Australian shares closed higher after European stock markets rebounded on positive company earnings and news of job cuts at Swiss bank UBS, but Wall Street remained closed for a second day.
- Arrium knocks back Posco consortium's $1.2b offer
- British costs drag NAB profit down 22% to $4b
- Wall Street to reopen as mop-up begins
5.09pm: That's all from us here at blog central, thanks for being with us, we'll be back tomorrow from 9.30am, we hope to see you there.
4.31pm: Blue chip stocks performed reasonably well today, although a couple were down.
- BHP: +0.8%
- Rio: +0.1%
- ANZ: +0.3%
- CBA: +0.8%
- NAB: -0.3%
- Westpac: +0.7%
- Fortescue: -0.5%
- Woolworths: +0.5%
- Wesfarmers: +1.3%
- Telstra: +0.7%
4.25pm: Among the sectors, health and gold were the biggest winners, both adding 1.8 per cent. Materials rose 0.9 per cent and consumer staples gained 0.7 per cent.
4.12pm: The market has closed higher, the benchmark S&P/ASX200 jumped 31.3 points, or 0.7 per cent to 4517, while the broader All Ords added 29.7 points, or 0.7 per cent, to finish at 4535.4.
4.10pm: ASX: The only time that trade on the Australian sharemarket has been disrupted for a weather event was November 9 1984 due to flooding.
— Craig James (@craigjamesOZ) October 31, 2012
3.53pm: The Australian dollar was up 0.1 per cent on the day at $US1.0373, having risen as high as $US1.0391 after approvals to build new homes in Australia jumped 7.8 per cent in September, far exceeding forecasts of a 1 per cent rise.
Building data has become more important for markets as the RBA is looking for a recovery in the housing market to offset a peak in mining investments.
3.45pm: Gasoline stockpiles on the US East Coast may sink to the lowest level since at least 1990 as Hurricane Sandy moves ashore, curtailing fuel production and distribution, based on Energy Department data.
Refineries accounting for 94 per cent of regional processing capacity shut or reduced rates before Sandy, the largest tropical storm on record in the Atlantic, approached the East Coast yesterday. Colonial Pipeline, which operates the largest link between Gulf Coast refiners and East Coast distributors, planned to shut its main line delivering fuel to Philadelphia and New York Harbour late yesterday as customers shuttered operations.
Prices had jumped 5.9 per cent in three days, breaking the longest losing streak since 1986, as the storm headed directly for the heart of East Coast fuel refining and distribution. Gasoline inventories in the central Atlantic area are already 16 per cent below a year earlier. Sandy threatens to flood and disrupt power at refineries and terminals that account for one- third of US finished gasoline production, according to BNP Paribas SA.
3.27pm: Many small businesses won't be impressed with a Facebook change that forces brands and even personal users to pay for “promoted posts” to reach all of their “likers” and friends.
3.20pm: Nissan would think twice before making new investments in China, the company's chief executive, Carlos Ghosn, told the Financial Times, as Japan-brand auto sales dive amid a territorial row between Tokyo and Beijing.
Future investment in the world’s biggest vehicle market is something that will require consideration over a period of time, Mr Ghosn said.
‘‘Certainly beyond what we have decided, before going for further decisions in China, we will be very careful in assessing how much of an impact (the political situation) has on consumers’ minds.’’
3.02pm: Archer Daniels Midland, the US agribusiness giant bidding $2.7 billion for Graincorp, reported a 60 per cent fall in its quarterly profit on Monday, due partly to the US drought.
Net profit for the September quarter fell to $US182 million, from $US460 million a year earlier. Sales were flat, falling 0.4 per cent to $US21.8 billion. ADM shares are yet to trade this week as the market was closed due to Hurricane Sandy, but the figures beat analyst consensus estimates cited by Bloomberg.
Shares in Graincorp were up 0.9 per cent to $12.32.
2.43pm: Here's a snapshot of how markets around the region are performing:
- Nikkei: +1%
- Shanghai: -0.2%
- Taiwan: -0.5%
- South Korea: +0.6%
- Singapore: -0.2%
- New Zealand: +0.5%
2.29pm: Woolworths is one of the Australian success stories of the past 20 years, writes Motley Fool's Scott Phillips.
