Markets Live: Stocks regain energy
The Australian sharemarket has ended higher, led up by strong gains in the energy sector, after signs of movement in the US fiscal cliff conflict.
- Billabong's US boss make play for control
- Gang of four take on Qantas's Alan Joyce
- Elders makes another loss, sees greener pastures
5.25pm: That's all for today. Thanks everyone for reading this blog and sending us your comments.
Here's the evening wrap of today's session.
4.43pm: Here's how some of the blue chips performed:
- BHP: +0.85%
- Rio: -0.3%
- ANZ: flat
- CBA: -0.2%
- NAB: +0.7%
- Westpac: -0.1%
- Woolies: +0.8%
- Wesfarmers: flat
- Telstra: +1.2%
- Origin: +4.2%
- Santos: +3.9%
4.32pm: With the rhetoric from Washington having struck a more conciliatory tone, financial markets have stabilised with traders giving the ‘sell’ button a rest at least momentarily, says CMC Markets trader Tim Waterer:
- However, while talk that the two parties are coming closer together will settle some market nerves, until a deal is inked the downside risks of the market still exceed those to the upside by a very wide margin.
- Australian shares advanced in rather measured fashion, with the market still showing signs of fatigue following the near 3% slump experienced last week.
- The Materials and Energy sectors responded best to a bounce back in commodity prices, however financial stocks in the main were less enthusiastic to kick off the week.
- It seems traders are going to require further convincing from Washington in order for a more sizable market rebound to occur.
4.24pm: Dear QBE: cut the bloody dividend, Nathan Bell writes in an open letter to the insurer's chief executive, John Neal.
4.18pm: All sectors ended higher, with energy jumping 2.3 per cent, materials adding 0.6 per cent and financials inching up 0.2 per cent.
4.15pm: The sharemarket has closed higher, recovering from some loss of enthusiasm around midday. The benchmark S&P/ASX200 index added 24.6 points, or 0.6 per cent, to 4361.4, while the broader All Ords gained 22.5 points, or 0.5 per cent, to 4382.6.
4.09pm: National Australia Bank chief executive Cameron Clyne has received a small pay rise to $8.8 million.
But Clyne remains the third-highest paid of Australia’s bank bosses, behind ANZ’s Mike Smith and Westpac’s Gail Kelly. NAB’s annual report shows Clyne was paid a cash salary of $2.4 million in the year to September 30, and $1.215 million in cash in short-term incentives.
He also received $3.2 million worth of shares awarded in previous years as part of short-term and long-term incentive programs, plus $1.9 million in options or rights to further shares.
4.01pm: Gold mining juggernaut Newcrest Mining has been served with a lawsuit challenging its licence to Australia’s biggest underground gold mine, Cadia Far East, a licence granted by NSW power broker and former politician Eddie Obeid.
The lawsuit is likely to drag Newcrest into the ICAC corruption scandal where officers from the NSW mines department are scheduled to face questions this week.
Last month the Australian Financial Review ran a story which covered claims by a small explorer Gold and Copper Resources (GCR) that Newcrest had been mining in the Cadia/Ridgeway area without a mining licence.
BusinessDay has obtained a claim served last week on Newcrest which contests the validity of its licence over the mining licence itself – and over the leases which cover the underground mine itself.
3.36pm: Here's a snapshot of how markets around the region are performing:
- Nikkei(Japan): +1.6
- Shanghai: -0.3%
- Taiwan: +0.2%
- South Korea: +1.2%
- Singapore: +0.3%
- New Zealand: -0.1%
3.21pm: Telstra is trading at its highest point in more than four years, around $4.15. As you can see in the graphic, 2012 has been a reasonably good year for the telecommunications giant.
3.07pm: The man who audited Centro’s books in 2006-07 – misclassifying $2.1 billion worth of debt – and is now partner at PricewaterhouseCoopers, Stephen Cougle, has promised the corporate watchdog he will not do any auditing work for three years.
