Markets Live: Shares jump on Greek debt deal
Australian shares close at a two-week high, with resource stocks leading gains after officials said international lenders have reached an agreement on a new debt target for Greece.
- CSL climbs to record high on profit upgrade
- Eurozone and IMF strike deal on Greek debt
- High hopes for Bank of England's new broom
5.13pm: That's all for today. Thanks everyone for reading this blog and posting your comments.
Here's our evening wrap of today's session.
4.50pm: Investors' focus is likely to shift now to another major concern hanging over markets, the looming US fiscal crisis.
Republicans in the US Congress on Monday called on President Barack Obama to detail long-term spending cuts to help solve the country's fiscal crisis, while holding firm against the income tax rate increases for the wealthy that Democrats seek.
"Now people will start focusing on the US fiscal cliff and there could be some nervousness there, particularly if it drags on," says Burrell & Co dealer Jamie Elgar of Australian shares.
4.32pm: With gains across all sectors, blue chip stocks also performed valiantly:
- BHP: +0.6%
- Rio: +1%
- ANZ: +1.1%
- CBA: +0.1%
- NAB: +0.5%
- Westpac: +0.5%
- Fortescue: +1.3%
- Woolworths: +0.7%
- Wesfarmers: +0.1%
- Telstra: +1.7%
4.28pm: The Australian dollar rose to a two-month peak against the US dollar as risk sentiment improved after lenders finally agreed on measures to cut Greece's long-term debt, paving the way for the release of more loans to Athens.
The dollar climbed to $US1.0491, its highest since late September. It last fetched $US1.0480, up 0.2 per cent on the day.
The dollar's rise was only modest as markets had been fully priced for a Greek deal, which emerged after three weeks of painful discussions.
4.21pm: Hopes that Brickworks would buckle quickly to investor pressure for a restructure have been rebuffed, with the status quo of a blocking cross shareholding with investor Washington H. Soul Pattinson to remain.
Even so, Brickworks director Mr Robert Webster said the door is open to discussing future options for the group.
Institutional investor Perpetual Ltd which has a 12 per cent stake in Brickworks has been pressuring the board to review its long-standing cross shareholding with Soul Pattinson, to help improve shareholder returns.
Soul Pattinson has a 44.5 per cent stake in Brickworks which in turn, holds 42.7 per cent of Soul Pattinson. Perpetul is also a large investor in Soul Pattinson as well, with a 12.2 per cent stake.
4.17pm: All the major sectors posted gains today, health surged 4.1 per cent, telecoms rose 1.6 per cent, while materials inched up 0.7 per cent and financials added 0.4 per cent.
4.12pm: The market has closed higher, the benchmark S&P/ASX200 added 32.6 points, or 0.7 per cent, to 4456.8, while the broader All Ords rose 29.9 points, or 0.7 per cent, to 4473.4.
4.01pm: Harvey Norman executive chairman, Gerry Harvey, has warned that industry conditions remain dire and expects more retailers will go bust early next year.
‘‘There are more retailers currently under pressure than I’ve ever seen, I’ve been in retail 50 years,’’ he told reporters after the company’s shareholder meeting Tuesday.
‘‘There’s a lot of businesses that are hanging on for Christmas, and expecting Christmas sales to be good but they know, or have this gut feeling, that the first half of next year is going to be extremely difficult.’’
He warned that despite the wave of failures over the last two years ‘‘there’s plenty more to go because I have them all coming to see me (saying) ‘will you take us over’. ‘will you buy a share in the company’ etc etc.’’
He said many of these companies just need a little push and they are gone.
3.58pm: An official review has urged the government to devote more resources to preventing foreign companies from selling their goods below cost in Australia, saying current attempts to combat ‘‘anti-dumping’’ are not up to scratch.
Dumping is where foreign suppliers sell their goods to Australians below cost. The practice is a key gripe of manufacturers facing growing competition from overseas due to the high dollar.
