‘; var fr = document.getElementById(adID); setHash(fr, hash); fr.body = body; var doc = getFrameDocument(fr); doc.open(); doc.write(body); setTimeout(function() {closeDoc(getFrameDocument(document.getElementById(adID)))}, 2000); } function renderJIFAdWithInterim(holderID, adID, srcUrl, width, height, hash, bodyAttributes) { setHash(document.getElementById(holderID), hash); document.dcdAdsR.push(adID); document.write(”); } function renderIJAd(holderID, adID, srcUrl, hash) { document.dcdAdsAA.push(holderID); setHash(document.getElementById(holderID), hash); document.write(” + ‘ript>’); } function renderJAd(holderID, adID, srcUrl, hash) { document.dcdAdsAA.push(holderID); setHash(document.getElementById(holderID), hash); document.dcdAdsH.push(holderID); document.dcdAdsI.push(adID); document.dcdAdsU.push(srcUrl); } function er_showAd() { var regex = new RegExp(“externalReferrer=(.*?)(; |&|$)”, “gi”); var value = regex.exec(document.cookie); if (value && value.length == 3) { var externalReferrer = value[1]; return (!FD.isInternalReferrer() || ((externalReferrer) && (externalReferrer > 0))); } return false; } function isHome() { var loc = “” + window.location; loc = loc.replace(“//”, “”); var tokens = loc.split(“/”); if (tokens.length == 1) { return true; } else if (tokens.length == 2) { if (tokens[1].trim().length == 0) { return true; } } return false; } function checkAds(checkStrings) { var cs = checkStrings.split(“,”); for (var i=0;i 0 && cAd.innerHTML.indexOf(c)>0) { document.dcdAdsAI.push(cAd.hash); cAd.style.display =’none’; } } } if (!ie) { for (var i=0;i 0 && doc.body.innerHTML.indexOf(c)>0) { document.dcdAdsAI.push(fr.hash); fr.style.display =’none’; } } } } } if (document.dcdAdsAI.length > 0 || document.dcdAdsAG.length > 0) { var pingServerParams = “i=”; var sep = “”; for (var i=0;i 0) { var pingServerUrl = “/action/pingServerAction?” + document.pingServerAdParams; var xmlHttp = null; try { xmlHttp = new XMLHttpRequest(); } catch(e) { try { xmlHttp = new ActiveXObject(“Microsoft.XMLHttp”); } catch(e) { xmlHttp = null; } } if (xmlHttp != null) { xmlHttp.open( “GET”, pingServerUrl, true); xmlHttp.send( null ); } } } function initAds(log) { for (var i=0;i 0) { doc.removeChild(doc.childNodes[0]); } doc.open(); var newBody = fr.body; if (getCurrentOrd(newBody) != “” ) { newBody = newBody.replace(“;ord=”+getCurrentOrd(newBody), “;ord=” + Math.floor(100000000*Math.random())); } else { newBody = newBody.replace(“;ord=”, “;ord=” + Math.floor(100000000*Math.random())); } doc.write(newBody); document.dcdsAdsToClose.push(fr.id); } } else { var newSrc = fr.src; if (getCurrentOrd(newSrc) != “” ) { newSrc = newSrc.replace(“;ord=”+getCurrentOrd(newSrc), “;ord=” + Math.floor(100000000*Math.random())); } else { newSrc = newSrc.replace(“;ord=”, “;ord=” + Math.floor(100000000*Math.random())); } fr.src = newSrc; } } } if (document.dcdsAdsToClose.length > 0) { setTimeout(function() {closeOpenDocuments(document.dcdsAdsToClose)}, 500); } } }; var ie = isIE(); if(ie && typeof String.prototype.trim !== ‘function’) { String.prototype.trim = function() { return this.replace(/^\s+|\s+$/g, ”); }; } document.dcdAdsH = new Array(); document.dcdAdsI = new Array(); document.dcdAdsU = new Array(); document.dcdAdsR = new Array(); document.dcdAdsEH = new Array(); document.dcdAdsE = new Array(); document.dcdAdsEC = new Array(); document.dcdAdsAA = new Array(); document.dcdAdsAI = new Array(); document.dcdAdsAG = new Array(); document.dcdAdsToClose = new Array(); document.igCount = 0; document.tCount = 0; var dcOrd = Math.floor(100000000*Math.random()); document.dcAdsCParams = “”; var savValue = getAdCookie(“sav”); if (savValue != null && savValue.length > 2) { document.dcAdsCParams = savValue + “;”; }
Business
5:05pm: That’s all from here at Markets Live – thanks for being with us.
