July 19, 2012
Australian shares close at two-month highs after investors grow more confident about the global economy. Energy stocks leap.
5.10pm: As promised, here's the closing wrap (although still evolving). Thanks again for joining Markets Live. We'll be back tomorrow at 930am AEST to see if this rally can be extended.
4.35pm: Just compiling the evening markets wrap, which we'll point you to it shortly.
Of the top 200 shares, only 9 ended lower.
The dollar, meanwhile, has climbed to just under $US1.04 - also the best in about 11 weeks.
Across the region, Australia's share gains look like the biggest among the main markets. Risk appetitie, it seems, is back.
4.24pm:Only Iluka was down among the top 50, losing 0.3%
Other losers, though, included:
Seven West Media off 4.6% (after its capital raising)
PanAust down 4.7%
4.21pm: Some of the big moves - among the gainers:
BHP added 3%
Woodside 7.5% - most in about three years
4.19pm: The ASX200's close is the highest since May 15. In rough terms, the day's gain for the overall market is about $24 billion.
4.16pm: Remarkably, energy stocks have jumped 4.9%, consumer staples 2.9%, materials 2.6% and even financials are up 1.4%.
4.14pm: The All Ords have also surged to the finishing line, adding 80 points, or 1.9 per cent, to 4236.4 points.
4.12pm: ASX200 index has ended the day up 2% - its biggest rise since January 4 - or 83.1 points, to 4206.7 points.
4.08pm: Dow futures are up about 0.4% and London's are up about one third of one per cent - as we wait for local share prices to settle.
3.51pm: Here's a Bloomberg chart of New York oil futures (in $US) over the past year, to give some perspective on the recent run-up in prices:
3.42pm: Virgin Australia's shares are up 2.6% - which might be linked to this news:
Abu Dhabi's Etihad Airways said today the Australian government had allowed it to raise its stake in Virgin Australia to 10 per cent, Reuters reports.
Last month, Etihad raised its stake in Australia's no. 2 carrier to 4.99 per cent, a day after it announced plans to build its holding and said it would seek regulatory approval to go higher.
3.38pm: A bit more on retailing from BusinessDay's Chris Zappone:
In a move welcomed by the retail sector, the federal government said it will begin to fund an official gauge of internet spending.
The Australian Bureau of Statistics will receive $2.1 million over the next four years for the research, with the aim of shedding light on the scope of the rapidly growing sector.
Traditional retailers have found tough business conditions made worse by the drift of sales to online operations. The strong dollar and the absence of GST on most purchases have added to the allure of shopping online.
(If you can't measure it, you can't tax it.)
3.27pm: Bit of good news on the retail front:
Women’s fashion retailer Noni B is expecting a significant lift in full-year profit, despite tough trading conditions across the sector.
Noni B said it expects to unveil a net profit between $2.5 million and $2.7 million when it announces its results for the 2012 financial year in August.
The result is a major improvement on the $200,000 net profit it reported for 2011. Sales revenue for 2012 rose 2 per cent to $119.7 million.
Noni B’s shares are four cents, or 6 per cent, higher at 70 cents.
3.20pm:We've been watching grain prices rising in recent weeks as the US big dry continues.
Reuters just reporting that Chicago soybeans futures climbed to a record high of $US16.92-1/2 a bushel today as the worst drought to hit the US midwest in 56 years continues to curb grain and oilseed yields.
Add in rising oil prices (with more to come if Syria descends further into chaos), and it's possible to imagine fresh headwinds forming for global growth (not to mention social stability in a lot of places.)
3.11pm: BusinessDay's Adele Ferguson, author of an interesting (and unauthorised) biography of Gina Rinehart, has filed a comment piece on the Fairfax board battle:
Fairfax Media's decision to appoint Jack Cowin, a friend of the company's biggest shareholder Gina Rinehart, adds a new twist in Rinehart's battle for board representation.
What makes Cowin's appointment interesting is he joins as an independent director rather than a representative of Rinehart, who owns just under 15 per cent of Fairfax.