With the number of complaints about dumping almost tripling in the past year, a review by former Victorian Premier John Brumby found there was a strong case for a dedicated agency based in a capital city to deal with the growing number of alleged cases.
The report, published today, said Australia’s efforts to combat the practice – currently led by the Customs Department – were ‘‘under-resourced and underperforming.’’
Aside from the effect of the currency, the report said the weak state of the world economy had sparked increased concerns about dumping, because there was a global surplus of manufactured goods.
3.53pm: With minutes remaining before the close of trade, here's how markets around the region are performing today:
- Nikkei(Japan): +0.2%
- Shanghai: -1%
- Taiwan: +0.1%
- South Korea: +0.9%
- Singapore: +0.2%
- New Zealand: -0.1%
3.35pm: Australia should focus on turning Perth into a global energy technology hub, the head of oil and gas producer Woodside says.
Chief executive Peter Coleman said resources and agriculture would still make a big contribution to the Australian economy this century, but Australia’s skills and ingenuity would allow the nation to succeed in the Asia Pacific.
‘‘We must ensure that Australia’s endowment of natural resources does not create a sense of complacency in the Australian community, the feeling that our prosperity is virtually assured as Asia continues to rise,’’ Mr Coleman said.
He said Perth, where Woodside is based, could be a global leader in oil and gas technology.
3.05pm: Despite a tepid start to the day the market has rallied higher in light volume as we saw Euro Finance ministers reach a deal to provide Greece with debt relief, CMC Markets trader Ben Taylor says:
- The deal has brought confidence back into today’s markets. The Greek debt issue has been a hand break on the markets march higher.
- If Greece meets its pledge under the bailout plan it can now expect to receive its next tranche of payments which is positive for risk assets and currencies.
2.50pm: Qantas has warned that growth in Japanese tourists will remain ‘‘stagnant at worst, anaemic at best’’ over the coming years due to their travel tastes changing and a lack of investment in tourism attractions to woo them to Australia.
The airline has highlighted the challenges faced in reversing a major drop in Japanese tourists over the past decade as part of a pitch to aviation authorities to allow its budget-offshoot, Jetstar, to continue a code-sharing alliance with Japan Airlines on flights between Australia and Japan until 2017.
2.37pm: CBA currency strategist Joseph Capurso has dismissed comments by Saxo Bank chief economist Steen Jakobsen that Australia could be facing a recession in two years if the dollar remains strong and interest rates are not cut, saying:
- If the Australian dollar was really going to send the economy into recession, it would have happened already and it’s clearly not happened.
- I think the Aussie is going to stay at quite strong levels. The fact is the Australian economy is in quite good shape. And you can see that because the unemployment rate is about 5.5 per cent.
- The high value of the Australian dollar reflects a lot of good things happening in Australia as well as a lot of the bad things happening outside of Australia, like very high unemployment in the US and in Europe.’’
2.26pm: Gerry Harvey, he's the gift that just keeps on giving.
Speaking at the Harvey Norman AGM today, the chairman said the weather would play a part in the success of the retailer’s Christmas sales.
I think December, I’m hopeful, will beat last year. That might have a bit to do with the weather. If we have a really hot period across Australia and we sell a lot of air conditioners, then we’ll definitely beat last year. If it’s cold every day then we’ll battle because air conditioners are a big part of our business in December.
2.10pm: Agricultural chemicals supplier Nufarm’s payment to settle a class action mounted by some of its shareholders has been increased to $46.6 million.
Nufarm had expected to pay $43.5 million to settle proceedings after some shareholders claimed they were insufficiently informed about the impact of the declining international glyphosate market on Nufarm’s business - allegations Nufarm denies.
The settlement payment was increased to $46.6 million because of the higher-than-anticipated number of claims, Nufarm said today.
Nufarm shares have risen 2 cents - 0.3 per cent - to $5.74.
2.05pm: Back to the Harvey Norman AGM on Sydney where Gerry Harvey reveals he's started to believe in Santa Claus again.
