Australian shares close higher despite US stocks easing after a top Republican lawmaker John Boehner said there had been no substantive progress in talks to reach a budget deal.
5.15pm: As Bugs Bunny used to say, that's all folks, have a fantastic weekend, we hope to see you Monday.
4.45pm: Here's a look at how the blue chips performed today:
- BHP: +0.5%
- Rio: +2.7%
- ANZ: +1.1%
- CBA: +0.4%
- NAB: +1.5%
- Westpac: +1.1%
- Fortescue: +1.3%
- Woolworths: -0.2%
- Wesfarmers: -0.4%
- Telstra: flat
4.34pm: Retail Food Group, the company behind the brands such as Michel’s Patisserie and Donut King, remains optimistic the group will continue to perform well despite trough trading conditions.
Chief executive Tony Alford told the company’s annual general meeting today that its brands had performed strongly during a challenging retail climate in 2012.
He said he expected that challenge to continue throughout this financial year.
‘‘Whilst not immune to them, each of the brand systems under RFG management are well positioned to endure present challenges within the retail industry, and indeed have performed admirably given the hostile retail environment,’’ he told shareholders.
Retail Food Group posted a net profit of $28.5 million for fiscal 2012, up 4.9 per cent on the previous year.
4.26pm: The dollar jumped above 86.00 yen, within striking distance of a peak of 86.42 hit on Monday. Likewise, the kiwi bobbed up to 67.84 yen, having touched 68.08 earlier this week.
Against the US dollar, the Aussie nudged lower to $US1.0427, versus Thursday's late local level of $US1.0462, weighed by rising chances of a quarter point rate cut.
4.20pm: Among the sectors, industrials added 1 per cent, energy rose 0.9 per cent and materials jumped 0.8 per cent. Consumer staples bucked the trend, slipping 0.3 per cent.
4.12pm: The market has finished higher on the day, but lower for the month, ending a five-month run of monthly gains.
The benchmark S&P/ASX200 added 28.3 points, or 0.6 per cent, to 4506, while the broader All Ords rose 27.9 points, or 0.6 per cent, to 4518.
For the month, the ASX200 dropped 0.24 per cent.
3.47pm: Missed out on all the action of the market this week? Let Michael Pascoe catch you up, with the week that was.
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3.32pm: As we approach the close of trade, here's how markets around the region are performing:
- Nikkei(Japan): +0.9%
- Shanghai: +0.6%
- Taiwan: +0.9%
- South Korea: +0.2%
- Singapore: +1.1%
- New Zealand: +0.7%
3.16pm: After a better than six-fold return on his investment to date, MYOB founder Craig Winkler has taken cash off the table from his stake in new-generation accounting software company Xero, cutting his holding to 15.7 per cent.
3.06pm: The Australian Bureau of Statistics will release the national accounts for the September quarter on December 5.
TD Securities Asia-Pacific macro strategist Alvin Pontoh said weaker exports and spending cuts from state and federal governments were expected to weigh on economic growth.
But he said strong business investment in capital goods - including equipment and buildings - had helped growth in the September quarter.
Mr Pontoh expected growth to slow to 0.5 per cent in the September quarter.
2.58pm: The chance of the Reserve Bank cutting the official cash rate next week have increased significantly after figures released by the ABS showed a reduction in mining investment expectations, writes BusinessDay's Max Mason.
2.49pm: A former high school teacher who built an $800 million business from scratch has been named Ernst & Young's Australian Entrepreneur of the Year.
2.31pm: Japan’s factory output unexpectedly rose the most since December on production of parts for devices including Apple's iPhone, providing a bright spot in an economy poised to shrink for a second straight quarter.
Industrial production in October increased 1.8 per cent from the previous month, when it dropped 4.1 per cent, the Trade Ministry said in Tokyo today. That compares with economist estimates for a 2 per cent fall. Production of electronic parts and devices rose 14.7 per cent from September, the biggest advance since at least 1998, the ministry said.
The report underscores how reliant Japan’s electronics industry has become on iterations of the iPhone, the newest of which sold 2 million units in first-day orders, in an economy at risk of a recession from a contraction in Europe and diplomatic dispute with China. The latest version of the device, introduced September 21, may have also boosted South Korean industrial production, data today showed.
2.10pm: An independent inquiry has called for an overhaul of the mining and petroleum taxes to remove incentive for states to increase their royalties.
The report by former state premiers Nick Greiner and John Brumby and tax expert Bruce Carter, released today, found the federal government’s decision to fully credit state royalties under the minerals resource rent tax and petroleum resource rent tax had created an incentive for states to boost royalties which was neither ‘‘desirable nor sustainable’’.