He has also agreed to additional training and to submit his first three audits after the suspension is lifted in June 2015 for checking by another auditor approved by the Australian Securities and Investments Commission (ASIC).
A spokeswoman for PwC said Mr Cougle would remain a partner and stay with the firm working on internal issues.
2.50pm: BHP has added the most value to the ASX200 today, being responsible for a 4.5 point rise, while the Commonwealth Bank has been the biggest drag, bringing the ASX down 1.4 points.
2.41pm: More than $1 trillion could be lost to the Australian economy in the next 80 years if education improvements are not made now, a new report warns.
The analysis by PricewaterhouseCoopers (PwC) says that Australia has lost its reputation for high education performance levels in the past decade.
The report states that there is currently a good system of primary and secondary education, but ‘‘good is not great’’.
It says leaving things as they are ‘‘imposes opportunity costs on Australia’’.
If the present trend continues, the overall productivity costs to be borne by the nation between now and 2092 would be $1.5 trillion, according to PwC.
2.19pm: The International Energy Agency (IEA) says electricity prices around the world are expected to rise by up to 15 per cent over the next decade.
IEA executive director Maria van der Hoeven says while there would be some regional differences, there would be a double digit increase globally.
‘‘Electricity prices are expected to increase everywhere in real terms over the coming decade by 15 per cent on average,’’ Ms van der Hoeven told the Australian Institute of Energy national conference in Sydney on Monday.
‘‘That’s principally due to rising fuel prices and also due to renewable (energy) subsidies.
‘‘Where renewable subsidies are passed onto consumers through electricity prices, the additional tariff component can be substantial.’’
Ms van der Hoeven said electricity prices were highest in Japan and the European Union, well above those in the United States and China, due to higher fuel costs and higher capital costs and renewable subsidy costs.
2.07pm: Qantas chief executive Alan Joyce and his predecessor Geoff Dixon used to meet as often as every fortnight at one of Sydney’s finest eateries to chew the fat.
But the days when Dixon acted as a mentor for Joyce are over, writes BusinessDay's Matt O'Sullivan:
Now, it can be confirmed that as recently as two months ago the group of four – money man Mark Carnegie, former Qantas finance boss Peter Gregg, adman Peter Singleton and Dixon – was briefing large institutional investors and union leaders about their plans to take a cornerstone stake in Qantas.
Under their plan, the consortium would seek three board seats at Qantas and agitate for management change. Gregg, now the Leighton chief financial officer, was seen by some as the Qantas CEO-designate, giving him the chance to assume the position Joyce had beat him to more than four years earlier.
1.49pm: China is on track to become the world’s largest generator of nuclear power between now and some time in the 2020s, according to a senior Rio Tinto executive.
Rio Tinto Energy general manager of markets and industry analysis Stephen Wilson said China was currently about the eighth or ninth largest nuclear energy producer but would overtake the US in the 2020s, producing 100 gigawatts of power.
‘‘Their vision is to produce 400 gigawatts of nuclear power by 2050. That’s been publicly stated by Chinese officials,’’ he told the Australian Institute of Energy national conference in Sydney.
‘‘That’s more than the whole world has got today.’’
1.44pm: More on Lynas, and there should be fireworks at its annual general meeting in Sydney tomorrow.
A 19-strong delegation of Malaysian protesters - supported by locals from Friends of the Earth - will be taking to the streets outside the Sofitel hotel in Phillips Street to protest at the "toxic legacy for future generations of Malaysians" that will come with Lynas' proposed rare earths processing plant.
1.38pm: Iron ore miner and steel maker Arrium has begun looking for its next chief executive.
Current managing director and chief executive Geoff Plummer has committed to continue in the role, as required, until the end of 2013, Arrium said.
But the company will begin considering internal and external candidates to replace him, chairman Peter Smedley said.
‘‘This gives the company the extended and flexible timeframe to enable a smooth and measured leadership transition,’’ he said.
1.35pm: BusinessDay’s Elizabeth Knight has been looking at the latest chapter in the Billabong takeover saga, and she says that when it comes to potential buyers, the troubled retailer has a habit of getting to various stages of dating and then being dumped before it gets to the altar.