‘‘This year I’ve agreed that Santa can come back into the store. Last weekend we had umpteen thousand of people into our stores and we had a good weekend because we’ve got the Santa.’’
1.55pm: The volume of imports fell marginally in the September quarter, suggesting little contribution to economic growth from trade flows.
After adjusting for inflation (real terms), the seasonally adjusted level of imports of goods and services fell by 0.2 per cent, according to preliminary estimates from the ABS.
The figures give economists a partial glimpse of the effect of trade volumes on growth in GDP, which will be revealed in the national accounts next Wednesday.
1.27pm: Before anyone gets carried with the good vibes on equities and currencies markets today, David Scutt at Arab Bank has offered this thought:
1.21pm: Gerry Harvey has confirmed he is a shareholder of Qantas but says he's just a passive investor.
Speaking at Harvey Norman's AGM, Harvey wouldn't confirm if he's part of a consortium around former Qantas chief Geoff Dixon, former CFO Peter Gregg and adman John Singleton that has allegedly purchased a small straegic stake in the airline, aiming for a change in direction.
1.14pm: An alternate view on the trajectory of the Aussie dollar:
1.09pm: Bricks and masonry maker Brickworks says its earnings have stabilised in recent months, but the timing of a recovery in the housing sector remains unknown.
Earnings from Brickworks’ building products operations had fallen over the 18 months to the end of July 2012 because of weak housing construction activity.
But earnings in the three months to the end of October were steady compared to the same period in the previous year, shareholders at the company’s annual general meeting on Tuesday were told.
1.02pm: Regional Express is blaming an expected economic slowdown and additional costs such as the carbon tax for a predicted big drop in profits this financial year, writes BusinessDay’s Matt O’Sullivan.
Rex - Australia’s largest independent regional airline - has told shareholders at its annual meeting in Sydney today that pre-tax profits could drop to as low as $22.8 million.
Despite the headwinds, Rex’s deputy chairman, John Sharp, told shareholders the airline was ‘‘well poised to face the many challenges ahead’’.
Rex shares have fallen 2.1 per cent today - 2½ cents - to $1.14.
12.55pm: Shares in Havilah Resources have hit a two month high, after the company appointed Peter Reeve as its new chief executive.
Mr Reeve is the former chief executive of Ivanhoe Australia and has previously worked for Rio Tinto and Newcrest Mining.
Havilah is hoping to develop tenements that are prospective for copper, gold, iron ore, cobalt and molybdenum in the South Australian outback.
Shares in Havilah were 4 cents higher at 50 cents shortly before 1pm.
12.52pm: Lunchtime approaches and the day’s gains continue.
In recent trade the All Ordinaries index was 29.9 points higher, or 0.7 per cent, to 4473.4, while the benchmark S&P/ASX200 was 33.2 points higher, or 0.8 per cent, to 4457.4.
RBS Morgans’ Bill Chatterton said the equities market had bucked the weaker finish in the US based on speculation the Australian dollar would strengthen.
‘‘That may be in the short term what we’re seeing,’’ he said.
‘‘There’s some speculation that the Aussie [dollar] is going to go higher so they’re jumping back into Aussie securities.’’
12.46pm: More on the dollar, which is now about a third of a US cent above where it was at 7am and - as ANZ's Andrew Salter said just now - is looking like making a run at $US1.05. Economist Stephen Koukoulas reckons it’ll pass that mark and keep going:
AUD about to have a look at 1.05... If we get solid data in the next 10 days and RBA holds, we could see a 1.08 level in next few months— Stephen Koukoulas (@TheKouk) November 27, 2012
12.41pm: The deal done in Brussels on Greek debt has given the dollar a bit of a shove.
In recent trade it was at $US1.482 up from $US1.0453 on Monday.
ANZ foreign exchange strategist Andrew Salter said this was a "reasonably favourable outcome that suggests that the ECB, IMF and EU are supporting the rebalancing of the Greek economy."
He said the Australian dollar was likely to rally past $US1.05 over the next day or so.