1.56pm: Aquila Resources said it had not yet reached an agreement with its partners on their $7.4 billion WA iron ore project but was hopeful of a resolution early next year.
Aquila aims to build the mine, rail and port with annual iron ore production of 30 million tonnes, but the project has been stalled by a delay in securing funding and regulatory approvals.
A budget dispute between Aquila and its partner AMCI (WA), a joint venture between private mining investment and trading group American Metals and Coal International and Korean steel giant Posco, is further complicating matters.
The partners had been in talks to conserve funds but had not been able to agree on a budget for the 2012/13 financial year.
"Aquila remains hopeful that this will be resolved in early 2013," Aquila said in notes for speeches at its annual meeting today.
1.51pm: More on Lynas from BusinessDay's Glenda Kwek. The rare earths miner has started production at its controversial Malaysian plant, prompting shares in the rare earths miner to rise up to 7.4 per cent.
"This is a significant milestone for Lynas," executive chairman Nicholas Curtis said. "The operation of the LAMP is now a reality."
Shares in Lynas have fallen back in recent trade and are now only 0.7 per cent ahead at 68 cents. after earlier rising as high as 72½ cents.
1.44pm: Consumer confidence is up, and interest rates down since last year’s festive season, writes BusinessDay's Colin Kruger, but this has done little to cheer up our major retailers ahead of the Christmas sales that will largely define their fortunes for the year.
AMP Capital chief economist Shane Oliver says it looks like Christmas spending would be ‘‘okay, but still not great".
1.19pm: Local markets now climbing into fresh intraday peaks - up more than 0.7 per cent for the day.
1.12pm: As we mull the prospect of a rate cut next week, Glenn Stevens has dismissed reports he is considering an early exit from his position as the nation’s central bank governor.
Mr Stevens’ seven-year term as head of the Reserve Bank of Australia (RBA) will end in September 2013. The suggestion that he was considering leaving early came up during a parliamentary inquiry hearing in Canberra on Friday.
‘‘The mooted idea that I would retire at the end of my seven-year term, that that’s an early exit, strikes me as a little odd,’’ Mr Stevens said. ‘‘But it won’t be before then.’’
12.56pm: Looking at the continued weakness in lending growth, CommSec's Craig James says that rate cuts must stay on the agenda. He says:
The Reserve Bank has made mention of the modest rise in inflation in recent commentary. However the construction and CAPEX data has confirmed that building cost and equipment costs pressures remain benign.
Over the medium term the lower fixed and variable rates will tempt businesses and consumer to once again borrow. However, over the short term it is hard to see a catalyst to justify a turnaround in activity. The key factor is confidence.
The outlook for the economy looks bright from a longer-term perspective but the lack of confidence is the key detriment. It is likely confidence levels will gather pace as activity levels improve over the next six month.
12.43pm: Former deputy governor Ric Battellino has again defended the Reserve Bank over the operations of its wholly-owned subsidiary Note Printing Australia and part-owned note-making firm Securency.
Mr Battellino told the Joint Committee on the Australian Commission for Law Enforcement Integrity that millions of dollars had been paid to the agents of NPA and Securency but, he said, every company in Australia paid commissions.
I know the word secret gets thrown in there, but there is nothing secret about it. It was there in the contract. As far as we knew, the commissions being paid were in line with what Austrade had said were reasonable ... There was no suspicion at the Reserve Bank that these commissions were used to pay bribes.
12.34pm: The dollar is slightly lower amid concerns about a lack of progress in US fiscal cliff talks.
In recent trade, it was at at $US1.0429, down from $US1.0467 on Thursday afternoon.
CMC foreign exchange strategist Tim Waterersaid the dollar fell after US House Of Representatives speaker John Boehner warned no substantive progress had been made:
At the moment it seems like we have one day of positive comments and then one day of negative comments [about the negotiations] and that is what is effecting the up and down momentum of risk assets. Mr Boehner’s comments promoted some buying of the US dollar as a safe haven and, as a consequence, the Australian dollar eased back below that $US1.0450 level.
12.27pm: The battle over Australia’s skies between Qantas Airways and Virgin Australia continues to eat into the Flying Kangaroo’s revenues.
Although Qantas’s monthly traffic figures published today showed an increase in the number of domestic passengers, the extra seats that have gone into the market in recent times has resulted in a fall in revenue.
Passenger numbers on Qantas’s domestic operations rose 5.9 per cent to 1.97 million in October, compared with the same month a year ago.
However its revenue seat factor - an industry measure for the number of passengers flown and how far they fly - fell 3.5 percentage points to 78.2 per cent.
