That is all from us today. Thanks for your time and your comments.
Tomorrow is a busy day for results with reports expected from Virgin Australia, Tabcorp, Skycity, CSL, Computershare, Aveo, Bapcor, Beach Energy, Charter Hall, Evolution Mining, and Villa World.
We will be back in the morning. Good night.
The S&P/ASX 200 has closed higher with a gain of 0.3 per cent to 6079. The energy sector was the best performing with gains of 1.2 per cent thanks to a 2.2 per cent rise in Origin Energy and 1.9 per cent rise in Santos, and 0.6 per cent rise in Woodside Petroleum.
Pact Group was a significant lagger today with a 9.7 per cent drop to $3.55. Meanwhile Ausdrillout-performed all other stocks with a 7.2 per cent rise to $1.57.
Another of the nation's biggest banks has changed its forecast on the direction of interest rates with the NAB saying the Reserve Bank is likely to leave them on hold for an extended period because of growing softness in the economy. In the wake of its latest monthly business survey, which showed a slump in confidence across the east coast and a worrying deterioration in capacity utilisation by the nation's businesses, the NAB believes there is a chance the RBA may be forced into cutting interest rates within months.
The NAB had believed the next move in rates would be up, probably in the second half of next year. But the bank's chief economist, Alan Oster, said with inflation remaining weak and households facing a range of headwinds including modest wages growth, the RBA may have to slice the official cash rate from 1.5 per cent.
As we head into the final minutes of trading for today's session the S&P/ASX 200 is up 16 points to 6077.
The biggest gain in the top 200 today is Ausdrill, up by 7 per cent to $1.56, followed by listed real estate company REA Group, up 4.6 per cent to $76.01. In a conference call last week REA management said listing volumes will be lower in the second half of the current financial year, but expects February to be better than January when volumes were down 11 per cent.
Bluescope Steel is up 4.3 per cent to $12.30 and Emeco Holdings is up 4.3 per cent to $2.69.
Apart from Pact Group, which is down 9.7 per cent to $3.55, Estia Health is down 3.6 per cent to $2.41 and Orocobre had dropped in afternoon trading by 3.4 per cent to $3.14. Transurban is still lagging, down 1.9 per cent to $12.23.
In a very stock-market story, royalties for the 1983 broking classic Trading Places are up for sale. You've got 41 hours left to buy into the residual royalties.
"Trading Places was well-received by critics and movie-goers alike and was nominated for several awards including Best Motion Picture – Musical or Comedy at the 41st Golden Globe Awards. The film earned over $90 million during its theatrical run in the U.S., making it the 4th highest-grossing film of 1983, behind Flashdance, Terms of Endearment and Return of the Jedi."
"And over 30 years later, Trading Places still continues to generate earnings from cable TV airings, on-demand streaming, and theatrical rebroadcasts. Over the last 10 years, this asset has generated payments averaging about $10,500/year, with the highest-earning distribution totaling over $14,000.
Shares in Pact Group are now at $3.56, a drop of 37 cents or 9.4 per cent. Its market capitalisation has fallen by $127 million to $1.2 billion. This morning it warned of a $340 million post-tax non cash impairment, and confirmed a guidance change first flagged in November that full year earnings would be between $230 million and $245 million instead of between $270 million and $285 million as advised at the 2017-18 full year results.
There have been a few negative surprises from Pact Group in recent years that have seen its market capitalisation drop from $2.2 billion to $1.2 billion.
In May 2017 shares dropped 10.6 per cent in one day from $7.31 to $6.53 after it said that its fiscal year 2017 earnings before acquisitions will be generally flat compared to the previous year and Deutsche Bank cut its rating to hold from buy.
In August 2018 shares dropped 22 per cent from $5.34 to $4.17 after full-year net profit missed analyst consensus estimates by 10 per cent an profit dropped 18 per cent to $74 million.
In November 2018 shares dropped 9.7 per cent from $3.60 to $3.25, after the company said its 2019 earnings guidance had been cut to $245 million, compared with its previous forecast of $270m-$285m.
