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Markets Live: Shares post modest gains

That's all for today. Thanks everyone for following the blog and we hope to welcome you back tomorrow, from 9.30am.

Here's the wrap of today's session.


The dollar has shaken off weak economic data again, with the Aussie rising to $US1.0560, from $US1.0535 early, and near Friday's four-month peak of $US1.0598. It also hit a four-year peak of 94.54 yen.

The Aussie has shown a remarkable resilience to a flow of weak domestic data including a fall in housing finance and another slide in job ads. Last week, figures showed soft retail sales and a widening trade deficit.

Supporting the local currency is ongoing strength in commodity prices and an improving Chinese economy.

The Aussie fared worse against the euro, which soared to $1.2709, the highest since January 2 and around four cents above Thursday's trough.

The single currency has been on a tear since European Central Bank chief Mario Draghi last week gave no indication the bank would ease monetary policy any further.

Meanwhile, Chinese sharemarkets are going through the roof, after the head of the financial regulator flagged that the amount foreigners can invest in Chinese securities may be increased:

  • Shanghai Composite: +2.6%
  • Shenzhen Comnposite: +3.1%
  • CSI300: +3.2%

Guo Shuqing, Chairman of China Securities Regulatory Commission, said China can raise 10 times the level of quotas for the so-called QFII and RQFII programs, according to Bloomberg.

‘‘Guo’s comments are very significant as it shows the government is trying to get bullish on stocks and it’s a policy signal as well,’’ said Hao Hong, Hong Kong-based managing director of research at Bank of Communications Co.

Regulators have since 2003 approved a combined QFII quota of $US36.04 billion as of November 30 under the program which allows foreign investors to buy yuan-denominated securities. The government scrapped a ceiling on investments by overseas sovereign wealth funds and central banks in its capital markets last month, part of government efforts to encourage long-term foreign ownership and shore up slumping equities.

China has started preparations for a trial program that would allow individuals to invest in overseas capital markets as the nation seeks a greater role for its currency in global finance.

Oil and gas producer Woodside Petroleum has shut the Vincent oilfield offshore Western Australia for scheduled maintenance that which will run for five months, trade sources have told Reuters.

The field's floating production and storage offloading (FPSO) Ngujima-Yin will be heading to a shipyard in Singapore very soon, one source said.

Oil production at the Vincent field, located about 50 km north-west of Exmouth, in Western Australia, was about 46,000 barrels per day (bpd) at the end of the second quarter last year, Woodside said on its website.

Virgin Australia has experienced minor teething problems on its first day of a new booking and reservations system but the airline insists the transition has been relatively smooth.

The airline’s head of corporate affairs, Danielle Keighery, said there had been some delays of up to 40 minutes at Sydney Airport but on a network-wide basis the switch to Sabre’s global distribution system had ‘‘gone reasonably well’’.

‘‘Even this morning during peak hours the queues were not particularly long ... when you consider this is the first time [the system has been operated] in a live environment,’’ she said. ‘‘Whilst we have had some delays across the network, they have been minimal. We haven’t had to cancel flights.’’

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"Overall there seems to be a fairly solid level of confidence as we move through January that the recent gains in our market can be sustained," says Mike Kendall, executive director of JBWere.

"That’s giving investors confidence as they see deposit rates continue to deteriorate to maybe put a little bit more money back into the equity market.

"That certainly underpinned the recent rise and is holding things at the moment, there doesn’t appear to be an about face."

Materials ended 0.1 per cent higher, financials and energy bot added 0.3 per cent, while IT was the only sector to post a loss, slipping 0.2 per cent.

The sharemarket has closed higher, with small gains in most sectors. The benchmark S&P/ASX200 index added 10.2 points, or 0.2 per cent, to 4719.7, while the broader All Ords gained 11.9 points, or 0.3 per cent, to 4745.7.

India-owned Sembawang Australia has given Macmahon until tomorrow to accept its $25 million takeover offer that rivals an agreement with Leighton.

Macmahon is looking to become a dedicated full service mining contractor, and in December struck a $20 million deal with its biggest shareholder Leighton to sell its construction projects, including equipment and staff, with the exception of some assets and its rail business.

But Sembawang has since made a two-part rival offer to the Leighton agreement. The first offer - to buy all of Macmahon’s construction businesses - lapsed over the weekend. But the second offer - to replicate the deal with Leighton but for an additional $5 million - remains in play.

Speculation of higher iron ore prices pushing the budget into surplus is heating up.

Achieving a 2012-13 budget surplus is "certainly possible", after forecasters from Deutsche Bank forecast the price would climb to almost double the September mark within weeks, says Labor backbencher Andrew Leigh, a former economist.

Treasurer Wayne Swan said last month a surplus was unlikely - but that was before iron ore prices took off, to around $US155 a tonne.

A spokesman for acting treasurer Penny Wong appeared to agree.

"People should be cautious about putting all their faith in numbers that are based on a day's, week's or month's spot prices for our resources," the spokesman said.

"It's no secret that our budget revenues have already taken a big hit from the impact of continued global instability, commodity price volatility and a high dollar."

