That’s it for Markets Live today.
You can read a wrap-up of the action on the markets here.
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See you all again tomorrow morning from 9:30.
Miners were the big winners today, with Iluka Resources and Newcrest leading the charge.
Village Roadshow had a another tough day, while Treasury Wine also fell.
Here's a quick wrap-up of what will be moving markets overseas tonight, courtesy of IG Markets:
Later we get unemployment claims out of the US which are expected to come in at 327,000, slightly weaker than the previous week’s reading.
At the same time we have CPI data due out and considering inflation is the other major metric the Fed is closely watching; it will also carry significant weight.
The Philly Fed manufacturing index will also help shape up economic sentiment while comments by Ben Bernanke and Fed member Williams will also be in focus.
A great day on the sharemarket, with the ASX 200 jumping 1.2 per cent, extending yesterday's gains and more than making up for the big losses on Tuesday.
No matter where you were in the market it's likely you made some money (notionally, at least).
By sector, the big winners were energy stocks where Woodside jumped 2.7 per cent, and resources more broadly, which as a group finished 2.6 per cent.
Gold stocks also leaped 3.5 per cent.
The banks lagged the overall upswing, with the ASX 200 banks index advancing 0.6 per cent.
Roy Morgan Research’s latest Business Confidence survey in December 2013 has fallen sharply from its immediate post-election peak of 136.3 in October to 125.2. This turnaround was expected to some degree after the election but a number of negative events since have contributed to a more severe drop than was considered likely.
The further drop in confidence among business in December was caused by a decline in positive feelings about where the economy is heading in the next 12 months and the next five years. There has also been a small drop in the proportion of businesses considering that the next 12 months are a good time to invest in growing the business.
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Some advice for Qantas from a former chief economist for the airline:
Every man and his dog have a view about the problems facing Qantas but little has been said about the strategies that can turn the business around.
The first ten things that I would do are as follows.
The business needs fresh sets of eyes on both the Board and Executive Committee. Airline finances are so complex and pivotal to earnings that the top jobs should go to persons with a strong finance background and deep insights into aviation strategy.
I would have Peter Gregg or Colin Storrie as CEOs. I’ve worked for both and they are the smartest aviation financiers and strategists going around. I suspect the horse has bolted for both.
Market Share Target
Qantas should bite the bullet and admit that its 65 per cent market share target is wrong.
Removing the market share target will free-up the airline’s capacity decisions and enable it to better align its capacity with the economic cycle.
Jet Fuel Prices
In the 1980s and '90s the oil and jet fuel prices cycled around a fixed mean of $US20. In this world capacity grew profitably at 5 per cent per annum.
Since early 2000, jet fuel prices have cycled around an upward trend of 14 per cent per annum yet airlines have continued to grow at 5 per cent.
Most airlines worldwide have focused their capacity decisions on expectations about demand but they have "dropped the ball" in relation to how capacity responds to surges in cost. Qantas can lead the way in adopting processes that will enable it to better adjust capacity to both costs and demand.
Bega Cheese has announced its intention to sell its holding in Warrnambool Cheese and Butter to Canadian dairy giant Saputo, in a move that looks set to seal the milk processor’s fate.
WCB has been the target of a fierce bidding war between Bega, Murray Goulburn and Saputo.
Bega withdrew from the race late last month after it received only a handful of acceptances which increased its holding in WCB to 18.8 per cent.
That stake has now catapulted Saputo’s acceptances to more than 45 per cent.
Bega Cheese executive chairman Barry Irvin said he would have liked to see WCB, Australia’s oldest listed dairy processor, stay in Australian hands.
But he said selling into Saputo’s unconditional offer of $9 cash a share was a ‘‘better financial outcome for Bega Cheese and its shareholders’’.