Although Rinehart and Cowin have been friends for more than 30 years and Cowin has been her emissary in trying to get her board representation, the statement to the ASX today makes it clear he is being appointed as his own man.
While some might be sceptical of the use of the word “independent” given Cowin's close relationship with Rinehart, he has proved it in no uncertain terms by agreeing to the company's governance principals and charter of independence, something Rinehart has repeatedly refused to do.
3.03pm: Looks like the ASX200 is trading at its highest since May 17. All that Greece, China, US worry and stocks are back to the level at the time of Greek elections.
2.50pm: Energy stocks, meanwhile, are now up 4% for the day. The sub-index hasn't risen so much in intra-day trading since October 6 last year, according to Bloomberg data.
Woodside is also on course for its biggest one-day gain in about three years, based on its 7.2% advance.
The ASX200, meanwhile, is headed for its best day in July. Up arrows abound.
2.30pm: Brent crude is steady above $US105, near a seven-week high on geopolitical fears, while comments by the US Fed about the world's biggest economy avoiding a double-dip recession has renewed hopes of a recovery in oil demand growth.
Fed chief Ben Bernanke's comments helped improve sentiment across financial markets on hopes the global economy might not deteriorate further. But oil supply fears were stoked by a deadly bombing in Syria and an attack on Israeli tourists in Bulgaria that plunged the Middle East deeper into crisis.
Brent crude gained for a seventh straight day, rising to $US105.83, its highest since May 30. It’s now up 65 cents at $US105.81 a barrel.
2.23pm: The dollar has hit a fresh all-time high against the European currency, fuelled by a disparity between the two economies and monetary policy.
The dollar is at 0.8456 euro cents, its highest point since the European currency began trading. Ozforex senior foreign exchange manager Jim Vrondas says the strength of the Australian economy compared to that of Europe is an important backdrop for the cross rate's high trend.
''If you look at the two economies - Australia and Europe as a whole, there's a good argument for this cross rate to be as strong as it is now,'' he says.
''But that's something that's been the case for a while now. What we've seen recently which is giving this cross rate a leg up is the resistance to interest rate cuts here.''
2.15pm: Nestle has been forced to take down an image from its Kit Kat Facebook fan page, after it emerged that it was similar to an icon used to ward off paedophiles.
The picture of the nut brown-coloured bear was used briefly to promote Kit Kat Bars on the Facebook page of the Nestle-owned chocolate bar. The company said it had no idea that the image matched that of “Pedo-bear” - considered visual shorthand on the internet for sites posting material with inappropriate overtones towards minors.
"Drum roll please ... Kit Kat is on Instagram," the company wrote above an Instagram photo of the brown bear at a drum set yesterday, with two Kit Kat chocolate bars in its paws in the place of drumsticks yesterday.
2.09pm: Rio Tinto says jobs will go at a central Queensland mine as the company battles falling coal prices.
The mining giant says it is looking at ways to reduce its costs at its Clermont Coal Mine, west of Mackay, to improve competitiveness as the price of thermal coal drops.
‘‘A review is underway and although the details are to be worked out, it will unfortunately mean redundancies will be required,’’ a spokesman says.
‘‘We do not take this decision lightly and are committed to keeping our employees informed and providing support to those affected.’’
The spokesman says it is too early to say how many workers would be affected. The mine opened in 2010 and has a workforce of 770 which is shared with the neighbouring Blair Athol mine.
1.57pm: Waste from coal seam gas projects could be reinjected into an underground water aquifer under a proposal being considered by the NSW government.
The NSW Office of Water’s aquifer interference draft policy has been given to farmers but has not been officially distributed by the government.
It proposes to allow economically significant coal and CSG mining projects to proceed even if they are found to have a negative effect on the water table. The document also explores ways of disposing of waste from coal seam gas mining projects.
