Markets Live: Shares on a roll
Australian shares rise for a seventh straight day, with mining stocks leading the rally.
- Three of the Big Four cut rates
- Investors cheer Woolies float plans
- Macmahon calls in lawyers over fake emails
5.16pm: That's it for today, and this week. We'll leave you with the cliffhanger question: will the rally continue next week. It will likely depend on the US jobs numbers out tonight.
But for now, here's our evening report.
Thanks and have a good weekend.
4.55pm: IG Markets analyst Stan Shamu says the market got off to a good start thanks to positive US economic data but is also profiting from a general rise in risk appetite:
"We also had some fairly positive US economic data on the unemployment claims front, that really has panned out well for our local market," he says.
"We're just seeing a broad recovery in risk assets, with all the developments overnight."
4.49pm: The dollar dind't fare so well this week, plunging from a high of $US1.0426 on Tuesday to a low of $US1.0182 on Thursday, pulled down by the RBA's rate cut and weak economic data.
It's currently trading at $US1.0250.
4.46pm: Here's a statistic for numbers geeks: the market's current winning streak is the longest since April 2010 when the ASX200 rose eight consecutive sessions, and matches two seven-day periods in 2011.
4.25pm: For the week, the ASX200 rose 2.45 per cent, its best performance since July.
4.22pm: Gains were across the board, with the materials sector rallying 1.7 per cent, industrials up 0.8 per cent and financials rising 0.6 per cent.
4.16pm: The market has closed strongly higher for the day, and the week. The benchmark S&P/ASX200 index jumped 42 points, or 0.9 per cent, to 4494.4, while the broader All Ords gained 41.2 points, or 0.9 per cent, to 4513.8.
4.04pm: European stock index futures are pointing to a higher open on Friday, following slight losses on major European markets in the previous session, with many investors focused on the publication of US non-farm payrolls economic data later in the day.
Futures for the Euro STOXX 50 index are up by 0.6 per cent, while the futures contracts on Britain's FTSE100, Germany's DAX and France's CAC are up by 0.5 per cent.
Wall Street futures are indictating a flat start, with Dow and S&P500 futures up less than 0.1 per cent.
3.51pm: Macmahon Holdings is investigating a ‘‘false’’ email chain after rumours of a takeover offer forced it into a trading halt.
The company has also instructed its lawyers to raise the matter with the stock exchange and the Australian Securities and Investments Commission.
The Perth-based mining services company said it was contacted by a media outlet this morning about an email chain purported to involve a Chinese joint venture proposing a ‘‘formal takeover offer for Macmahon at a substantial premium’’.
But after an internal inquiry, Macmahon established the email to be ‘‘false’’.
‘‘There was no truth to the matters referred to in the emails and ... the emails themselves were false,’’ it said in a statement to the stock exchange.
3.41pm: Echo Entertainment shares rose today after a botched share raid yesterday evening was taken as a sign that the battle of the billionaires on its share register has heated up again.
Investors confirmed to BusinessDay that RBS was in the market Thursday evening for 40 million shares at $3.90.
This was just a 5 cents a share premium to the stock’s previous close and too little to tempt shareholders who also have James Packer’s Crown Ltd on the register.
Crown is seeking to lift its 10 per cent stake to 25 per cent if granted permission by the casino regulator.
It is understood that RBS could have picked up 20 million shares at $4 each but that window of opportunity has passed with shares this afternoon rising more than 3.6 per cent to as high as $3.99.
3.14pm: The Bank of Japan has kept interest rates unchanged, unsurpringly, and held off further easing measures, opting not to build on the boost to its asset-purchase program announced last month.
The BoJ said in a statement that its policy board had voted unanimously to keep rates at between zero and 0.1 per cent, while it has left an Y80 trillion ($1 trillion) asset purchase program in place.
The Nikkei is up 0.1 per cent for the day.
2.54pm: The sharemarket is on a roll, on track for its seventh straight day of gains and well positioned to chalk up a rise of more than 2 per cent for the week.
2.41pm: Investors will closely watch monthly US payrolls data overnight after recent data suggested the economy was picking up traction again, although it appears still stuck in a slow recovery.
Jobs likely increased by 113,000 in September but the jobless rate likely ticked up to 8.2 per cent from 8.1 per cent in August.
"All eyes are on the jobs data, as it affects markets from energy to metals through its impact on stock prices and currencies," says Naohiro Niimura, a partner at Tokyo-based research and consulting firm Market Risk Advisory.
"Recent sluggish economic data shows demand is unlikely to pick up explosively even on a strong jobs report, so broad price reactions in commodities will likely be triggered by the dollar's move.’’
