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Markets Live: Stocks hang onto gains

The Australian sharemarket ends slightly higher, retreating from the day's highs in afternoon trade.

5.22pm: That's all from us here at Markets Live, it has been a pleasure, we'll be back tomorrow from 9.30am, we hope to see you there.

Click here for a full wrap of today's sessions.

4.52pm: City Index analyst Peter Esho says it’s going to be very stock-specific this week as annual general meetings ramp up:

  • Our market will probably underperform for a little while before finding some solid support.
  • Media stocks appear to have found a bottom, with Fairfax receiving some relief following a tumultuous AGM last week.
  • Commonwealth Bank will hold its AGM on Tuesday, while the National Australia Bank releases its full year profit result on Wednesday.

4.38pm: Some noteworthy stock developments among the top 200 today:

  • Fairfax: +7.8%
  • APN: +7.1%
  • Energy World: +5.7%
  • Ten Network: -3.6%
  • Resmed: -3.5%
  • Acrux: -3.3%

That leaves us bloggers rubbing our eyes, trying hard to remember when Fairfax, publisher of this website (and blog), was last the best performer among the market's largest 200 companies.

4.31pm: The Australian dollar is trading at $US1.0360, steadfastly refusing to sink despite the RBA's last rate cuts, expectations of more cuts and reports of the central bank 'passively' intervening in currency markets by piling up foreign reserves.

This week's first Aussie flash point will take place on tomorrow with a speech by Reserve Bank deputy governor Philip Lowe.

Markets will be keen for any guidance on the chance of another rate cut in November following high inflation numbers last week.

Financial markets have lengthened the odds of an easing next week with interbank futures factoring in a less than 50/50 chance of a cut to 3.0 per cent. A quarter-point cut, however, is fully priced in by Christmas.

4.27pm: Dow and S&P futures are both around 0.4 per cent lower, but there won't be any trade tonight on Wall Street, as regulators, exchanges and brokers worry about the integrity of markets and the safety of employees in the face of Hurricane Sandy.

Market participants and regulators decided late on Sunday to shut the market, reversing a plan to keep electronic trading going on Monday. Bond markets will remain open, but will close at noon, a trade group said.

The decision to close stock and options markets came after regulators, exchanges, and dealers discussed the unknowns that would have been tested if the markets opened on Monday, three sources familiar with the situation told Reuters.

For example, NYSE Euronext's New York Stock Exchange had initially planned to shut its physical trading floor, which would have meant operating as an all-electronic exchange for the first time.

4.23pm: The main sectors materials, financials, energy and consumer staples all ended between 0.1 and 0.2 per cent higher.

Defensive sectors health and telecommunication slipped 0.5 and 0.3 per cenr respectively.

4.19pm: The stockmarket ahs closed slightly higher, well off the day's highs. The benchmark S&P/ASX200 index edged up 4.5 points, or 0.1 per cent, to 4476.9, while the broader All Ords added 3.1 points, or 0.1 per cent, to 4499.4.

4.08pm: Following the heavy selling which characterised trading last week, today was all about ‘righting the ship’ on the Australian sharemarket, says CMC Markets trader Tim Waterer:

  • Solid US GDP data offered a reprieve which was capitalised on by the Materials and Energy stocks and this had the ASX200 again heading in the direction of the 4500 level.
  • Looking further ahead, Chinese Manufacturing PMI data due Thursday could have a significant impact on how our key mining stocks fare as the week progresses.

3.52pm: As Sandy blows into New York, investors are looking at the potential exposure of insurers. Here's a tweet by Eric Johnston:

Around 10% of QBE Insurance's US premiums in Hurricane Sandy exposed states, according to Deutsche Bk numbers.

- @ejohnno

3.42pm: The downside risks to global growth, softer Asian oil demand and higher supplies have finally started to work in the favour of Aussie motorists, says CommSec economist Savanth Sebastian.