Qantas shares are 0.75 of a cent higher at $1.3275.
12.12pm: The strength in the miners and big banks today has helped push the major indices back over 4500.
In recent trade the All Ordinaries index is 24.8 points higher, or 0.6 per cent, to 4514.9, while the benchmark S&P/ASX200 is 26.4 points higher, or 0.6 per cent, to 4504.1.
‘‘We seem to be following the positive lead from offshore last night,’’ said Steven Daghlian, market analyst at Commonwealth Securities.
‘‘It was always likely to be quite a good day, it’s not just the miners and banks that are doing great but pretty much all the other sectors.’’
12.02pm: The RBA has released its private credit data and it's quite weak.
Total credit provided to the private sector by financial intermediaries rose by 0.1 per cent over October 2012, the bank said, after rising by 0.3 per cent over September. Over the year to October, total credit rose by 3.8 per cent.
Housing credit increased by 0.3 per cent over October, following an increase of 0.4 per cent over September. Over the year to October, housing credit rose by 4.7 per cent.
AMP Capital chief economist Shane Oliver had this to say on the data in a recent tweet:
Aust priv credit v weak. +0.1% mom in Oct or 3.8% yoy. Fall in biz credit. Housing credit growth at record low. Rates still to hi. RBA to cut.
11.53am: NAB has changed their rate cut call, stating they believe the RBA will cut the official interest rate by 25 basis points, next Tuesday.
This comes after a significant increase in Credit Suisse interest rate futures since yesterday, jumping from around a 60 per cent to an 85 per cent chance of a rate cut.
11.45am: Tokyo stocks have opened 0.49 per cent higher, buoyed by optimism over the US economy.
The Nikkei 225 index at the Tokyo Stock Exchange was up 45.89 points at 9,446.77 in early trade on Friday.
Talks on averting the fiscal cliff of tax hikes and spending cuts proceed in Washington, while the US government raised its estimate of third-quarter economic growth, analysts noted.
11.40am: The Australian government has sold $600 million of October 21 2015 Treasury bonds.
The Australian Office of Financial Management (AOFM), which conducts bond auctions on behalf of the government, said the bonds were sold for a weighted average yield of 2.59 per cent.
The sale attracted bids totalling $2.83 billion, giving a coverage ratio of 4.72.
11.29am: Here's a look at how the ASX has slowly risen over the last six months. While the market may not close at its highest point over the period, it is still aiming for six-straight months of gains.
11.03am: And here are the major sliders on the ASX200 early on:
- Northern Star: -10.46%
- Imdex: -4.13%
- Ten: -2.74%
- Seven West Media: -2.47%
- Fairfax: -2.11%
- Metcash: -1.71%
10.59am: An hour into the day's trade, here are the best performed companies on the ASX200:
- Lynas: +4%
- Whitehaven: +3.86%
- Regis: +3.7%
- Acrux: +3.69%
- Rio: +3.31%
- Toll: +3.12%
10.55am: IG Markets analyst Stan Shamu says the Aussie market has risen with increasing optimism about the ability of the US to avoid the ‘‘fiscal cliff’’ encouraging investors.
The ‘‘fiscal cliff’’ is the term given to a looming series of tax hikes and spending cuts that could push the US economy into recession.
‘‘It does seem like we continue to see some choppy trade with all the rhetoric from US political leaders on the ‘‘fiscal cliff’’ but all things considered without the noise it does seem like the world’s in a better place,’’ he said.
‘‘We’ve seen improved economic data from the US. Markets are generally positive and it seems like investors want to bid the market higher.’’
10.50am: The big banks are either trading in line with or ahead of the general market:
- CBA is 0.4% higher to $59.68
- ANZ is 0.64% higher to $24.24
- NAB is 0.9% higher to $24.16
- Westpac is 0.44% higher to $25.34
10.42am: With markets about 0.5 per cent higher, the big miners are way out in front:
- BHP is 0.79% higher to $34.48
- Rio is 3.2% higher to $59.01
- Fortescue is 1.3% higher to $3.91
10.34am: Here’s a quick snapshot of the ASX200 for November. If the market stays in positive territory today, then Australian shares would have experienced six months in a row of gains, the first time in more than three years. Wall Street and the NASDAQ have remained positive for the month.
The biggest contributor to the ASX200’s rise for November was Commonwealth Bank, which added 11.3 points after a surge of 1.7 per cent. The National Australia Bank, ANZ and Westpac went in a different direction. NAB was the biggest negative mover of the Australian market with a fall of 17.3 points.