Click here for a full wrap of the day’s session
4:45pm:Sundance Resources expects to sign up customers by the end of the year as it pins its hopes on producing iron ore in west Africa by 2017.
The Perth-based company believes it has turned the corner after shareholders had their investments halved in April following the collapse of a $1.3 billion takeover deal with China’s Hanlong Mining.
Legal action against the company over a 2010 plane crash in west Africa which killed the company’s entire board of directors has also occupied management, with the latest claim coming from the family of an investment banker seeking more than $10 million over his death.
Sundance directors believe the company is not liable for the deaths as it pushes ahead with its 35 million tonne Mbalam-Nabeba iron ore project which has the support of the local governments of Cameroon and the Democratic Republic of Congo.
Chairman George Jones said 95 per cent of the company’s shares had changed hands since the Hanlong deal fell over.
‘‘The damage has already been done,’’ Mr Jones told the Diggers and Dealers mining conference today.
Sundance shares finished down 1.3 per cent at 7.9 cents.
4:27pm: Here are the best and worst performers on the ASX200 today:
4:18pm: All the major sectors finished down at least 1 per cent:
- Consumer discretionary: -1.7%
- Consumer staples: -1.1%
- Financials: -1.8%
- Materials: -2.5%
- Property trusts: -1.1%
- Telecommunications: -1.2%
4:13pm: The market has closed sharply lower, with the benchmark S&P/ASX200 finishing down 94.3 points, or 1.8 per cent, to 5011.3. The broader All Ords fell 91.4 points, or 1.8 per cent, to 4996.6.
4:03pm:ING, the biggest Dutch financial-services company, said second-quarter profit fell more than analysts estimated after a loss at its Asian insurance unit.
Net income fell to 788 million euros ($1.17 billion), from 1.29 billion euros a year earlier, the Amsterdam-based company said in an e-mailed statement today. That missed the 907 million-euro average estimate of nine analysts surveyed by Bloomberg. ING’s Asian insurance and investment management unit, which includes Japan, reported a loss of 98 million euros compared with a profit of 111 million euros a year earlier.
ING Groep is nearing the end of a European Union-imposed restructuring that requires shrinking the balance sheet by 45 per cent, including disposing of global insurance operations. ING has completed about 70 per cent of the plan after selling a stake in its US insurer to the public in May, according to chief executive Jan Hommen. It is reducing costs by 1 billion euros by 2015, resulting in 7,450 job cuts and additional cost savings are being looked at, ING said in a presentation today.
Profit excluding divestments and one-time items fell to 942 million euros in the second quarter.
3:47pm: Explosives and mining chemicals supplier Orica will start this month cleaning up a former manufacturing site that is contaminated with mercury.
The clean-up of the old ChlorAlkali plant site within the Botany Industrial Park (BIP) in southern Sydney is expected to take two years.
‘‘While current testing indicates there are presently no unacceptable human health or environmental risks posed by the mercury contamination at the BIP, Orica understands this is an important issue for the community, and is committed to the remediation works,’’ Orica said in a statement today.
The remediation work will include excavation of contaminated soil, and the construction of a vapour cap and barrier walls.
Orica shares are down 2.6 per cent to $18.65.
3:37pm:Fortescue said it was ‘‘disappointed’’ by the High Court ruling on the mining tax, pointing out that the ‘‘very low’’ revenue collected by the tax vindicated its opposition to the tax.
“Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility and that it was also an unfair, discriminatory and complex tax. We’re disappointed by today’s decision,” the Fortescue managing director Mr Nev Power said.
