Markets Live: Shares reverse early losses
Australian shares have reversed early losses as top miners were bolstered by gains in the price of iron ore and the broader market attracted light demand.
- ANZ's record profit fails to impress
- Star shines as Echo boosts revenue
- Coles rocks status quo as sales spike
4.51pm: That's all from us here at Markets Live, thank you for reading and commenting, we'll see you tomorrow from 9.30am.
4.45pm: Billabong was one of the top gainers today, clawing back some lost ground. Let's look at the other top performers as well as the worst.
4.31pm: Here's a look at how blue chip stocks performed today:
- BHP: +0.2%
- Rio: +0.4%
- ANZ: -0.9%
- CBA: +0.4%
- NAB: +0.4%
- Westpac: flat
- Fortescue: -2.4%
- Woolworths: +0.5%
- Wesfarmers: -0.1%
- Telstra: +1%
4.16pm: Among the sectors, gold miners suffered, falling 2.5 per cent, while materials lost 0.4 per cent. Telecommunications added 1 per cent, health rose 0.6 per cent and financials were up 0.2 per cent.
4.12pm: The market has finished marginally higher. The benchmark S&P/ASX200 added 4.7 points, or 0.1 per cent, to finish at 4510.5, while the broader All Ords inched up 2.9 points to 4533.5.
3.49pm: Political uncertainty is to blame for big business’ failure to find a way to fund a cut to the corporate tax rate, ANZ chief executive Mike Smith says.
The federal government’s business tax working group has been unable to find a revenue-neutral way to fund a cut in the 30 per cent corporate tax rate.
Mr Smith said there were a lot of vested interests involved in the program to find a way to cut the corporate tax rate.
‘‘If you think about the election cycle and the phase that we are presently in, it is very difficult to see how you would get some sort of agreement,’’ he told reporters on Thursday.
3.39pm: Australian Pharmaceutical Industries (API) returned to profitability in fiscal 2012 as its Priceline chain defied the retail gloom to expand sales.
The strong performance at Priceline helped API post net profit of $30.3 million for the 12 months to August 31, a turnaround from a loss of $23.3 million in the prior corresponding period.
Revenue fell 6.1 per cent to $3.2 billion, API said, as the health, beauty and pharmacy products company absorbed drug maker Pfizer’s decision to distribute directly to pharmacists and changes to the federal government’s Pharmaceutical Benefits Scheme (PBS).
3.27pm: Australia gave the green light to GDF Suez's Bonaparte floating liquefied natural gas (LNG) project off the coast of northern Australia today, making it the second such facility to be approved in Australia.
France's GDF Suez and its partner, Australia-based Santos plan to make a final investment decision on the 2 million tonne per annum (mpta) development in 2014.
3.18pm: Standard & Poor's Rating Services today revised its outlook on Western Australia to negative from stable. The outlook revision reflected our expectation that WA may experience weakened budgetary performance as a result of lower mining royalties and the time-lag before Australia's framework of horizontal fiscal equalisation between the Australian states and territories adjusts to reflect WA's lower fiscal capacity and the downside risk to revenues.
2.56pm: Australia’s renewable energy target (RET) has driven $18.5 billion of investment in clean power and eroded wholesale energy prices since it was introduced a decade ago, a new report suggests.
The Clean Energy Council analysis released on Thursday finds wholesale prices are as much as $10 per megawatt hour lower as a result of the RET being in place since 2001.
The target is meant to ensure 20 per cent of Australia’s electricity comes from renewable sources by 2020.
It’s currently being reviewed by the Climate Change Authority amid speculation that softer demand and the popularity of rooftop solar panels means the 20 per cent target may be exceeded.
2.40pm: China's industrial sector is still not on a stable recovery track, particularly in export markets, the Ministry of Industry and Information Technology said today.
"The stabilisation trend of China's industrial sector is not yet solid and we are still facing many challenges and difficulties to realise stable growth," the Ministry said in a statement released ahead of a scheduled news conference.
China's industrial output in September grew 9.2 per cent, picking up from a rise of 8.9 per cent in August, and along with other economic data from exports to retail sales, signals that recovery is taking hold in the world's second-largest economy.
2.31pm: A New South Wales piggery has become the first in Australia to turn its manure into carbon credits, earning it as much as $150,000 a year.