‘‘I think it’s a positive for the Australian dollar and we will go higher from here. I think this is good for another half a cent over the next 24 to 48 hours.’’
12.30pm: More on CSL, which has kept on rising today. It's now up 7.3 per cent - $3.43 - at $50.21, on the back of improved profit guidance.
RBS Morgans client adviser Bill Chatterton said CSL’s announcement had not just helped its own share price.
"With that result, it stimulates the rest of the market,’’ he said.
12.22pm: Ever get the feeling people are getting you to do things you don't really want to?
The small business editor asked me to mention this in the blog, so here goes:
Almost every workplace has one - the office manipulator. Here are 10 tips on taking control of the problem.
12.19pm: A group led by Macquarie Group, is among five bidders short-listed by Total SA to purchase its French gas network.
Macquarie is teaming up with as many as four other partners to bid for the TIGF gas-pipeline network spanning about 6000 kilometres in southwestern France, the person said, asking not to be named because the process is private. The asset may fetch about €2.5 billion euros ($A3.1 billion).
12.12pm: Jeremy Warner, who writes for The Daily Telegraph in London, is full of praise for Mark Carney, the Canadian central banker who has been named as the first non-Brit to take the helm at the Bank of England:
He’s generally thought of as at the very top of his game as a central banker, and by some, given Canada’s evident immunity to the credit crunch, in a league all of his own. Osborne will be hoping that some of the Canadian approach to banking regulation and balanced economic growth can be brought to this country.
12.06pm: Would-be homebuyers should take heart from the latest survey showing a steady increase in housing affordability in all states.
The Housing Industry Association/Commonwealth Bank housing affordability index released this morning showed a rise of 5.3 per cent in the September quarter, for a reading of 65.8.
Properties became more affordable in all regions, with Hobart the most affordable city. Sydney was the least affordable, with an index of 54.2, followed by Melbourne at 63.6
HIA chief economist Harley Dale said a number of conditions had boosted the affordability picture, although there was still some reluctance for people to enter the housing market.
‘‘Housing affordability has been improving on the back of steadily growing incomes, falling interest rates, and easing dwelling prices,’’ he said.
11.55am: Shares have extended their early gains and are now up 0.8 per cent after officials said international lenders have reached an agreement on a new debt target for Greece.
"The news of a possible Greek deal just before the open has given us a bit of a boost, particularly in the resources sector," says Burrell dealer Jamie Elgar. "Now people will start focusing on the US fiscal cliff and there could be some nervousness there, particularly if it drags on."
11.50am: Hard on the heels of steep rises in household electricity prices, gas prices are set to follow suit, with AGL seeking to raise prices by more than 10 per cent from the middle of next year.
The gas company has applied to the NSW government pricing regulator IPART, the Independent Pricing and Regulatory Tribunal, to raise gas prices by 10.1 per cent plus.the rise in the consumer price index for 2013/14, which indicates that prices will rise by upwards of 13 per cent.
The rise will mark the start of a steep round of price rises as the impact of rising gas exports from eastern Australia flow through to domestic prices.
11.30am: The little stockmarket that could. Aussie shares are on a steady rise today, defying the weak leads set by Wall Street and Europe. The ASX200 is now more than 0.6 per cent higher.
11.26am: One from our MySmallBusiness section - an interesting article on what it really takes to get through the first year of business.
11.22am: Here's a conversation starter. Australia could face a recession within two years unless the dollar and interest rates fall and major labour market reforms are introduced, a leading economist warns.
Saxo Bank chief economist Steen Jakobsen warns that with the mining investment boom expected to peak in 2013, Australian authorities need to do more to ensure other sectors of the economy can pick up the slack.
‘‘You have an excellent starting point, you have the ability to both fiscally and monetarily support and mitigate the effects of this slowdown,’’ the prominent Copenhagen-based economist said.
‘‘If nothing happens, if we have a political vacuum leading to nothing being done next year and the price (of the Australian dollar) remains above where it needs to be then, yes, absolutely a recession is possible.’’