Fortescue said the tax was ‘‘ill-conceived’’, saying it was ‘‘an unfair and administratively burdensome and inefficient tax’’.
The company has incurred up to $5 million of costs resulting from the tax, with the mining sector already paying a high level of tax since along with company tax, it also pays royalties to state governments.
“Fortescue expects to pay $1.5 billion in company tax and royalties this financial year rising to $2 billion in the years ahead,” Mr Power said.
3:23pm: Shares have dived, led by losses in mining and banking stocks. The benchmark S&P/ASX200 is down 85.8 points, or 1.7 per cent, to 5019.8. The broader All Ords is down 83.4 points, or 1.6 per cent, to 5004.6.
3:12pm:Gold has extended losses into a third session, falling to a three-week low after strong US trade data and comments by a Federal Reserve official stoked fears the central bank could start tapering its stimulus from next month.
Bullion has lost nearly a quarter of its value this year after 12 annual gains as markets anticipate a reduction in the Fed’s $US85 billion monthly bond purchases. The commodities-friendly stimulus had pushed prices to all-time highs in 2011.
Spot gold had dropped 0.3 percent to $US1,277.61 an ounce in early trade, after losing over 1.5 per cent yesterday.
2:49pm:Alacer Gold said it expects to receive bids within a month to sell two gold mines, in a sign that merger activity in the sector may be starting to stir after a slump in bullion prices.
Gold miners in Australia have been hammered by asset writedowns, as they grapple with high costs and a financing drought that has left many smaller operators scrambling for cash, prompting speculation of an asset swoop by Chinese buyers.
“Certainly some (potential buyers) are Asian-backed operators that already have an Australasian base,” Alacer Chief Executive David Quinlivan said, declining to name the interested parties when asked about how the sale was progressing.
Alacer is selling its Higginsville and South Kalgoorlie mines, which together produced 176,000 ounces in 2012/13, in order to focus on lower-cost mines it is developing in Turkey.
“We are expecting indicative bids soon,” added Quinlivan, speaking on the sidelines of the Diggers and Dealers conference.
He said he had a put a one-month deadline on offers.
A group of seven one-time Australian favourites including Alacer Gold, OceanaGold and Silver Lake Resources And Evolution Mining have clocked up $2.5 billion in writedowns this year.
2:37pm:Are high-yielding stocks overvalued amid what could again be the chase (stampede?) for yield as the cash rate falls?
Analysts have noted that the soaring prices of yield stocks may not always be backed by earnings growth, and that these stocks are more vulnerable to sell-offs if market and economic conditions change.
Credit Suisse analyst Damien Boey says it is important for investors to note that as they weigh up yield, they also need to weigh up the quality and sustainability of that yield.
“Not all yield is going to be defensive, like putting your cash in the bank. As we look at the yield landscape in Australia, the ultimate candidates will be Telstra, the banks, some property trusts and maybe a few consumer staples or utilities companies.
“But the issue here will be – should the economy slow down, should GDP growth go down to 1 or 0 per cent, will these companies be able to sustain the yield that they are currently offering?”
Mr Boey says that ultimately, investors have to get used to a lower-return environment.
“So you cut the risk-free rates and people search out the riskier end of the spectrum for a little while until the riskier end starts to blow up, and then you are in a permanently lower return environment.
“I think what investors should actually be looking for here is quality and defensiveness. You will pay a premium for those sorts of stocks in the short-term, but we are in a lower-return environment now. On top of that, at some point in time, the whole Asia story will unravel very quickly and we’re going to see some bargains in that space.”
2:23pm:Global demand for resources will soar by up to 75 per cent over the next 15 years, but Australia is facing fiercer competition from rival nations, the head of BHP Billiton says.
In his first public speech in Australia since becoming chief executive in May, Andrew Mackenzie was positive about the industry’s prospects, in contrast to comments from Prime Minister Kevin Rudd that the good times and China’s strong growth were over.
Australia was one of only a handful of countries that could deliver the volumes of resources Asia requires for its economic growth, Mr Mackenzie told a business lunch.
