and services was a deficit of $427 million in December seasonally adjusted, compared with an upwardly revised deficit of $2.788 billion in November. Economists’ forecasts had centred on a deficit of $750 million in December.

During the month, exports rose 3.0 per cent, while imports fell 6.0 per cent, the ABS said.

Aviation reporter Matt O’Sullivan writes that federal Transport Minister, Anthony Albanese, has given ground on his demands that Sydney Airport hand over details of its long-term plans a year earlier than scheduled.

After a battle in the Administrative Appeals Tribunal, the minister and the airport have reached agreement that the master plan be submitted only six months early – on December 2.

Last year Mr Albanese had sought to force Sydney Airport to place on his desk the 20-year plan by July 1, which prompted the airport to launch legal action.

Sydney Airport’s chief executive, Kerrie Mather, said she was pleased Mr Albanese had agreed to extend the revised deadline for the next 20-year master plan to December.

“Sydney Airport generates and facilitates $27.6 billion a year in economic activity ... and it’s important to get long-term planning for Australia’s gateway airport right,’’ she said. 

Sydney Airport

Sydney Airport Photo: Andrew Quilty

Following those last two posts, here's another important piece of data in the debate about rates - jobs. On Thursday we get official jobs data for January. It's expected to show Australia started 2013 on a weak note, with not enough jobs created to offset population growth.

An AAP survey of 15 economists showed a median expectation for the unemployment rate to rise 0.1 per cent to 5.5 per cent in January. Total employment is expected to grow by 5,000 in the month, not enough to offset population growth.

St George economist Janu Chan said the jobs market was likely to remain weak for several months, with the unemployment rate rising towards 6.0 per cent. She said economic conditions remained subdued with many sectors struggling due to the high value of the Australian dollar.

‘‘Overall, the view of the labour market that we have is that it will be soft but still continuing to post modest job growth,’’ she said.

‘‘Maybe not enough (jobs growth) to prevent the unemployment rate from rising, but we don’t expect the unemployment rate to rise significantly,’’ she said.

In this morning’s MacroBusiness article, David Llewellyn-Smith argues that we shouldn’t get too swept away by the strong start to the year on equities markets or in some of the economic data.

He argues that the global economy will have a better year than last, but ‘‘despite the equity market froth, the globe is not entering some new virtuous cycle of private sector growth":

Every year since the GFC, the global economy has shown the same underlying pattern at this time of year. It bounces into a year-end Christmas cycle as retail gets a boost and manufacturers enjoy an inventory draw-down.

Then, as the year settles into its rhythm around March and new normal savings patterns reassert themselves, manufacturing finds itself well-stocked and production starts to slide. The greatest likelihood is that US, European and Chinese growth will ease into the second half, with commodity prices following suit.

So, what does that mean for rates? Probably not the four downward moves predicted by ANZ at Christmas, but certainly not vigorous tightening either.

Read the full story here.

This sentiment is something we could see a bit more in the coming months, but I'll post a counterpoint next:

The big miners are also in negative territory this morning:

  • BHP is 1.19% lower to $37.36
  • Rio is 1.17% lower to $67.195
  • Fortescue is 1.67% lower to $4.71

The banks are all lower this morning:

  • CBA is 0.65% lower to $64.29
  • ANZ is 0.68% lower to $26.37
  • NAB is 1.35% lower to $27.67
  • Westpac is 0,57% lower to $27.78

Hearing implants maker Cochlear has made a first-half net profit of $77.7 million after a record six months of sales.

The company said its net profit for the six months to December 31 rose to $77.7 million, compared with a $20.4 million loss in the previous corresponding period when it was forced to issue a costly mass recall of its bionic ear products.

The market has not, as yet, responded favourably to the result. In recent trade, Cochlear’s shares were down $2.96, or 3.7 per cent, at $77.50.

In case you didn't spot that, Macquarie Group shares are down this morning, after Australia's top investment bank forecast a smaller-than-expected 10 per cent rise in 2013 profit.

Macquarie said its capital markets businesses were facing subdued activity, while its expected tax rate would rise.

In recent trade Macquarie shares, up 55 per cent in the past year, were at $37.23, down $1.50, or 3.9 per cent.

The stocks doing least well on the ASX200 this morning include:

  • Imdex: -4.78%
  • Macquarie Group: -4.11%
  • Boart Longyear: -3.29%
  • Leighton Holdings: -2.93%
  • Alumina: -2.61%

The best performed stocks on the ASX200 in early trade include:

  • Silver Lake Resources: +2.53%
  • Ardent Leisure: +1.91%
  • Medusa Mining: +1.83%
  • Energy World: +1.56%
  • Primary Health: +1.37%

In early trade, all the sectors on the ASX200 are in negative territory bar one, Health, which is up a meagre 0.32 per cent. The big early losers are:

  • Materials: -1.03%
  • Finance: -0.91%
  • Energy: -0.76%
  • Industrials: -0.66%
  • Information Technology: -0.63%
  • Telecoms: -0.46%
  • Consumer Discretionaries: -0.31%

The markets have opened, and as expected they're heading downwards.