  • The terminal gate or wholesale price of petrol has fallen over 6 cents a litre from the highs just under two weeks ago. But so far the pump price has only just started to react to the sharp global prices falls.
  • In fact motorists can expect some considerable relief in the next fortnight, with pump prices likely to fall around 4-5 cents a litre.
  • Petrol prices are currently nearing their cyclical lows looking across most capital cities and petrol can be purchased for as low as $1.28 a litre today with shop-a dockets.
  • In other words if you need to fill up fuel the best day is likely to be today or tomorrow before prices ratchet higher.

3.30pm: Markets around the region are, for the most part, trading a touch lower today:

  • Nikkei(Japan): flat
  • Shanghai: -0.1%
  • Taiwan: -0.4%
  • South Korea: +0.2%
  • Singapore: -0.4%
  • New Zealand: -0.8%

3.09pm: The Reserve Bank has built up more than $800 million in foreign reserves in the past two months, in a "passive" effort to weaken the Aussie dollar.

While avoiding outright intervention in the currency markets, RBA data shows that the central bank has accumulated $863 million in August and September, compared to the post-January 2010 pace of $54 million a month.

The increase of foreign reserves is seen as a way to put pressure on the buoyant dollar, easing some of the pain local export industries, tourism and retailers are facing.

2.54pm: Here's something a little different from the Money desk: a marriage breakdown is not just emotionally wrenching. Financially, it can be devastating.

Since her divorce, Maree's life has been all about forward planning. Simple things like getting the car serviced, which used to just be done automatically, now have to be budgeted and planned for. Even a $20 school excursion isn't a simple matter. "I just don't have a spare $20," she says. "I've always worked with a budget, but there's no buffer any more."

Click here for the full story.

2.40pm: The rural services division of Elders, which was put up for sale this morning, may be worth between $247 million and $329 million, analysts say.

The underperforming company announced it would “commence a process to sell Elders Rural Services as part of an accelerated strategy to return value to stakeholders”.

Elders had been planning to sell off its Futuris Auto division, forestry operations and other non-core assets and return to its roots as a “pure play” rural services business based around its Australian branch network and international trading business.

Click here for the full story.

2.27pm: US stock trading will be closed on Monday and possibly Tuesday in response to Hurricane Sandy, NYSE Euronext said late on Sunday (US time).

NYSE Euronext, which runs the New York Stock Exchange, had previously said that electronic trading would remain open and that only the exchange's trading floor would close.

In a statement, the company said that "the dangerous conditions developing as a result of Hurricane Sandy will make it extremely difficult to ensure the safety of our people and communities, and safety must be our first priority."

1.59pm: There’s a bit of an argument about what if any impact global warming is having on rising storm damage figures. A big hit from Hurricane Sandy may also intensify discuss even if the US presidential candidates haven’t seen fit to mention ‘climate change’ in their debates.

One thing is certain is that Australian policies are fragmentary, Peter Hannam notes. The states can’t decide what amount of sea-level rise to plan for when deciding on land-use zoning, with Tasmania and lately NSW avoiding giving any benchmarks. Businesses, meanwhile, are losing interest too when it comes to assessing their exposure.

Here's the full article

1.48pm: High mobile phone bills and dodgy coverage were behind a 9 per cent rise in mobile complaints to the telco watchdog, with one user hit with a $12,500 bill.

The Telecommunications Industry Ombudsman (TIO) annual report found thousands of frustrated consumers are unable to resolve simple disputes with their phone companies, while problems with mobiles are the biggest gripe.

The 2011-12 report, released today, cites the case of one man who was hit with a whopping $12,500 bill due to global roaming charges.

1.23pm: Here's a good case study in how not to use social media to build brand awareness. BusinessDay’s Chris Zappone reports that Korean carmaker Kia has suffered a user backlash on Facebook after the company apparently solicited 'likes' in exchange for feeding starving refugees from war-torn Sudan. He writes:

Kia posted an image of a tearful African child with the words "1 Like = 1 Day Food for 1 Family" followed by an arrow that pointed to the 'like' button on its Facebook page. The company linked the ad to its support for the charity World Vision.

The decision by Kia Motors to associate the promotion of its Facebook page with the support of World Vision's 2012 Global End Poverty Campaign gained almost 4000 likes, but also more than 160 comments, many of them furious. Full story.

1.19pm: The Aussie dollar, meanwhile, is back to where it started the day. It's currently buying $US1.0364, but dipped as low as $US1.0344 in morning trade.