But the country’s productivity and competitiveness are not strong enough if it wants to be one of those to deliver those resources, he said.
While acknowledging miners have to do their bit, Mr Mackenzie also called on governments to rise to the challenge.
‘‘We must all get sharper at productivity,’’ he said.
2:13pm: The developers of a hotel that forms a centrepiece of Darling Harbour’s proposed revamp have released a scaled-down concept after a community backlash.
Lend Lease had originally planned to build two towers of up to 34 storeys, catering for 900 rooms, but the plan was modified after concern it would block sunlight in the surrounding area.
One 38-storey, slightly slimmer tower will be built instead, the company’s group head of development David Hutton says.
‘‘We have created a more elegant and slimmer hotel design, which improves view-sharing with surrounding buildings and provides more public space and flexibility at the ground level,’’ he said in a statement.
The hotel, which will be subject to planning assessment, will undergo further community consultation.
It is set be built alongside the planned International Convention Centre – slated to be Australia’s largest – as part of an overhaul to the area, including the development of Haymarket.
The proposed development over a 20-hectare zone between Cockle Bay, Haymarket and Ultimo is expected to create 3700 construction jobs and a further 4000 positions.
2:00pm:Peter Martin and Politifact are on the cost of living case…and the results aren’t what you think.
Anyone would think our cost of living was spiraling out of control.
Prime Minister Kevin Rudd used the phrase “cost of living” an extraordinary 14 times in his press conference Monday. On Tuesday, Opposition Leader Tony Abbott used it four times. Mr Abbott spoke of “cost of living pressures”, which would mean that not only was the cost of living “going up and up and up”(his words) but that it was going up faster than household income. Mr Rudd’s claim was universal. He said Australian families were “all struggling from cost of living pressures”.
1:52pm: The lopsided nature of Rupert Murdoch’s two media corporations was in the spotlight this morning, writes BusinessDay‘s Elizabeth Knight.
The cable, television and film operations, 21st Century Fox, pitched up a very strong result and left analysts to speculate further about what smaller sibling News Corp might deliver.
Meanwhile, Murdoch waded around the Twitter mud with the Australian Prime Minister, arguing about the damage the national broadband network would do to Foxtel – the most profitable asset in new News Corp.
Rudd v Murdoch – entertaining as it is – is a sideshow. The media mogul’s future is all about the performance of 21st Century Fox and it didn’t disappoint. (The market is far less confident – and far more divided – on what the international print and Australian business will produce.)
The rationale of the split was all about allowing the growth assets, housed in 21st Century Fox, some clean air without the anchor of the print divisions to divert management’s attention.
21st Century Fox has not operated as a stand-alone business long enough to see the fruits of its freedom but analysts are pleased with what they see so far. Strangely Murdoch did not front the call to the media and analysts as he typically does – perhaps keeping a slightly lower profile because new sensational speculation about his personal life written in USA Today was spreading virally.
Rupert Murdoch Photo: Bloomberg
1:32pm: Here’s a bit more on the falling cash rate and where investors are looking to put their money while attaining a decent rate of return.
While the cash rate has fallen by 225 basis points since October 2011, term deposit (such as the three-month and six-month term deposits pictured) rates haven’t fallen as quickly, as banks have sought to attract retail investors.
The cash rate and termn deposits.
1:23pm: A decade after he blocked a takeover bid from an unwanted US group, Peter Gray who is the founder of Sirtex Medical, a cancer treatment company, appears to have sold the bulk of his stake in the company.
A block of 7.27 million Sirtex shares was sold at $12 a share late on Tuesday, a slight discount to the market price. Sirtex shares are currently down 2.1 per cent at $12.29.
The block of shares traded late on Tuesday is equal to 12.95 per cent of the company’s capital, and raised a gross amount of $87.24 million for Gray.
Gray has been involved in a lengthy dispute with the board of directors of Sirtex over the way the company has been managed, and he has been gradually selling down his holding over the past six months, taking advantage of an upswing in the Sirtex share price as it prepares for greater penetration of its cancer treatment in offshore markets.
