Well...that was an interesting day and it all starts again tomorrow with 'Super Thursday' as earnings continue to pour in. Be sure to tune in early from 8am sharp.
Here's what you need to know this Wednesday evening:
- ASX 0.3% higher at 5098.7
- AUD flat at $US1.0363
- Nikkei up 0.9%, Hang Seng up 0.2%, Kospi up 1.7%
- Gold at $US1607, WTI oil at $96.62
- Wall Street futures are flat. while FTSE up 0.1%
- New BHP captain to adjust the course
- Boom-time chiefs call it quits
- Unlikely to pay mining tax for years: Fortescue
- ANZ sends another 70 jobs offshore
- Suncorp spooks market with lower payout
- AMP est FH profit $514 million
- ASX est FH profit $168.45 million
- Alumina est FH loss $55.21 million
- Brambles est FH profit $310.5 million
- Drillsearch est FH profit $41 million
- Echo Entertainment est FH profit $18.7 million
- Fairfax Media est FH profit $98 million
- Insurance Australia est FH profit $370.5 million
- iiNet est FH profit $28.4 million
- Iluka Resources est FH profit $104.67 million
- Origin Energy est FH profit $415.40 million
- Qantas Airways est FH profit $156.28 million
- Tatts Group est FH profit $125 million
- Village Roadshow est FH $30.1 million
Here's a look at the best and worst performers on the ASX200 today:
Among the sectors, consumer staples gained 1.6 per cnet, energy finished up 1.3 per cent and financials added 0.9 per cent.
Materials slipped 0.9 per cent and telecommunications fell 1.6 per cent.
The market has finished higher, buoyed by financial and consumer staple stocks. The benchmark S&P/ASX200 added 16.8 points, or 0.3 per cent, to 5098.7, while the broader All Ords rose 14 points, or 0.3 per cent, to 5115.Back to top
Leighton Holdings said today it was in negotiations to sell 70 per cent of its telecommunication assets, including its NextGen Networks fibre-optic business, to Canada's Ontario Teachers' Pension Plan.
The sale values the entire assets, which include NextGen and two other data centre facilities Metronode and Infoplex, at $885 million, Leighton said in a statement.
"The sale price represents a compelling value creating proposition for Leighton Holdings' shareholders," Leighton CEO Hamish Tyrwhitt said in the statement.
The $117.1 billion Ontario Teachers fund, Canada's largest single-profession pension plan, lined up against Australia's TPG Telecom to bid for Leighton's NextGen business, sources had previously told Reuters.
Leighton shares were up 3.1 per cent to $24.18.
With today's resignation of BHP Billiton boss Marius Kloppers the reign of the mining boom-time chief executive is coming to an end, writes BusinessDay's Max Mason.
The generation of executives that oversaw a rapid expansion of the mining industry like no other before it is being replaced as mining giants steer into the post-peak period.
The mining giants reaped huge profits during the boom years. In 2011, BHP reported a profit of $22.86 billion and hit a market cap of more than $200 billion as iron ore prices skyrocketed from around $US60 per tonne in 2009 to a peak of $US191.90 per tonne in early 2011.
But the good times couldn’t last forever and commodity prices retreated from their peaks, while chief executives oversaw hefty write-downs and the delaying of mega projects.
While Mr Kloppers seems to have had the good fortune of being able to influence the date of his departure - BHP chairman Jac Nasser today noted a succession plan for Mr Kloppers had been in place for some time - several of his peers were pushed out of their jobs.
More again on BHP, asked if Mr Kloppers was paying for the price for unsuccessful bids and write-downs including last year's $US2.8 billion write-down on BHP's $US20 billion expansion into oil and gas shale in the United States, BHP Billiton chairman Jac Nasser told Fairfax Media:
''Clearly not. We've been clear on the succession process, and for those people who have that opinion, I would say look at the results. They speak for themselves."
BHP's shares were trading at about $35 on the Australian Securities Exchange at the end of 2006-2007 year as Mr Kloppers prepared to take over as CEO in October of that year. They are not much higher at $38.76 now, but BHP has returned $US36.3 billion of cash over the period in dividends and buybacks, including $US24 billion in dividends.