ANZ economists Jack Chambers and Felicity Emmett have created a useful graph showing the impact of regulatory changes on housing lending.
"The decline in housing finance accelerated in December, with the largest falls seen for owner-occupiers," they wrote in a note to clients.
"Finance for first home buyers, which had previously outperformed other segments, fell sharply in December. Total financing is down 20 per cent over the last year, and further falls are likely in the near term. A sustained improvement in housing finance would be an early indicator of a stabilisation in the housing market."
"Within the owner-occupier category, the trend of first home buyer outperformance has ended, as it declined 8% m/m. As a share of the value of total housing finance (excluding refinancing), first home buyers were 16%, down from 17% in November. It appears that tighter lending standards are now affecting this segment."
For what its worth, people I know who are looking for their first home are waiting until after the federal election to let the prices fall as much as possible. They see no risk of prices rising again before then.
Telecommunications company Vocus hit a one-year high of $3.65 in trading this morning, but has since settled back down to $3.53. This was the highest price since mid-2017, but still well down from the $9.30 shares were attracting back in mid-2016.
Morgan Stanley's telco analysts published a 56-page note this week suggesting Vocus and Superloop were well positioned to take advantage of the $10 billion business and enterprise telco and broadband markets. Unlike the NBN, Vocus owns a lot of the infrastructure it uses to reach business customers, giving it more cost control.
"We view Vocus as a turnaround story, upgrading to a non-consensus 'overweight' [rating]," they wrote in a note to clients. They have given it a target price of $4.
"Totay's telco headlines tend to focus on the consumer segment, with a potential new entrant in mobile and the NBN transition. We are bearish on this segment, as competition remains elevated and returns are falling. But we do see opportunity in enterprise...a segment less well understood and where we have a more bullish view. Yes, enterprise is smaller, but we think it is less competitive and offers sustainably higher markets (+30 per centage points above consumer)."
The S&P/ASX 200 is softening in early afternoon trading, now at 6073 points from a high of 6093 around midday.
In the past hour Pact Group has fallen further, now 8.6 per cent lower at $3.59, and Bendigo & Adelaide Bank has fallen to $10.06, a drop of 3.1 per cent. Also in the past hour Harvey Norman has fallen 1.4 per cent to $3.44.
Flight Centre is also scraping close to fresh 18-month lows with a 3 per cent drop to $42.14. Yesterday Morgan Stanley analysts published a note raising the possibility Air BnB could be getting into airline bookings after hiring former Virgin America chief executive Fred Reid.
Shares in Challenger are up 11 cents to $7.94 this morning after it's half-year results were announced. The results showed net profit in the six months ended December 31 plunged to just $6.1 million, from $195.4 million in the same period a year earlier. Revenue slumped 20.8 per cent to $893.5 million, from $1.13 billion in the second half of 2018. The company also cut its guidance for its net profit before tax in the second half from $565 million to $545 million, reflecting a flow-on effect from the first half and lower equity distributions.
However, Macquarie has an 'outperform' rating on the stock and a target price of $10.60, saying "While the second-quarter sales run-rate is disappointing this was factored into the recently revised guidance and we continue to see value in Challenger at current level." The stock reached $13.35 in May last year.
This morning the company said its earnings had been hurst by investment market volatility resulting in lower asset returns for its life business and lower funds management fees. "Our results have clearly been impacted by the difficult operating environment we're experiencing, with increased market volatility, industry disruption and political uncertainty," said Challenger chief executive Richard Howes in a statement accompanying the earnings release. Challenger said it will pay an unchanged fully franked dividend of 17.5 cents a share on March 26, the same as in the first half of fiscal 2018. Mr Howes said the results should be best viewed in terms of normalised profit after tax, as statutory profit includes valuation movements in assets and liabilities. "While some of these factors are beyond our control, the fundamentals underpinning our business remain supportive," Mr Howes said. "We continue to target a growing market of retirees, we have the leading retirement income brand in the country and our capital position remains very strong. "Our resilient position is well demonstrated by the solid domestic annuity sales we achieved in the half. Australian annuity sales were up 4 per cent on the same period last year, reflecting the continued demand from retirees for our products."