Blantyre Farms, near Young in the state's south-east, spent almost $1 million on a biogas generator that captures methane from the manure, turns it into electricity and exports it to the national grid.
It has turned the farm's monthly power bill of $15,000 into a $5000 credit.
2.22pm: With Australian stocks up, here's a look at how the rest of the region is performing:
- Nikkei(Japan): +0.6%
- Shanghai: +0.1%
- Taiwan: flat
- South Korea: flat
- Singapore: +0.3%
- New Zealand: -0.3
2.07pm: Ratings agency Standard & Poor's has revised its outlook for NSW and its Treasury to negative.
“In our view, there are increasing pressures on the New South Wales government to increase its investment in infrastructure,” said credit analyst Claire Curtin.
“These capital expenditure pressures, combined with our view of the state’s moderate budgetary performance, lead to our opinion that NSW’s budgetary flexibility may become increasingly challenged. The negative outlook reflects our view that there is a one-in-three chance of a downgrade in the coming 24 months, based on our view that NSW’s budgetary performance could weaken and might not provide NSW with the capacity to undertake its infrastructure program while managing to contain its debt burden.”
1.27pm: Investors were watching the US Fed closely last night. Tonight it's data on durable goods orders for September. Tonight’s data is interesting because the August reading fell off a cliff.
Durable goods are things which last a long time, like cars and television. In August, durable goods orders fell 13.2 per cent, the biggest month fall in more than three years and hinted at a worrying slowdown in the factory sector. The August number appeared to result in part from a fall in orders for commerical aircraft, but it hinted at a worrying slowdown in the factory sector.
Expectations are for a recovery in tonight’s number, however. A Bloomberg survey predicts a 20 point turnaround for September - from minus 13.2 per cent to plus 7.5 per cent. If the number comes in low, Wall Street may get the jitters.
1.15pm: The ASX is now touching fresh highs for the day. Investors aren't exactly reaching for the sky, but overall the mood is positive. The All Ordinaries index is 10 points higher, or 0.2 per cent, to 4540.5, while the benchmark S&P/ASX200 is 11.9 points higher, or 0.3 per cent, to 4517.7.
1.09pm: Not a fan of negative gearing? Here's a segment from last night's episode of The Business on ABC TV about it. Here’s how reporter Neil Woolrich signs the segment off:
While Saul Eslake says negative gearing could be phased out for a number of years to minimise inequity and market distortions, political reality is another matter. With the business community still bristling over Wayne Swan’s changes to company tax, it might be some time before any Treasurer takes on the 1.7 million taxpayers who rely on negative gearing deductions.
12.56pm: Time for a quick wrap of commodities trade today:
- Three-month copper on the London Metal Exchange has climbed 1.1% to $US7,899 per tonne after four sessions of losses in which it had dropped nearly 5%
- Spot gold climbed as much as 0.4% to $US1,708 an ounce. The metal slumped to $US1,699 yesterday, dropping below $US1,700 for the first time since September 7
- Crude oil has risen 8 US cents to $US85.81 a barrel, after settling down 94 US cents at $US 85.73 a barrel on Wednesday, the lowest settlement since July
12.47pm: BusinessDay's Clancy Yeates reports that the taxpayer-owned Future Fund has put its $219 million in tobacco investments under review, and will consider the case for ditching the controversial holdings.
The $80 billion fund amassed its stake in big tobacco at the same time Labor was introducing its plain packaging laws, sparking criticism from health advocates and some members of the government.
But the fund's managing director, Mark Burgess, today said the fund's governance committee was considering the investment in cigarette manufacturers after a request from the board. Full story.
12.35pm: Bell Direct equities analyst Julia Lee said property companies were outperforming the broader market, with gains among Westfield Retail Trust, Goodman Group and Dexus Property.
‘‘That’s helping the Australian market higher,’’ Ms Lee said.
‘‘Property is seen as one of those defensive areas because of its relatively high yield. It looks like the gains on the Australian share market are being driven by some of those defensive areas, which is a little bit unusual.’’
In property news today, Mirvac reaffirmed earnings guidance for 2012/13, with operating profit to be between $366 million and $370 million. Here's a short video breaking down the Mirvac numbers.
12.25pm: Here’s an interesting item from the small biz desk. As a technology revolution sweeps through the world of retail, the retailers which once led the digital products boom in both Australia and the US are looking hugely vulnerable, writes retail analyst Michael Baker.
