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Markets Live: Third week of gains

Australian shares end the day higher, led by banks and chalking up their third straight week of gains.

4.55pm: That's all for today. Thanks everyone for reading this blog and posting your comments.

Here's the evening wrap. Have a good sporting weekend.

4.28pm: Here's how some of the blue chips did today:

  • BHP: flat
  • Rio: -0.4%
  • ANZ: +0.4%
  • CBA: +0.3%
  • NAB: -0.5%
  • Westpac: +1.4%
  • Fortescue: +0.3%
  • Woolies: +1.1%
  • Wesfarmers: +0.1%
  • Telstra: +0.3%
  • Newcrest: -3%

4.24pm: European stock index futures are pointing to strong gains at the open, bouncing back from the yesterday's dip, helped by renewed hopes that central bank action will revive economic growth and resolve the euro zone debt crisis.

Futures for Euro STOXX 50, for Germany's DAX and for France's CAC are up 0.5-0.7 per cent.

Meanwhile, Dow and S&P500 futures are up between 0.3 and 0.4 per cent.

4.21pm: The ASX200 was also in the black for the week, adding 0.4 per cent and chalking up its third straight week of gains.

4.18pm: The market's gains were led by the industrials, up 0.6 per cent, financials (0.4%) and energy (0.3%) sectors.

Materials slipped 0.3 per cent, while the gold sub-index fell 1.4 per cent.

4.14pm: The market has closed higher. The benchmark S&P/ASX200 index climbed 11.1 points, or 0.3 per cent, to 4408.3, while the broader All Ords gained 11 points, or 0.2 per cent, to 4430.8.

4.05pm: The Australian dollar bounced back today as investors cut bearish positions following a break of chart resistance, but it’s still seen vulnerable to renewed concerns about the global growth outlook.

The dollar was last trading at $US1.0473, up more than a cent from late yesterday, and at 81.8 yen and 80.6 euro cents.

The euro got stung overnight after a batch of surveys showed eurozone business activity remained weak despite the European Central Bank's recent bold plans aimed at tackling the region's debt crisis.

The selling of the euro and upbeat equities across Asia helped lift the Aussie against the greenback.

"There were a few stop-loss activities at $1.0410 which helped to get the first leg up to $1.0440, then it looked like a bit of a short-squeeze to bring it to where it is now," says Michael Turner, a strategist at RBC Capital Markets.

3.31pm: Qantas will be split up and sold off at a "rock-bottom price" within four years if its proposed tie-up with Emirates goes ahead, the transport union warns.

Flying kangaroo boss Alan Joyce announced on September 5 that his airline had inked a deal with Dubai-based Emirates which would see the two airlines sharing routes, frequent flyer programs, IT systems, airport facilities and other key parts of the businesses.

Story here.

3.19pm: The government's financing arm has defended its $11 billion investment in the nation’s home loan market, denying it has bought ‘‘sub-prime’’ assets as part of its purchase of residential mortgage backed securities.

Since 2008, the Australian Office of Financial Management has been investing in residential mortgage bonds, a key source of funding for credit unions and other rivals to the big banks.

However, a Senate inquiry into banking has been told the agency may have invested in so-called ‘‘low-doc’’ loans that were issued with fraudulent mortgage documentation.

The chief executive of the AOFM, Rob Nicholl, today said he was not aware of any fraudulent mortgages in the portfolio.

3.09pm: The oil price has recovered from yesterday’s lows, but is still down more than 5 per cent for the week.

Brent is up 38 cents at $US110.41 a barrel, while US crude was up 69 cents at $US93.11 a barrel, as concerns about Libya's precarious security situation and lower North Sea production stoked supply fears.

OPEC member and Africa's third biggest producer Libya swiftly ramped up oil output after last year's revolution, but an assault last week on the US consulate heightened fears about the new government's ability to impose its authority, and this is likely to delay the already-slow return of expatriate oil workers to the country.

"We saw oil prices spike up around 30-32 per cent last year when Libya was out of the market," says ANZ commodity strategist Natalie Rampono. "This is something to focus on, especially if the security situation deteriorates," she added.

3.01pm: A shake-out from sliding iron ore and coal prices has touched off a spate of mining asset sales as tough times spread from Australia to Indonesia and could boost deal activity in what has been a lean year in the mining sector.

Cashed up Japanese, Korean and Chinese buyers are waiting in the wings to snap up bargains, particularly in the coal sector, investment bankers and lawyers say.

"Overall, what we're seeing is smart money is coming into the coal sector now because they believe the bottom has been hit," says Roger Suyama, head of Indonesia corporate and investment coverage at VTB Capital in Singapore.