At this stage Naude’s move looks more like a punt than a certainty - Billabong has yet to receive any kind of proposal although it's understood the board is aware of who Naude is dealing with ... The issue is that Naude is intimately acquainted with how Billabong is travelling and what it might be worth. He is Billabong’s president of the Americas and a member of the board and therefore a perfect conduit for would-be private equity partners. Presumably given Naude was approached by the potential suitor he would be the pick to run Billabong in the event of a successful buy-out.
Read the full story here:
1.29pm: Lynas shares have soared today, rising 11.7 per cent to 62 cents.
The rare earths miner issued a statement to thr ASX late on Friday saying it had issued 80 million new shares as part of a $200 million capital raising scheme.
Lynas is waiting to hear the outcome of a High Court challenge to the temporary operating licence it hads been granted for its Malaytsian refinery.
1.19pm: Good news out of China, with coal imports in October rising 15 per cent from September, to 21.4 million metric tons, the China Coal Transport and Distribution Association said on its website.
1.05pm: BusinessDay’s Adele Ferguson has been talking to Peter Gregg about a story in this morning’s Financial Review which claimed Gregg and venture capitalist Mark Carnegie had held discussions with key investors and unions as they considered a rival plan to extract value out of Qantas.
Speaking from Dubai, Mr Gregg, who is the chief financial officer of Leighton Holdings and a former senior executive at Qantas, said people ask for his opinion on Qantas on a regular basis and he gives it to them, but that doesn't mean he has been actively meeting shareholders to garner support for a strategy that would include selling its frequent flier business and float Jetstar to extract value from the ailing airline. Mr Gregg said:
I have always believed Asia is an important region for the company and I still believe that is the case, but I'm not there at the company so they are just opinions. I have not been agitating for change at Qantas.
Read the full story here:
12.57pm: A bit more on Billabong and the move by its US supremo Paul Naude to take over the entire company.
Institutional dealer Anson Rosewall from BBY Limited said while Mr Naude’s bid was something to pay attention to, it would be dependent on whether he can get financing.
At this point, we haven’t heard any details on pricing. Earlier in the year, TPG made a bid at $3.30 a share and that dropped down to $1.45, and they walked away, and now the stocks are trading just north of 80 cents. So the pricing around such a deal is likely to be nowhere near TPG’s original bid at $3.30 a share and it could well be below their last bid at $1.45 a share.
12.48pm: It's G'Day Gdansk for drilling company Boart Longyear which is moving its Perth operations to Poland to cut costs.
Boart, which slashed its 2012 earnings forecast for the second time in three months said it would cut annual costs by about $US70 million ($A68.08 million), or 20 per cent of its total overheads, as it deals with lower demand.
The savings would be achieved by relocating its manufacturing operations from Perth to an existing facility in Poland and other locations, Boart Longyear said.
The market has welcomed the move, pushing Boart shares up 10.8 per cent to $1.435.
12.40pm: The dollar is higher after signs deficit reduction talks in the US have lifted market sentiment.
In recent trade, the currency was at $US1.0366 US cents, up from $US1.0321 on Friday afternoon.
Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar received a boost over the weekend after US Democrats and Republicans expressed willingness to find common ground on the fiscal cliff.
‘‘So far what’s coming out of Washington is positive so that is probably supporting the Aussie,’’ he said.
But Mr Capurso said that, with no major local economic news, the currency had traded in a narrow range so far today.
‘‘It’s been a pretty quiet start to the week and I think its going to stay that way today,’’ he said.
12.20pm: More on the move by Paul Naude - head of Billabong’s US operations - to take over the troubled surf wear retailer.
The anouncement this morning drove Billabong shares up 18 per cent, the biggest gain since July 24, and they are now trading 11.5 per cent higher at 82.5 cents
“Paul’s generally viewed quite favorably by the market, which makes this an interesting trade,” Nick Berry, a retail analyst at Nomura Holdings, said by telephone from Sydney.
“If either a bid isn’t forthcoming or it gets knocked back it’s going to be very difficult for him to go back.”
Read the full story, from BusinessDay’s Glenda Kwek, here.
12.12pm: A couple of hours into the day and though the main indices are still ahead, some of the shine is being rubbed of the bright early start to the week. In recent trade the All Ordinaries index is 10.3 points higher, or 0.2 per cent, to 4370.4, while the benchmark S&P/ASX200 is 12.0 points higher, or 0.3 per cent, to 4348.8.
12.04pm: Next we’re off to Tokyo, where Japanese stocks have risen this morning. The Topix index is heading for the biggest three-day gain since March 2011, as the yen fell amid speculation elections next month will hand power to an opposition party pushing for more stimulus.
Canon, the world’s biggest camera maker, was up 3.7 per cent and Funai Electric, a television maker that relies on North America for half its sales, gained 2.1 per cent after US House Speaker John Boehner said talks with President Barack Obama on the fiscal cliff were “constructive”.
Japan Tobacco Inc. jumped 4.7 per cent after the government said it would postpone sale of its stake in the company.
The Topix rose 1.6 per cent to 763.33 in early trade with more than seven shares advancing for each that fell. The index is set for a three-day gain of 5.6 per cent, after the ruling party decided to dissolve parliament.
The Nikkei 225 Stock Average gained 1.4 per cent to 9153.33 today on volume about 60 per cent above the 30-day intraday average.
11.54am: Gravity has taken hold of Apple, and a lot of investors have been smacked on the head.
Apple, the largest US stock by market value, posted its eighth week of declines in a row ast week, as the rush to secure profits before a potential rise in capital gains taxes next year has investors dumping the former market favourite.
Since hitting a record high of $US705.07 a share in September, Apple has lost about a quarter of its value. The stock’s descent has vastly outpaced that of the S&P 500, which is down just under 7 per cent in the same time frame.
‘‘No individual investment can defy gravity,’’ said Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank, in San Francisco.
The declines have shaved about $US170 billion ($A165 billion) off the company’s market capitalisation - or more than the entire value of Rio Tinto ($A88.4 billion) and Telstra ($A51.6 billion) combined.
11.40am: Too much fracking democracy? Voters in Romania are to have their say on shale gas extraction.
The inhabitants of Mangalia, a resort city on the Black Sea coast, will be asked whether they agree to ground water and tourism in the region being damaged by shale gas drilling.
American oil giant Chevron, which has four concessions in southeastern and eastern Romania, had been hoping to drill the first shale gas exploration well in the second half of this year.
In May Romainia’s centre-left government imposed a moratorium on shale gas that runs out next month.
The December 9 referendum, to be held alongside general elections, will not be binding but the government may invoke them in its future decisions, analysts said.
11.23am: Here's Michael Pascoe on the week ahead:
11.17am: APN News & Media, publisher of the New Zealand Herald, is selling its South Island newspapers, along with its Wellington-based community papers. It's shares have slipped 1 per cent in early trade.
In a memo to staff, APN describes the decision to quit the twice-weekly giveaway Christchurch paper, The Star, the Oamaru Mail and a clutch of other small, community titles in the South Island and Wellington to ‘‘consolidate its publishing business in the North Island’’.
The twice-weekly Star has an audited circulation of 71,644, while the Oamaru Mail is one of the country’s smallest, with a circulation of just 2883.
11.12am: The big banks are all in positive territory but lagging behind the general markets, which is now more than 0.5 per cent higher:
- CBA is 0.17% higher to $58.38
- ANZ is 0.17% higher to $23.70
- NAB is 0.47% higher to $23.31
- Westpac is 0.02% higher to $24.42
11.03am: There no prizes for not knowing about Redflow, a maker of zinc-bromine flow batteries which can both store power and smooth out the inevitable intermittency of electricity generated from solar and wind-generated energy.
But some investors are onto them. Its shares have risen 27 per cent in early trade, or 3 cents, to 14 cents, on news that talks to supply a major US defence contractor continue to advance.
“We're boxing up a bunch of batteries to send over there,” Alex Winter, Redflow's co-founder and head of engineering, told carbon economy reporter Peter Hannam. “That's moving ahead definitely.”
10.55am: Reuters reports the Sales of Coates Hire could fetch $3 billion. The potential sales figure comes after the company’s owners, Private equity firm Carlyle Group and Seven Group Holdings, announced last week that Goldman Sachs would be assisted by China International Capital Corp in China and Nomura Holdings in Japan with the ownership review process.
"The strategic review will commence immediately and is expected to take several months to reach a conclusion," the two firms said in the joint statement.
10.52am: Air New Zealand has kept its stake in partner airline Virgin Australia, buying 49.1 million shares to retain ownership at 19.99 per cent.
New Zealand’s national carrier made the transaction at the same time Singapore Airlines was issued a 10 per cent stake in Virgin. No dollar figure was put on the purchase, which at today’s trading price equals some 23.81 million dollars.
10.49am: IG Markets Stan Shamu said this morning's gains were on relief about a resolution to the US fiscal cliff. The fiscal cliff refers to the huge tax hikes and spending cuts that will come into force on January 1 if Republicans and Democrats do not reach a compromise.
‘‘We did take a bit of a positive lead from the close of the US session,’’ he said. ‘‘We did see a pretty strong recovery in the US after there was some optimism around US fiscal cliff negotiations between the Republicans and the Democrats.’’
10.44am: BHP has jumped out of the blocks in early trade:
- BHP is 1.58% higher to $33.45
- Rio is 0.33% higher to $57.09
- Fortescue is 0.26% higher to $3.91
10.35am: More on Billabong. Paul Naude was appointed president of Billabong’s American operations in September 1998, and established Billabong USA as a wholly-owned activity in North America.
He has been involved in the surfing industry since 1973 and has extensive experience in managing clothing brands.
Billabong has been the subject of several takeover offers from private equity firms. It rejected TPG’s first offer in 2012. A second offer from TPG and a separate offer from another private equity firm were both withdrawn by the bidders after talks with the company.
10.29am: The worst performed companies on the ASX200 include:
- Gryphon Minerals: -8.09%
- Saracen: -3.41%
- Iluka: -2.7%
- Macquarie Atlas: -2.15%
- Ausdrill: -1.56%
- Asciano: -1.04%
10.26am: Now for the major early gainers on the ASX200:
- Billabong: +15.54%
- Alacer Gold Corp: +6.03%
- Buru Energy: +5.44%
- Lynas: +4.5%
- Mirabela Nickel: +4%
- Paladin: 3.92%
10.23am: All sectors except consumer staples (which is flat) are higher:
- Materials: +0.94%
- Energy: +0.84%
- Health: +0.42%
- Consumer disc.: +0.37%
- Industrials: +0.34%
- Finances: +0.33%
10.18am: Billabong shares are 15.5 per cent higher, or 11.5 cents, to 85.5 cents on the buyout news. The decision to pursue a potential takeover was not solicited by Billabong’s board, the company said.
‘‘Mr Naude has confirmed that there is no agreement, arrangement or understanding with any member of the board or Billabong’s senior management team in regard to his proposal,’’ it said.
‘‘He is acting independently.’’ Mr Naude has stepped down from his positions with Billabong while he considers the possible deal. More soon.
10.13am: The Australian share market has opened half a per cent higher. The benchmark S&P/ASX200 index was up 24.3 points, or 0.56 per cent, at 4,361.1, while the broader All Ordinaries index was up 21.8 points, or 0.50 per cent, at 4,381.9.
On the ASX 24, the December share price index futures contract was up 25 points at 4,373, with 7,128 contracts traded.
10.10am: Drilling services firm Boart Longyear slashed its 2012 earnings forecast for the second time in three months, expecting earnings to fall 10-13 percent as savings from job cuts have yet to flow through.