12.15pm: Although Coles was able to grow like-for-like sales by 3.7 per cent in its fiscal first quarter, beating expectations of 3.4 per cent and beating Woolies which grew sales at 2.3 per cent, it hasn’t strongly outperformed its rival on the ASX today.
Shares in Wesfarmers, which owns Coles, are 0.58 per cent higher while shares in Woolies are 0.43 per cent.
12.09pm: Tiger Airways has been hit with a $110,000 fine for continuing to spam customers after they unsubscribed from marketing emails.
An investigation by the Australian Communications and Media Authority (ACMA) has found the airline failed to remove customers despite their repeated requests.The emails also continued despite several warnings from ACMA.
The authority’s deputy chairman Richard Bean said the action was another reminder to businesses about paying attention to what their customers were saying.
11.55am: Octa Phillip resources analyst Lawrence Grech has an interesting take on the battle between Whitehaven's board and Nathan Tinkler, its largest shareholder.
Mr Grech said this week’s $18 million-plus settlement with Mirvac was extremely significant as it showed Mr Tinkler still had funds available. He would not comment on why Mr Tinkler would seek to vote against the board.
I can’t hope to understanding everything he says. I just want to follow what he does and then assess that. I just don’t understand why you would want to replace a performing management team with high credibility, strong and deep relationships with the customer base, and a demonstrated ability to develop mines cost-effectively and also make shareholders good returns.
11.45am: Back to Brisbane again now for the Echo Entertainment AGM.
With James Packer’s casino operator, Crown, looming on the horizon as potential competition, Echo’s chairman, John O’Neill, was keen to preach the company’s strong position to investors today, writes BusinessDay's Colin Kruger.
‘‘In Sydney we are the only game in town for at least the next seven years and our licence extends until the year 2093,’’ he said at the meeting being held at Echo’s Gold Coast casino, Jupiters.
Barely hours after the NSW Government gave approval to James Packers $1 billion hotel casino complex at Barangaroo, Mr O’Neill said Echo believes an industry structure with one casino in each major city is the right one.
He said this creates a platform for truly ‘‘distinctive developments’’, safeguards responsible gambling and provides a growing stream of tax revenue to governments as well as adequate returns to investors.
And after a torrid year for Echo, Mr O'Neil promised shareholders there will be ‘‘no more slip-ups or stumbles’’.
11.30am: Rio Tinto is putting its Gove bauxite and alumina operation in the Northern Territory under review because of higher fuel oil costs and low alumina prices.
The review will examine options including suspending operations or using cheaper natural gas to power the refinery, Pacific Aluminum, a unit of London-based Rio, said.
‘‘Our focus remains on building on the improvements we have made and doing everything we can to make gove operations financially viable,’’ Sandeep Biswas, chief executive of Pacific Aluminum, said.
‘‘Given the current market and energy price conditions it is prudent that we consider all options.
11.27am: We can't keep away from AGM season for long so let's look at Newcrest Mining, whose shareholders are being promised better dividends in the years ahead at the gold producer's meeting in Melbourne this morning.
The positive outlook for dividends has been a recurring theme of today's meeting, with Newcrest stressing that it's capital expenditure is set to recede in coming years, as the start of new projects increase its revenue streams.
Throw in expectations that the gold price is set to rise in the near future, and the outlook for increased shareholder returns appears strong.
11.19am: Now for a look at the big banks in the light of ANZ's annoucement this morning of a record profit. And they're a bit mixed.
- CBA is 0.2% higher to $57.09
- ANZ is 1.45% lower to $25.23
- NAB is 0.31% higher to $25.98
- Westpac is 0.08% lower to $25.35
11.16am: More AGMs, this time in Melbourne, where Amcor’s chief executive Ken MacKenzie says businesses in Australia are hurting.
Mr MacKenzie told shareholders he was confident the packaging company can deliver increased earnings this financial year, but painted a grim picture of industry in this country.
Trading conditions in Australia are difficult We’ve got slowing economic conditions, we have the high Australian dollar, and we have inflationary cost pressures in areas like energy and labour.