The supermarket chain that was rescued from mediocrity and now turns over more than $55 billion in sales each year.
To put that in perspective, that is the equivalent of more than $2400 for every man, woman and child in Australia. Yes, the company also owns businesses in New Zealand, but it's still an astonishing number.
It's $7250 per household – or $140 per week.
Whichever way you look at it, it's hard to miss the grocer-cum-publican-cum-hardware-store proprietor. To say it dominates the retail landscape in Australia comes very close to understatement.
2.13pm: More from NAB, chief executive Cameron Clyne has ruled out a “fire sale” of the bank’s loss making UK business, saying such a move would trigger deep shareholder losses.
“The weak economic backdrop has contributed to further falls in property prices, particularly commercial real estate outside of London,” he said.
"Unfortunately there is no quick fix solution in the UK and believe me when I say we’ve been looking. The restructure we announced to the UK in April was the right response and will take time before that business will generate acceptable returns," he said
"A fire sale – even if possible would not be in the interest of our shareholders," he said.
2.02pm: Small businesses face sharp economic hardship in the year ahead, according to ANZ boss Mike Smith. To boost your chances of surviving and thriving, you must make every dollar count. Here are six tips on how to maximise your marketing without busting the budget.
1.50pm: Shares in Arrium jumped more than 6 per cent after bid rejection announcement, but are now trading flat at 80 cents.
1.39pm: And a little bit more on the Tabcorp AGM and investors' concern over the decision to seek about $686.8 million statutory payment from the Victorian government for the non-renewal of its gaming operator’s licence.
Ms Dwyer would not place a limit on costs, stating the matter was before the court and Tabcorp would continue to evaluate the case as it develops.
‘‘The prize is large and we will fund the legal team appropriately’’ said Ms Dwyer.
1.29pm: More on James Packer and the Leadership 2012 Tourism, Aviation and Transport Infrastructure Summit in Canberra.
Mr Packer’s attendance at the conference meant missing his billion dollar pay day in Perth where his fellow Consolidated Media Holding’s investors voted in favour of News Corp’s $2 billion bid for the company which holds a 25 per cent stake in Foxtel and related companies.
Mr Packer is deputy chairman of CMH and owns 50 per cent of the company while Kerry Stoke’s Seven Group holds another 25 per cent.
1.24pm: Watch Malcolm Maiden's video, where he looks at the big news of the week so far, including Virgin's plans for Tiger, and NAB's results.
1.20pm: More from the Tabcorp annual general meeting, where a representative of the Australian Shareholders Association, holding proxies for 664 shareholders, voted against the re-election of chairman and former chief executive Elmer Funke Kupper.
The ASA believed it was ‘‘poor governance’’ for a former chief executive to serve on the board and look over the decisions made by current chief executive, David Attenborough.
The representative also said they did not believe Mr Funke Kupper could efficiently serve on the board of Tabcorp as well as being the chief executive of the ASX.
Another shareholder raised concerns about Mr Funke Kupper’s investment, or lack of, in Tabcorp.
‘‘You’ve sold all your shares in the company, so you must not have much confidence in [Tabcorp],’’ said the shareholder.
Mr Funke Kupper - who was re-elected to the board - told BusinessDay he plans to purchase shares in Tabcorp but due to his role at the ASX there were tighter rules surrounding his investment portfolio.
1.09pm: The big miners are all ahead today:
- BHP is 0.91% higher to $34.28
- Rio is 0.49% higher to $57.14
- Fortescue is 1.59% higher to $4.165
12.52pm: The British are the biggest office suck-ups, Germans are the most fashion-conscious and Australians? They just want to be liked by their mates.
That’s the conclusion of a poll of 3200 professionals in Europe, Australia and Singapore on their office-related work habits. Career coach Sally-Anne Blanshard says its all about feeling like we belong:
Being liked in the office is an important part of feeling connected in office life. Most professions incorporate at least some element of team work, and forging a strong relationship with colleagues is a perfect way to learn from them and help each other develop.
12.46pm: Transpacific Industries shares have been going backwards on its disclosure of a soft start to the new financial year.
Shares are down 9.5 per cent to 81 cents, which ranks it as one of the market’s weakest stocks.