11.14am: Tokyo stocks opened down 0.19 per cent as investors had few trading leads from overseas markets while watching latest news on a meeting on aid for debt-crushed Greece. The Nikkei 225 index at the Tokyo Stock Exchange was down 17.81 points at 9,371.13 at the start.
11.12am: Here's one view on CSL:
Impressive profit upgrade by CSL; pays not to underestimate great businesses.— Intelligent Investor (@value_investing) November 27, 2012
11.02am: The ASX200 and the All Ords are now both more than 0.4 per cent higher for the day. Steady gains since the session opened.
10.56am: CSL shares have continued to rise, climbing as much as $3.38, or 7.2 per cent, at $50.16, an all-time high for the company.
Meanwhile, Tatts group, Australia’s biggest lottery operator, climbed the most in more than five months after signing a 40-year contract to run games in South Australia state. The stock rose as much as 3.9 per cent, the biggest gain since June 12, and was trading 2.8 per cent higher at $2.91.
10.48am: Here's what reader '4400, The New Black' thinks about the Greece bailout news:
A New Greece Deal Has Been Reached!!!!!!!! Again.
10.46am: CMC Markets chief market strategist Michael McCarthy said Australian investors were staying on the sidelines as they waited for news from Europe regarding the bailout package for Greece and further developments in the US over the looming budget deadline. Moreover, Australian data on private capital expenditure was due out later this week.
‘‘All of that adds up to a lot of sitting on hands,’’ Mr McCarthy said.Healthcare was the best-performing sector on the market, having climbed 3.98 per cent, according to IRESS data.
10.37am: A few numbers are starting to arrive on the Cyber Monday shopping event in the US. Online retailers are poised for a record $US43.4 billion holiday sales season as shoppers increasingly rely on social networks and mobile devices to find and buy merchandise.
Internet sales will grow 17 per cent from a year earlier and make up more than 10 per cent of US retail spending in the last two months of the year, excluding gas, food and cars, said Andrew Lipsman, vice president of industry analysis at ComScore Inc.
You can see why eBay shares had a good night on Wall Street.
10.30am: CSL is easily the best-performed stock on the ASX200, up more than 6 per cent now. Companies also trading strongly higher:
- Intrepid Mines: +3.45%
- APN News & Media: +3.33%
- Tatts: +2.83%
- Iluka: +2.80%
- Coalspur: +2.7%
- Lynas: +1.42%
10.24am: Health stocks are holding markets aloft this morning with a gain of 3.47 per cent, thanks to CSL. Here's how the other sectors are performing:
- Telecoms: +0.33%
- Consumer staples: +0.2
- Consumer disc.: +0.11%
- Utilities: -0.45%
- Energy: -0.34%
- Info tech: -0.31%
10.21am: Back to CSL for a moment - this morning's gains have taken the shares to an all-time high, and mark a 46 per cent gain for the year.
10.17am: The Australian share market has opened flat. The benchmark S&P/ASX200 index was up 4.2 points, or 0.09 per cent, at 4,428.4, while the broader All Ordinaries index was up 2.6 points, or 0.06 per cent, at 4,446.2.
On the ASX 24, the December share price index futures contract was up five points at 4,437, with 4,815 contracts traded.
10.12am: Shares in CSL are almost 6 per cent higher in early trade after the company upgraded its profit outlook. The world's No. 2 blood products maker said it expected its full-year net profit to jump by 20 per cent, up from previous guidance of a 12 per cent rise, helped by stronger sales and supply-chain efficiencies.
Its shares have risen $2.73 to $49.51.
10.07am: Shares open higher - up about 0.1 per cent as markets open.
10.04am: Ric Spooner, chief market analyst at CMC Markets, said investors have a couple of major news events before them ‘‘in the shape of announcements on Greek bailout funding and negotiations on the US Fiscal cliff next month’’.
The general expectation is that reasonable compromises will be negotiated on both these issues and markets are priced for this outcome.