2.32pm: And here's what the second-tier banks have done so far: Bank of Queensland chopped its standard variable rate by 20 basis points to 6.71 per cent just minutes after the RBA announced its decision on Tuesday.
The Newcastle-based Greater Building Society cut its mortgage rate by 15 basis points to 6.25 per cent.
Both Bankmecu and ING passed along the full 25 basis points, taking their standard variable rate loan to 6.19 per cent and 6.09 per cent respectively.
2.08pm: Only minutes after NAB finally moved to cut mortage rates, CBA followed suit, but also refrained from passing on the full 0.25 percentage point rate cut by the RBA.
CBA has cut its standard variable mortgage rate by 20 basis points to 6.6 per cent, effective October 12.
"In making this decision, (CBA) has continued to balance the needs of 1.8 million home loan borrowers with those of its 11 million depositors and its shareholders, who include 800,000 Australians who own its shares directly, and millions more Australians who own shares through pension funds," CBA said in a statement.
1.56pm: What is Billabong worth without a suitor waiting in the wings?
Investors appear to be wrestling with this question today, with choppy trading sending the stock up as much as 5 per cent and down as much as 2.3 per cent when a suspension was lifted this morning. Shares are currently flat at $1.075.
Billabong was forced to confirm yesterday that TPG has not walked away from its $700 million offer after the company's shares plunged as much as 20 per cent on reports to that effect.
The embattled leisure wear retailer did little else to quell speculation that it may yet lose its second private equity suitor in as many weeks.
Deutsche Bank analyst Michael Simotas says the probability of a deal progressing at this stage is very difficult to assess:
- But the fact that TPG has been pursuing the business since February and made agreements with major shareholders which suggests that it is a keen buyer.
- The stock, trading around the $1 mark, is now at a significant discount to TPG’s indicative offer of $1.45 a share reflecting a great deal of skepticism on whether a formal offer will be forthcoming.
- But the loss of TPG as a bidder could send shares even lower. The potential for the bid to be lowered or withdrawn altogether is real.
- There would be considerable downside if this occurs in our view, given our fundamental valuation is (around) 85¢.
1.47pm: Staying in Asia, the region's markets are higher following more upbeat US data, while European Central Bank chief Mario Draghi has reassured dealers over its bond-buying scheme.
The upbeat outlook has also provided support to the US dollar and euro as dealers await the release of closely-watched jobs data in the United States.
Tokyo has risen 0.42 per cent, Hong Kong is 0.24 per cent higher and Seoul has climbed 0.36 per cent.
Shanghai is closed for a public holiday.
1.40pm: More rates news: the Bank of Japan has kepts its key rate on hold at zero to 0.1%.
1.31pm: National Australia Bank has cut its variable mortgage rate by 20 basis points, making it the first of the big four banks to move following the RBA's rate cut this week.
NAB's new standard variable rate will be 6.58 per cent, effective from Monday.
Group executive personal banking chief Lisa Gray says decision was "not taken lightly" and the bank "had sought to strike the right balance" between offering the lowest standard variable rate of the big four and "our obligations to ensure Australian banks are safe and secure".
1.25pm: Australia’s largest electricity retailer Origin Energy has pushed back its next debt repayment to 2015 after securing a $2.4 billion syndicated bank loan facility.
Origin has been actively chasing long term debt over the past year to meet its funding share of the massive $US23 billion ($22.56 billion) Australia Pacific LNG project in Queensland, in which it has a 37.5 per cent stake.
The new loan facility has terms of four and five years and will be used to refinance existing loan facilities maturing next year and in 2014, removing any requirement for refinancing until the 2015 financial year.
1.19pm: American Airlines says it will inspect 48 of its Boeing 757 jets for problems with loose seats, likely causing the embattled airline to delay and cancel scores of flights.
AA spokeswoman Andrea Huguely says the company, working with the Federal Aviation Administration, is taking extra steps "to enhance the locking mechanism features used to secure the seats to the aircraft floor" of some 757s.
"The work is expected to be completed after the 48 affected aircraft land at their next destination," says Huguely, adding that some flights "may be delayed or canceled in order to complete this work".
Blocks of seats have become loose on at least three AA flights, including one on the Boston-Miami route had to make an emergency landing in New York.
1.14pm: Spot gold has risen to $US1795.69 an ounce, its highest level since last November, extending gains to a fifth session as stimulus measures from major central banks increased gold's appeal as an inflation hedge.
The most active US gold futures contract climbed to $US1798.1, its highest since the end of February.