Read more here
11.08am: Now a look at how the big miners are faring this morning:
- BHP is 0.09% higher to $34.34
- Rio is 0.07% higher to $57.30
- Fortescue is 2.12% lower to $4.16
11.03am: Here’s a novel idea from South America, where Colombia’s congress is debating a bill that would see citizens who earn less than 3,350,000 pesos per month (about $A1800) exempted from paying income tax.
Finance Minister Mauricio Cardenas said the reform means that 96 per cent of Colombians won’t be taxed on their earnings.
There was no mention in the story as to how else Mr Cardenas would raise revenue.
10.59am: The markets seem to be lacking in direction - zigging up and zagging back down again.
Right now, after spending most of the first hour in positive territory, the All Ordinaries index is 0.9 points lower to 4529.7, while the benchmark S&P/ASX200 is 0.5 points lower to 4505.3.
The positive start on the local market came despite Wall Street closing lower amid some weak US corporate earnings results and soft commodities prices.
Bell Potter senior adviser Stuart Smith said the expiry of exchange traded equity options on the Australian Securities Exchange later on today had offered the market some support at the start of trade.
‘‘Options expiry day tends to steady the market,’’ Mr Smith said.
But it seems even that upward impetus has petered out.
10.54am: The AGMs keep on coming and today it's the turn of Echo Entertainment. The casino company - which has been in James Packer's sights as he tries to get his own Barangaroo project in Sydney greenlighted - has been holding its meeting in Brisbane this morning.
Chairman John O’Neill told shareholders that total gross revenue for the first 16 weeks of the financial year was 12.9 per cent higher than the same period a year ago.
Revenues at its flagship Sydney casino The Star rose by 27.5 per cent, with its international rebate business posting a 21.1 per cent rise on a normalised basis.
"All in all, we are pleased with the momentum for the group, especially at The Star, Mr O'Neill said.
10.47am: The utter turmoil at Whitehaven Coal continues this morning with the long-awaited planning approval of its crucial Maules Creek project announced amid unconfirmed reports the managing director Tony Haggarty will be replaced, writes BusinessDay’s Paddy Manning.
Whitehaven is in a trading halt as the board faces threats from its largest shareholder Nathan Tinkler, who has a 19.4 per cent stake.
Whitehaven this morning announced the New South Wales Planning Assessment Commission had approved the Maules Creek Coal Project, subject to a series of stringent conditions, after a process lasting more than two years.
Maules Creek is key to Whitehaven’s expansion plans and delays in state government approval have weighed on the company’s share price.
Whitehaven shares - which were changing hands for more than $6 in Aopril - last traded at $3.20.
10.40am: Early sliders on the ASX so far include:
- St Barbara: - 9.72%
- Alacer Gold: -9.57%
- LincEnergy: -4.13%
- Oceangold: -4.08%
- Fairfax Media: -3.17%
10.37am: The early risers on the ASX200 this morning include:
- Coalspur Mines: +6.36%
- Arrium: +4.35%
- Ten Network: +3.57%
- Billabong: + 3.49%
- WorleyParsons: +2.77%
10.30am: Wesfarmers shares are down too, falling 0.4 per cent - 15 cents - to $34.45 in a pretty flat market after the coal-to-Coles conglomerate reported improved first-quarter sales.
10.28am: ANZ shares are down 1.4% or 35 cents to $25.25, despite the big bank this morning an almost $6 billion profit for the year.
ANZ's latest bumper result, helped by tighter cost control, kicks off the big bank reporting season with National Australia Bank and Westpac to follow in coming weeks, BusinessDay's Eric Johnston writes.
Commonwealth Bank, which operates on a different reporting cycle, posted an 11 per cent increase in profit to $7.1 billion in August.
Even in the face of a subdued banking environment, ANZ’s key numbers came in line or slightly ahead of market expectations, including the 4 per cent increase in final dividend to 79 cents a share. This takes the full year payout to $1.45 a share, also up 4 per cent.
10.23am: Sectors heading backwards include:
- Materials: -0.17%
- Consumer Staples: -0,13%
10.21am: Sectors moving forward today include:
- Telecoms: +0.62%
- Industrials: +0.39%
- Utilities: +0.35%
- Information Technology: +0.27%
- Energy: +0.23%
10.15am: In early trade, the All Ordinaries index is 3.1 points higher, or 0.1 per cent, to 4533.7, while the benchmark S&P/ASX200 is 2.6 points higher, or 0.1 per cent, to 4508.4.
