That’s it for Markets Live today.
You can read a wrap-up of the action on the markets here.
Thanks for reading and your comments.
See you all again tomorrow morning from 9:30.
Looking to tonight, comments from Chicago Fed president Charles Evans (due to speak at 04:50) will be interesting, says IG Market’s Chris Weston.
“We have heard a raft of hawks of late, which has been positive in so much that a number of Fed members are looking past the weak December payrolls report.”
“However Charles Evans, while not a voter this year, has been a key voice of the Fed of late and is on the dovish side of the scale.”
“His comments could really solidify the view that the December payrolls report were a one-off and largely weather effected.”
So much for the age of thrift, Aussies are getting back into debt - good news for the banks.
Consumer and business lending is growing at the fastest pace since the global financial crisis as record low interest rates trigger a recovery in personal loans.
Personal financing improved for two consecutive months for the first time in almost a year, official data shows.
"We have just had the first back-to-back gains in personal lending since January and February last year," Commsec economist Savanth Sebastian told AAP.
"It's still early days but encouraging to see a lift in consumer borrowing."
Personal loan levels rose by 0.6 per cent in November to $7.925 billion, Australian Bureau of Statistics figures show.
Total lending finance - which includes personal loans, home mortgages, business lending and lease financing - grew by 23.1 per cent in the year to November, marking the fastest annual pace since January 2008, during the early days of the GFC.
Speaking of Oz Minerals, fancy some beaten-down bluechips?
Invast's chief market analyst Peter Esho has identified his top six contrarian picks for 2014, including a couple - Newcrest Mining and Oz Minerals - that have already shown some very early signs of a turnaround.
Esho admits that some of the stocks "might raise some eyebrows" but he stands firmly behind them. He points to BlueScope Steel as an example of how a beat-up blue-chip stock can reward the brave.
It was one of the worst performing stocks in 2012, but gained 64 per cent in 2013.
For the brave: Invast's top contrarian picks for 2014
No surprise that Oz Minerals is the best performer today, with a less heralded performer, uranium miner Paladin Energy, also up strongly off the back of solid quarterly production figures.
Gold miners led the charge downwards, while Wotif and Echo Entertainment shareholders had a day to forget.
Jan15 best and worst stocks at close
The ASX has clawed back some of yesterday's losses to finish 0.6 per cent higher for the day.
BHP was down 0.6 per cent after asset management giant BlackRock announced it reduced its ASX-listed holding in the miner. Rio Tinto was up 1.6 per cent, with analysts expecting Rio to tomorrow announce a big boost to its quarterly iron ore production.
Cyclical sectors consumer discretionary and IT were up 1.5 per cent each.
Gold stocks were the exception to a broad uptrend, finishing down 2.7 per cent as a group.
The Australian dollar is threatening to drop below 89 US cents, trading at 89.14 US cent as it moves further away from yesterday's highs of 90.58 US cents.
The dollar was pushed down overnight after US retail sales came in better than expected, strengthening the greenback. Tighter money market conditions in China put further pressure on the dollar this afternoon.
But this year's weak start to commodity prices has also been weighing on the dollar, Westpac currency strategist Jonathan Cavenagh says.
The iron ore price has slipped below $US130 per tonne over the past day, its lowest level since July. Iron ore has already fallen by 3.5 per cent this year.
"The trend in that price is obviously very important for Australia's terms of trade story," Cavenagh says. "It looks as if we've still got a very strong iron ore export story, but on the price side of things, as with most other commodity prices, we haven't got off to a great start this year. So our overall commodity price index, which includes bulk commodities, is down. That trend has probably left the market happy to sell the Aussie above 90 US cents."
Another factor weighing on the Australian dollar in recent weeks has been the rise in the New Zealand dollar on the back of its strengthening economy.
"We saw a move up to $NZ108.50 but the better data out of New Zealand reversed a lot of that," Cavenagh says. "So certainly some of the weakness in AUD/USD reflected AUD/NZD selling and we also saw a bounce in EUR/AUD and GBR/AUD on the cross basis. It seems [when you] get a better environment of US data, generally what you will see is the Aussie dollar underperforming the crosses."