1.07pm: More on MacMahon... ‘‘The trading halt is requested pending an announcement about takeover rumours brought to the company’s attention this morning,’’ Macmahon says.
The trading halt will remain until October 9 at the latest. Macmahon’s shares hit a three-year low recently after the company warned the suspension of large scale resources projects would impact its business.
After forecasting profit growth of 20 per cent in August, Macmahon warned in September that its 2012/13 net profit could fall by more than 50 per cent.
12.54pm: MacMahon Holdings has entered a trading halt amid takeover rumours, it last traded at 29 cents.
The company said the rumours were brought to its attention this morning, even though there was no noticeable rise in share price or value yesterday.
12.53pm: BHP Billiton’s chief executive Marius Kloppers has offloaded another $1.8 million worth of shares to help fund a tax bill.
The sale in London came within days of Mr Kloppers selling $3.3 million worth of BHP stock in Australia, meaning he has raised a total of $5.1 million this week.
BHP said Mr Kloppers sold nearly 60,000 of the company’s shares listed on the London Stock Exchange for STG19.13 ($30.44) each.
The purpose of the share sale was ‘‘to fund a tax obligation’’, BHP said.
Earlier this week, Mr Kloppers sold 98,000 of his Australian-listed BHP shares for $33.52 each, again for tax reasons.
However he also gained just under 300,000 BHP shares at no cost thanks to the mining giant’s incentive plans.
12.50pm: Looking forward to next week, there are a few international events that will shape market performances say CBA economists:
- The tone for international financial markets this week will be set by tonight’s US September payrolls data. It is expected to show a rise of about 115k, with the unemployment rate edging higher to 8.2%. Payroll outcomes close to expectations could mean a greater focus on the limited number of releases this week.
- The main EU event is the EU Finance Ministers meeting on Monday. Spain’s economic and fiscal position, and possible remedies, will be discussed given recent debate about the likelihood of the EU organising a financial assistance package.EU industrial production data later in the week could return the market focus to whether there are any signs of output recovery coming in the major EU economies.
12.39pm: It's been a rough day for Bank of Queensland thus far:
12.26pm: Woolworths has seen a 2 per cent price jump this morning as its revealed details of its proposed $1.4 billion float of 69 properties being a combination of supermarkets and some variety stores.
Investors said the new vehicle will be welcomed by the property real estate investment trust sector as it will be a pure food-anchored vehicle.
12.16pm: They battled the Asian financial crisis, and more recently the global financial crisis, without posting a loss. But now the Bank of Queensland is about to become the first Australian bank in 20 years to post a full year loss.
BOQ said today its second half profit would not be large enough to prevent a full year loss for 2011/12.
BOQ expects to make a profit of $70 million to $75 million in the second half of its fiscal year, the six months to August 31.
That would result in a full year loss of up to $20.6 million, the first posted by a local bank since ANZ made a $579 million loss in its 1991-92 fiscal year.
12.07pm: Zynga, developer of Words with Friends, slashed its 2012 outlook for a second time on the poor performance of its live internet games and the writeoff of an acquisition, fanning doubts about its ability to halt a steep decline in earnings and sending its shares to a record low.
The social games maker -- hailed a year ago as part of a new generation of hot consumer Internet companies -- acknowledged on Thursday that it is still struggling to stem user flight from Facebook titles like "CityVille" and "FarmVille" that had once driven revenue growth.
Zynga, which went public to much fanfare in December but has since lost three-quarters of its market value, has also been hit by delays in its game pipeline as older titles fade, while it has struggled to come up with new hits for mobile devices.
Zynga forecast 2012 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $147 million to $162 million, versus its previous outlook for $180 million to $250 million.
11.59am: Shares in Arrium Limited have soared above the 75 cent offer price that was lodged by a foreign consortium one week ago.
The shares are 2.5 cents higher this morning, taking them to 77 cents per share.
This time last week, prior to the takeover offer, Arrium shares were worth just under 55 cents.
The takeover offer from a consortium involving Korean steel giant POSCO, commodities group Noble and some Korean investment funds was rejected by the Arrium board on Monday.
The market appears to be expecting a sweetened offer to be forthcoming.
11.52am: Here's an interesting read from small business blogger James Adonis:
My mornings are characterised by psychiatrist and author Elisabeth Kübler-Ross’s five stages of grief.
The first is Denial, which entails pressing the sleep button when the alarm goes off. Five minutes later it’s buzzing again, so I proceed to Anger. This is followed by Bargaining, during which I attempt to calculate how many more minutes I can stay in bed without being late. The stage of Depression hits as soon as I realise that – shit – now I’m late. And finally, when I get to work, I reach Acceptance.
