And that's it for Markets Live for today and for the week.
Have a great weekend and see you all again Monday morning from 9.
And that's it for Markets Live for today and for the week.
Have a great weekend and see you all again Monday morning from 9.
Shares ended with gains on Friday with utility companies putting a bit of a spark into the benchmark at the end of lacklustre week.
The S&P/ASX 200 index advanced 16 points over the five sessions, or 0.3 per cent, to 5994 while the broader All Ordinaries climbed the same amount in points and percentage terms to 6077. On Friday the benchmark top 200 measure climbed 19 points.
The ASX floundered over the week, putting in a flat performance overall as two days of gains at the end of the week offset losses in the early part of the week. On Friday, Origin jumped 1.3 per cent to $9.13 and AGL jumped 1.5 per cent to $25.82 after both energy firms were upgraded to buy at Goldman. However, the ASX lost 2 per cent following a downgrade to sell at UBS.
The Australian dollar had a more active week, falling 1.3 per cent in response to disappointing GDP and trade data to hover around US75¢ on Friday.
"With the RBA on hold for the next year or more and the Fed on track to hike in December with another four hikes next year the interest rate differential will continue to move against Australia which should result in further weakness in the Australian dollar," said AMP Capital's head of investments Shane Oliver.
In contrast, Australian shares are likely to continue to participate in the global share rally that has driven US markets to record highs, albeit remaining a relative laggard thanks to a more constrained earnings outlook, Mr Oliver said.
The heavyweight listed banking sector, dominated by lenders CBA, Westpac, ANZ and NAB, fell 0.4 per cent over the week.
Miners lost 0.9 per cent over the week after gyrations in the metal markets pulled the sector down. Volatility in commodity prices offset a boost to sentiment around the sector after broker Citi during the week turned positive on many of the big names.
Broker action was a theme all week, with Telstra climbing on Monday after an upgrade by Macquarie Bank following the company's earnings revision which was released at the end of last week. The bank upgraded Telstra from neutral to outperform with a $3.70 price target. Telstra shares jumped 7.9 per cent to end the week at $3.69.
Everyone from President Xi Jinping on down in China -- and plenty of observers outside it -- have warned about the need to rein in leverage in the world's second-largest economy. What's gone little recognised is that a large group of its companies has already done just that.
Looking at their capacity to make interest payments along with their debt relative to earnings, listed non-financial enterprises in China on average are in the best shape in more than a decade, according to data compiled by Bloomberg. The improvement has been propelled by supply cuts, rebounding prices and a boom in global trade that have boosted profit growth.
The strengthening position of China's companies puts them in better shape to cope with the increase in bond yields being driven by regulators' efforts to rein in shadow banking. That offers scope to keep up the campaign and let weaker players default without sparking broader contagion. While accounting transparency issues remain, it could also encourage investors to look again at a bond market with higher returns than other major economies.
"Profitability conditions have improved a lot, not only for the state-owned companies but also the small and mid-cap companies," said Margaret Yang, an analyst at CMC Markets Singapore. "This will give policy makers more room to push through the deleveraging campaign and keep monetary policy neutral," she said.
Total debt for almost 4000 non-financial firms listed on the mainland is now on average about the same size as earnings, down from 2.4 times a year earlier, according to data compiled by Bloomberg. Their operating profits can now cover over 18 times interest expense, a significant improvement from just 5 times in 2016.
If the folks at ASX Ltd were hoping the buzz around blockchain would rub off on their stock, they would have been disappointed.
After a getting a bit of a lift on Thursday to $57.33 a piece, the shares have lost that ground and more in today's session, off 1.9 per cent at $56.23 as analysts reacted coolly to the ASX's announcement that it plans to replace CHESS with its blockchain, or distributed ledger technology (DLT), solution.
"At this stage, this is little more than a technology replacement decision," Citi analysts said, adding that "blockchain should boost revenue, but not for some time yet". The broker has a "sell" rating on the stock, saying it looks expensive.
"This could in time lead to significant changes in ASX's revenue streams," the analysts continue. "While some revenues it currently earns will likely diminish in a DLT world, there should be substantial scope for new services and, potentially too, an increase in trading volumes."