10.10am: The markets are pretty flat in the first few minutes.
9.57am: Miguel Audencial, sales trader at CMC Markets, says we’re in for a sluggish start to today’s session, and reckons the Australian energy sector ‘‘will face selling pressure today with the price of crude oil lower after inventories increased more than expected.’’
And one final note on why US markets turned a bright start into a day of losses. Mr Audencial says:
The Fed described that the economy is growing ‘modestly’, which is below ‘moderately’ in Fed speak. Concerns are growing over the effectiveness of QE3.
9.53am: Staying in the US for a moment, CBA analyst Martin McMahon says the December 12 meeting will be more interesting. In a note this morning, he wrote:
The next major decision for the FOMC is what to do when the current Operation Twist program runs it course. The duration extension program will be complete by the end of the year.
We continue to believe that the bar to additional monetary easing is low. In our view the unemployment rate is unlikely to fall rapidly from current levels given prospects of decent, but unexciting GDP growth. We are forecasting US GDP growth of around 2.6% for 2013. Recovery in the US is not yet broad based and there are “significant downside risks” to the economy.
9.48am: ANZ economists have offered a neat summary of the US Fed’s announcement overnight. They say there was no expectation of new policy announcements:
Members noted that growth remains moderate but that household spending had picked up slightly (in line with the improvement in retail sales and housing data) but business investment growth had slowed a little. We believe the slowing in investment is likely due to uncertainty surrounding the upcoming Presidential election and the slowing in European and Chinese growth momentum. Overall, the unemployment rate, while falling gradually, remains high and accommodative policy is likely to remain for some time. The Fed’s ‘Operation Twist’ policy finishes next month.
9.44am: Here are some analyst rating changes for today:
- WorleyParsons raised to 'buy' from 'hold' at RBS
- Mirabel Nickel raised to 'market perform' at BMO
- Dexus Property Group raised to 'overweight' at JPMorgan
- Dexus Property Group raised to 'neutral' at Macquarie
- St Barbara cut to 'hold' at Deutsche Bank
- Charter Hall Retail REIT cut to 'hold' at Deutsche Bank
9.40am: Amcor has also updated the market, with chief executive Ken MacKenzie saying he is confident the packaging company can deliver increased earnings this financial year.
Mr MacKenzie said Amcor had made a solid start to the 2012/13 financial year, with volumes remaining resilient and benefits from recent acquisitions and cost cuts beginning to flow through.
"The key message this morning is that we are tracking in line with the expectations outlined at the time of the full-year result in August and there are no changes to the outlook comments," he said in a speech to be delivered to shareholders at Amcor's annual general meeting on Thursday.
9.38am: Also this morning, Wesfarmers said like-for-like sales at its Coles supermarkets grew 3.7 per cent in its fiscal first quarter as it increased sales volumes and prices of fresh fruit and vegetables strengthened.
That beat average market forecasts for 3.4 per cent growth and compared with growth of 2.3 per cent at its rival Woolworths.
Total sales at Coles were up 4.2 per cent to $8.4 billion on the corresponding period last year, with food and liquor sales rising 4.9 per cent to $6.6 billion.
9.35am: Kicking off a busy day for local companies news, ANZ has posted a record $5.66 billion full-year profit as it grew earnings from its domestic and international operations.
ANZ's net profit for the year to September 30 was up six per cent from $5.36 billion in the previous year, but slightly lower than analyst expectations. The bank's cash profit of $6.01 billion was also up six per cent from $5.65 billion in the previous year.
9.32am: Local stocks look like dipping at the open after US investors gace a thumbs downt to the US Fed's downbeat assessment of where the world's largest economy was headed. European shares were up in anticipation of hte Fed statement.
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 9 points lower at 4483
- The $A is higher at $US1.0337
- In the US, the S&P500 lost 0.31% to 1408.75
- In Europe, the FTSE100 added 0.12% to 5804.78
- China iron ore added $US1.20 to $US118.70 a metric tonne
- Gold lost $1.03 to $US1701.95 an ounce
- WTI crude oil fell lost 91 US cents to $US85.41 a barrel
- Reuters/Jefferies CRB index lost 0.73% at 297.69
9.30am: Hi everyone. Welcome to the Markets Live blog for Thursday.
This blog is not intended as investment advice
BusinessDay with agencies