However, current valuations reflect the reality that even with these issues safely behind us, at least for the short term, developed economies face the prospect of a long hard slog of moderate growth weighed down by the government and household debt repayment.
This is likely to limit the extent of positive market reaction to any announcement of a negotiated solution for Greece’s liquidity funding in the short term.
9.53am: BBY institutional dealer Anson Rosewall said the announcement, when confirmed, would boost the local share market.
"The initial reaction we’ve seen so far is that the Euro has climbed against most of its peers including the US dollar," he said.
"The headlines are sketchy so far, but on the whole I think a lot of investors have been sitting on the sidelines waiting for a resolution on the European front and any sort of further details or confirmation that Greece’s aid package has been finalised should help restore sentiment and give a boost to the market."
The IMF-Eurozone deal would also nudged the Aussie dollar upwards.
"What’s good for the Euro is typical good for the Australian dollar. ... Obviously it’s not as positive for the Aussie dollar as it is for the Euro, but it’s still a positive and we now see it tracking towards the $1.05 mark," Mr Rosewall said.
9.46am: Britain has named Canadian central bank chief Mark Carney as the new Bank of England governor, picking the first ever foreigner to lead the institution through a period of enormous change. The appointment follows speculation linking Australian central bank boss Glenn Stevens to the role.
George Osborne, the Chancellor of the Exchequer, told MPs he had chosen the Mr Carney, 47, because he was the "outstanding central banker of his generation". Mr Carney said he was honoured to have been picked.
"He is quite simply the best, most experienced and most qualified person in the world to be the next governor of the Bank of England," Mr Osborne told parliament.
9.42am: Some analyst rating changes for this morning:
- BHP rated new buy at Renaissance Capital
- Rio rated new buy at Renaissance Capital
- Fleetwood cut to neutral at Macquarie
- Cabcharge raised to outperform at CIMB
- AGL raised to overweight at JPMorgan
9.38am: In other local corporate news this morning, gaming firm Tatts has secured the right to operate South Australia’s lottery and Keno services for the next 40 years. Tatts has agreed to pay $427 million for the exclusive management agreement with the South Australian government.
Chief executive Dick McIlwain said the transaction would immediately boost the company’s earnings per share.
‘‘The extension of Tatts Lotteries business into South Australia is a logical and natural expansion of our lottery businesses in Queensland, New South Wales, Northern Territory, Victoria, Tasmania and the Australian Capital Territory,’’ he said in a statement today.
9.35am: Shares in CSL could sees some action today after the blood products maker lifted its profit guidance for the financial year due to the performance of its US-based subsidiary CSL Behring.
The company said it now expected its profit after tax in the 2012/13 financial year to grow by about 20 per cent, from $US1.02 billion profit in 2011/12. In August, CSL forecast profit growth of about 12 per cent.
Managing director Brian McNamee said the improved forecast was largely underpinned by the performance of CSL Behring, which supplies antibodies to treat immune deficiencies and rare diseases. More here.
9.32am: Local markets are set for a flat start, but some news on a deal about Greek debt is starting to filter in, which may give local sentiment a boost, unless it has already been priced in. Reuters reports that the deal to cut Greece's debt-to-GDP ratio to 124 per cent by 2020 should free up the next installment of emergency aid, which had been held up by disagreement over debt reduction. More on this as it arrives
For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- SPI futures are flat at 4432
- The $A is higher at $US1.0460
- In recent Wall St trade, the S&P500 was down 0.4% at 1403.26
- In Europe, the FTSE100 fell 0.56% to 5786.72
- China iron ore lost 70 US cents to $US118.20
- Gold fell $US1.10 to $US1749.10 an ounce
- WTI crude oil fell 63 cents to $US87.65 a barrel
- Reuters/Jefferies CRB index was flat at 299.07
9.30am: Good morning folks. Welcome to the Markets Live blog for Tuesday.
Contributors: Thomas Hunter, Jens Meyer, Richard Hughes
This blog is not intended as investment advice
BusinessDay with agencies