1:14pm: Apparently Australian borrowers haven’t had it this good for over 50 years – but you wouldn’t know it from looking at the home loan data, CommSec chief economist Craig James notes:
- While there has been an encouraging lift in new lending over 2013, the value of all new loans still is over 4 per cent below the highs set five years ago.
- In short, borrowers remain cautious – especially first home buyers. Despite some of the most attractive buying conditions in years, the proportion of first home buyers in the market is still well down on the average levels recorded over the past 22 years.
- The good news is that more people are taking out loans to build new homes rather than buying established properties. The revised grants from state governments are helping to lift construction, as is the low level of interest rates.
- Once the election is out of the road, we would expect more people to seriously contemplate buying homes to either live in or as a form of investment.
- Certainly interest rates are low enough, affordability has improved, the population is growing and rental markets are reasonably tight across the country.
1:08pm: We’ve taken a closer look at Bell Potter analyst Charlie Aitken’s thesis yesterday that investors should respond to low deposit and borrowing rates – brought about by the cash rate being cut to a historic low – by moving their money away from cash into a large capital equity like Telstra.
One of the factors that investors should take into account when making such a shift is bond yields, says UBS equities strategist David Cassidy.
- Banks move with bond yields as much as short rates, and so I think the risk would be that if bond yields move in the opposite direction to cash rates. And I think the key for the bond market is not so much what is going with the domestic economy but what’s going on with the US economy.
- US bond yields drive all bonds markets as the US equity market tends to drive all stock markets. So I think one trap potentially is if you get further rises in US bond yields, you’ll also see a back-up in Australian bond yields over time.
- I would be cautious about getting too bullish on high-yielding stocks because of that bond yield risks.
At the longer end of the yield curve, US bond yields have risen amid speculation the US Federal Reserve is set to wind back its bond-buying program.
Investors have been cutting back on their exposure to US bonds amid rising yields. The Pimco Total Return fund, the world’s biggest bond fund, had a $US7.5 billion outflow in July, according to Morningstar. It was the second biggest monthly outflow for the fund, with the biggest outflow – a record $US9.6 million – in June.
1:03pm: The stock market still hasn’t bottomed, down 1.3 per cent now, as talk of the US Federal Reserve tapering its stimulus measures weighs on sentiment.
RBS Morgan private client adviser Bill Bishop says the latest Fed comments should not have taken the market by surprise:
- They’re gently breaking us in, and it had to happen, quite frankly. They’re going to happen to do it sooner or later, and the market’s hooked on the drug (of stimulus), and they like it.
- The market is reacting badly to it in a fit of self interest.
- The market has been lukewarm and there hasn’t really been anything to change that, not even the federal election or the interest rate cut.
Maybe it’s just the correction we had to have after a pretty solid July and 10 days of consecutive gains (a run that ended on Friday). So far this week, the ASX200 has piled up a loss of roughly 1.5 per cent.
12:48pm: New Zealand’s finance minister said today the result of dairy giant Fonterra’s latest auction suggests it has suffered little impact from a recent scare over contaminated products.
Finance Minister Bill English told parliament the issue would need careful handling if the company and the country were to continue to benefit from high commodity prices.
“The indications are that, providing the issue of the potential contamination is handled effectively and transparently, the direct impact on the New Zealand economy can be contained,” English said in reply to a question.
In the latest auction of dairy goods by Fonterra overnight, the average price fell 2.4 per cent, but volumes rose strongly.
12:36pm:Traders see the RBA cutting rates by year-end, even after Governor Glenn Stevens signalled he’s willing to give record-low borrowing costs time to turn the economy around.
Traders see 76 per cent odds the RBA will follow yesterday’s decision to cut the overnight cash-rate target to 2.5 per cent by reducing it to 2.25 per cent or lower by December 3, swaps data compiled by Bloomberg show. The Aussie remains high, Stevens said yesterday, even after it dropped this year by the most among major currencies.