Asia-Pacific mining deals so far this year total $US47.6 billion, down 23 per cent from a year earlier, Thomson Reuters data shows. However, activity has picked up in recent weeks, led by a $US960 million bid by Thai state-controlled energy company PTT to privatise coal miner Sakari Resources.

2.53pm: Spain’s bailout plan will be unveiled next Thursday, the FT is reporting:

EU authorities are working behind the scenes to pave the way for a new Spanish rescue program and unlimited bond buying by the ECB, the paper writes.

According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue program, ensuring they are in place before a bailout is formally requested.

One senior European official said negotiations have been conducted directly with Luis de Guindos, the Spanish finance minister. The plan will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and spending cuts.

2.44pm: BHP Billiton’s biggest-ever bond sale priced at a yield premium almost half the average for similar-rated issuers, showing debt investors are favouring the largest miners as the commodities boom peaks.

BHP raised the equivalent of $5.15 billion selling 8- and 15-year notes in euros and 12- and 30-year issues in British pounds, according to data compiled by Bloomberg.

The 2020 debt priced at 72 basis points above swap rates, compared with an average of 136 for a Bank of America Merrill Lynch index of euro debt due in seven to 10 years and rated similar to the Melbourne-based company’s A1 from Moody’s Investors Service.

‘‘BHP is a very strong investment, a great credit,’’ says Mark Mitchell, portfolio manager at Kapstream Capital in Sydney. ‘‘If you want exposure to mining, it’s certainly a good place to go.’’

2.35pm:  A 76-carat diamond billed as one of the most famous in the world is expected to fetch well over $US15 million when it hits the auction block in November, Christie's says.

"The legendary Golconda mines in India produced some of the world's most famous diamonds, including the Dresden green, the blue Hope, and the Koh-i-Noor (in the Royal Collection at the Tower of London)," Rahul Kadakia, head of jewelry for Christie's Americas and Switzerland, said.

Prices for rare, top quality diamonds have soared in recent years, although the expected price would not make the record books. Higher prices attained in recent years include the Wittelsbach Diamond - a 17th century cushion-shaped deep grayish-blue diamond, which sold for $US24.3 million in 2008 at Christie's in London.

2.10pm: ANZ has offloaded its wholesale mortgage distribution business, Origin Mortgage Management Services to Sydney-based mortgage funding business Columbus Capital.

The sale, for an undisclosed amount, comes on the heels of ANZ selling its shares in global payments group Visa. Both sales have been triggered in part by the introduction of tough new banking rules that require banks to hold more levels of capital.

Origin provides funding for approximately $2.2 billion of residential mortgages through a network of mortgage managers who originate and manage the mortgages under their own brands.

ANZ shares are up 0.1 per cent.

Here's the full story

1.46pm: Here's how the region's sharemarkets are doing:

  • Japan (Nikkei): +0.6%
  • Hong Kong: +0.8%
  • Shanghai: +0.5%
  • Taiwan: +0.2%
  • Korea: +0.5%
  • India: +0.7%
  • Singapore: +0.4%
  • New Zealand: +0.1%

1.29pm: DuluxGroup is creeping closer to gaining control of takeover target Alesco Corporation. The paint maker said its holding in Alesco had increased to 49.18 per cent from 48.25 per cent in the three days since the takeover target held its annual meeting for shareholders.

Dulux has said it would declare its takeover offer unconditional on or after October 1 once it reaches 50.1 per cent. It has also vowed to shake up Alesco’s board soon after its offer becomes unconditional.

1.22pm: Politicians are generally usually circumspect when talking about their counterparts in other countries, partly because they might have to work with them one day. But speaking this morning, Treasurer Wayne Swan shared his true feelings about his ideological opponents in the US, saying  ‘‘cranks and crazies’’ in the Republican Party were threatening economic growth in America as Congress remained deadlocked on tax increases and spending cuts set to take effect in January.

‘‘Let’s be blunt and acknowledge the biggest threat to the world’s biggest economy are the cranks and crazies that have taken over the Republican Party,’’ Swan said in a speech in Sydney today.

‘‘Global markets are nervously watching the positioning of hardline elements of the Republican Party for signs that they will dangerously block reasonable attempts at compromise.’’

1.15pm: Here's a lunchtime read from Michael Pascoe on China and how the scary headlines are getting in the way of the real story. He writes:

There are good reasons for economic forecasters to be humble and for all forecasts to be taken with a grain of salt. When it comes to forecasting China though, a 20-kg bag of the stuff you tip into swimming pools may be more appropriate.

12.58pm: Growing interest from China and Australians wanting to explore their own backyard are predicted to boost tourism spending to almost $72 billion over the coming year.

A new report by IBISWorld estimates tourism expenditure in Australia to grow by 5.9 per cent to $71.9 billion in 2012-13.