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Meanwhile, spot Gold has edged up 0.1 per cent to $US1664.04 an ounce after a sharp correction in the previous session, buoyed by a stronger euro and physical buying from China, while expectations of aggressive monetary easing in Japan also lent support.

But moves in the currency market have done little to change the sluggish mood in the gold market, with analysts expecting bullion to range between $US1660 and $US1680 an ounce until investors get a better clue to the health of the global economy and the direction of central banks' monetary policies.

Buying from China helped support sentiment.

"We see a fair amount of buying from China after gold prices fell last Friday, and the yuan hit a record high (against the dollar), making local prices cheap," says Peter Tse, director at ScotiaMocatta. "Having said that, gold is still rangebound and I wouldn't put too much on this morning's rise until liquidity returns when the European market returns."


Brent crude oil has risen to near $US111 a barrel as fears of disruption of supply from the Middle East resurface amid growing optimism for a revival in demand growth as the world's biggest economies show signs of steady recovery.

A plunge in oil exports from Iraq due to bad weather, a bomb attack on the convoy of its finance minister, escalating attacks in Syria and an exercise by Iran's navy in the strategic Strait of Hormuz have all revived supply fears. That has helped the market recoup some of the previous session's losses due to large shipments of European gasoline to the United States.

Front-month Brent gained 34 cents to $US110.98 a barrel in afternoon trade, while US oil rose 58 cents to $US94.14.

"If there is any supply side concern in the Middle East, it will reflect in the risk premium and support prices," said Ben Le Brun, market analyst at OptionsXpress. "Those concerns are offsetting the losses we saw in oil on Friday because of a fall in gasoline prices."

Treasurer Wayne Swan says RBA governor Glenn Stevens has the support of the Prime Minister and the country, while stopping short of saying the federal government will reappoint him this year to another term.

‘‘He’s done a superb job. He certainly has the strong confidence not only of the Australian government but I believe broadly across the Australian people,’’ Swan said today in Hong Kong. ‘‘His term’s still got a little way to run, so I’m not going to speculate about that.’’

Glenn Stevens Governor of the Reserve Bank.
Glenn Stevens Governor of the Reserve Bank. Photo: Andrew Meares

Seven West Media shares are down just 2 per cent now, regaining some ground after this morning’s sharp fall. The shares dropped as much as 7.8 per cent in morning trade, baffling investors.

asian markets

The Shanghai Composite is rallying today, up more than 2 per cent, which could be good news for the big Australian miners:

The Shanghai measure dropped 1.5 per cent last week after a government report showing inflation accelerated more than forecast last month, limiting room for monetary easing to support an economic recovery.

Still, the index has risen 15 per cent from an almost four-year low on December 3

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The Australian Workers Union is questioning the $100 million in government assistance given to BlueScope, after the steelmaker shed another 170 jobs at its Victorian plant.

About 110 employees at BlueScope’s Western Port mill at Hastings, southeast of Melbourne, will lose their jobs in the coming months, along with about 60 contractors. Production at the mill is being scaled down from mid-March to provide significant cost savings, BlueScope Australia and New Zealand chief executive Mark Vassella said.

BlueScope received $100 million in federal government assistance in 2011 as part of Canberra’s $300 million steel transformation plan to help steel producers cope with the effects of the carbon tax.

A lot has been made of the higher Australian dollar and the adverse impact on domestic exporters, said CBA economist Savanth Sebastian.

"However the same impact does not seem to be playing out when it comes to the tourism sector. In fact despite the high Aussie dollar, a record number of tourists are coming to Australia, with much of the growth from China and other Asian countries," Mr Sebastian said.

The number of people coming to Australia for holidays or business rose by 0.8 per cent in November to record highs. Arrivals are up 5.9 per cent on a year ago.

"And more importantly an ongoing improvement in the global economy will continue to be of benefit to the tourism sector. A growing tourism sector acts to diversify income flows to the country away from resources and rural exports," he said.

ANZ head of global markets research Richard Yetsenga said the US dollar was in a bit of a sour spot.

"The US trade deficit has begun to deteriorate in a normal cyclical response to a US economic recovery," he said.

"With foreigners having already bought Treasuries in record amounts in recent years…and US monetary policy likely to stay easy, the  US dollar is likely to stay weak," Mr Yetsenga said.

An independent report on James Packer’s proposed $1 billion Barangaroo development will be made public once it’s been assessed, the NSW government says.

The Greens have accused NSW Premier Barry O’Farrell of hiding the document from the public while ‘‘rolling out the red carpet’’ to Mr Packer for his planned resort hotel.

Cabinet commissioned the report by consultant Deloitte into Mr Packer’s Crown Limited proposal, including whether a casino is necessary for its financial viability.

The report was completed last year but is yet to be released.

asian markets

Japan's market is closed today but here's how the rest of the region is doing:

  • Hong Kong: +0.6%
  • Shanghai: +0.5%
  • Taiwan: -0.7%
  • South Korea: +0.2%
  • Singapore: -0.6%
  • New Zealand: +0.55%
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