In early trade, the All Ordinaries index is 36.1 points lower, or 0.7 per cent, to 4893.0, while the benchmark S&P/ASX200 is 36.6 points lower, or 0.7 per cent, to 4870.9.

Standard & Poor’s said it expects to be the target of a US Department of Justice civil lawsuit over its mortgage bond ratings, the first federal enforcement action against a credit rating agency over alleged illegal behaviour tied to the recent financial crisis.

Shares of McGraw-Hill, the parent of S&P, slid  13.8 per cent in New York overnight after news of the expected lawsuit surfaced.

An announcement of a lawsuit is expected later today.

The news also caused shares of Moody’s, whose Moody’s Investors Service unit is S&P’s main rival, to slide 10.7 per cent.

It is unclear why regulators may be now focusing on S&P rather than Moody’s or Fitch Ratings.

Housing developers are resorting to discounts, gift cards and help with mortgage payments to compete for dwindling buyers as home sales slow.

Stockland is giving rebates and gift cards of as much as $30,000 at projects in Victoria, Queensland and New South Wales. Devine is matching deposits in South Australia and taking over mortgage payments for as long as a year in Melbourne and Peet has been offering discounts of as much as $50,000 in Western Australia, Queensland and Victoria.

“The discounts this time round are bigger than we've seen before because the response we've seen to rate cuts has been far more muted,” said Stuart Cartledge, managing director of Phoenix Portfolios.

“Affordability based on mortgage costs has improved, but people are worried about losing their jobs. House buyer confidence isn't there.”

Read more here

Toll road operator Transurban’s first-half profit has fallen by 16 per cent but the company has increased its payout to securityholders.

Transurban, which owns Melbourne’s CityLink and the M2 and Lane Cove Tunnel in Sydney, made a net profit of $81.1 million in the six months to December 31, down from $96.6 million in the previous corresponding period.

In a statement to the ASX, Transurban offered no reasons for the fall.

‘‘We have made good progress on key development projects during the period and are now focused on completing the Hills M2 upgrade so that we can see the full benefit of that project flow through all of our northern Sydney assets,’’ chief executive Scott Charlton said.

Transurban declared an interim distribution of 15.5 cents per stapled security, up from 14.5 cents at the same time in the previous year, due to a rise in its cash flow.


The dollar is virtually unchanged, holding its ground before the RBA decision on interest rates is made public this afternoon.

In recent trade it was at $US1.0433, down slightly from $US1.0437 cents yesterday afternoon.

Bank of New Zealand currency strategist Mike Jones said the Aussie dollar held firm overnight in anticipation of the meeting, despite sharp falls on European stock markets.

‘‘The Aussie dollar seems to have sailed through that reasonably unscathed,’’ Mr Jones said.

‘‘I suspect that’s got to do with the approaching RBA meeting today. Investors are cautious about dipping their toes into the Aussie market ahead of that decision.’’

BK Asset Management's Kathy Lien had some predictions as to where the dollar might go after the decision is announced:

"If the RBA leaves rates unchanged and their monetary policy statement is neutral, 1.04 could become a near term bottom for the AUD/USD," she said.

"However if the central bank expresses any desire to continue easing, it could be just what the AUD/USD needs to close below 1.0350.  We believe that the RBA will leave the door open to additional easing and therefore the risk for the AUD/USD is to the downside."

Australia’s services sector contracted for the 12th  month in a row  in January, amid slowing activity in the mining sector and soft retail sales.

The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI) rose 2.1 points to 45.3 in January.

A reading of below 50 indicates a contraction in the sector.

Ai Group chief executive Innes Willox said many businesses covered by the survey believed slowing activity in the mining sector had affected their sales, while retailers reported a quiet January sales period.

‘‘A weakening in local mining investment had always been expected at some stage during 2013 or 2014, but it is clearly coming much earlier than anticipated.’’

Four of the sub-sectors covered by the index expanded in January: personal and recreation services (with an index level of 56.6), health and community (50.6), finance and insurance (61.5) and cafes and restaurants (73.8). However, activity was particularly weak in wholesale trade (34.1) and transport and storage services (34.3).

A 24-hour strike planned for Friday will prevent at least 300,000 tonnes of coal in Australia from reaching port, the rail operator says.

Asciano’s coal division, Pacific National Coal, said that the loss would cost the NSW economy more than $25 million. The company hauls 80 per cent of the coal produced in the state.