PM Capital's chief investment officer Paul Moore explains why "essentially 100 per cent" of their new listed investment company (the PM Capital Global Opportunities Fund) is in cash:
"Not expensive, but not cheap, is probably the best way to describe the current status of equity market valuations. In comparison to rates available on cash and debt securities, one could argue that equities are in fact cheap, but rates are distorted, the Fed has begun a slow taper and with minimal corrections all year, it is a tough dilemma on how to invest new capital in the very short term."
He also outlines why he won't be chasing the banks and other high dividend payers in the local market:
"One issue at the front of our minds is a belief that long term interest rates have ended their 30 year decline giving us conviction on what we do not want to own: the so-called defensive yield plays."
"The consistent long term decline in interest rates has made stocks with high pay-out ratios and thus, high relative dividend yields, a favourite of investors and also driven an extreme in retail investor non-diversification within their investment portfolios."
More on Woodside, which is up 2.2 per cent:
An unexpected tax benefit to be recorded by Woodside Petroleum and a surge in LNG revenues have raised expectations for a healthy final dividend payout, outweighing news of up to $US400 million ($449.3 million) in writedowns.
Woodside said on Thursday that it expected to get a petroleum resource rent tax (PRRT) benefit this year of between $US200 million and $US250 million, higher than analysts had anticipated. It also reported record annual production and a more than doubling in LNG revenues in the December quarter from the September period.
For investors, the writedowns – for early work done for expansions that did not go ahead at the Pluto LNG project, other ventures in Western Australia and on a field in the Gulf of Mexico – were not as important as the tax credit, analysts said.
“If you are concerned about the dividend the more important influence is this massive PRRT credit: it goes straight to the bottom line and will be included in the dividend calculation,” said Adrian Wood at Macquarie Equities.
“If you’re a dividend holder you’ve had strong revenue and this PRRT credit that is going to support underlying earnings so your dividend expectations are probably rising because they just pay out 80 per cent of it now.”
Read more ($).
While shareholders remain unfussed, the bond market is up after the shocker of a jobs number.
The 3-year bond futures contract has moved quite dramatically after the 11.30 am release, with the sharpest moves in the shorter dated rates.
The 1-year bond rate has moved from predicting a rise in the cash rate in 12 months time to a fall, after it fell from 2.54 per cent to 2.43 per cent. The 10-year rate also fell from 4.26 per cent to 4.18 per cent.
The move down in Australian bond yields is the market evidence of a “de-synchronisation” of Australia’s economy with the US and for that matter most of the developed world.
Over the past three months US and Australian three-year rates have clearly moved in the opposite direction as traders bet that better conditions in the US will lead to a rise in rates while weakness in Australia will keep rates low or push them lower.
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Move over, Janet Yellen and Ben Bernanke. Step aside, Mario Draghi and Haruhiko Kuroda. When it comes to monetary stimulus, Zhou Xiaochuan, the longtime governor of the People’s Bank of China, has no rivals.
The latest data released by China on Wednesday show that the country’s rapid growth in money supply has continued. Mr. Zhou and his colleagues at the Chinese central bank have only begun the difficult and dangerous task of reining it in.
The amount of money sloshing around China’s economy, according to a broad measure that is closely watched here, has now tripled since the end of 2006. China’s tidal wave of money has powered the economy to new heights, but it has also helped drive asset prices through the roof. Housing prices have soared, feeding fears of a bubble while leaving many ordinary Chinese feeling poor and left out.
Deutsche Bank senior economist Phil O'Donaghoe said while the economy lost jobs last month, the falls came after three months of gains.
"I don't think it changes our view of the economy," Mr O'Donaghoe said of the December data, adding that the monthly report was subject to sampling variability.
"There's conflicting forces on either side - you've got stimulatory policy with a rebound in housing and construction on the one hand, and they are positives. On the other hand, you've got a fall in mining investment, further weakness in commodity prices and the terms of trade and also pretty soft government spending.
"We do the trend in the official employment numbers are softer than where we think the true economy is tracking. I think the economy is actually generating more jobs on average per month than is being caught in the official employment statistics at present."