At today’s annual general meeting of shareholders, it disclosed a 6 per cent decline in earnings before interest, tax and depreciation for the September quarter, hurt by softness across the eastern states, especially in Victoria, with no pick up in sight in New Zealand, either.
12.44pm: They're not a happy crowd over at NAB today:
As analysts drill down into National Australia Bank's stalled profit growth, one notes the investor briefing is 'not the friendliest room'.— Eric Johnston (@ejohnno) October 31, 2012
12.40pm: Private sector credit is still growing at a snail’s pace, up 0.3 per cent for the month in September and 4 per cent over the year.
Housing credit growth is slightly higher, at 0.4 per cent and 4.7 per cent respectively, but that’s still well below previous years.
Annual growth in housing credit has been running around 5 per cent for months, a huge slowdown from the double-digit pace of the previous decade.
Personal credit has been subdued as households chose to save more and borrow less.
Growth in business credit had picked up through the middle of the year, having been negative for much of 2011, though now it seems to be losing steam again.
12.29pm: BREAKING NEWS More on the rejected offer for Arrium. The Asian consortium's revised offer was for 88 cents for each Arrium share. Arrium shares are currently in a trading halt at 80 cents.
Chairman Peter Smedley's statement goes on:
‘‘The revised proposal is opportunistic. It comes as iron ore prices are rising and after we have shipped the first ore from our new mine two weeks ago.’’
12.26pm: BREAKING NEWS Steelmaker Arrium has rejected a $1.19 billion takeover offer from a consortium of Asian steel companies.
Arrium, formerly named OneSteel, had already rejected a $1 billion offer from the consortium, headed by Hong Kong commodities trader Noble Group and South Korean steel giant Posco.
The Asian companies lodged an increased bid late on Tuesday, which retained similar conditions to its original bid, such as its need to carry out due diligence and to arrange debt financing.
Arrium’s board has rejected the offer after a careful review.
‘‘We believe that the revised proposal significantly undervalues Arrium and is not in the best interests of Arrium shareholders,’’ chairman Peter Smedley said in a statement.
‘‘We also believe that the highly conditional nature of the proposal carries significant risk.’
12.24pm: We've looked at NAB a fair bit today, but now lets turn to the other big banks - and they're all doing quite well so far.
- CBA is 0.23% higher to $57.44
- ANZ is 0.12% higher to $25.35
- Westpac is 0.39% higher to $25.44
12.19pm: BusinessDay’s Georgia Wilkins is at the JB HiFi annual general meeting in Melbourne where chief executive Terry Smart has told shareholders that he doesn't expect trading conditions to improve in 2013, but is nonetheless positive about the future.
"We expect the outlook to remain challenging for retail, but we are confident we will grow our market share as product innovation continues to grow sales," he said.
Mr Smart said weak consumer sentiment and growing deflation had made 2011-12 the "most demanding" period in the electronic retailer's history.
JB HiFi shares are up 3.6 per cent - 36 cents - at $10.50.
12.14pm: Just after noon and the early gains aren't going away. The All Ordinaries index is 26 points higher, or 0.6 per cent, to 4531.7, while the benchmark S&P/ASX200 is 27.2 points higher, or 0.6 per cent, to 4512.9.
National Australia Bank has made up most of its losses and not long ago was at $25.86 - two cents below yesterday's closing price. It had earlier fallen to $25.53 after announcing 22 per cent slump in full-year profits to $4.1 billion
12.02pm: More from BusinessDay’s Clancy Yeates who’s been listening to James Packer’s speech to federal politicians this morning.
The Crown chairman said he was ‘‘amazed’’ by the number of business and government leaders who had never visited China, and still viewed the country ‘‘through Western eyes’’.
Many bureaucrats and business people who have not been to China have no idea of how much it has changed and how much the country is doing to lift its people out of poverty. It should be almost compulsory for all senior executives and government officials to make a trip to China to gather an appreciation of how the country has changed. We need to stop viewing China like it’s the Cold War and start viewing them as a modern member of the industrialised world.
11.52am: Now for more on takeover target Arrium Limited whose shares are in a trading halt pending news of a renewed acquisition bid for the iron ore and steel producer.