The Rail Tram and Bus Union announced the strike after refusing Asciano's latest wage offer.

RTBU national secretary Bob Nanva said members felt they had no choice left but to strike.

‘‘Any Pacific National customer with concerns about this weekend’s stoppage needs to ask Pacific National management why it is conducting an ideological union-busting campaign against the RTBU, rather than getting on with the task of moving coal.

Pacific National coal director, David Irwin, said the union had rejected its pay offers:

‘We have offered a very generous wage increase of four per cent each year, against the RTBUs exorbitant publicly stated wage claim of nine per cent, seven per cent and seven per cent.’’

Staying in the States, where there was more bad news for Facebook, which had its worst day in more than four months after predicting that its average revenue per user would decline as it expands in regions such as Asia, where advertising spending is lower.

Shares in the  social network dropped 5.5 per cent to $28.11 at the close in New York, the biggest decline since September 24.

The stock has fallen 26 per cent since an initial public offering in May, compared with an 11 per cent gain for the Nasdaq Composite Index.

‘‘While we never modeled it, we had been hoping Facebook ad revenue could potentially increase,’’ Doug Anmuth, an analyst at JPMorgan Chase wrote in a research report Monday.

He estimates that sales will fall 8 percent in the current period from the fourth quarter, driven in part by a 12 per cent decline in average revenue per user.

The overnight slide on Wall Street gave the S&P 500 its worst day since November, as renewed worries about the euro zone crisis caused the market to pull back from recent gains.

‘‘The market is extended and due for a pullback’’ said Michael James, senior trader at Wedbush Morgan in Los Angeles.

‘‘I think people are looking for an excuse to make sales, and there [is] the concern coming from Europe.’’

Analysts said that Wall Street had been due for a breather after the Dow closed on Friday above the psychologically important 14,000 level for the first time in more than five years.

There are a number of company results due out today, including:

  • Challenger Diversified (HY) - Expected: $22.2 million net profit/8.7c dividend
  • Cochlear (HY) - Exp: $80 million / $1.25
  • Navitas (HY) - Exp: $35.5 million / 9.4c
  • Reckon (FY) - Exp: $18.4 million / 4.8c
  • Transurban (HY) - Exp: $213 million / 15.5c

We'll bring you the details on these as soon as we get them.

Today's big economic news will be the RBA rates decision. Most economists are expecting them to keep rates as they are, despite some weak data out yesterday.

Macro Investor's David Llewellyn-Smith has this to say on today's decision:

There is little doubt that the RBA should and will leave the cash rate unchanged today. Global manufacturing is enjoying its seasonal post-Christmas upswing and the iron ore price is flying. Markets agree, pricing only one cut in the next twelve months, probably around September.

In short, credit markets are pricing a soft landing for Australia later this year when the economy launches over the mining investment cliff. That is the point at which the fantastic run of mining investment growth goes into reverse.

Read more here:

More on Macquarie Group, which is expecting a 10 per cent rise in net profit

Macquarie had previously forecast a rise in its full-year net profit, but didn’t provide details. It’s $730 million profit in the 2011/12 fiscal year was down 24 per cent on the previous year, reflecting lower activity in financial markets because of global economic uncertainty.

Mr Moore said Macquarie’s capital markets businesses continued to experience subdued conditions, but their profits were higher in the three months to December 31 than in the preceding quarter and the previous corresponding period.


Australian shares are set to drop this morning after European and US stocks fell overnight.

Fears of Spain losing a PM (Rajoy under a cloud) and Italy getting one (Berlusconi is rising again) sent Europe down (FTSE -1.5%, Italy -4.5%)  and Wall St followed suit with the S&P500 off 1.15%.

On the ASX24 the SPI futures contract was 31 points lower at 4838.

Macquarie Group has been giving an operational briefing to anlaysts and investors this morning, and the investment bank says it expects a substantial rise in net profit, due to improving financial market conditions.

Chief executive, Nicholas Moore, says he expects Macquarie’s net profit for the year to March 31 to be up 10 per cent from its $730 million net profit in the previous year.

It could even be higher, if improved market conditions persist, he said.

‘‘Since our result announcement for the first half of the 2013 financial year, market conditions have shown some signs of improvement. However, client activity remains subdued for capital markets-facing businesses,’’ he said.

For a comprehensive look at this morning’s business news, check today’s need2know.
Here are some key numbers and links for the morning:

  • SPI futures are 31 points lower at 4838
  • The $A is up at $US1.0431
  • In New York, the S&P500 is 1.15 per cent lower at 1495.75In Europe, the FTSE100 fell 1.582% to 6246.84
  • China iron ore was up at   $US154.20 a metric tonne
  • Gold rose 45 cents to $US1674.62 an ounce
  • WTI crude oil fell $US1.47 to $US96.30 a barrel
  • Reuters/Jefferies CRB index fell 0.71% to 302.91

Good morning folks. Welcome to the Markets Live blog for Tuesday.