Privatisation, like so many Australian policy issues, often seems more the province of ideology than disinterested analysis, Michael Pascoe comments on the latest privatisation debate:
Some statement of belief will surface, cause a squall of claim and counter claims, and then blow over until the next time. Cue Rod Sims and a bunch of economists, never mind cautious politicians.
But a more sustained storm is brewing over our rich pickings – for all our capitalist ways, Australia has one of the world’s highest levels of government non-financial assets as a percentage of GDP. And whatever the federal government might get up to, state governments around the nation are facing increasing fiscal challenges that mean they won’t be able to afford to sit on lazy assets.
When the roof has a hole in it, the kids need shoes and you have to buy seed to plant the next crop, there’s no place for retaining the family silver.
Among OECD nations, Japan is out in front of us with government-owned assets equal to about 120 per cent of GDP. We score silver with governments holding roughly $1.5 trillion worth – the equivalent of our gross national product.
Surging electricity usage due to the extremely hot weather in southern Australia may result in blackouts as power generators struggle to cope, with large industrial users such as Alcoa’s Portland aluminium smelter expected to see supplies cut for a time.
Along with the intense heat, power supply in Victoria has been hit by unplanned cuts to output at some power stations, with one of the units at Loy Yang believed to be not generating at the moment.
The extreme heat, coupled with supply disruptions has prompted Australian Energy Markets Operator to warn of possible cuts to power supplies across South Australia and Victoria.
‘‘A combination of intense weather, high electricity consumption and some unplanned outages on the generation network has triggered the potential for load shedding to occur in parts of South Australia and Victoria,’’ AEMO said in a statement.
It has warned of possible cuts to supplies since late morning in Victoria, to avoid unscheduled blackouts due to extreme demand levels.
It's a strong day around most of the region, with China once again swimming against the tide:
- Japan (Nikkei): +1.7%
- Hong Kong: +0.3%
- Shanghai: -0.6%
- Taiwan: +0.7%
- Korea: +0.3%
- ASX200: +0.5%
- Singapore: +0.6%
- New Zealand: +1%
Helping the better mood overall, the World Bank upgraded its forecast for global growth this year by two tenths to 3.2 per cent, and predicted a faster pace for both 2015 and 2016.
While it trimmed forecasts for some developing nations, including China, growth as a whole was seen accelerating to 5.3 per cent this year.
"The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead," said the bank's chief Jim Yong Kim.
Data from China showed new bank lending and money supply growth missed forecasts for December, suggesting the central bank's efforts to tap the brakes on credit expansion to contain debt levels are gaining traction.
British online fashion retailer Asos says growth slowed in Australia and the US, two key markets, taking the shine off a big jump in Christmas sales.
Asos, founded in 2000 by current chief executive Nick Robertson, has been a success story in British retailing with its fast-changing fashions appealing to internet-savvy twentysomethings and attracting fans including US First Lady Michelle Obama and singer Rita Ora.
Its shares have more than doubled over the last year, giving it a market value of 5.8 billion pounds, only 2 billion pounds less than the 130 year-old Marks & Spencer, Britain's biggest clothing retailer.
"Though the impressive UK outcome should certainly be seen as reassuring, some people will be fretting about the overseas slowdown," independent retail analyst Nick Bubb said.
Growth in Asos's Rest of World (RoW) division, which includes Australia, Russia and China, slowed to 19 per cent from 26 per cent. Robertson said the segment was being dragged down by Australia.
"On a like-for-like basis because of the Australian dollar we are about 15 per cent more expensive than we were this time last year," he said.
Star Australian fund managers Magellan have warned of the fat tail risks of the Federal Reserve’s unwind of extreme monetary policy.
In its semi-annual update to investors, Magellan said that the build up of $US2.4 trillion of excess deposits of US banks with the central bank could have catastrophic consequences.
“We continue to view the major current investment risk as what will happen when the Fed ends QE,” Hamish Douglass, CEO and portfolio manager, wrote in his semi-annual update to investors.
The fund sees two scenarios. The first is the more likely one of an orderly unwind of quantitative easing which results in the 10-year US bond rate rising to 4.5 per cent to 5.5 per cent over the next two and a half years.
But Douglass refuses to rule out the possibility that the Federal Reserve botches its exit from QE and loses the confidence of the market.
