Markets Live: Citi lifts big miners, G8 dives
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Markets Live: Citi lifts big miners, G8 dives

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Shares ended a volatile session on a downbeat note on Monday, as investors sold off the banks and education provider G8 weighed on the bourse.

A bump in the iron ore price and some positive broker comment boosted materials and resources stocks, with telecommunications and consumer staples also performing well.

But the banks were a heavy drag on the index after last week's royal commission announcement and consumer discretionary and healthcare stocks were also on the nose.

The benchmark S&P/ASX 200 Index declined 4 points, or 0.1 per cent, to 5985, while the broader All Ordinaries Index dipped 5 points, or 0.1 per cent, to 6070.

"The market really struggled, even though S&P futures in the United States were trading up," said James Gerrish, senior investment adviser at Shaw & Partners. US investors were set to cheer after the US senate passed an amended version of an eagerly awaited corporate tax package on Saturday.

"6,000 points is providing a cap again and our market really can't rally without the banks. It looks like there's a hangover from the royal commission announcement."

Commonwealth Bank finished the day down 0.3 per cent to $78.92, ANZ was off 1 per cent at $28.33, National Australia Bank declined 0.3 per cent to $78.92 and Westpac was 1.2 per cent lower at $31.17.

Money was flowing into Telstra, however, following 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.

Shares closed Monday 2.3 per cent higher at $3.50 a share.

Resource giants BHP Billiton and Rio Tinto enjoyed a respective1.6 per cent rise to $28.01 and 1.2 per cent advance to $72.05, thanks to a lift in the iron ore price and after Citi went positive on the big miners with a clutch of upgrades to "buy" after making positive revisions to its commodity price forecasts.

South32 jumped 1.6 per cent to $3.26 and Fortescue shares were up 1.6 per cent to $4.62.

Elsewhere in the market, Cann Group rose 4.7 per cent to $3.14 after the cannabis firm resumed trade following its $60 million capital raising last week.

Stocks finished the day down.

Stocks finished the day down.

There's been an outage on the New Zealand Stock Exchange affecting all vendors.

The outage disrupted stocks, indices, futures and options trading, according to Reuters, and was first reported at 3.26pm (Wellington time).

As at 5.30pm there was still no estimated time for a resolution.

The S&P/NZX 50 Index slipped 3.96 points, or 0.05 per cent, to 8184.87.

Within the index, 25 stocks gained, 18 declined, and seven were unchanged. Turnover was $77.3 million.

Some economic data in:

  • Company operating profits fell by just 0.2 per cent in the September quarter but are still up 20 per cent in the year. Wages, sales and inventories all rose in the quarter.
  • Profits totalled a record $318.2 billion in the year to September. Profits are up 26.9 per cent over the year – the strongest gain in 15 and a half years.
  • Job ads rose for the fifth time in six months in November to 172,395 ads – a 6-year high. Job ads are up 12.1 per cent on a year ago.
  • According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 3.0 cents last week to 138.5 cents a litre.

According to Craig James, chief economist at CommSec:

"Recent surveys have indicated that business conditions are the best in 20 years. So it would have been a surprise if the results weren't backed up by the hard data. And today's data didn't disappoint. Profits are at record highs. In fact, for the year to September, profits are up almost 27 per cent on a year ago – the strongest gain in 15 and a half years. Sales also rose in the latest quarter – the biggest quarterly gain (and biggest annual gain) in six years. Inventories edged higher and the wage bill lifted again – wages and employment together are serving to boost purchasing power.

And there was more good news on the job front with job advertisements at 6-year highs in November, pointing to further job growth and lower unemployment ahead.

Last week the key oil producers from the Organisation of Petroleum Exporting Countries (OPEC), and other producers like Russia, committed to extending the agreement to retrain production. If the agreement continues to hold, then prices will be maintained at US$50-70 a barrel. And that means Australian pump prices will hold at $1.30-1.50 a litre. For those motorists in cities with discounting cycles, there will clearly be value in shopping around for the cheapest fuel and closely following the discounting cycle."

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Copper junior Finders Resources will be playing for keeps when it makes public the company's view of a $178 million hostile cash offer backed by two of its major shareholders.

The company has until Tuesday to issue a target statement backed by an independent expert's report prepared by Deloitte in response to the unsolicited offer from Eastern Fields Developments (EFD), a consortium that holds about 19.8 per cent of Finders shares.

Perth-based Finders owns and operates the Wetar copper cathode mine in Indonesia.

The company's largest shareholder, Indonesian-backed Provident Capital Partners, and third largest shareholder, Saratoga Investama Sedaya, are behind Eastern Fields Developments along with an Indonesia miner they are both shareholders in, Merdeka Copper Gold.

Brad Thompson reports.

asian markets

asian markets

In commodities news, China's crude steel output is expected to rise 3 per cent to 832 million tonnes this year, and by a further 0.7 per cent in 2018.

Major mills have started ramping up operations and offsetting the impact of the shutdown of outdated plants, a government body said on Monday.

Output in 2018 will be 838 million tonnes, said the China Metallurgical Industry Planning and Research Institute (MPI) in a report.

"The growth comes after Beijing's crackdown on illegal low-grade steel products, which were never included in the official statistics," it said.

"The supplies are now filled in by legal steel mills."

A strong rebound in China's industrial activity this year, led by steel and other metal producers, has helped produce forecast-beating economic growth of nearly 7 per cent.