Credit Suisse analyst Michael Slifirski said the overseas consortium looking to take over Arrium would need to offer closer to $1.10 per share to be taken seriously. Arrium shares last traded at 80 cents.
But he cautioned that the takeover could struggle to win approval from the Foreign Investment Review Board (FIRB) given that some of Arrium’s iron ore assets are located within Defence Force land in outback South Australia.
“We still cannot see how the FIRB could approve the acquisition given the very strong precedents already established in rejecting foreign acquisitions in the green and amber zones of the Woomera military zone,” he wrote, in a research note this morning.
11.40am: And back to AGM season, with some more good news for the economy, this time from furniture retailer Fantastic Holdings, which says retail conditions are slowly improving.
The company owns the Fantastic Furniture, Plush and Dare Gallery brands, and posted an 8 per cent rise in its net profit in the 2011/12 financial year.
Sales in the 2012/13 financial year so far are higher than in the same period last year too, Fantastic says.
‘‘We believe that the retail outlook in Australia is gradually improving,’’ managing director Julian Tertini said.
‘‘However, we retain a cautious outlook as discretionary consumer spending is sensitive to broader economic conditions.’’
11.36am: Building approvals data is out and it looks like good news. Australian residential building approvals rose 7.8 per cent to 13,388 units in September.
This compares with an upwardly revised 12,422 units in August. In the year to September, building approvals were up 12.4 per cent, the ABS said.
11.35am: Just as Hurricane Sandy was about to cut a swath across the north-eastern US on Monday night, 3500 kilometres away in Cupertino, California, Apple CEO Tim Cook was cutting a swath of his own, this one through the executive ranks of his own company.
11.31am: James Packer has ramped up his push for a second casino in Sydney, telling federal politicians Australia needed to compete with gambling hubs such as Singapore to attract lucrative Chinese visitors.
The Crown chairman, who plans to build a $1 billion hotel and gambling complex at Barangaroo in Sydney, told a tourism forum in Parliament House today that Chinese visitors were critical to the long-term future of Australian tourism.
‘‘Our international competitors get it, and are throwing everything in a co-ordinated and well-funded strategy to attract more high net-worth travellers. We need to do the same,’’ Mr Packer said.
11.25am: Shares in Macmahon Holdings are up more than 15 per cent after the engineering company announced that it had been nominated as preferred contractor by Fortescue to deliver mining services as part of the expansion of the Christmas Creek iron ore mine in the Pilbara.
If awarded, the five-year contract with a value of about $1.8 billion would be the company's largest ever mining contract.
Macmahon shares have risen 4.5 cents - 15.3 per cent - to 34 cents.
11.19am: BusinessDay's Lucy Battersby has more from Telstra's investor day presentation, where chief financial officer Andy Penn has revealed the telco's plans to move into the satellite broadband market for the first time.
Telstra is looking at reselling NBN Co's satellite and fixed wireless products, which will be rolled out to hundreds of thousands of Australians before the fibre optic network is complete.
Mr Penn also confirmed Telstra's 28 cent dividend was no longer guaranteed and the board would return to half-yearly guidance. The two-year guarantee provided "stability" during the NBN negotiations, but was no longer appropriate, he said.
11.10am: Smokers should have to pay more for health insurance, say almost three quarters of respondents in a new survey, while some think that heavy drinkers and the obese should also pay a higher premium for their lifestyle choices.
However if you break it down into dollars, some say that smokers are not as great a burden on the hospital system as people might think, as the diseases they contract kill them quickly. Cigarette anyone?
11.05am: An hour into the day and things are looking quite positive.
The All Ordinaries index is 23.2 points higher, or 0.5 per cent, to 4528.9, while the benchmark S&P/ASX200 is 24.4 points higher, or 0.5 per cent, to 4510.1.
Lonsec private client adviser Michael Heffernan said the Australian market had opened in the black after strong leads from European markets.
It’s a pretty buoyant opening. What struck me, apart from the New York Stock exchange closing because of the storm, was that Europe was on a roll with their markets being up one and two per cent. Commodities weren’t too bad either which has helped.