“In this environment, it is not unthinkable that US 10-Year Treasury yields could hit 8 to 10 per cent over the next one-and-a-half to two-and-a-half years. We note that US 10-year bonds peaked at over 8 per cent in the last bond market crisis in 1994.”
“The bad news is that a rapid rise in the treasury yield is likely to cause massive market dislocations and increase global systemic risk.
“We could see large and rapid falls in asset prices, major moves in currency markets and massive global monetary flows.”
“Furthermore, liquidity could be rapidly withdrawn from certain emerging markets, possibly triggering an event similar to the 1997 Asian crisis.”
Again, not Douglass's base case, but it's obviously worrying him enough to say something about it.
The chief economist of the country’s biggest mortgage lender has blamed central banks for policies which inflame property prices and are set to fuel another year of debate about a possible housing bubble collapse.
Commonwealth Bank chief economist Michael Blythe says demand, which has been driven by rapid population growth and limited housing supply, is set to intensify as record low interest rates, courtesy of central bank policies, make buying more affordable but in turn fuel even higher house prices.
“Concerns about a housing 'bubble' have lifted in tandem with dwelling prices,” Blythe says in a note to CBA clients:
- The risk of a speculative price overlay highlights the concerns about rising investor interest in the housing market.
- But investor interest is a rational response to the environment created by central banks. Their actions have encouraged a search for yield, lifted risk appetite and created an environment where asset prices rise.
- Concerns about the housing market are a focus for central bankers and dinner party conversationalists alike.
OZ Minerals is soaring after an upbeat production report. The shares are up a whopping 13.5 per cent, and have been as much as 20 per cent higher.
That is great news for shareholders that have persevered with a stock that was one of the worst performers last year when it shed 54 per cent.
But the sharp rise in the share price is painful for the legion of short-sellers that are betting against the stock.
It is difficult to speculate on the drivers behind market moves, but this could very well be a vicious short squeeze as short-sellers scramble to cover their positions on Wednesday.
OZ Minerals is one of the most shorted stocks in Asia. A list compiled by Markit had it among the 25 most shorted stocks last year.
Offshore analysts are notably more bearish on the Aussie sharemarket than local investors, and a good example of that is a piece of research on Australia from French investment banks titled "Good things don't last forever".
The bank's strategists forecast the ASX 200 will finish the year 4.6 per cent lower to 5000, and will trade around 5100 by June.
They give three reasons why they're not keen on Aussie stocks:
- The Australian market follows commodity prices and "the short-term outlook for commodities remains weak due to the general slowdown in developing economies and in particular to the slowdown of Chinese growth. They also believe that "Chinese commodity-intensive infrastructure spending growth will be moderate going forward".
- The Aussie dollar is "highly overvalued" on long-term measures, and vulnerable to, again, a China slowdown. And stocks will be hurt by a currency correcition.
- The big attraction of Aussie stocks - their dividend yield - will become less attractive as global bond rates rise.
On that last one, equities have become steadily less attractive against bonds over the past year or so. The chart below shows this, with the horizontal line dividing prices where equities are cheap (above) or expensive (below) against bonds.
Think of it like a relay race: can Mr Market make a successful hand-off from dividends to earnings growth, or will he drop the baton?
Aussie equities still look cheap versus bonds
Here's a quick analyst's take on the fall in the Australian dollar and the World Bank's China forecast:
"The overall report from the World Bank is still reasonably positive on the global outlook, but the fact that they are bringing their forecasts into line with the rest of the market around 2014 GDP growth for China, I think that's starting to probably help to weigh on sentiment a little bit further," Westpac currency strategist Jonathan Cavenagh said.
"From that perspective, it's very much a case of the market revisiting themes around slowing Chinese growth and better growth in some of the big major economies. Given the [Australian dollar] very close association with the China economic story, that's starting to feed into negative sentiment."
Credit rating agency Fitch Ratings has warned that a weakening economy and increased competition will create a more challenging environment for Australian bank profits.
“Profit growth is likely to be modest at best – due to higher impairment charges and net interest margin pressure from strong loan competition, partially offset by moderately higher credit growth and a reduction in funding costs,” said the report, released today.
“Cost management should remain a key focus for the Australian banks. Wealth management and measured expansion into Asia provides earnings diversification for the larger banks.