The world's largest steel maker produced 808 million tonnes of crude steel in 2016 and eliminated around 120 million tonnes of low-tech steel product capacity in the first half of this year.

Iron ore demand in the world's top buyer is expected to rise 1.3 per cent to 1.122 billion tonnes this year from 2016 and dip 0.2 per cent to 1.12 billion tonnes in 2018, according to the MPI report.

china

china

Photo: Reuters

The US dollar index is a bit higher this afternoon, trading at 93.10 after a volatile few days and CBA currency strategists believe US dollar recovery will be the main theme for currency markets this week:

The US dollar has scope to recover some of its recent losses this week on the rising prospect a pro‑growth US tax package can get signed into law before year‑end. Over the weekend the US Senate passed their amended version of the tax bill.

The next step is for the US House of Representatives (House) and Senate to reconcile the differences between their respective tax bills and pass a unified (Senate and House) final tax bill. The final bill will then be sent to President Donald Trump for signature into law.

Friday's US November non‑farm payrolls report can also support the US dollar. Leading employment indicators like initial jobless claims point to a decent 200k increase in non‑farm payrolls.

But with the US economy exceeding full employment for several months now, average hourly earnings growth will be a bigger driver of longer‑term US interest rate expectations and the US dollar than the pace of job gains.

The US Congress must also pass by Friday a short‑term spending bill (raise the debt ceiling) to avoid a partial US government shutdown. Failure to do so is a downside risk to the US dollar.

The US dollar.

The US dollar.

Photo: Phil Carrick

One day in 2013, when the price of bitcoin had crashed to $US600 from $US1,200 in a matter of hours, I wrote that this showed that the virtual currency was a dumb investment, Michael Hiltzik of the LA Times writes.

Three months ago, when the price hit $US5,000, I again called it a dumb investment.

So what about now, with bitcoin trading at about $US10,000? Yes, it's still a dumb investment. In fact, dumber than ever.

To bitcoin's faithful, this is a ludicrous statement. They ask: How can an asset enjoying a parabolic rise be a dumb investment, especially as it is increasingly accepted by major financial institutions?

Just Thursday, the Big Four accounting firm PwC said it had accepted bitcoin as payment for services for the first time. On Friday, the Commodity Futures Trading Commission approved bitcoin futures to be traded on the Chicago Mercantile Exchange and the Chicago Board Options Exchange Futures Exchange.

By providing a semblance of regulatory oversight as well as an efficient means for shorting bitcoin, those markets could make bitcoin more palatable for financial traders by bringing it at least nominally into the regulatory spotlight.

Other plausible rationales for a continued price rise exist. "A lot of institutional investors haven't entered the space," says Matthew Gertler, a Los Angeles-based analyst at Digital Asset Research, which advises investment clients on the complexities and peculiarities of bitcoin and other so-called cryptocurrencies. If these investors flood into the market, the price will rise.

Yet bitcoin bears all the signs of a bubble. Its price has run up by roughly 1,000 per cent this year, reaching more than $US11,000 Wednesday before backtracking.

Read more here

Bitcoin tokens.

Bitcoin tokens.

Photo: Rick Bowmer
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Australian shares are a bit weaker in lunch time trading, with gains in the mining and telecom sectors offset by losses for banks.

The S&P/ASX 200 index is down 6 points, or .0.1 per cent, to 5983 while the All Ordinaries is down 5 points, or 0.1 per cent, to 6069. The Australian dollar is trading at US75.96 cents.

Banks are lower, with Westpac down 1.2 per cent, ANZ down 0.7 per cent and NAB and CBA down 0.6 per cent each.

G8 Education is the standout decliner on Monday, however, shedding 20.8 per cent as investors parsed the company's latest financial update.

Miners are working to limit downside, with Citi upgrading several of the sector's biggest players to buy. BHP climbed 1.5 per cent , Rio Tinto rose 1.1 per cent, South32 advanced 2 per cent and Fortescue Metals rose 1.3 per cent.

And Telstra shares are higher by 2.5 per cent, with JPMorgan analysts estimating that there could be between 20 to 30 per cent upside for the telco's shares if the NBN restructures.

Best and worst performers.

Best and worst performers.

Some big news in the media space today with the Australian Competition and Consumer Commission launching an inquiry into digital platforms, including Facebook and Google, and the impact they are having of competition in the media and advertising markets.

The highly anticipated inquiry, which was a condition of a deal the Turnbull government struck with Nick Xenophon for his party's support for media reform, will examine the market power of Silicon Valley heavyweights who are vacuuming up digital advertising revenue while benefiting from the content created by traditional media, such as newspapers and television.

ACCC chairman Rod Sims said the watchdog goes into the inquiry with an open mind to see how digital platforms, such as Google and Facebook, operate.

"We will examine whether platforms are exercising market power in commercial dealings to the detriment of consumers, media content creators and advertisers," Mr Sims said.

"The ACCC will look closely at longer-term trends and the effect of technological change on competition in media and advertising. We will also consider the impact of information asymmetry between digital platform providers and advertisers and consumers."

The terms of reference include: the extent to which platforms are exercising market power in commercial deals with content creators and advertisers; the impact of platforms on the amount of choice and quality of news for consumers; the impact on media and advertising markets; and the impact of longer term trends on media and advertising.

The ACCC's Rod Sims .

The ACCC's Rod Sims .

Photo: AAP

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