Stevens indicated future decisions will be data driven and said ‘‘further effects can be expected over time’’ from his 2.25 percentage points of rate cuts over the past two years. That signalled to investors including BlackRock the RBA may pause to evaluate the economy’s ability to cope with a peak in mining investment. Prime Minister Kevin Rudd, who called an election for September 7, may benefit politically from yesterday’s move in a nation where 90 per cent of mortgagees have variable-rate loans.
‘‘Having cut rates they’d like to sit back and give some time to observe the effects of this cut and probably the May one,’’ said Stephen Miller, a managing director at BlackRock.
‘‘It’s that transition from a growth led by mining investment to other parts of the economy that’s troubling them. If another two or three months went by and we weren’t to see any signs that transition was occuring, I think it’s likely that we might get another cut.’’
12:26pm:More on lower cash rates and increasing one’s investments in yield stocks.
Patersons Securities Tony Farnham says the income stocks story has been around since May/June last year, and would continue as long as the economy stays healthy.
So what happens if the economy weakens?
“What flows from a slowdown in the economy is increased bad debt expense, and that decreases banks’ profitability. So with lower profits, it makes it harder to maintain dividends at their current levels,” Mr Farnham said.
“For the major consumer staples [companies] – Woolies and Wesfarmers – the issue there again is the economy. If there is a slowdown in economic growth to sub 2 per cent, there would be more people unemployed and people’s expectations of income growth would not be as strong as they thought, and they would wind back their spending.
“With that, there’s less sales occurring in the major retailers and with that, it crimps their potential earnings growth.”
12:14pm: Here are the best and worst performers on the ASX200 so far today:
12:03pm: Election betting is a sham, a shabby pretext for free advertising in the media, writes BusinessDay‘s Michael West.
BusinessDay called around the betting shops this morning: Tom Waterhouse, Centrebet and Sportsbet.
None would offer a market on the federal election although all three, and TattsBet too (it was too early to put a bet on), advertised a market on their websites.
Tom Waterhouse is touting odds of $1.24 for a Coalition win and Labor is paying $4. Asked if they would take a $1 million bet, the Tom Waterhouse rep went off to see his manager.
No luck there. “It’s not something we concentrate on.” How about $10,000? “It might be a bit of a push … it’s a smaller novelty market.”
That’s for sure, if the market exists at all, other than to lure journalists into writing it up for free advertising in the press.
How much “novelty” money would Tom Waterhouse accept on the Coalition at $1.24? No clarity on that either.
Then there was Sportsbet. Sportsbet was not offering straight odds, only a 10.5-seat handicap.
Centrebet however, was touting $1.23 for the Coalition and had Labor priced at $4.25.
Would Centrebet accept $1 million at $1.23? Perhaps we should have disclosed here that, as a journalist, we didn’t have a lazy $1 million to plunge on Tony Abbott. But we could surely dig it up from a contact. Abbott and Rupert Murdoch are a good bet.
11:51am:China is sticking the boots into Fonterra. If banning the products of the world’s biggest milk processor wasn’t enough after a contamination scare, China’s top economic planning agency has fined the company $NZ900,000 ($792,217.31).
The agency issued the fine following a review of pricing practices for consumer dairy products in mainland China, which Fonterra said in a statement that it accepted.”We accept the NDRC’s (National Development and Reform Commission) findings and we believe the investigation leaves us with a much clearer understanding of expectations around implementing pricing policies, which is useful as we progress our future business plans,” Kelvin Wickham, president of Fonterra greater China and India, said.
Units in the Fonterra Shareholders Fund last traded up 1.1 per cent at NZ$7.03.
11:38am:The number of home loans approved in June rose 2.7 per cent, official figures show.
There were 51,001 approvals in the month, compared to 49,642 approvals in May.
Economists had expected the number of housing finance commitments to rise 2.0 per cent in June.
Total housing finance by value rose 1.2 per cent in June, seasonally adjusted, to $23.690 billion, the Australian Bureau of Statistics said today.
11:34am:Tokyo’s Nikkei shed 2.7 per cent to trade at one-week lows, with exporters such as Toyota losing ground on concerns the stronger yen would erode their dollar earnings when repatriated.