The report described the challenges facing Australia’s banks as manageable with strengthening funding positions offsetting a slight deterioration in asset quality as the
The agency, however, warned that a sudden and severe slowdown in China, a decline in underwriting standards as banks compete aggressively for loans and disorder in the capital markets that impedes on access to funding could threaten its stable outlook on the banking sector.
Here's a bit more from the World Bank's report.
The global body said it expected global growth to rise from 2.4 per cent last year to 3.2 per cent this year.
Growth is then projected to stabilise at 3.4 per cent in 2015 and 3.5 per cent in 2016, "with much of the initial acceleration reflecting stronger growth in high-income economies".
"Growth appears to be strengthening in both high-income and developing countries, but downside risks continue to threaten the global economic recovery," World Bank Group president Jim Yong Kim said in a statement.
"The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead."
The World Bank said that while the world's economies appeared to be "finally turning the corner" five years after the financial crisis, growth would be vulnerable to a rise in global interest rates and the US Federal Reserve's wind-back of its unprecedented stimulus program this year.
Read the press release here.
In what is proving a popular column, Nathan Bell in BusinessDay has taken a big swing at Qantas and its boss, Alan Joyce:
"If one could locate the epicentre of shareholder unfriendly management, Alan Joyce would be standing atop it, middle finger raised at all beneath him."
He also warns off value investors who might be tempted to pick up shares in the devastated stock, saying that "even with a more considered and well-executed strategy, Qantas, like almost all airlines, is a poor business".
Qantas chief Alan Joyce has thrown everything to get relief for the struggling airline. Photo: Louie Douvis
The Australian dollar has fallen slightly on the back of a World Bank report that forecasts China's growth to moderate as the world's second-largest economy moves away from investment-driven expansion.
The local currency, which already fell almost a cent overnight after encouraging US retail sales data, eased another quarter of a cent to 89.46 US cents after the report from the global body was published about noon today.
The World Bank said it expected Chinese GDP to stay flat this year at 7.7 per cent before slowing to 7.5 per cent over the next few years, "reflecting deleveraging and less reliance on policy-induced investment".
"The region is vulnerable to risks of disorderly unwinding in Chinese investment and abrupt tightening in global financing conditions," the World Bank added.
"Commodity exporters are also vulnerable to sharper than expected declines in commodity prices."
The Aussie dollar has taken a turn downwards
Macquarie Group is reported to be among three shortlisted bidders for JPMorgan’s physical commodities business, a sale that may fetch as much as $US2 billion.
Blackstone Group and investment company Castleton Commodities International are also due to lob a final offer for the business next week, according to a report on CNBC. A Sydney-based spokeswoman for Macquarie declined to comment on Wednesday.
JPMorgan executives are believed to be keen to make a decision on the sale before the month’s end, some six months after announcing the auction plans, the report said.
In initial sale documents, JPMorgan is reported to have valued the sum of its physical commodities holding at about $US3.3 billion, but any transaction is unlikely to include the sale of the holdings in their entirety to one bidding party. Sources told CNBC the sale price would likely come in between $US1.5 billion and $US2 billion.
JPMorgan executives were coy about the pending sale on an earnings call last night, with chief financial officer Marianne Lake saying only that the bank was selling “the parts of the business that are the most capital-intensive”.
Quantitative easing was like "beer goggles" for investors said president of the Dallas Fed, Richard Fisher.
"Things often look better when one is under the influence of free-flowing liquidity," he said.
Fed officials are talking lots about the US economy and tapering and overnight it was the opportunity for Fed Philadelphia President Charles Plosser and Fisher, in separate speeches, to throw in their two cents' worth.
Plosser said the disappointing US payrolls data released on Saturday would not slow down the pace at which the central bank's stimulus program is trimmed.
“They’re not on a preset course but the default option is to continue on this path unless something upsets us from that,” he said. “I’m pleased that we’ve started to unwind this. I’d prefer it to be a little faster. I don’t think it’s accomplishing very much.”
In a second speech in as many days, Fisher said while he was happy with the $US10 billion wind-back of the Fed's tapering (which was announced in December), he would have preferred it to have been "double the announced amount".