Westpac currency strategist Robert Rennie said the US gross domestic product (GDP) reading on Friday was one of several international data pieces boosting the currency market.

‘‘If you look at last week’s data, we had strong Chinese PMI (purchasing managers’ index), stronger UK GDP, and stronger US GDP,’’ he said.

‘‘To me, those were fairly important pieces of data - all three either met or exceeded expectations.‘‘So US GDP was certainly a boost to our market on Friday.’’

He added that evidence of increased spending on housing and by consumers was a good sign in the data.

1.15pm: Local stocks are pushing into fresh highs for the day. The ASX200 is now 0.6 per cent higher and has just edged over 4500 - to be exact, it's currently trading at 4500.3.

1.10pm: The big miners are all enjoying a positive start to the week:

  • BHP is 0.53% higher to $34.04
  • Rio is 1.59% higher to $57.35
  • Fortescue is 0.25% higher to $4.06

1.06pm: It's a mixed bag among the retailers today, with a couple of them down sharply:

  • Woolworths: +0.72
  • Wesfarmers: +0.61%
  • Harvey Norman: -1.65%
  • DJs: flat
  • Myer: --1.64%

12.52am: While most business owners know it's good for the bottom line to manage staff effectively, they can sometimes slip when it comes to managing themselves.

And that can be a fast track to burnout. Find out how to look after your mental health here.

12.48pm: PanAust says it’s on track to meet full year production guidance of 64,000 tonnes of copper and 135,000 ounces of gold due to expanded processing.

The copper and gold producer, which has operations in South East Asia, said quarterly production at its flagship Phu Kham operation in Laos was 14,933 tonnes copper at a cash cost of $US1.22 ($A1.18) per pound after precious metal credits.

'‘Higher processing rates and a higher average copper head grade are expected to deliver a strong December quarter performance,’’ the company said in its third quarter report today.

PanAust shares are five cents, or 1.5 per cent, higher at $3.33.

12.41pm: More on the Bendigo and Adelaide meeting, where shareholders were told the bank was taking a long-term approach to growing its business, even if it means short-term pain for investors.

Managing director Mike Hirst says the banking sector continues to face tough trading conditions because of low demand for loans but he's confident strategy to strengthen its relationship with customers and improve the way it meets their needs would result in long-term growth.

When the economy enters a low growth phase such as this, markets reward companies that drive bottom line improvement through cost-cutting at both the operating and investment level. However, long-term research on companies shows that the best-performed firms are those that invest, innovate and grow through periods of difficulty - and that is what we plan to do.

12.24pm: CMC Markets chief market analyst Ric Spooner says the share market has been undergoing a correction after Asian markets overshot to the downside in late trading on Friday afternoon.

‘‘We had a significant sell-off on Asian markets on Friday in anticipation of a bad US market - that didn’t happen,’’ Mr Spooner said.

He said investors were likely to be in a ‘‘wait-and-see’’ mode early this week as Hurricane Sandy threatened New York and was likely to temper trading on Wall Street.

Investors were also waiting to see if the Reserve Bank of Australia (RBA) would cut interest rates again at its November board meeting.

Mr Spooner said market opinion on the prospect of the RBA cutting rates next week had become fairly divided, following last week’s higher-than-expected inflation figures. 

12.17pm A couple of hours in to the day and the early, albeit modest, gains seem to be here to stay. Just after noon the All Ordinaries index is 17.5 points higher, or 0.4 per cent, to 4513.8, while the benchmark S&P/ASX200 is 19.2 points higher, or 0.4 per cent, to 4491.6.

12.15pm: Christmas spending is expected to slow down as weak consumer confidence continues into the festive season, a retail index says.

The Australian Food and Grocery Council  and pallet and packaging company CHEP expect year-on-year growth of 2.9 per cent for the December quarter, well below the 10-year average of five per cent.

The council’s chief executive Gary Dawson said  consumer sentiment was still being adversely affected by broader economic conditions.

The Reserve Bank’s decision to cut interest rates over the last six months has helped boost retail trade conditions, but overall the broader economic backdrop is creating a soft retail environment heading into Christmas. We’re hoping that another cut in interest rates will send the right signals to households so they embrace this summer season with more optimism.

12.09pm: Theme park owner Ardent Leisure says visitor numbers have risen at its Gold Coast venues because of better weather, helping it to post higher earnings.

Ardent Leisure’s theme parks - Dreamworld, WhiteWater World and the SkyPoint observation deck at Surfers Paradise - generated $9.87 million in earnings in the three months to September 30.

That was up 3.9 per cent on the same period in the previous year.

‘‘The period evidenced more normalised weather patterns and improved local patronage to the Gold Coast destination,’’ chief executive Greg Shaw said.

12.05pm: We've another week of annual meetings ahead of us and the standout among today’s AGMs is Bendigo and Adelaide Bank.

The lender is holding its meeting in Adelaide, where MD Mike Hirst has been outlining his digital strategy and vision of running ‘‘Australia’s leading customer-connected bank’’. He had this to say:

We are well positioned for success in the current environment. We have a highly differentiated value proposition that will enable us to win customers and market share without resorting to price ... The economic outlook might be gloomy but our strategy provoides a bright light to guide us.

Shares in the bank are up 3 cents at $8.01.

11.57am: Gold has edged up thanks to robust US economic data which lifted prices on Friday.

But its not all good news, with speculation in the wind that the gains could be capped by a firmer US dollar, as well as lingering concerns about Greece's debt woes and whether Spain will ask for a bailout.

Gold had added $4.55 an ounce to $1715.31, still well below an 11-month high above $1795 an ounce hit in early October.

11.49am: The dollar has fallen as concern over the outcome of the US presidential election and Greece’s ability to meet bailout requirements sapped demand for higher- yielding assets.

The dollar was recently at $US1.0353. Late last week it was almost half a cent stronger, hitting a peak of $US1.0396 on Thursday.

There may be a “broadly negative risk environment towards the US presidential elections” and negotiations between Greece and its troika of creditors, said Ray Attrill, Sydney-based global co-head of currency strategy at NAB.

“That has the potential to support the US dollar, and hurt the euro, both of which would probably mean the Aussie would suffer some collateral damage.”

11.42am: More than 20,000 investors are seeking to recover their money and set aside their obligations to repay loans taken out to make their investments.

Counsel for investors, Gary Bigmore, QC, told the Victorian Supreme Court that investors  relied on a product disclosure statement that featured on its cover a photograph of a gum tree seedling held in a pair  of ‘‘dirty hands''.

‘‘The growers were induced to invest by the former and suffered losses as a result of the latter,’’ he said. ‘‘Great Southern’s story is a familiar one of greed ... triumphing over due diligence.’’

Counsel for Great Southern’s founder John Young, Paul Santamaria, SC, said this was ‘‘nonsense''.

There’ll be more on all this from our reporter, Ben Butler, as the day goes on. 

11.38am: The big four banks are a bit mixed this morning:

  • CBA is 0.02% higher to $56.86
  • ANZ is 0.04% lower to $25.22
  • NAB is 0.15% higher to $25.94
  • Westpac is 0.69% higher to $25.365

11.27am: Vodafone will cut about 500 jobs by the end of November, as the mobile phone operator faces falling revenues and rising costs, BusinessDay’s Chris Zappone reports.

It is understood that about 500 positions will go by the end of the November in a company that employs 5000 full-time and contract workers.

Vodafone Australia chief Bill Morrow had this to say to his staff today:

It is vital that we simplify the business to be efficient and to enable growth in the long term. We need to prioritise every dollar and internal action to count towards an improved customer experience and these changes are designed to deliver just this.We continue to face challenges, but I’m excited about the future.

Read more here

11.22am: More than half of would-be Australian franchisees only want to invest $100,000 or less, a new study has found.

A survey of 600 franchisees also found buyers have high - and sometimes unrealistic - expectations, with almost 30 per cent of respondents planning to earn between $50,000 to $100,000 in their first year.

Read the full story here

11.18am: BusinessDay’s Michael Pascoe says the long-awaited white paper stating Australia’s aspirations for the Asian century is worthy, but a bit of a statement of the obvious.

If you’ve been awake and paying attention, there’s nothing much in the paper that should surprise you, but the vast majority of Australians really have no idea of just how big Asia is already, let alone what it’s becoming. It’s a shame then that the white paper’s launch has been spun so poorly as there is plenty of good sensible stuff in it, as well as sound words about what we need to do if we hope to keep up with the Joneses, or the Wongs.

Read the full story here

11.12am: Japan's Nikkei share average has edged up in early  trade today on growing expectations that the Bank of Japan will take substantial easing steps when it meets tomorrow.

The Nikkei added 0.3 per cent to 8961.53 after falling 1.4 per cent on Friday. The broader Topix gained 0.3 per cent to 743.41.

11.09am: The big miners are up this morning after metal prices rose late last week after a report showing the US economy grew more than forecast in the third quarter. Among the big miners:

  • BHP is 0.38% higher to $33.99
  • Rio is 1.47% higher to $57.28
  • Fortescue is 2.47% higher to $4.15

11.01am: All eyes are on the US this week - and not just because of Hurricane Sandy.

“This week’s US payrolls data and manufacturing survey will give more guidance on the macro front,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. And he added:

The US macro data, particularly the housing recovery, looks promising for 2013, particularly given the recent stimulus. However, given the US election is just over a week away, expectations are for range trading until there is some clarity on who will steer policy for the next four years.

10.53am: IG Markets private client adviser Stan Shamu said the market has opened higher as investors correct Friday's late sell-off.

‘‘There was a sharp sell off on Friday going into the close that was a bit unwarranted as Australian investors exercised a bit of caution ahead of the weekend,’’ he said.

Mr Shamu said the mining and energy sectors were posting the highest gains but trading could be volatile throughout the day as Hurricane Sandy threatened the US north east.

10.48am: Base Resources has slumped 29 per cent over uncertainty about a new law in Kenya that would give the Kenyan government a minimum 35 per cent stake in mining leases.

Base, which is developing the Kwale Mineral Sands project in Kenya, announced in a statement to the ASX on Friday that it was trying to clarify its position in Kenya in the light of new mining laws which demand a 35 per cent ‘‘local equity participation’’ in every mining license.

Shares in Base have fallen 12.5 cents to 29 cents this morning.

10.34am:  An alliance of consumer, welfare and industry groups are calling for tougher powers to block unnecessary spending by electricity companies, which has pushed prices for some up more than 50 per cent, writes BusinessDay’s Brian Robins.

Choice, the Brotherhood of St Laurence and the Australian Industry Group, have joined forces to call for sweeping changes, including:

  • A stronger system for regulating electricity network operators.
  • Set targets for electricity distributors to use take measures to cut power demand.
  • Ensuring that users who cut usage during peak demand benefit directly from their lower consumption.
  • A stronger role for all consumers in the regulatory system.

‘‘Getting the costs of peak demand and network investment under control is a national priority.’’CHOICE chief executive, Mr Alan Kirkland, said.

10.32am: The ASX200's early sliders today include:

  • Resmed: -3.38%
  • Harvey Norman: -1.67%
  • Myer: -1.67%
  • News Corp: -1.39%
  • QBE: -1.35%
  • Macquarie Group:-0.97%

10.28am: Early risers on the ASX200 this morning include:

  • Gryphon Minerals: +4.46%
  • Lynas: +4.38%
  • Linc Energy: +3.60%
  • Boart Longyear: 3.16%
  • Saracen Mineral Holdings: +3.16%

10.24am: A couple of sectors are in negative territory, but only just:

  • Health: -0.13%
  • Consumer discretionaries: -0.11%

10.20am: Most sectors are up in early trade. Those performing best include:

  • Utilities: +0.97%
  • Energy: +0.74%
  • Telecoms: +0.70%
  • Materials: +0.55%
  • Industrials: +0.55%

10.14am: In early trade, the All Ordinaries index is 18.2 points higher, or 0.4 per cent, to 4514.5, while the benchmark S&P/ASX200 is 19.3 points higher, or 0.4 per cent, to 4491.7.

10.10am: Its early days yet, but the markets have opened ahead.

9.58am: The Aussie dollar is stronger, jumping higher on Friday night and holding onto most of those gains.

Commonwealth Bank currency strategist Peter Dragicevich said the dollar was likely to rise with the release of Chinese manufacturing data on Thursday, but that it would remain within recent ranges over the next week.

“Chinese PMI on Thursday will be the main guide for the Aussie, which could see another slight improvement,” he said.

“We think it will stay in its recent ranges, but our advice is that it will drift a little bit higher over the next few days.” 

Mr Dragicevich said the RBA decision next week would also play on the minds of market participants.

“We’ve now only got a 58 per cent chance of a rate cut next week,” he said. “So if they actually do come through with a cut, the market reaction could be a bit bigger that what it would have been a few weeks ago. But overall, we don’t see the Aussie falling too far.” 

9.55am: Shaw Stockbroking’s Jamie Spiteri said the Australian share market was likely to recover from its dip on Friday, as markets in Europe and the US remained stronger than expected.

“The market fell away here on Friday in anticipation that offshore markets may fall away on Friday evening. But as it turned out, they steadied and there’s been a slight improvement,” he said.

But Mr Spiteri said the improvement would be “nothing too convincing.”

“All it will be doing is making up for some lost ground from Friday, given that the market was down almost 40 points.”

9.51am: Making news this week:

  • Monday: Commonwealth Bank business sales indicator for SeptemberTuesday: HIA new home sales for September
  • Wednesday: Buildings approvals for September, private sector credit for September
  • Thursday: AiG performance of manufacturing index for October, RPData-Rismark house prices, export price index for third quarter
  • Friday: Producer price index for third quarter

9.50am: Some analyst rating changes from Friday:

  • Sims Metal Management raised to 'buy' at DA Davidson
  • Macquarie raised to 'neutral' at JP Morgan
  • Mirvac downgraded to 'neutral' at Credit Suisse
  • Mirvac cut to 'neutral' from 'overweight' at JP Morgan

9.47am: AGM season continues this week, with the Bendigo and Adelaide Bank Commonwealth Bank, Crown, Flight Centre, Consolidated Media Holdings, JB Hi-Fi, Tabcorp Holdings, Boral and Qantas all due to front shareholders. Click here for this week's calendar.

9.44am: The New York Stock Exchange will close its trading floor on Monday as Hurricane Sandy barrels its way up the Northeast, but trading will continue electronically. The NYSE says it will invoke its contingency plans on Monday.

The New York Mercantile Exchange also will be shutting its trading floor which is located in a mandatory evacuation zone. Trading has rarely stopped for weather. The NYSE shut down on March 27, 1985 for Hurricane Gloria. 

9.40am: Looking at the US GDP data from Friday, the US economy perked up in the third quarter, led by a government spending surge, but remains stuck in the doldrums, official data released Friday showed.

The world's largest economy grew at a 2.0 per cent annual rate in the July-September quarter following the second quarter's slump to 1.3 per cent, the Commerce Department said.

But the pace of expansion in gross domestic product (GDP) - a measure of the nation's goods and services output - was modest, and only half that seen in the final quarter of 2011.

Although European stocks rose ahead of the data, US stocks ened the day flat as investors balanced the news with poor earnings outlooks from major companies such as Apple and Amazon.

9.38am: Aussie stocks look set to start the week on a positive note after a reading of US GDP edged ahead of expectations on Friday night. More on that in a moment. 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 18 points higher at 4483
  • The $A is higher at $US1.0363
  • In the US, the S&P500 was flat at 1411.94
  • In Europe, the FTSE100 was flat at 5806.71
  • Gold lost 0.1% to $US1711.90 an ounce
  • WTI crude oil added 23 US cents to $US86.28 a barrel
  • Reuters/Jefferies CRB index lost 0.3% to 296.84
  • Australian business calendar: October 29 - November 3
  • Wall Street week ahead: Jobs, election may shade earnings

9.36am: Good morning folks. Welcome to the Markets Live blog for Monday.

This blog is not intended as investment 

Contributors: Thomas Hunter, Richard Hughes, Jens Meyer

BusinessDay with agencies


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