“Because trading volume is likely to be thin, the cash market will likely be swayed by futures trading. The market is keeping an eye on the yen’s level as that has been the cause of recent volatility,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4 per cent, extending a 0.5 per cent decline yesterday to trade at their lowest since July 19.
11:26am:Milk futures tumbled the most in 33 months on concern that demand may fall after a contamination scare at Fonterra, the world’s largest dairy exporter.
Fonterra said at the weekend that a dirty pipe in one of its processing plants might have tainted whey protein with a bacteria that causes botulism, a paralytic illness. The announcement prompted recalls in China, Vietnam, Sri Lanka, Thailand and New Zealand. Auckland-based Fonterra accounts for about a third of global trade in dairy products.
Milk futures for September delivery fell 3.8 per cent to close at $17.69 per 100 pounds on the Chicago Mercantile Exchange, the biggest drop for a most-active contract since November 2010.
“The botulism scare is the straw that broke the camel’s back for the dairy markets,” Shawn Hackett, the president of Hackett Financial Advisors said.
“When you have a big, quality supplier that is now in question, people wonder who they can trust. The initial reaction is to sell, and if you’re a buyer, you pull out of the market until you get clarity on how big the problem is and how long term it will be.”
Nevertheless, shares in Fonterra’s Australian export rival Warrnambool Cheese and Butter rose 2 per cent in early trade to $4.59.
11:15am:Senior Goldman Sachs executive James McMurdo will next year take charge of Deutsche Bank’s Australian operation overseeing the European investment bank’s franchise as equity markets are rebounding and deal making activity expected to pick up.
The move by London-based McMurdo represents a return to the Australian market, although it comes as Deutsche Bank is attempting to move to a more conservative global footing by paring back the size of its balance sheet.
Mr McMurdo has most recently been a partner at Goldman Sachs based in London running the Wall Street banks’ private equity group for Europe. He was previously co-head of investment banking for Goldman’s Australian business.
The move represents the latest shake-up among the ranks of top investment banks over the past year with Bank of America Merrill Lynch’s local boss Craig Drummond recently being named as National Australia’s Bank chief financial officer.
11:10am: As we push into the second hour of trade, shares are down heavily. The benchmark S&P/ASX200 is down 45.1 points, or 0.9 per cent, at 5060.5. The broader All Ords has fallen 43.3 points, or 0.9 per cent, to 5044.7.
11:05am:Billionaire financier George Soros’s private hedge fund is investing $US150 million ($167.68 million) in a Brazilian telecom firm to spur expansion of 4G high speed internet service in Brazil, the company says.
The Soros Fund Management has committed the money to On Telecom, a new, Sao Paulo-based company that earlier this year pioneered a 4G broadband internet network in Sao Paulo, Brazil’s most populous state and economic engine.
‘‘Our total investment plan is 500 million reais ($US217 million) over two to three years,’’ On Telecom chairman Zaki Rakib told a press conference.
Rakib and chief executive Fares Nassar own more than 50 per cent of the capital. But Rakib said that as the Soros fund disburses more of the money it committed, it could become the majority owner.
‘‘It’s only the beginning. Soros has confidence in us and in the growth of the Brazilian telecom market,’’ he said.
Brazil is already the world’s fourth largest IT and telecommunications market.
10:56am:Mr Forest’s Fortescue Metals argued the MRRT was invalid for a number of reasons, including the fact that it cut across State’s rights in the execution of their functions.
The challenge was dismissed unanimously by the full High Court.
‘‘The treatment of State mining royalties by the MRRT Act … did not discriminate between states and that the Acts did not give preference to one state over another,’’ the court ruled.
10:56am: During the trial, lawyers representing the Federal government refuted claims by Fortescue lawyers the mining tax was inhibited the states from developing their resources.
Mr Forrest’s lawyers had contended the Federal government had punished the states for reducing royalties for individual mining companies by imposing the MRRT, which is levied across the board.