The shift follows a tough five years for the industry, with spending falling in 2009 and 2011 due to the global economic downturn.

IBISWorld general manager Karen Dobie said domestic overnight trips are expected to grow by four per cent during the coming year, with spending rising 5.9 per cent.

12.46pm: As several regular readers have been pointing out in their comments, it's a pretty quiet day.

‘‘We are gaining for the third time in five days but there is nothing really driving trade at the moment,’’ Commsec market analyst Steven Daghlian says.

12.35pm: Today's market gains are helping to boost the Aussie, which has recovered from yesterday's losses to trade at $US1.0467.

CMC foreign exchange dealer Tim Waterer says the local currency has recovered some lost ground, following yesterday's reaction to weak Chinese manufacturing numbers.

‘‘It was starting to take on an over-sold appearance, having performed worse than its peers over the last 24 hours," he says. ‘‘It was the currency which reacted most adversely to the weak Chinese data yesterday.’’

12.14pm: Ansell chairman Peter Barnes will step down from the company's board at its annual general meeting in October.

Barnes was due to retire by rotation at the meeting and will be succeeded by his deputy, Glenn Barnes.

12.11pm: The sharemarket has just touched the day's high, up 0.4 per cent.

Most sectors are trading higher, with gains led by the energy and financials sectors, up 0.7 and 0.5 per cent respectively.

Materials are trading flat, as softer cipper prices and weak manufacturing surveys in major economies weigh on miners.

12.06pm: DuluxGroup is creeping closer to gaining control of takeover target Alesco.

The paint maker says its holding in Alesco has increased to 49.18 per cent from 48.25 per cent in the three days since the takeover target held its annual meeting for shareholders.

The predator has said it would declare its takeover offer unconditional once it reaches 50.1 per cent and vowed to shake up the takeover target’s board soon after.

Alesco shares are up 0.3 per cent, while Dulux shares are flat.

11.57pm: Many readers will have noticed the long queues in CBDs or anywhere Apple has a store today. But the good-news images of thousands of people lining up for the iPhone 5 are threatening to be overshadowed by complaints about the new Maps feature.

As most readers are no doubt aware, Apple opted out of Google Maps in favour of a home-grown map app.

But the app is already facing criticism from users globally for a number of geographical errors, missing information and because it lacks features that made Google Maps so popular, including public transit directions, comprehensive traffic data or street view pictures.

Here are some reactions on Twitter:

The people who thought the world was flat were more accurate cartographers than Apple Maps

- @RayneBradley

Apple Maps also have errors in business listings. I went to call a local taxi driver and it was a taxidermist (seriously)

- @TomDavenport

Apple spokeswoman Trudy Muller says the company launched the new service knowing it was a major initiative.

"Maps is a cloud-based solution and the more people use it, the better it will get," she says. "We appreciate all of the customer feedback and are working hard to make the customer experience even better."

11.48am: Sorry about the gap - small technical issue. Back online now.

10.55am: With the S&P500 futures contract pointing to a soft end to the week for stocks in the US, here's a view that neatly sums up what's been driving markets this week:

‘‘Poor economic data has superseded central-bank stimuli as the market’s near-term focus,’’ said Ioan Smith, a market strategist at Knight Equity Europe in London.

‘‘The re- acceleration of a slowdown in Asia and Europe to new cycle lows will be a big worry for countries in the midst of sweeping austerity and a concern for investors betting the recent rally can last.’’

10.51am: Investors like the look of the Premier Investments result. The stock has kept rising after a solid open. It's shares are up as much as 57 cents, or 11 per cent, to $5.75.

10.48am: Although the market is higher and continuing to climb, IG Markets analyst Cameron Peacock says he expects a modest day on the Australian market after weak leads from overseas.

‘‘I think we’re in a consolidation phase now,’’ he said. ‘‘We’ve had a good run and people are now wondering what to do next. We’ve got a US presidential election in six weeks and I don’t think much will happen until then.’’

10.44am: Stocks are now firmly in positive territory, rising to a gain of 0.3 per cent after a hesitant open. Despite a solid profit result from Premier Investments, the retailers are mixed:

  • Woolworths: -0.14%
  • Wesfarmers: -0.23%
  • Harvey Norman: +.25%
  • DJs: -0.85%
  • Westfield: +1.04%
  • Myer: +0.53%

10.38am: The Aussie dollar is headed for its biggest five-day loss in five weeks as concern that manufacturing is slowing in Europe and China damped the outlook for global growth and sapped demand for higher-yielding assets.

"Europe softening doesn’t help China, and it doesn’t help Australia," said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. "The downside risk is there in the short term for the Aussie."

The Aussie has fallen 1.1 per cent against its US peer this week, the most since the five days ended Aug. 17. New Zealand’s kiwi was little changed since September 14 after gaining 2 per cent in the previous period.