Great story in the AFR today describing what it's been like to hold shares in Forge:
"It’s like a bicycle accident. One moment you’re calm and balanced, with a clear idea of the destination. Or even a vague idea. The point is you’re upright.
Then a shock through the frame. The road flies up. Impact. Abrasion. Pain. Eyes wide. Mouth dry. Vision blurred.
You sit up slowly and focus on the grim, ghastly news. “Trading halt,” it says. “Ninety per cent drop predicted.” One of your stocks has been smashed. And there is nothing you can do.
It happened in November when Forge translated bad news on two of its projects into a trading halt that lasted nearly four weeks. When the shares traded again they were dropped quicker than the handkerchief of a sick kid at a birthday party.
From more than $4 to less than 40¢.
It was sickening."
Sound familiar to anybody??
You can read more here ($).
Guess who invested in Forge?
Since we’re looking hard at relationships that are breaking down (see yesterday's blog at 4pm) here is another one: how the Australian bank’s share prices have tracked their borrowing costs.
Below is a chart of Westpac’s five-year credit default swap spread (a proxy for wholesale borrowing costs) and the share price (inverted because as borrowing costs decline, the share price should rise).
The chart shows that the share price has steadily tracked a decline in borrowing costs. But in November, the relationship broke drown. Westpac’s stock began to sell off, even as its borrowing costs stabilised or declined.
There are a couple of conclusions we can draw from this – one might be that the key driver for banking stocks is losing its effectiveness.
Cheaper funding is clearly good for the banks because if they are raising money at better rates the margins on their home loans increase, lifting their earnings.
Declining credit spreads are also reflective of a search for yield among global investors. As bond rates have stayed low, investors have been forced into riskier investments such as Australian bank bonds, and other income generating investments, like bank stocks!
Since November, however, declining bank spreads aren’t being accompanied by a rise in bank stocks. So it looks like investors think that bank borrowing costs are about as low as they’re going to go, or that bank stocks are about as high as they can go.
Borrowing costs (orange) vs inverted share price.
More on OZ Minerals, which is the tearaway stock today after a quarterly update this morning, up over 16 per cent.
OZ Minerals reported its cash pile has fallen again, but the fall was not as far as analysts expected, helping to fuel the share price rally.
JP Morgan analyst Lyndon Fagan described that as a ‘‘positive surprise’’ in a note to clients.
Most analysts had predicted the cash balance to be closer to $250 million by now on the back of generous dividends and weak 2013 revenues.
Yields on Australian 10-year bonds have followed the lead set by US Treasuries overnight, after a rise in retail sales lifted the dampening sentiment from a disappointing jobs report last week.
Yields on 10-year Commonwealth Securities traded at 4.23 per cent late Tuesday, but rose as high as 4.25 per cent this morning. Yields on 10-year US Treasuries bumped higher overnight, and were fetching 2.87 per cent this morning.
"US 10-year yields have been trading in a range between 2.8 and 3 per cent since November and 2.6 and 3 per cent since June, so I think the ranges are pretty well set," UBS interest rate strategist Matthew Johnson said.
"I think we'll move back up towards 3 per cent and ultimately above it."
Financial markets are moving forward their expectations of a rise in US interest rates amid growing commentary from Fed officials that its quantitative easing would draw to a close this year.
"I don't think the Fed will raise rates in 2014 but I think we could go back to where we were in mid-2013 [in pricing in an earlier move]," Mr Johnson said.
"Futures data in the Fed funds market has the first rate hike in March 2013. So it's come forward into [the first-quarter of 2015], and it could come forward into [the fourth-quarter] in 2014."
Great news - Michael Lewis is writing a new book on Wall Street.
The author of classics such as Liar's Poker, which detailed the excesses of bond trading in the 1980s, and The Big Short, on the investors that made billions betting on the collapse of subprime, will publish a new book called Flash Boys.
The publisher reportedly said the topic will be squarely focused once again on Wall Street. We're betting it will be on the explosion of high speed trading, a topic Lewis has been writing on.
Michael Lewis is writing a new book.
Turning to early winners and losers on the ASX as the market maintains its early gains of 0.8 per cent.
OZ Minerals continues to pop - it's now up almost 17 per cent.