1.51pm: Regulators are investigating Credit Agricole, HSBC, Deutsche Bank and Societe Generale over the Libor manipulation scandal that claimed the boss of British bank Barclays, the Financial Times reports.
Citing sources close to the probes, the FT said on Thursday that regulators were examining evidence of links between traders at all four banks and Barclays’ former trader Philippe Moryoussef.US futures regulator the Commodity Futures Trading Commission recently accused an unnamed trader of having ‘‘orchestrated an effort to align trading strategies among traders at multiple banks’’.
According to the business publication, this trader was former euroswaps trader Moryoussef.
1.40pm: Markets across Asia have followed Aussie stocks higher, following the strong lead from Wall Street after upbeat earnings reports.
Tokyo has risen 0.75 per cent, Hong Kong has jumped 1.4 per cent, Shanghai has gained 0.44 per cent and Seoul is up 1.68 per cent.
Tech firms in Asia have benefited from news that Intel, the world's leading semiconductor maker, posted better-than-expected earnings for the April-June quarter.
1.33pm: Qantas passengers on the airline's 767 planes will be provided with iPads for their inflight entertainment, following a successful trial of new in-air streaming technology.
The airline announced today that passengers in both business and economy classes would be given iPads on board which they could use to access more than 200 hours of entertainment programs.
The first aircraft with the technology installed is set to roll out in the fourth quarter of this year. The technology, known as QStreaming, will be available predominantly on domestic east coast routes and on flights to Perth.
1.24pm: The government says it will provide extra funds for the Australian Bureau of Statistics to start surveying online retail sales as part of its monthly sales report, filling a growing gap in the coverage of spending in the economy.
The government will provide $2.1 million over four years for the ABS to track online spending, from domestic and offshore retailers.
"This funding will allow the ABS to track trends in online sales growth and provide better data to the Government and industry," says Assistant treasurer David Bradbury.
"The retail sector is a major employer and contributor to the Australian economy. While it faces a number of significant challenges, online retailing presents enormous opportunities for traditional bricks and mortar retailers to expand and innovate."
1.17pm: The body representing journalists at Fairfax Media has welcomed the appointment of Hungry Jack’s founder Jack Cowin to the media group’s board, citing his agreement to editorial independence principles.
Fairfax house committee chairman and Sydney Morning Herald journalist Stuart Washington says he believes Mr Cowin will make a fantastic contribution to the board.
Mr Cowin is a friend and adviser to major Fairfax shareholder and Hancock Prospecting chairman Gina Rinehart, who’s been denied a board position because of her refusal to commit to the charter of editorial independence.
Mr Washington says he’s not concerned about Mr Cowin’s relationship with Mrs Rinehart because of his willingness to sign the charter of independence.
1.07pm: CMC markets chief market analyst David Land says a combination of factors, including overnight leads from US tech stocks and a recovery for local resources and oil companies, helped boost market confidence.
‘‘It’s a fairly consistent market with all of the sectors broadly in positive territory. The lead from the US did the trick for the market overnight, and we’ve certainly seen a bit more life in the resources sector,’’ he says.
1pm: BHP Billiton is under pressure again in the US courts over its shale production ventures in the Midwest with landowners in Arkansas now claiming energy companies are short-changing them, Leonie Wood reports.
BHP and other energy companies in eastern Arkansas have been peppered with class actions in the past year as local residents claim that the drilling injection of liquids into underground shale formations, a process known as fracking, has caused tremors and damaged the environment.
But some landowners now are contesting how much they are being paid for leasing the land for fracking and gas production.
12.50pm: Market touching new highs, as the chart above shows.
Bit of action earlier around Fairfax offering a seat to Jack Cowin, a close friend of Fairfax's biggest shareholder Gina Rinehart.
This just in from BusinessDay's Kirsty Simpson:
Fairfax shareholder Perpetual welcomed the appointment of Mr Cowin:
"(It) was a good decision. Jack Cowin is a good businessman with media experience, having been on the Ten board for some time," Perpetual's deputy head of equities Charlie Lanchester said.