Woodside Petroleum has advised of writedowns of as much as $US400 million on oil and gas fields in Western Australia, which will eat into earnings for 2013.
The adjustments are for the carrying value of the Stybarrow, Enfield, Laminaria and Corallina fields, Woodside said on Thursday.
However, it also advised it would receive a benefit on petroleum resource rent tax of up to $US250 million, offsetting some of the impact.
Record annual production for Woodside has failed to prevent a dip in full-year revenues as gas became a larger proportion of overall sales, weighing on prices, according to the quarterly report.
Woodside shares are 2.2 per cent higher.
A soft labour force market is not expected to trigger further interest rate cuts because the Australian dollar is weakening.
Commonwealth Bank economist Gareth Aird said despite there being no jobs growth in the past six months, he thinks its unlikely the RBA will make further cuts to the cash rate.
"We don't think today's numbers will sway the RBA to cut again," Mr Aird said.
"They would probably want to see the Aussie dollar do most of the work in further easing monetary conditions.
"It does increase the risks of further cuts, but the main thing to keep an eye on is that the Aussie dollar is now comfortably below 90 US cents."
The Australian dollar has fallen to the lowest level since July 2010.
The currency fell from 88.94 US cents to 88.27 US cents within 10 minutes of the labour force data.
Mr Aird said this will give businesses a lift and this will eventually flow through the economy.
Shareholders appear unphased by this morning's poor job numbers and the falling Aussie dollar.
The ASX 200 is up 0.7 per cent at midday, led higher by resource and energy stocks.
Gold stocks continue their strong run, up 3.7 per cent. The only lagger in a day of broad market gains is the IT sector.
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Here's an update on the Aussie dollar movements today from our technical analyst at Invast, who sees the chance of the local currency falling even further:
A continuing AUD/USD downtrend is likely in motion.
The immediate support at 88 US cents might not hold after the bad employment numbers.
There are two levels below 88 US cents that are key from a technical trading view: these are 87.5 and 86.5.
Our view remains to the downside and we think a break below 88 now could trigger heavy selling towards 86.5 to 86 US cents.
The Aussie dollar has plunged to 88.13 US cents and looks to be stabilising at around its lowest levels since August 2010.
Here's a quick reaction on the softer-than-expected jobs report.
"[The] disappointing jobs growth reflects how businesses have been slow to respond to RBA rate cuts," Moody's Analytics associate economist Katrina Ell said.
"The unemployment rate doesn't adequately capture weakness in the labour market due to outsized growth in part-time positions and falling participation. Unless the Australian dollar falls further the RBA will be forced off the sidelines."
In shock numbers the economy has shed 22,600 jobs, but the jobless rate has remained 5.8 per cent as the participation rate fell to 64.6 per cent.
The economy shed 31,600 full-time positions but added 9000 part-time jobs in December, figures released by the Bureau of Statistics today showed.
The Aussie dollar fell half a cent to 88.39 US cents.
In the years since the financial crisis, hedge funds managed by women performed better than a broader index that reflects the performance of the industry, according to a report released on Wednesday by the professional services firm Rothstein Kass. The report seeks to show that this “alpha” – superior returns, in Wall Street speak – is no mere fluke.
“There is meaningful alpha to be gained from investing in women-owned and -managed funds,” Meredith Jones, a director at Rothstein Kass who wrote the report, said in an interview. “There appear to be both behavioral and biological factors that impact women’s ability to manage money and make them consistent.”
From the beginning of 2007 through June 2013 – a period that includes the dark days of the crisis – a Rothstein Kass index of women-run hedge funds returned 6 per cent, the report says. By comparison, the HFRX Global Hedge Fund Index, released by Hedge Fund Research, fell 1.1 per cent during that time, according to the report.
Last year through November, the index of women-run funds had a 9.8 per cent return, compared with a 6.13 per cent rise in the broader index, the research showed. (Still, both indexes fell short of the Standard & Poor’s 500-stock index, which rose about 27 per cent during that time.)Back to top