This blog is not intended as investment advice

BusinessDay with agencies

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  • Discovery Metals (DML) copper producer and massive fall due to failed chinese takeover. Catch the opportunity to buy a copper producer

    Date and time
    February 05, 2013, 11:58AM
  • This Bull is getting weak already. Perhaps a shot of Red Bull in the form of even lower interest rates might give him another tiny jolt.

    Date and time
    February 05, 2013, 11:51AM
  • Woo hoo. Cochlear (COH) down 4.8% MQG clawing back. LNC is now my favourite yo-yo stock!

    Gordon Gekko
    Date and time
    February 05, 2013, 11:08AM
  • "Australia’s services sector contracted for the 12th month in a row in January, amid slowing activity in the mining sector and soft retail sales."

    Couple that with 11 months of falling job ads, 11 months of negative terms of trade, falling hours worked, white collar off-shoring and nearly 30% of workforce casualised you start to see why nobody belives the headline unemployment figure. Ross Gittins didn't mention that of course.

    Date and time
    February 05, 2013, 10:39AM
  • We don't want to buy houses we'd rather rent in the 1 of your 20 you have, for cheap.

    Date and time
    February 05, 2013, 10:37AM
  • Big falls there today. Macquarie (MQG) down 4% nothwithstanding 10%profit jump suggests markets had already factored that in. AMP is holding up pretty well with results due on 21/2 suggesting market think good tidings are forthcoming.

    Gordon Gekko
    Date and time
    February 05, 2013, 10:25AM
  • So yesterday we didn't get the bounce higher ( Sorry after 10.10am) and now our market looks sickly. This has been going on since 15/10/2009. Since then we are 40% behind the dow not 4% 40% Forty. Why did our market fall yesterday with all the positive news around. I can understand why we are falling today but there have been so many more yesterday days over the last three years that have now left our market left on the starting line without movement for three years three months and 21 days. What a Joke the ASX is.

    Date and time
    February 05, 2013, 10:16AM
    • Jonaze, you really must stop assuming the market runs on logic. You will drive yourself mad trying to rationalise it. If you just accept that most of the big traders and brokers are subservient to America and react from fear, and are spendign other peoples money, you can make money. Trading the massive swings between outight terror and irrational optimism of the market is a sound strategy.

      Another Grump
      Vic (state of despair - but looking up now Bracks has really gone)
      Date and time
      February 05, 2013, 10:30AM
    • Fear and suspicion. Many have not forgotten GFC, and the collapse in '09.

      Gordon Gekko
      Date and time
      February 05, 2013, 10:31AM
    • Probably get the answer from the casino or TAB or any other gambling site 'cause as far as I can tell no one knows why we have to follow anyone, are we not smart enough to 1) understand why the market goes up or down or 2) not smart enough to make our own decisions. I wouldn't care if it didn't effect me but it does, superannuation you know!

      Date and time
      February 05, 2013, 10:35AM
    • markets don't follow fundamentals short term. it's herd behavior.

      Date and time
      February 05, 2013, 10:35AM
    • Well, keep investing in it. Everyone needs something to whine about.

      Date and time
      February 05, 2013, 10:44AM
    • The Australian economy is very sick, destroyed by over population, ridiculously high personal debt, ridiculously high wages compared to our competitors. The ASX reflects this in direct contradiction to the politicians that destroyed it. Much lower to come.

      Date and time
      February 05, 2013, 11:16AM
  • "Developers, including Stockland and Peet, have said they're facing the worst housing market conditions in 20 years and expect little change in 2013. "

    Nope. No housing recovery in 2013. Yikes! What will that do to house prices?

    Date and time
    February 05, 2013, 9:31AM
    • Maybe it's due to where these new housing developments are. Who wants to go into 30 years of debt to pay for a new house 10's of kilometres away from public infrastructure, schools and employment where the only entertainment is shopping in your local Coles / Wollies?

      Date and time
      February 05, 2013, 10:15AM
    • "Sydney Homes for Sale Plunge to 3-Year Low as Demand Recovers"

      I'm surprised you didn't post this as well or do you only post links to negative articles?

      Turn on the immigration tap if there is a problem. No problem.

      It can't be good for one's psyche to only focus on the negative.

      Date and time
      February 05, 2013, 10:25AM
    • @Santiago

      They're homes taken off the market unsold.

      Date and time
      February 05, 2013, 11:13AM
    • Why are there less properties for sale? Perhaps owners have given up?

      Oh and prices falling is not negative, it's positive.

      Date and time
      February 05, 2013, 11:20AM

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