10.26am: Materials stocks are leading the charge higher on the ASX200 in early trade:
- Materials: +1.06%
- Info tech: +0.91%
- Energy: +0.82%
- Industrials: +0.59%
- Consumer disc.: +0.47%
- Consumer staples: -0.44%
- Health: -0.28%
10.23pm: It's a sea of green among blue chips. Here's the pick of the bunch:
- Rio: +3.43%
- NAB: +0.96%
- Woodside: +1.07%
- Harvey Norman: +1.39%
10.16am: The benchmark S&P/ASX200 index is 22.4 points, or 0.5 per cent, stronger at 4,500.1, while the broader All Ordinaries index is 21.3 points, or 0.47 per cent, at 4,511.4.
On the ASX 24, the December share price index futures contract was 23 points at 4,512 with 10,075 contracts traded.
10.12am: Metcash downgraded its earnings guidance for the current financial year blaming loss of operating leverage due to price deflation in its grocery business as well as the closure of more Franklins stores than expected thanks to delays in the acquisition caused by the competition watchdogs legal challenge to the transaction.
“The number of Franklins stores that had to be closed or will be closed was higher than anticipated and the stores had deteriorated more than expected as a result of the delay in the sale,’’ said Metcash chief executive Andrew Reitzer.
Its shares have fallen 3.6 per cent, or 12.5 cents, to $3.38 in opening trade.
10.09am: Shares in Lynas have jumped out of the blocks - up 6.7 per cent - after announcing that "operations are underway and its Malaysian plant.
In a statement to the ASX, the company said: ‘‘Initial feeding of concentrate into the kiln has occurred, and the current plan is to progress to continuous feed by next week.’’
10.06am: Shares are higher as markets open - up about 0.2 per cent.
9.56am: According to the interest rate futures market, the chances of a rate cut next have risen since yesterday: up to an 82 per cent a 25bp rate cut from 77 per cent. They’ve risen steadily since Tuesday when they touched 55 per cent.
9.53am: Here’s HSBC on next week’s rates decision. It’s another line-ball call:
Even though global conditions have stabilised, the effect of the previous global slowdown is still flowing through to Australia, with local employment weak, wages growth easing and investment intentions for 2012/13 declining
We expect another cut next week, just in time for Christmas, and ahead of the RBA's two-month hiatus
9.45am: It's been a slow start to the day locally, but things are starting to flow in. Sky New is reporting some Lynas news, which could interest investors:
9.42am: Some analyst rating changes for today
- Mirvac cut to neutral at Macquarie
- Henderson Group cut to neutral at Macquarie
- Perseus Mining raised to top pick at RBC Capital
- Macquarie Atlas raised to overweight from neutral at JP Morgan
- NRW Holdings downgraded to underperform at Credit Suisse
- Harvey Norman cut to at Deutsche Bank on JB Hi-Fi plans
9.38am: CommSec stock market analyst Juliette Saly said she expected the trading week to end on a positive note at this stage.
"It’s always difficult to tell on Friday because we do sometimes get that investor apathy coming through in the late session and also as investors also look towards what the Dow futures is pointing to in the later session, but at this stage it’s all looking really positive," she said.
"A lot of companies are holding their AGMs today. There's no major ASX 50 [companies] coming through today but a lot of companies are updating shareholders."
9.35am: Stocks on major US indices enjoyed early gains before they were trimmed by news that there had been no major progress by politicians toward a compromise on the so-called fiscal cliff of automatic tax rises and spending cuts.
Sentiment dipped when Republican Speaker of the House John Boehner warned of a lack of progress in the talks aimed at breaking an impasse over tax hikes and deep spending cuts.
"No substantive progress has been made in the talks between the White House and the House (of Representatives) over the last two weeks," Boehner told reporters, admitting his dour assessment was a result of his phone call with Obama and his meeting with Geithner.
Early in the session, new data showed gross domestic product grew at a 2.7 per cent annual rate, up from a 2 per cent prior estimate, and fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed.
9.32am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
- At 8am, the SPI was 23 points higher at 4512
- The $A was trading lower at $US1.0434
- In the US, the S&P500 added 0.45% to 1416.36
- In Europe, the FTSE100 added 1.15% to 5870.30
- China iron ore lost $US1 to $US116.90 a metric tonne
- Gold added 0.6 per cent to $US1729.50 an ounce
- WTI crude oil added $US1.58 to $US88.07 a barrel
- RJ/CRB commodities index lost 1.07% to 296.70
9.30am: Hi everyone. Welcome to the Markets Live blog Friday.
Contributors: Thomas Hunter, Richard Hughes, Jens Meyer, Max Mason
This blog is not intended as investment advice
BusinessDay with agencies
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