On a total shareholder return basis that measures share price movements and payments to shareholders, BHP's return was 49 per cent. The next best big mining group was Brazil’s Vale group, which returned 17 per cent. Rio Tinto returned 4 per cent, Xstrata returned minus 41 per cent and Anglo American returned minus 47 per cent.
Company collapses hit a record high in 2012, with the construction industry bearing the brunt.
The construction industry accounted for more than one fifth of the 10,632 insolvencies in the last financial year, figures from the Australian Securities and Investments Commission show.
‘‘All eyes are currently on the construction industry following tough conditions in 2012, and a formal government inquiry commissioned to assess the cause and extent of insolvency in the sector,’’ accounting Firm Taylor Woodings said in an analysis of the figures.
‘‘We predict 2013 will remain a challenging year for many Australian businesses due to continued low consumer confidence and the stubbornly high Australian dollar.’’
Bank of Japan policymaker Yoshihisa Morimoto reassured markets of the central bank's resolve to push on with monetary easing as a weaker yen and a pick-up in global demand look to be boosting the export-reliant economy.
Morimoto, a former utility executive, said the government also had a role in beating deflation, such as through deregulation and reforms to encourage more investment in new business areas.
"Recent exchange-rate moves will likely underpin exports and corporate revenues," Morimoto told business leaders, reiterating the BOJ's view the economy would recover as overseas growth picked up.
"The BOJ will continue to promote powerful monetary easing through steps including massive government bond purchases."Back to top
Iron ore miner Fortescue does not expect to pay any mining tax for years on end, because of flaws in the tax’s design.
Announcing a first-half net profit of $US478 million, chief financial officer Stephen Pearce said the federal government’s minerals resource rent tax allowed the build up of ‘‘capital shelters’’ or tax credits – which meant the miner was unlikely to pay any mining tax, despite it expecting iron ore prices to remain strong.
‘‘Under a general considered view of where iron ore prices are heading over the next few years – no, we don’t anticipate we will be paying any MRRT,’’ Mr Pearce said.
Fortescue chief executive Nev Power was quick to add that it was ‘‘completely appropriate’’ that the miner did not pay more tax because it was paying ‘‘already over 1 billion in income tax and royalties’’.
Good day for Woodside investors, as shares jump 3 per cent to their highest since July on the back of good earnings. But some analysts aren't all happy:
Morningstar analyst Mark Taylor says the strong profit result was within market expectations on the back of Pluto’s solid contribution.
But, he says, he was disappointed the company would push ahead with the Israel project.
‘‘It’s an unnecessary diversification away from their core area of expertise and where they’re located,’’ he said.
Woodside increased its capital expenditure budget for 2013, with a forecast it will spend about $US1.0 billion on the Leviathan gas project in Israel.
The dollar is trading steady at $US1.0345, as investors consolidate recent gains.
CMC Markets senior trader Tim Waterer says the Australian dollar has had a decent 24 hours.
‘‘The Australian dollar now seems to be in consolidation mode in the wake of the Reserve Bank of Australia minutes (released on Tuesday),’’ he said. ‘‘It appears the RBA is in not a great rush to cut the rate.’’
Waterer said the Australian dollar got a further boost from better than expected German consumer confidence figures, released on Tuesday night.
‘‘Equity markets responded well to that and it was a good night for risk assets like the Australian dollar,’’ he said. ‘‘But today it’s really been consolidating its gains.’’
Australia’s largest listed rail company, Aurizon, has suffered one of its sharpest one-day falls since it was floated more than two years ago, after its half-year earnings failed to meet market expectations.
The company formerly known as QR National posted a 36 per cent rise in underlying pre-tax profit to $356 million for the half, which was lower than analysts’ expectations of between $370 million and $380 million.
Shares in Aurizon fell more than 6 per cent, or 26 cents, to $3.95 in trading this afternoon.
Aurizon also lowered its forecasts for the amount of coal it expects to haul this financial year to between 192 million and 195 million tonnes. It has previously forecast coal volumes of between 195 million and 205 million tonnes.
The company blamed the reduced forecast on heavy rains and flooding in Queensland last month, which was the result of Cyclone Oswald. A train derailment was also blamed.