Forge and Ten Network have reversed some of yesterday's losses, up 3.7 per cent and 3.9 per cent, respectively. Shareholders in those companies must be getting dizzy.
Gold miners are copping it, despite the precious metal's price slipping only slightly overnight to now trade at $US1243.98/ounce as sentiment has turned more buoyant.
This morning's best and worst performers
Fortescue shareholders have cheered the company's plans to retire another $1.6 billion in debt in March.
They will be keen for the miner to have as little debt as possible should the worst happen and a big hiccup in China send the iron ore price plummeting.
But experts are divided on the future path of the crucial commodity this year.
CLSA analyst Andrew Driscoll told the AFR he believes iron ore prices will fall dramatically in the second half of the year to below $US100/tonne. UBS's Gavin Wendt said he thought demand from China would stay "robust" and the price would trade between $US110/tonne and $US150/tonne in 2014.
Meanwhile, iron ore has hit a six-month low of $US129.50/tonne, and has shed $US10/tonne since early December.
Fortescue Metals Group will make another early move on its debt pile, after announcing plans to pay back another $1.6 billion in March.
The debt, which is owed in two separate parcels, was not due to be retired until 2015 and 2016 respectively.
The iron ore miner's share price jumped 3.9 per cent on the news.
But Fortescue has vowed to use its current liquidity to move early on its debt pile, which topped $US12 billion with the past year.
That tally is falling quickly, and will soon stand at $US9 billion once the March payments are made.
Fortescue will then have net debt under $US8 billion, and will be free of any debt repayments until early 2017.
Today's latest round of debt retirement was foreshadowed in late November by Fortescue chief financial officer Stephen Pearce, when he vowed that more early action on debt was imminent.
It comes after a flurry of payments in November.
And we're off!
The local market has opened higher as expected, with the ASX 200 following Wall Street up, gaining 0.7 per cent in early trading after Tuesday's nasty sell-off.
Gains are spread across sectors, with gold stocks being the exception, down 1.6 per cent.
OZ Minerals is an early winner, shooting 14 per cent higher to $3.50 on this morning's quarterly production report - investors were clearly unphased by their dwindling cash pile.
The Aussie dollar continued to trade steadily lower overnight to dip below 90 US cents and is now trading at 89.5 US cents.
A top official from the US Federal Reserve has said the central bank should pare its bond buying as quickly as possible, even if doing so sends stock prices tumbling, because more bond buying risks inflation and makes an eventual exit from easy policies more difficult.
Richard Fisher, president of the Dallas Federal Reserve Bank and one of the Fed's most hawkish policymakers, said that continued purchases by the US central bank of Treasuries and mortgage-backed securities carries the risk of fueling an asset price bubble, though he stressed that no such bubble now exists.
Janet Yellen, who takes over as Fed chief after January 31 when Ben Bernanke's term ends, is expected to continue to pare the program and end it later this year, unless the economy takes a clear turn for the worse.
Fisher's comments suggest that he will keep up the pressure to do so, even if markets react unfavourably.
The weekly poll is still around:
Poll: It's not been a great start of the year, with the ASX200 ending last week lower than it started the year. What are your expectations for this week?
- The ASX will end the week flat, around 5310 points.
- The stock market will post a cautious rise.
- The market will rallly above 5400 points.
- The market will slip but not more than 1%.
- Last week was the start of a major sell-off, taking the ASX200 below 5200 this week.
Total votes: 932.
You will need Cookies enabled to use our Voting Feature.
Poll closed 17 Jan, 2014
These polls are not scientific and reflect the opinion only of visitors who have chosen to participate.
The negative sentiment that has dogged markets finally came to a halt on Wall Street after December retail sales data came in better than expected, IG's Stan Shamu notes:
- Earnings also got off to a fairly good start with gains for JP Morgan and Wells Fargo. This raised expectations heading into the Bank of America earnings, which carry significant weight given the bank’s large retail offering and mortgage exposure.
- With tapering likely to roll on, investors really want to see data suggesting the US economy is in a much better place to justify tapering.
- Of course sentiment was still reeling from Friday’s disappointing payrolls reading, and this retail sales reading had been expected to disappoint by many analysts citing weather-related issues as the main drawback.