So, not only is the impact some way off, it is also hard to quantify, they say.
"ASX suggests it will provide 'day 1' functionality and proposed timing for transition by March 2018, but detailed timings and likely required capex is unlikely to be available until Aug 2018. Full rollout is likely to take ~24 months, implying benefits are probably still some time away."
Deutsche analysts strike the same tone, but are a bit more upbeat:
"This is likely to have limited near term impact, but medium term opens up significant opportunities for growth," they write. "We maintain a 'hold' on ASX. We like its strong market position and pristine balance sheet, but with cost growth currently running double revenue growth we think the stock is fairly valued."
"Lord give me inflation, just not yet."
That's the catch-cry of many investors around the world who are luxuriating in the uncommon mix of strong growth and low rates.
Which means an unexpected breakout in inflation is something analysts are worried could pour cold water over hot markets in the coming year.
"Predicting a sustained recovery in US inflation to target over the past decade has been ill-fated," ANZ economists note. But, they say, 2017 "may yet prove to be a watershed year". They go through what might have changed:
The ANZ team forecast that the Fed will raise rates by 75 bps next year, with the Fed funds rate reaching 2.5 per cent by mid-2019. Market pricing is 50bps below that, they point out.
Aussie shares have lagged their global peers by around 10 percentage points this year, Deutsche Bank strategists say, although if you exclude the drag from the banks we have traded broadly in line.
"Looking ahead, the growth profile isn't great versus offshore, especially outside of resources," they write in a note to clients. "But Australia still offers a world-leading dividend yield."
"And there are pockets of value. Sectors which look cheap on a forward P/E basis relative to global peers are energy, retail, media. In contrast, capital goods and healthcare look expensive.
Speaking of valuations, the market P/E has ticked up to slightly above 16, but equities "remain cheap versus bonds".
And as the year draws to a close, resources "continue to offer the best combination of valuations and growth", they say, with a P/E that matches the overall market but with 20 per cent earnings growth forecast for this financial year.
Banks are "cheap" on a P/E of 13, but "earnings headwinds are on the rise and the Royal Commission will weigh on sentiment".
Overall, though, the 2017-18 financial year is "likely to see a step-down in earnings growth after a strong 2016-17". On the other side, "earnings revisions have been resilient of late and there were no major downside surprises during AGM season," the strategists note.
"Pleasingly, earnings have taken over as the key driver of market upside this year." (See chart.)
The DB team aren't expecting much from the next 12 months, with an ASX 200 target of 6050 points by the end of 2018.
The crypto-currency frenzy has minted another billionaire. For 45 minutes, at least.
James Gilbert, the president and largest shareholder of Malibu, California-based Crypto Co, held a $US1 billion stake Thursday after its stock surged as much as 83 per cent. The shares later retreated, paring the value of his holding to $US919 million as of 12.17pm in New York. Crypto's market value climbed to as much as $US3.04 billion, with just 5360 shares changing hands in over-the-counter trading out of 19.6 million outstanding.
Gilbert's stake increased six-fold in the past week as bitcoin and other cryptocurrencies continued to skyrocket.
Bitcoin's rally of more than $US3000 in the past 24 hours continues to defy its legions of sceptics, as mainstream demand for the world's largest cryptocurrency explodes. Investors flocking to open new accounts or place orders Thursday left Coinbase, the largest US exchange, warning of outages and slow transactions.
Bitcoin listed at $US16,395 as of 1.15pm in Bloomberg pricing that is a composite of exchanges. That takes its rally this year past 1500 per cent and its market capitalisation is now at $US274 billion.
"This is irrational exuberance," Royal Bank of Scotland Chairman Howard John Davies said in an interview on Bloomberg TV overnight. "This is a very, very unusual market, that shows we're not in a normal two-way trading market."
Crypto is investing in and trading digital assets, and developing source code for managing them, according to its regulatory filings. Gilbert, an Australian who previously co-founded startups including one acquired by LivingSocial, helped launch Crypto in January.