Apart from missing expectations for the first half, analysts were also disappointed about Aurizon’s lack of specific earnings guidance for the full financial year.
‘‘A lack of guidance is this market has been punished,’’ one said.
Just in case anyone was wondering, the new BHP boss did his PhD in steroidal molecular maturity parameters, a subject this blogger feels doesn't get anywhere near enough attention in Markets Live.
As we've mentioned already, you can find out a bit more about Andrew Mackenzie here. We'll leave you with another couple of quotes, taken from his time at Rio.
“I get an enormous buzz out of creating wealth and well-being from natural resources. At BP, that was expressed in just two products – oil and gas – in a narrow set of geological conditions. Here at Rio Tinto, the real excitement for me, privilege even, is that we have the whole periodic table to play with.
“I’ve moved from organic to inorganic chemistry and I’ve had the chance to open up whole new chapters in my geology textbooks. It’s no longer just drilling muds and sandstone; nowadays I’m into sedimentary rocks, metamorphic rocks, igneous rocks, the whole gamut. And everything from the Recent to the Pre-Cambrian."Back to top
The AFR is reporting that mining magnate Andrew 'Twiggy' Forrest and his wife will donate half of their wealth to charity, joining other billionaires around the globe. The report says:
The Forrests – with an estimated wealth of nearly $6 billion – are among the first billionaires from outside the United States to sign up to the “giving pledge”, started by American investor and philanthropist Warren Buffett and Microsoft founder Bill Gates to encourage the world’s richest people to give to philanthropic and charitable causes.
Others who announced their pledge include Virgin founder Richard Branson and David Sainsbury, the founder of the UK supermarket giant Sainsbury’s. Full story.
It's one thing to be generous, but there is also practicality. However will they survive on just $3 billion in their dotage?
This isn't directly related to Aussie shares but local investors will find it interesting. Bloomberg reports that price swings in US stocks are narrowing the most since the Great Depression, a signal of reviving investor confidence that’s fuelling the bull market poised to enter its fifth year.
Average daily price moves for the Standard & Poor’s 500 Index have fallen to 0.43 percent in 2013 from an average 1.08 percent the past five years, the steepest decline for any corresponding period since the 1930s, according to data compiled by Bloomberg.
The last time the annual average was this low was 1995, when the S&P 500 surged 34 percent and doubled in the next four years. Stocks gain an average 17 percent during years when the gyrations are so small, the data going back to 1928 show.
The combination of declining volatility and the best start to a year since 1997 is prompting bears to warn that investors are growing complacent as the rally ages. Bulls cite smaller fluctuations as another reason to buy, on top of rising earnings forecasts, below-average valuations and the biggest deposits in equity mutual funds in nine years.
Some more detail on FMG. The iron ore miner's first half profit has dropped 40 per cent because of weaker ore prices.
But the company says it has had a strong start to the second half of the 2012/13 financial year with iron ore prices returning to high levels and cost savings being realised.
Fortescue made a net profit $US478 million ($A463.99 million) in the six months to December 31, down from $US801 million in the previous corresponding period.
It will not be paying shareholders an interim dividend, and said it would review its dividends after its full year result is announced.
Fortescue Metals Group has reported 40% fall in 1H profit to US$478M. Revenue down 2% US$3.3B, no interim dividend declared #ausbiz ^JS— CommSec (@CommSec) February 20, 2013
Economists at ANZ have taken a look at the wage data from the ABS, which met expectations, and say the "subdued outcome is consistent with the gradual deterioration in labour market conditions through 2012".
This moderation in wage growth is expected to continue through 2013 as the increase in the unemployment rate becomes more pronounced and given firms’ emphasis on cost-cutting (ANZ is forecasting the unemployment rate to reach 5¾% by end-2013).
There is little in today’s figures to contradict the RBA’s forecast for wage growth to ease to 3¼% over the forecast horizon. This is a key component of the RBA’s well-contained inflation forecasts, which allows room for further monetary policy easing over the course of 2013 should the domestic economy need further support. ANZ expects a further 50bps of cuts over 2013, although little action is likely over the next few months as the RBA accumulates evidence on how the economy is responding to earlier rate cuts.Back to top