11.47pm: Moody's Investors Service says that Woolworths' A3 rating and stable outlook are unaffected by its announcement that it intends to de-merge a portfolio of property assets into a separately listed and externally managed vehicle, Shopping Centres Australasia Property Group "SCA Property Group" (unrated).
11.38am: BusinessDay's Gareth Hutchens is at the ASX AGM, he says the board is getting plenty of questions from the audience on high frequency trading and dark pools, much more than anything else.
Elmer Funke Kupper says market fragmentation is “out of control” in America, and thankfully things aren’t as bad here.
He says he is more concerned about the proliferation of dark pools, and it’s easier to tackle the problem of dark pools than it is HFT.
He has urged shareholders to let their political representatives know about their concerns.
"We need your voice to be heard elsewhere," he said.
11.30am: The dollar, meanwhile, is marginally higher from this morning. It's now at $US1.0260. Compare it with other currencies here.
11.26am: With a 0.5 per cent gain, the ASX200 is trading an another 14-month high.
11.23am: Gold stocks are the clear standouts on the markets so far - the index is up 2.7 per cent. Miners and materials indices are both up 1.4 per cent and industrials are up 0.4 per cent. After a positive start, financials are now down 0.1 per cent.
11.17am: Specialty Fashion Group has appointed the co-founder of upmarket fashion website Net-A-Porter, Megan Quinn, as its latest board member.
The Brisbane-born fashion entrepreneur has more than 20 years experience in senior executive and consulting roles with companies including London’s famous department store Harrods and online luxury retailer CoutureLab.
Ms Quinn, who left Net-A-Porter in 2003, has also worked with British luxury brands Asprey and Garrard, as well as the Australian Tourist Commission, Qantas and Dell.Specialty Fashion Group said Ms Quinn’s experience in would be an asset for the company, whose brands include Millers and Katies.
‘‘She brings unique experience, which will be invaluable as we progress our omni-channel strategy,’’ chairman Geoff Levy says.
11.11am: South Korea’s Samsung expects a record operating profit of 8.1 trillion won ($7.16 billion) in the third quarter, boosted by sales of its flagship Galaxy smartphones.
The estimate is above analysts' expectations and comes with a predicted 26 per cent surge in sales to 52 trillion won in the three months to September, and despite uncertainties surrounding Samsung’s growing legal battle with Apple.
Samsung, the world’s largest technology firm by revenue, is giving earnings guidance before official results later this month. The predicted operating profit for July-September represents a 90.5 per cent rise from a year earlier, and beats the previous record of 6.7 trillion won set in the previous quarter.
Samsung’s operating profits have been on the rise since the first three months of 2011, as rising smartphone sales helped it leapfrog Apple as the world’s biggest smartphone maker.
11.03am: Village Roadshow has taken a majority stake in a $US32 million Las Vegas water park currently under construction.
Village Roadshow has taken a 51 per cent in the park, which will be given the Wet’n’Wild brand, with an investment of $US12 million.
The other 49 per cent interest in the project is held by a group of prominent investors, including former tennis stars Andre Agassi and Steffi Graff.
The water park is set on 41 acres in southwest Las Vegas, and will feature 25 slides and has the potential to entertain more than 650,000 visitors a year. Village Roadshow operates several Gold Coast theme parks, including Sea World and Warner Bros Movie World.
10.57am: The ASX200, meanwhile, is now up 17 points, or 0.4 per cent, to 4469.4. Track the market's progress here.
10.51am: RBS Morgans Brisbane private client adviser Craig Walker says the Australian market is higher after a strong lead from Wall Street.
An encouraging report on the US labour market and better sales from retail stores helped push US stocks higher.
‘‘We had a reasonable lead from the US overnight and commodity prices were were up as well which has resulted in strong moves in the resources space,’’ Mr Walker says. ‘‘The major banks are holding their own today too.’’
10.46am: An industry study has found construction activity in Australia fell by its sharpest rate in 12 months.
The Australian Industry Group performance of construction index has fallen to 30.9 in September, from 32.2 the month before.
A reading of less than 50 points indicates contraction.The sector has been contracting for 28 straight months, with steep declines in activity, employment and deliveries highlighting its weakness.
10.40am: Equity market operator ASX Ltd says global economic uncertainty has kept trading levels subdued so far in 2012/13.
ASX chief executive Elmer Funke Kupper says activity levels in the cash equities market in the first three months of the current financial year were below the prior corresponding period.