The company had net assets of $US3.6 million as of September 30 and posted a $US1.5 million net loss in the third-quarter, according to a regulatory filing.
A typical Sydney first homebuyer can afford just one in every 10 properties in the city and must move an average of 31 kilometres from the central business district to buy a flat and 56 kilometres from the CBD to buy a detached home, a Reserve Bank study has found.
A new housing accessibility index developed by the bank shows the purchasing capacity of the "median potential first homebuyer" in Sydney last year was $474,000.
That puts 85 per cent of apartments and 93 per cent of detached homes in the city beyond their reach following a five-year boom in Sydney property prices.
The Reserve's investigation of affordability for first homebuyers found the average distance to the CBD of homes accessible to the median potential first homebuyer in Sydney has grown "consistently over the past decade for both houses and apartments."
Apartments affordable to the median potential first homebuyer are now an average of 11 kilometres further from the CBD than they were a decade ago. Separate houses affordable for the median potential first homebuyers are now an average of 12 kilometres further from the CBD than they were a decade ago.
Also, the size of housing affordable to first-time buyers has declined considerably.
"In all capital cities, the average number of bedrooms in affordable housing has declined over the past 20 years, most notably in Sydney," the study found.
"This partly reflects apartments being smaller and an increased share of affordable homes, although the average number of bedrooms for affordable houses has also declined over time."
Rebuilding Westpac's public reputation will be the bank's "biggest challenge" over the long-term, says chairman Lindsay Maxsted, who hopes the royal commission can help banks win back the community's trust and respect.
A week after the government announced the powerful judicial inquiry into the financial sector, Mr Maxsted has told shareholders the bank would cooperate with the probe, to be led by former High Court judge Kenneth Hayne.
He said he hoped the inquiry could ultimately have a role in "restoring trust, respect and confidence in Australia's already strong financial system".
Even so, he said improving the bank's reputation after a tough couple of years, which included Westpac's 200-year anniversary, would be challenging.
"As we begin our third century, our biggest challenge lies in rebuilding our reputation across the communities in which we operate," Mr Maxsted said.
"If we are to continue to prosper, we must ensure the needs of customers and communities are the priority and we must actively demonstrate the value we bring to society and the value we bring to customers every day."
While the bank had viewed a royal commission as unnecessary, Mr Maxsted said it had last week changed its mind on a commission in order to end the uncertainty in the industry.
Reputation was also a key theme in remarks from chief executive Brian Hartzer, who said he hoped the royal commission could stop banks being attacked by politicians, even if it did uncover further problems.
A 33-year-old Australian tech entrepreneur, who left Australia five years ago for Silicon Valley, has returned home to ring the bell at the ASX today as his fintech company Credible becomes the biggest local tech float of the year.
Stephen Dash, a former investment director at Mark Carnegie's private equity, venture capital and advisory firm M.H. Carnegie, already raised over $US20 million ($26.5 million) in external funding for the US-focused online student loan marketplace before raising $68 million through an initial public offering, which valued the company at $306.6 million.
Credible has carved out a potentially lucrative niche in the US market, where students have typically paid significantly higher rates for their loans. It has created an online marketplace where borrowers can seek out offers from numerous vetted lenders, and has also recently expanded into personal loans and a credit card marketplace.
Mr Dash told The Australian Financial Review the ASX had emerged as an extremely desirable listing location for overseas tech companies, and now shaped as a preferable option to venture capital and private equity for larger growth funding rounds.
Credible will be hoping local investors buy into its vision of taking a large share of a potentially huge and under-served market. It expects to close loans worth $US758 million this year, which would be more than double last year's $US364 million and well up from $US81.4 million in 2015.
So far so good - the stock has jumped 24 per cent from its listing price to $1.50, on Thomson Reuters data.
The company has a number of Australian backers, including Regal Funds Management, Aussie Home Loans founder John Symond, former Seven Group chief executive Peter Gammell and Carthona Capital, which was Credible's first external investor.
The IPO funds will be used to build out its platform and also get increasingly sophisticated in its marketing strategy.