12.41pm: Financials are up about 0.7% - but that makes it five days in a row for the sub-index.
That's the longest advance since the end of March.
ANZ is up 0.4% today and 12% for the year
CBA is up 0.4% today and 13% for the year
NAB is up 0.5% today and 2% for 2012
Westpac up 0.8% today and 14% in 2012
12.30pm: Materials are also up 1.5%, with BHP clawing back most of yesterday's 2% drop (now up about 1.8%.)
Other sectors are higher, with consumer staples doing well with a 2.2% advance. Woolies is about 2% and Wesfarmers 2.6%.
12.25pm:Woodside shares are up 7 per cent after the strong production figures, noted below.
Energy stocks are up 3.7% - helped by Woodside, of course, but also the oil price. New York futures are now back above the $US90 a barrel mark.
Troubles in Syria, such as the battles in Damascus, no doubt are fanning Middle East tensions.
12.17pm: Dollar, stocks are holding near their daily highs. Aussie dollar remains just under the $US1.038 level - the highest since May 1.
12pm: The rump of the failed RAMS Home Loans business, RHG Ltd, has agreed to return more than $3 million in fees to customers, following discussions with the corporate regulator, Michael Evans reports.
"RHG has reached an agreement with ASIC to address concerns raised by ASIC in respect of fees charged by RHG on certain loans," the company says.
"That resolution with ASIC will result in an aggregate refund to eligible customers of approximately $3.3 million."
11.57am: The head of Coles says he’s worried about a picket line blocking access to a Melbourne warehouse, but insists the company will not join talks between striking workers and their employer.
Coles chief executive Ian McLeod says he has no issue with Toll Group workers taking protected industrial action at its Somerton warehouse provided it was ‘‘peaceful and within the law’’.
But he says he is troubled by the blockade outside the site, now in its tenth day, despite a Supreme Court order banning workers from blocking access.
‘‘It is somewhat troubling when you’ve got ... up to 200 people who actually want to go to work but have been denied the right to do so. I think that’s concerning.’’
11.52am: Fisher & Paykel will make 29 workers at its Auckland fridge production factory redundant, with their jobs heading offshore.
The Engineering, Printing and Manufacturing Union says its members, and members of FIRST Union, were told of the job losses at a meeting on Wednesday afternoon.
Union members made redundant will receive a redundancy package as part of their collective agreement.EPMU national secretary Bill Newson says one of the company’s fridge production lines is being discontinued in Auckland and sent to the company’s Thailand factory.
11.47am: Gold is trading little changed after two sessions of losses as US Federal Reserve chairman Ben Bernanke again offered no hints on further stimulus, while worries about the eurozone persist.
Spot gold is nearly flat at $US1573.04 an ounce.
11.42am: More on the NAB business survey... negative headwinds from Europe appeared to have overwhelmed any optimism following the two recent rate cuts from the central bank, according to NAB chief economist Alan Oster.
‘‘At the time the survey was conducted, business confidence appeared to have reacted negatively to the uncertainty emanating from overseas economies,’’ he says.
‘‘In particular, concerns about the future of the euro zone and stability of European banking systems. Furthermore, the sizeable depreciation of the Australian dollar over the three-month period appears to have provided little relief to those industries exposed to currency movements, including manufacturing and mining.’’
11.34am: Australia has taken more permanent migrants from India than any other country for the first time in the year to June, 2012, the government says, with the intake from China not far behind.
Australian employers, particularly in the booming mining industry, have been calling for a greater migrant intake to fill shortages in a range of skilled occupations.
The government says that almost 185,000 permanent migrants entered the country in the 2011/12 financial year, including 125,755 in the skilled migrant programme.
The total migrant intake was up from 168,685 in 2010/11, and Australia plans to take 190,000 in 2012/13.
11.28am: Tokyo stocks opened 0.78 per cent higher, following the gains on Wall Street on upbeat earnings reports from technology and other firms.