It's a similar story on the ASX24 derivatives market, Mr Funke Kupper says, apart from September, where activity levels were up 22 per cent compared with the same month a year ago.
‘‘When we presented our results in August we said that activity levels in the first few weeks of the new year were subdued,’’ Mr Funke Kupper told shareholders at the company’s AGM.
‘‘This pattern has continued over subsequent weeks, particularly when compared to the first quarter of the 2012 financial year, which was a strong quarter by historical standards."
10.34am: It's been a wild ride for Billabong so far this morning... the surfgear maker's shares have risen by as much as 5.1 per cent, fallen by as much 3.6 and are now trading flat.
10.29am: Here's how the big companies are faring so far this morning:
- BHP up 0.7%
- Rio up 0.9%
- ANZ up 0.3%
- CBA up 0.1$
- NAB up 0.2%
- Westpac up 0.1%
- Woolworths up 1%
- Wesfarmers 0.7%
- Telstra down 0.1%
Among the top 200, the biggest gains are from Discovery Metals up 14%, Saracen up 5.7% and Echo up 2.9%.
The biggest fallers are APN down 3.6%, BOQ down 2.5% and Charter Hall down 2.4%.
10.18am: Other big movers this morning include Billabong whose shares are up 4.7 per cent after coming out of a halt - and Arrium which is up 2.7 per cent.
10.15am: Bank of Queensland is set to post a full-year loss after a business review uncovered $10 million in outstanding items in the second-half.
BOQ posted a first-half loss of $90.6 million back in February, and says it expects to make a profit of $70 million to $75 million in the second-half of its fiscal year. That would result in a full-year loss of between $20.6 million and $15.6 million.
BOQ's shares are down 3 per cent.
10.09am: Macquarie’s head of investment banking in Asia, Kalpana Desai, is leaving after three years with the company.
Desai, 45, will retire as head of Macquarie Capital Asia effective in April to spend time with her family, according to an internal memo obtained by Bloomberg.
10.04am: Here's an early look at the market: the ASX200 is up 9.6 points, or 0.2 per cent, at 4462.
9.59am: A class action brought by Australian shareholders has compelled seven New York bankers to answer questions about massive losses incurred by the National Australia Bank during the global financial crisis.
Law firm Maurice Blackburn, which is representing Australian shareholders in the lawsuit, says it has successfully asked the US District Court to order people - including past and present employees from NAB's New York office - to answer its clients' questions about the heavy losses NAB suffered over toxic US subprime home loans.
In July 2008, NAB saw the biggest drop in its share price since 1987 after it revealed it had lost up to $US1 billion in the US mortgage crisis.
9.52am: Telstra board member Timothy Chen has resigned after just six months in the job to return to China.
Mr Chen, a former president of Motorola in China and a Microsoft regional chief executive, joined Telstra as a non-executive director on April 1. He has resigned, effective immediately, to return to a full-time executive career in China, Telstra says.
The company says it will consider future non-executive director appointments as part of its ongoing board management process.
9.46am: Iron ore shipments to China from Port Hedland, a bellwether for Chinese industrial activity, fell by 9.5 per cent in September from the previous month to be flat on the year, port authority data showed.
August shipments to China dipped to 15.13 million tonnes, from 16.72 million tonnes in August, according to the data. That was unchanged from September last year.
9.39am: The buyer attempting to snap up a parcel of 40 million Echo shares, or 5 per cent of the company yesterday evening, has been unsuccessful, sources say. But there's a good chance another attempt will be launched today.
The AFR reports broker RBS is believed to be bidding for $3.90 a share on behalf of an unnamed buyer. The bid is 5 cents above Echo's $3.85 closing price - a premium that may have been too skinny for Echo shareholders.
The mystery buyer is tipped to be Genting Hong Kong, which has already applied to lift its Echo stake from 4.2 per cent to 25 per cent. Its related entity Genting Singapore last month sold 40 million Echo shares. Genting HK and Genting Singapore are both subsidiaries of Genting Group.
9.34am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
What you need to know
- SPI futures are 11 points higher at 4471
- The $A is higher at $US1.0245
- In the US, the S&P500 rose 0.72% to 1461.40
- In Europe, the FTSE100 rose 0.03% to 5827.78
- Gold rose $13.10 to $US1792.90 an ounce
- WTI crude oil rose $3.48 to $US91.62 a barrel
- Reuters/Jefferies CRB index is down 1.58% at 306.58
- Iron ore is higher at $US110.26 a tonne, Platts data shows
9.30am: Hi everyone. Welcome to the Markets Live blog for Friday.
Contributors: Peter Litras, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies