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Markets Live: Stocks inch higher

That's all for today. Thanks everyone for reading this blog and posting your comments.

Here's our evening wrap of today's session

Here's a list of the main winners and losers on the ASX200 today:

The big piece of data coming up tomorrow is fourth-quarter inflation, which is expected to be moderate.

AAP’s survey of 15 economists reveals a median forecast for the December quarter’s consumer price index to show an increase of 0.5 per cent in prices over the three month period.

Underlying inflation, which excludes the most volatile price movements and is the Reserve Bank of Australia’s prefered measure, is expected to be at 0.65 per cent for the quarter.

Economists have said that if underlying inflation surprises on the downside there's a higher chance the RBA will cut rates again in February.

Over the 12 months to December, consumer prices are expected to have risen 2.5 per cent and underlying inflation is expected to be 2.4 per cent, around the middle of the RBA’s target range of 2 to 3 per cent.

The Australian Bureau of Statistics will release official CPI figures at 11.30am.

Arab Bank Australia treasury dealer David Scutt describes the Bank of Japan’s announcement as ‘‘very underwhelming’’:

  • Realistically, it’s not going to have much of an impact [on the Australian economy].
  • They’re trying to do expansionary monetary policy, which should be seen as good for Australia’s prospects. But how much  that was built into the price action leading up to the Bank of Japan statement? I would saying almost all of it was already pre-built in.

Scutt said there would have been disappointment that the Bank of Japan was not more aggressive on the inflation front:

  • [Analysts] were looking for them to do a 2 per cent near-term inflation goal, but yet all of their core CPI forecasts for 2013 and 2014 are all less than 1 per cent.
  • It’s more of the same, it’s more of the underwhelming policy response that we’ve seen for years and years.
  • Once [BOJ governor] Shirakawa’s tenure comes to an end in April and presuming that Abe puts in a very pro-government BOJ governor, I suggest that what we are seeing today will not necessarily be what occurs.

Among the major sectors, materials edged up 0.1 per cent, while financials and energy stocks both slipped 0.1 per cent.

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The sharemarket has closed, inching into the black. The benchmark S&P/ASX200 index added 1.6 points to 4779.1, while the broader All Ords gained just 0.7 of a point to 4802.9.

Australia’s property market surged ahead in the first few weeks of 2013, with home prices up more than 1 per cent since the start of January.

The RP Data-Rismark daily home value index for Australia’s five largest capital cities was up 1.3 per cent today, compared to January 1, and up 1.7 per cent compared to a year ago.

CommSec chief economist Craig James said the index showed house prices were at their highest point since November 2011.

Mr James said the figures showed recent interest rate cuts and signs of improvement in the global economy had provided a boost for the housing market.

‘‘The rate cut delivered in December certainly seems to be adding momentum to buying activity and thus prices,’’ Mr James said.


ANZ currency strategist Andrew Salter says any additional quantitative easing by the Bank of Japan should see the Australian dollar appreciate against the yen:

  • He added that any current reaction in the Australian-US dollar cross was likely to be a reflection of the volatility of the market.
  • "I think it is too early to say if there would be any sustained change in the Aussie/US rate. I doubt there will be," he said.
  • Salter says the Bank of Japan had delivered on market expectations with its inflation target.
  • "There were a couple of features of the BoJ’s monetary policy that were not expected, and that was the fact that the new asset purchases are going to be open-ended," he said.
  • "The other factor that is working in the opposite direction is that the asset purchases are not going to be engaged in until January 2014, almost 11 months away."

The yen is gaining, reversing earlier losses, after the Bank of Japan announced open-ended asset purchases and adopted a 2 per cent inflation target.

‘‘The BOJ statement disappoints on the pace of purchases in 2013, which has been maintained,’’ says Greg Gibbs, currency strategist at Royal Bank of Scotland. ‘‘Overall, the size of the program has not been raised as hoped. That is risking disappointment and causing a downward correction in dollar-yen.’’

The yen was up 0.6 per cent to 89.07 per US dollar, after earlier weakening by as much as 0.8 per cent, while the Aussie slipped back towards 94 yen.

 Some more details on the Bank of Japan announcement:

  • The BoJ adopted an open-ended commitment to buy assets, surprising markets that had expected another incremental increase in its 101 trillion yen asset-buying and lending program.
  • The BoJ also issued a joint statement with the government in which it set 2 per cent inflation as its new target, although two of the central bank's nine board members dissented against this decision.
  • As widely expected, the BoJ maintained its overnight call rate target at a range of zero to 0.1 per cent by a unanimous vote.
  • The central bank said it will buy about 13 trillion yen in assets per month from January 2014, including about 2 trillion in Japanese government bonds and about 10 trillion yen in treasury bills.
  • The BoJ previously said it would ease until 1 per cent inflation is ‘‘in sight’’.

Here's a full article on the moves

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The Australian dollar has jumped to $US1.0545 and 94.971 yen on the Bank of Japan move, but dropped to 78.84 euro cents.

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The Bank of Japan has announced an open-ended commitment to buy assets and doubled its inflation target to 2 per cent to boost Japan's ailing economy.

The Nikkei rose 1 per cent to 10,855.03 after trading at around 10,777 before the BoJ announcement.

Australia's Port Hedland, a major terminal for iron ore exports will shut operations due to a tropical storm threatening the far west Australian coastline.

Port Hedland is used by BHP Billiton, Fortescue Metals Group and Atlas Iron to ship ore, currently at a rate of around 200 million tonnes per year, accounting for a fifth of global seaborne trader in the steel-making raw material.

"An official port closure time will be disseminated later today," the Port Hedland Port Authority said in a statement.

Public trust in business, government and media leaders has fallen in the wake of financial and political scandals, according to the results of a new global survey that probably won't surprise too many readers.

Heads of financial institutions did particularly poorly, mainly in richer countries that have suffered financial crises and fined banks for, among other things, manipulating markets and facilitating money-laundering.

The 2013 edition of the annual Edelman Trust Barometer found ‘‘a very significant crisis of leadership’’, said Richard Edelman, president and CEO of Chicago-based public relations firm Edelman.

‘‘Leaders are just not seen as leading.’’A big problem is that people think their leaders ‘‘just can’t get around to telling them the truth’’, he said.

As a result, people are increasingly looking to other sources of information for the straight story about what’s going on, such as academic experts or even their peers through social media and the internet.


More bearish analyst comments on iron ore coming in: Bank of America expects the commodity to fall to $US110 a tonne by the end of the year from $US140 a tonne in the first quarter. Iron ore was fetching just under $US145 a tonne yesterday.

The bank's outlook tallies with forecasts this month from Deutsche Bank and JPMorgan Chase that prices are poised to retreat in the second half as supply increases.

Iron ore has surged 68 per cent since slumping to a three-year low in September as China, the world’s biggest buyer, accelerated for the first time in two years and mills rebuilt inventories.

‘‘The recent price rally is unsustainable and should come off in the second half of the year as more supply begins to come on line,’’ Bank of America said. Prices will ‘‘remain supported over the winter due to seasonal factors,’’ it said.

Deutsche Bank said on January 8 that prices will drop below $US120 in the second half from about $US170 in the first six months, predicting that the theme of 2013 may be ‘‘a tale of two halves.’’ Prices will drop from an average $US145 a tonne in the first quarter to $US120 a ton in the fourth quarter as new supply comes on stream, JPMorgan Chase said last week.

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One from our Small Biz team: Want to be an entrepreneur? Then stop wasting your time. Here's 10 bad habits to quit immediately.


Ahead of the Bank of Japan's stimulus decision, this timely piece by Ambrose Evans-Pritchard is going gangbusters on our websites: Japan’s economic revolution to rock the world:

Forces are being unleashed that could rock the world’s asset markets and trading system. Premier Shinzo Abe has vowed an all-out assault on deflation, going for broke on every front with fiscal, monetary, and exchange stimulus.

This is a copy of what happened in the early 1930s under Takahashi Korekiyo, the first of his era to tear up rule book and pull his country out of the Great Depression. He took Japan off gold in December 1931. He ran ‘‘Keynesian’’ deficits, launching a New Deal blitz before Roosevelt.

Monetarists say Japan’s mistake over the past 20 years has been to launch one spending spree after another without monetary backing. The result has been to push net public debt to 145 per cent of GDP this year (or gross

Mr Abe has lost patience. This time the BoJ will do what it is told. The next governor must be a soulmate ‘‘with the will and ability to pull the nation out of deflation’’, he said. Leaks suggest that the BoJ will set an inflation target of 2pc this week, backed by unlimited bond purchases.

The liquidity effects of this by the world’s top external creditor could be large enough to leak into everything from New Zealand bonds, to Brazilian equities, and Chelsea property, a ‘‘carry trade’’ on steroids.

Premier Shinzo Abe has vowed an all-out assault on deflation.
Premier Shinzo Abe has vowed an all-out assault on deflation. Photo: Reuters

With Sims Metal shares off another 1.8 per cent so far today, following on from Monday's 5 per cent slide on news of a $60 million exposure to fraud in the UK, holders of the stock can't draw much solace from this morning's broker notes.

For Macquarie, it has retained its 'underperform' rating on the stock:

"We have stated previously that we will need to see an inflection point in ferrous scrap earnings to get more bullish on Sims. We now couple this requirement with needing to satisfy concerns around Sims' internal governance and controls. Retain Underperform."

Commbank Securities also has an 'underperform' rating on the shares, and highlighted the potential for a write-down of goodwill against its US business, which accounts for half of total goodwill on the books:

"The US metal recycling industry is suffering from excess shredder capacity and low scrap generation growth," it told clients today. "This has resulted in more competition for scrap flows and significant margin contraction.

"In our view, rationalisation of underperforming assets is required to restore balance and profitability. But so far, industry efforts have been mainly concentrated on reducing headcount."

As a result, it has slashed its fiscal 2013 earnings a share forecast to 23.7 cents from 43 cents for the shares.

Businesses’ enthusiasm to invest has sunk to its lowest level in at least 15 years against the back drop of a high Australian dollar and soft growth in non-mining sectors of the economy.

The Australian Chamber of Commerce and Industry (ACCI) survey of investor confidence released today found while business conditions improved slightly in the December quarter, the outlook remained gloomy for future sales and profitability.

‘‘This builds a strong case for the need for further interest rate cuts,’’ ACCI chief economist Greg Evans told reporters in Canberra.

‘‘The economy would certainly benefit from further rate cuts and our expectation is that we will see that throughout 2013.’’

Household appliances and cleaning products supplier GUD Holdings says it is in a strong financial position although most of the sectors in which it trades remain highly competitive.

GUD on Tuesday booked a net profit for the first half of the 2012/13 financial year of $18.19 million, down 21 per cent on the the prior corresponding period.

The result included $3.6 million in integration and restructuring costs for the Dexion Commercial business. Its underlying net profit was 8.7 per cent lower at $21.7 million. Revenue for the six months to December 31, 2012 was up 0.2 per cent at $311.78 million.

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