Hit by a slowdown in the mining industry worldwide, it also warned it expects to take a $50 million charge on inventory and asset values.
The Denver-based, Australian-listed company said it now expects calendar 2012 earnings before interest, tax, depreciation and amortisation (EBITDA) to fall to between $310 million and $320 million, from $356 million last year.
It flagged in August it expected earnings to be flat to 10 per cent higher. It still expects revenue to hold around $2 billion. In early trade, Boart Longyear shares have risen 2.7 per cent to $1.33.
10.07am: Early take - shares are up about 0.2 per cent as markets open.
9.59am: Australian 10-year bond futures are slightly higher but are expected to trade in a tight range on positive sentiment from US deficit negotiations.
JP Morgan interest rate strategist Sally Auld said futures started the day higher following caution on the market on Friday but she expected local bonds to trade in a narrow range on Monday.
‘‘Equities will probably rally a bit and that will probably stop bonds from rallying too much,’’ she said.‘‘I think it will be very much a range-bound day.’’
At 8.30am AEDT, the December 10-year bond futures contract was at 97.060 (implying a yield of 2.940 per cent), up from 97.040 (2.960 per cent) on Friday. The December three-year bond futures contract was trading at 97.510 (2.490 per cent), unchanged from Friday.
9.55am: Billabong has announced that its US head, Paul Naude, is stepping aside temporarily to investigate a buyout of the company. The company said in a statement:
Mr. Naude has advised that he is seeking to hold discussions with potential financiers,both debt and equity, to gain their support for a potential change of control transaction of Billabong.
9.51am: Agricultural business Elders has made a $60.6 million loss but says its underlying performance is improving.
Elders’ result in the year to September 30 compares to a $395.4 million loss in the previous year. The fiscal 2012 loss was caused primarily by $75.3 million in costs related to the company’s exit from its forestry business, Elders said on Monday.
Underlying profit in the year to September was $13.2 million, up 47 per cent from $9 million in the previous year. Earnings were higher in the company’s agricultural services and automotive interiors business Futuris, the company said.
9.46am: Commonwealth Bank chief currency strategist Richard Grace expected things to remain quiet on the markets today ahead of more tension around the fiscal cliff.
“The dollar might drift a little higher given Asian stock markets opened a little higher, but we’re not expecting huge amount in terms of market direction,” he said.
“The underlying concern is still the US fiscal cliff. The fact that Obama is in Asia at the moment could mean a few headlines (but) the Australian dollar will remain fairly quiet and within a fairly narrow range.”
Mr Grace said things could pick up this evening ahead of US negotiations and the Eurozone finance ministers meeting tomorrow.
“A lot of it will be dependent on the fiscal cliff. The movements will be driven by that. The risks are that the dollar will move slightly lower if those negotiations don’t take place.”
9.41am: Wall Street rose on Friday after positive signals from the federal government on the debate over the US fiscal cliff. Stocks recovered from early declines after leaders of the Senate and House emerged from a meeting at the White House and indicated they would be flexible in efforts to settle policy differences. This was followed yesterday by by soothing words from President Barack Obama, who expressed confidence that he and Congress would find something like common ground. Local markets may take that and run with it today.
9.37am: A positive end to the week on Wall Street, following sharp losses in Europe, has the local market poised for a modest gain in early trade. For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- The SPI was 12 points higher to 4360
- The $A was higher at $US1.034
- Cliff talks cheer investors Wall Street investors
- European stocks slump on fiscal cliff fears
- Oil rises on Middle East tensions, Gulf fire
- Gold posts weekly loss on slowdown fears
- RJ/CRB commodities index added 0.25% to 293.56
- Australian business calendar: November 19-23|
- Wall Street week ahead: Off the fiscal cliff with a bungee cord
9.35am: Hi folks. Welcome to the Markets Live blog for Monday.
Contributors: Thomas Hunter, Richard Hughes, Jens Meyer
This blog is not intended as investment advice
BusinessDay with agencies