The Nikkei index at the Tokyo Stock Exchange is up 68.26 points at 8795.
11.23am: Business confidence and conditions dived in the June quarter as the European debt crisis and high Australian dollar cancelled out gains from a series of cuts in the official cash rate, Madeleine Heffernan reports.
The latest National Australia Bank quarterly business survey shows that business confidence - measuring expectations for business conditions over the next three months - fell deeper into negative territory. It was down 1 point to negative two, meaning expectations for busiuness conditions are below pre-financial crisis levels.
Business conditions - taking in trading conditions, profitability and employment metrics - also slumped for the June quarter, to fall below the long-term average. Current conditions came in at 1 point, from three points in the previous quarter.
The survey, of 900 firms across the non-farm business sector, was conducted in the volatile time just before the Greek election on 17 June.
11.12am: The banks are also in positive territory, but not trading as strongly as the miners:
11.07am: The big miners are enjoying a much more positive day:
11.02am: BusinessDay media writer Kirsty Simpson adds some context to the appointment of Jack Cowin to the board of Fairfax Media, publisher of this website. She writes:
Mr Cowin is an old friend of Mrs Rinehart's and her father before her. He has repeatedly advised her to invest in media, and was at Mrs Rinehart's side when she first visited the offices of Fairfax Media in Sydney earlier this year.
He has also previously condemned the company's decision not to appoint Mrs Rinehart to the board citing her extensive business success, according to reports. However he added that Mrs Rinehart should not have direct contact with journalists.
10.57am: Shareholders in takeover play Hastings Diversified have a little longer to wait until they find out whether there will be a takeover tussle for shares in the company.
There are two bids on the table at present - one from rival pipeline owner and manager APA and another from a private consortium, Pipeline Partners Australia - but the competition watchdog the Australian Consumer and Competition Commission, has been reviewing the APA bid since if it succeeds, it would result in one company controlling a significant portion of the pipeline assets in eastern Australia.
The ACCC decision is not anticipated until after the close of trading today.
10.54am: Intersuisse director of equities Andrew Sekely said the Australian stockmarket had followed positive guidance from overseas.
‘‘The resources sector has recovered the lost ground they suffered yesterday,’’ Mr Sekely said.
‘‘Even though we’re seeing BHP and Rio up, there’s still a flight to quality, with investors buying the banks and Telstra.’’
10.49am: And to the companies trading in negative terriroty today:
10.45am: Looking at the companies leading the ASX200 higher now:
10.37am: The energy index is leading the market higher with a 2.78 per cent gain. All sub indices on the ASX200 are in the green:
10.33am: Fairfax chairman Roger Corbett said Mr Cowin’s appointment was effective immediately.
‘‘Our discussions with Mr Cowin over recent months have made it clear that he has considerable value to add to the company,’’ Mr Corbett said in a statement.
‘‘Neither Mr Cowin or Fairfax Media consider his appointment as being indicative or connected to the potential outcomes of the company’s inconclusive discussions with (Mrs Rinehart’s) Hancock Prospecting Pty Ltd.’’
Mr Cowin agreed to the same conditions as other baord members, including editorial independence.
10.29am: More here on the appointment of Jack Cowin, the fast-food magnate and close associate of Gina Rinehart, to the Fairfax board. Morningstar senior media analyst Tim Montague-Jones expressed surprise that a board member of Channel Ten could take a seat on Fairfax's board, given the potential media concentration issues.
“(Mr Cowin) is also a board member of Channel Ten and I’m surprised he doesn’t have to relinquish that board seat to go on to Fairfax,” said Morningstar senior media analyst Tim Montague-Jones.
“I’m sure Gina wants to get on the board too," he said. "It’s pretty obvious she wants a board seat. It will be interesting to see what happens next. The plot thickens,” said Mr Jones.
10.22am: Shares in Seven West Media have lost 9.9 per cent to $1.46 after the company raised $340 million with the sale of new shares at $1.32. The company listed at $7.57 in April 2010.