10.33am: The banks are trading in line with the general market which has slipped back to a gain of 0.1 per cent:

  • CBA is 0.09% higher to $55.02
  • ANZ is 0.04% higher to $24.75
  • NAB is 0.31% higher to $25.61
  • Westpac is 0.29% higher to $24.36

10.29am: Among the other big miners:

  • BHP is 0.21% lower to $33.63
  • Rio is 0.21% higher to $56.70

10.26am: Fortescue shares are still basking in the afterglow of this week's debt deal. They're up 1.39 per cent today for a weekly gain of close to 20 per cent.

10.22am: Looking at how the sub-indices on the ASX200 are performing:

  • Industrials: +0.39%
  • Financials: +0.32%
  • Utilities: +0.21%
  • Consumer disc.: +0.2
  • Telecoms: -0.11%

10.16am: In early trade, the All Ordinaries index is 9.1 points higher, or 0.2 per cent, to 4428.9, while the benchmark S&P/ASX200 is 9.4 points higher, or 0.2 per cent, to 4406.6.

10.10am: Some of the early gainers on the ASX200 include Goodman Fielder (1.98%), Lynas (1.7%), and Goodman Group (1.52%).

And the early slider include Southern Cross Media (-5.16%), Nufarm (-3.97%) and Oceanagold (-3%).

10.08am: Premier Investments shares are up 23 cents, or 4.4 per cent, to $5.41 in early trade. The retailer announced a solid profit result earlier today.

10.05am: Early take - Shares have edged higher as markets open. Both the All Ords and the ASX200 are 0.1 per cent higher without all companies trading.

9.55am: An electrical fault has caused a reduction in capacity at Newcrest’s Lihir mine in Papua New Guinea.

Production at the mine has been reduced to about 25 per cent due to an issue with the electrical system in the main oxygen plant at the mine, Newcrest said.

Maintenance crews are on site, and full production is expected to be restored within 10 days, the company said. Newcrest has not changed its full year production guidance for the Lihir mine or its overall operations.

9.47am: Oil has been the story of the week in commodities following a big sell-off, but it looks like it could be moving into recovery mode. Oil has risen as investors speculated that the biggest weekly decline in more than three months was exaggerated.

November futures gained as much as 0.7 percent after front- month prices slipped 7.2 per cent in the four days through yesterday’s close when the October contract expired.

‘‘When you see an unexpected sharp drop like that you normally see a peak to valley move about $10 from high to low and then the buyers come in,’’ said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

‘‘We should see a 30 percent to 50 percent recovery of the crude price drop in short order.’’

9.43am: Australian bond futures prices are lower after a readjustment from an earlier rally. UBS interest rate strategist Matthew Johnson said he had expected earlier rises in the price of Australian bonds to be short-lived, given recent actions by the US and European central banks.

At 8.30 AEST, the December 10-year bond futures contract was trading at 96.830 (implying a yield of 3.170 per cent), down from 96.860 (3.140 per cent) at Thursday’s close.

The December three-year bond futures contract was at 97.460 (2.540 per cent), down from 97.500 (2.500 per cent).

9.38am: In local company news today, Premier Investments has reported a 68 per cent increase in full year profit and a final dividend of 18 cents per shares.

The previous year's result included more than $15 million costs related to Premier's strategy review, which resulted in cost cutting measures and an increased focus on the expansion of its Peter Alexander and Smiggle brands.

Sales from Premier's retail business in the year to July totalled $829.1 million, down 4.3 per cent from $866 million in the previous year. Full story.

9.35am: Here are some analyst rating changes for this morning:

  • Westfield Retail Trust raised to 'buy' at UBS
  • Graincorp raised to 'overweight' at JPMorgan
  • Cardno raised to strong 'buy' at BBY Ltd
  • Tiger Airways cut to 'hold' from 'buy' at OCBC Investment Research
  • Paladin Energy rated new 'overweight' at Morgan Stanley

9.32am: Local stocks are looking for a solid if not spectacular start - futures point to a gain of about 0.25 per cent and the dollar is a bit stronger.

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 at 4417
  • The $A was trading at $US1.0435
  • In the US, the S&P500 lost 0.05% to1460.32
  • In Europe, the FTSE100 lost 0.57% to 5854.64
  • Iron ore lost 40 US cents to $US109.10 a metric tonne
  • Gold lost 0.1% to $US1770.20 an ounce
  • WTI crude oil was flat at $US91.87 a barrel
  • RJ/CRB commodities index lost 0.48% to 306.93

9.30am: Good morning all. Welcome to the Markets Live blog for Friday.

Contributors: Thomas Hunter, Peter Litras, Jens Meyer

This blog is not intended as investment advice

BusinessDay with agencies


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