- Locally, given the sharp selling we’ve already seen this week, there is likely to be some bargain hunting at some stage today, particularly in the cyclical space.
OZ Minerals' cash warchest continues to erode, with the company today revealing that its once billion dollar cash holdings now stand at $363 million.
The continued erosion of the cash pile stood out amid a December quarterly report that saw the copper and gold miner meet, and in some cases beat, its revised guidance for the 2013 calendar year.
The company has dabbled with some minor acreage in Chile, but appears to have mostly spent the cash pile on generous dividends and extending the operating life of its flagship mine, Prominent Hill.
Investors were alarmed in August when OZ reported the cash pile at $432.9 million, and today it has slipped further to $363 million at December 31.
OZ stressed that number was subject to audit and possible change before the full year results presentation in February, and stressed that it also had an undrawn debt facility of $US200 million.
UBS estimated recently that the cash pile could slip to zero by the end of 2014.
The slipping cash pile has been one factor in OZ Minerals share price slide over the past year, but some major shareholders have been outspoken in favour of the spend, saying they will happily lend money to the company in the future if needed and would prefer the stronger dividends in the meantime.
OZ managing director will speak to the investment community later this morning.
As Qantas Airways’ management continues to work through a strategic review, a partial float of its lucrative frequent flyer division would seem increasingly likely, writes the AFR's Street Talk column.
Some in the market are attributing the stock’s 15 per cent rise from a record low of 95¢ last month to short-term oriented investors betting the float of a minority stake would unlock enough cash and see-through value to produce further gains in the Qantas share price.
There are suggestions in some quarters that Macquarie has been given a formal advisory mandate, although others say pitches have been made by several investment banks with no final decision to date. Another option would be a dual-track process that could culminate in the sale of a minority stake to private equity.
A float of the division would have the potential to lead to a rift between short-term holders looking for an immediate cash injection and longer-term investors concerned it would be selling part of a crown jewel and losing flexibility with its rewards points.
US stocks rose overnight, erasing much of the previous session's steep drop, after as a strong December retail sales reading eased concerns about a slowdown in the economy.
Google rose 2.4 percent to $1,149.40, giving a large boost to the outperforming Nasdaq, a day after the technology giant announced plans to acquire Nest Labs Inc, scooping up a promising line of products and a prized design team for $3.2 billion in cash.
Core U.S. retail sales increased 0.7 percent in December, flying past the 0.3 percent gain expectation. Fourth-quarter growth prospects were further boosted by a report showing retail inventories, excluding autos, increased 0.6 percent in November.
The data followed Friday's payroll report, which was sharply below expectations.
"Retail sales numbers for December sort of calmed everyone down," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"Numbers indicate the economy is most likely moving forward at a nice pace despite an errant jobs number last Friday."
The Dow Jones industrial average rose 115.92 points or 0.71 percent, to 16,373.86, the S&P 500 gained 19.68 points or 1.08 percent, to 1,838.88 and the Nasdaq Composite added 69.712 points or 1.69 percent, to 4,183.016.
Tuesday's gains followed the largest drop in two months on the S&P 500, and market participants say they are gearing up for a more volatile 2014 after a year that constantly saw U.S. stocks go higher.
"We're seeing a good preview of what the year will bring, which is a little bit more volatility," said Andres Garcia-Amaya, Global Market Strategist at J.P. Morgan Funds.
Both JPMorgan Chase & Co and Wells Fargo & Co posted earnings that beat expectations, though upside was limited with Wells Fargo near all-time highs and JPMorgan highest since 2000. Shares of both banks rose less than 0.1 percent on the day.
Local stocks are poised to open higher, rebounding from yesterday's losses after Wall Street rallied overnight.
What you need2know:
- SPI futures up 23 pts at 5197 at 5.29am AEST
- AUD at 89.72 US cents at 5.29am AEST
- On Wall St, S&P500 +0.91%, Dow Jones +0.48%, Nasdaq +1.49%
- In Europe, Eurostoxx ... , FTSE100 +0.14%, CAC +0.26%, DAX +0.32%
- Spot gold fell 0.8 per cent to $US1243 an ounce
- WTI crude oil rose 0.8 per cent to $US92.50
- Iron ore slid 1.1 per cent to $US129.50