11.00am: Meanwhile, BusinessDay's Eric Johnston is listening to NAB's conference call where the focus is very much on the underperforming UK business. Here are some tweets:
NAB chief Clyne says the UK remains the bank's biggest challenge. Says 'no quick fixes' for UK and acceptable returns there will take time.— Eric Johnston (@ejohnno) October 30, 2012
NAB chief Clyne also says a 'fire sale' of UK-based Clydesdale Bank not in best interest to shareholders.— Eric Johnston (@ejohnno) October 30, 2012
10.56am: And talking of Telstra, shares in the telecom are at their highest since the GFC. They were recently trading at $4.145, up from a low in November 2010 of $2.56.
10.55am: BusinessDay''s Lucy Battersby is at Telstra's investor day. She tweets:
#Telstra lists 8 threats to SMS revenue, iMessage, Viber etc. Could create own messaging service to avoid losing revenue.— Lucy Battersby (@LucyBattersby) October 30, 2012
10.52am: Top performing stocks on the ASX200 this morning include:
- Evolution Mining: +6.53%
- Reject Shop: +5.84%
- BlueScope Steel: +3.16
- Ardent Leisure: +2.87%
- Beach Energy: +2.59%
10.48am: Businessday’s Eric Johnston has also been looking at the NAB result and says that the challenge for the bank continues to be generating an adequate return to its shareholders.
The latest results show return on equity for the year fell by 100 basis points to 14.2 per cent. With all the offshore headaches, Mr Clyne has tried to keep shareholders onside by keeping the bank's final dividend steady at 90 cents a share despite the dip in earnings per share. This has taken the full year payout to $1.80 – up 8 cents. But in an environment where investors have been quick to mark down banks, this may not be enough.
Shares in the bank have been climbing slightly since an abrupt early fall and are now 1 per cent lower at $25.62
10.40am: Shares in takeover target Arrium Limited have gone into a trading halt this morning pending news of a renewed acquisition bid for the iron ore and steel producer, writes BusinessDay’s Peter Ker.
In statements to the ASX this morning, Arrium – which was until recently known as OneSteel – said the bid was a “revised acquisition proposal”, suggesting it has come from the same foreign consortium that bid for the company in early October.
That consortium includes Korean steel giant Posco, commodities trader Noble group and a collection of Korean investment funds.
An initial offer price of 75 cents per share was rejected earlier this month, and a second attempt at the same price was rebuffed last week. Arrium shares last traded at 80 cents.
10.34am: Now for some of the early sliders on the ASX200:
- Transpacific: -4.25%
- NAB: -1.08%
- Cochlear: -0.92%
- Pacific Brands: -0.84%
- Seven West Media: -0.83%
- Treasure Wine Estates: -0.80%
10.30am: BusinessDay’s Adele Ferguson has been looking at today’s NAB result, which, she says, "offers up more disappointments, particularly from its UK business and to a lesser extent its business banking operations, which suffered a rise in bad and doubtful debts".
Today’s results will put added pressure on NAB chief Cameron Clyne, who has been in the top job for almost four years, after a meteoric rise, and who now finds the bank is going backwards. To be fair most of the problem lies in the UK and Clyne inherited the UK mess, but it is intensifying under his watch. The finger now needs to be firmly pointed at the board, which made the error of not extricating the bank from the UK a few years ago when it had the chance. Investors are now paying a heavy price.
Read more here
10.27am: Now on to AGM season, and Tabcorp, where chairman Paula Dwyer has defended Tabcorp’s decision to seek about $686.8 million statutory payment from the Victorian government for the non-renewal of its gaming operator’s licence.
Tabcorp and rival Tatts lost their duopoly over the operation of poker machines outside of Melbourne’s Crown casino on August 15, and poker machines are now operated by clubs and pubs.
Ms Dwyer said that while it was inappropriate to comment on the matter as it was before the courts, Tabcorp’s directors had carefully considered their decision to lodge the claim.
‘‘The board considers that the company is entitled to a payment,’’ she said. ‘‘We also consider that we have a duty to our many individual shareholders to pursue the payment.’’
10.21am: All the sectors on the ASX200 are up this morning, with the exception of Finance, which is down a marginal 0.05 per cent. Among the sectors doing well are:
- Health: +0.84%
- Information technology: +0.68%
- Materials: +0.53%
- Consumer discretionaries: +0.49%
- Telecoms: +0.36%
- Energy: +0.35%
10.15am: Investors have responded to NAB's profit result, with the shares in the bank falling more than 1 per cent to $25.56 in very early trade this morning.