10.21am: Jack Cowin, a close associate of Gine Rinehart, has been given a seat on the board of Fairfax Media, publisher of this website. The position is effective immediately, according to reports. More on this as it comes to hand.
10.17am: Both Woodside and Santos shares are higher early following production updates:
10.12am: The Australian share market has opened more than one per cent higher. The benchmark S&P/ASX200 index was up 49 points, or 1.19 per cent, at 4172.6, while the broader All Ordinaries index was up 47.1 points, or 1.13 per cent, at 4203.5.
On the ASX 24, the September share price index futures contract was up 45 points at 4,137, with 7,447 contracts traded.
10.10am: Santos has also delivered its June quarter production update. June quarter output was 13 mmboe, with sales at $739m. That keeps the company on track to meet full year guidance of 51 to 55 mmboe.
10.08am: Shares are strongly higher as markets open - early gains of around 0.8 per cent.
10.02am: Strong news in Woodside's second quarter production update. Woodside reported a 43 per cent increase in production compared to the prior quarter "due to the successful rampup of the Pluto LNG Plant and high reliability from the foundation business". Revenue is up 14% on the previous quarter, and the company raised production guidance for 2012 - from 77 to 83 mmboe, up from 73 to 81 mmboe.
9.57am: Stats nerds, here's one for the diary courtesy of Craig James at CommSec. On Monday the ABS is scheduled to release an iPhone application. "Statisticians and economists will be in seventh heaven!"
9.55am: Reader Oragelo has offered this thoughts on where things are headed today:
Should be a good day for our miners today as they hit a bump on their slippery dip. I think the financials will lag behind a little however so I'm predicting a half percentage gain overall on the market.
9.51am: Miguel Audencial, sales trader at CMC Markets, says the ‘‘energy sector is likely to perform well today after Crude Oil prices posted solid gains overnight’’. In a note this morning, Mr Audencial wrote:
Crude oil extended its rally to six straight days after a higher than expected inventory figure was reported. The increasing conflicts with Iran also provided increased risk premiums because supply disruption may be present in the future. Obviously a lot of attention will be placed on any developments in this conflict by oil traders. Just a few months ago, the same conflict in the region is one of the main reasons why crude oil traded in the $110 mark.
9.46am: The chance of an interest raet cut at the RBA board meeting in August continues to shrink, with Credit Suisse data today giving a 25 basis point reduction a 41 per cent chance, down from 45 per cent yesterday and 60 per cent early in the week.
9.42am: There aren't too many fresh analyst rating changes for today, but Cabcharge has been cut to 'hold' from buy at RBS, which said that a possible 10 per cent service fee for electronic taxi payments could have big implications for earnings. Analyst Tim Plumbe wrote that uncertainty surrounding the charge overshadowed positives in the short term, and reduced the price target to $5.53 from $6.63. Cabcharge last traded at $5.12.
9.39am: The Aussie dollar is playing its role in adding to the positivity, surging against both the greenback and the euro. The Aussie was recently buying $US1.036, the highest level since the start of May. It was up from $US1.031 late yesterday.
And continuing its recent run of strong form against the euro, the local unit hit a new all-time high against the eurozone currency, touching 84.5 euro cents at 2.30am today. It was up strongly from 84.09 euro cents early yesterday.
9.35am: Let's take a look at what's pointing shares higher. It's mostly optimism in the US about earnings and a positive reading on new home starts. Investors were by Federal Reserve head Ben Bernanke's second congressional appearance, where he repeated Tuesday's message of being ready to support the American economy if needed.
And the Federal Reserve's Beige Book of regional activity points to modest economic growth, with a cooling in the past couple of months and tepid employment market.
But bellwethers IBM, eBay, Intel and Honeywell defied fears of a collapse in earnings, sparking gains on US markets of about three quarter of a per cent.
9.32am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:
9.30am: Good morning folks. Welcome to the Markets Live blog for Thursday.
This blog is not intended as investment advice
BusinessDay with agencies