10.10am: In early trade, the All Ordinaries index is 10.0 points higher, or 0.2 per cent, to 4515.7, while the benchmark S&P/ASX200 is 10.2 points higher, or 0.2 per cent, to 4495.9.
10.06am: A few minutes into the day's trading and the markets look to be on the way up.
9.57am: There is increasing evidence that the RBA is worried about the level of the dollar, HSBC chief economist Paul Bloxham notes after deputy governor Philip Lowe's speech last night in which he linked relatively high local rates with the strong dollar:
This comes after numbers last week showed the RBA accumulated more reserves than usual in the past two months. They appear more worried about the high currency. By articulating the rates/AUD link, while noting that inflation is on target, Lowe leaves the door open for a rate cut in response to the high AUD. We still expect another cut by year-end, maybe as soon as next week.em>
Read more on Dr Lowe's speech here
9.55am: AGM season continues today with Tabcorp, JB Hi Fi and Consolidated Media Holdings among the companies meeting shareholders.
9.51am: Energy retailer Australian Power and Gas has flagged a strong rise in its underlying earnings in the year to June 2013, largely on the back of buoyant revenue growth and a normalisation of weather conditions, BusinessDay’s Brian Robins reports.
Underlying net profit is forecast to rise to between $8-11 million, up from $6.1 million last year.
Taking valuation losses into account, the latest net profit was turned into a loss of $3.9 million, which was down from a loss of $9.5 million a year earlier.
Part of the revenue rise refects the carbon price, which is automoatically passed on to customers.
9.48am: After a two-day break while New York weathered post-tropical storm Sandy, major US stock exchanges expect to reopen for trade on Wednesday (overnight tonight Australia time).
The exchange says its building and trading floor are fully operational and normal trading will resume at the usual starting time of 9.30am (New York time).
Exchange spokesman Ray Pellecchia says reports the exchange’s building was flooded aren’t correct.
Dozens of US companies have postponed earnings reports this week because of the storm, but Ford did release results for the third quarter that topped expectations.
Ford’s revenue fell three per cent to $US32.1 billion ($A31.21 billion) because of the economic crisis in Europe and falling sales in South America.
9.42am: NAB this morning reported a 22 per cent slump in full-year profits to $4.1 billion. NAB’s net profit fell from $5.22 billion in the previous 12 months. Full-year cash profit, which excludes one-off financial items, was $5.43 billion, down slightly from $5.46 billion in the previous year.
City Index chief analyst Peter Esho told BusinessDay that NAB profits had been dragged down by the banking situation in Britain.
‘‘[Britain] is bearing the brunt of the losses as expected while NAB tries to build a narrative that things are tough in both markets,’’ said Mr Esho.
The market was already expecting full year 2012 earnings to be in line with the same period last year when including the higher provisioning charges. Bad debt charges are part of doing business and banks should not be forgiven by shareholders for ongoing elevated losses
9.35am: Australian shares look set for early gains after European stock markets rebounded on positive company earnings and news of job cuts at Swiss bank UBS, but Wall Street remained closed for a second day.
On the ASX24, the SPI futures contract was 23 points higher to 4507. The Aussie dollar was modestly higher, rising to $US1.0366 from $US1.0350 late yesterday. It was also buying 82.53 yen, 79.98 euro cents and 64.48 pence.
What you need to know
- SPI futures are 23 points higher at 4507
- The $A is lower at $US1.0366
- US markets were closed for a second day
- In Europe, the FTSE100 added 0.95% to 5849.9
- China iron ore lost 20 US cents to $US119.80 a metric tonne
- Gold lost 0.1% $6.70 to $US1709.88 an ounce
- WTI crude oil added 10 US cents to $US85.64 a barrel
- Reuters/Jefferies CRB index lost 0.36% at 295.78
9.33am: Good morning folks. Welcome to the Markets Live blog for Wednesday.
Contributors: Thomas Hunter, Richard Hughes, Jens Meyer
This blog is not intended as investment advice
BusinessDay with agencies