10:44am:Three big-name bidders for Rio Tinto’s majority stake in Canada’s largest iron ore producer are now out of the running, sources familiar with the talks have told Reuters, after offers came in well below the mining group’s targets.
The sources said private equity firm Apollo, which had been working with Canadian pension fund CPPIB, rival Blackstone and commodity trader and miner Glencore were no longer in the race after a second round of bids last month.
The low offers, at a time when dozens of mining assets are for sale and demand for steelmaking commodities is uncertain, raise questions over the future of a sale that could still take months to tie up – should Rio decide to push ahead.
Rio has a handful of assets on the block as it battles to cut a $19 billion debt burden and meet cost cutting targets. Like other miners seeking to divest unwanted activities, however, it has found buyers unwilling to pay up and in June was forced to scrap the sale of its $1.3 billion diamond business, 15 months after it was first announced.
Rio shares are down 1.3 per cent at $59.10.
10:37am: The High Court has upheld Labor’s controversial Mineral Resources Rent Tax (MMRT), rejecting a challenge launched by miner Fortescue Metals Group.
10:35am:The RBA cutting the official cash rate to a record low is likely to bolster the sharemarket in the medium-term as investors pour money from term deposits into high-yielding equities, an analyst predicts.
The ASX is tipped to open lower this morning, following losses on Tuesday, and on Wall Street overnight. But Rivkin global analyst Tim Radford is tipping the initial bearish reaction to the interest rate cut will be temporary.
‘‘With real interest rates effectively falling to zero after yesterday’s 0.25 per cent cut, we should see risk seeking behaviour among local investors increase substantially, leading to high yielding Australian stocks such as Telstra and the big four banks becoming targets,’’ he said.
‘‘A low interest rate environment is bullish for Australian equities. So while the recent uptrend in the broader Australian market looks a bit overdone, the low-interest rate environment and the rotation from cash and fixed interest to equities should see stocks push to new multi-year highs.’’
10:20am:General Electric is permanently scrapping plans to build the largest solar factory in the US near Denver.
GE blamed the cancellation on a glut of solar panels on the market and falling prices, The Denver Post reported overnight.
The factory was to have been bigger than 11 football fields and have an annual capacity of 400 megawatts. State officials said it would create 350 jobs.
GE put the project on hold last month.
A research centre that developed the thin-film solar-cell technology for the plant will be closed, with 50 people losing their jobs, according to Lindsay Thiel, a GE spokeswoman. The research centre, formerly a startup named PrimeStar, was in Arvada, another Denver suburb.
10:11am: The market has opened lower, the benchmark S&P/ASX200 falling 29.5 points, or 0.5 per cent, to 5076.1. The broader All Ords is down 28.3 points, or 0.6 per cent, to 5059.7.
10:02am: And here’s the other earnings result we were expecting today, from FlexiGroup. The financial services group has posted a net profit after tax of $72.1 million, up 18 per cent from the previous corresponding year.
The firm declared a fully franked final dividend of 7.5 cents per share.
“With full-year [net profit after tax] growth accelerating relative to the [first-half 2013 financial year] growth rate, this is a strong result across the business,” FlexiGroup managing director and chief executive Tarek Robbiati said.
9:53am: Here’s a bit more on the newly separated 21st Century Fox inaugural quarterly figures. The entertainment company reported higher revenue and profit because of growth at its cable operations and film studio.
Fox’s stable of cable networks including the Fox News Channel, FX Networks and National Geographic channels, said quarterly operating income before depreciation and amortization (OIBDA) soared 25 per cent to $US1.8 billion ($2 billion) on higher affiliate fees and advertising revenue.
Fox executives said the company’s cable networks account for two-thirds of total earnings before interest, taxes, depreciation and amortisation (EBITDA).
Fox is growing its cable franchise and plans to invest $US200 million next year. It is launching new channels including Fox Sports 1 this month, a competitor to Walt Disney Co’s ESPN, and a new channel FXX aimed at young adults.
At its movie studio 20th Century Fox, OIBDA fell to $US117 million from $US140 million on lower contributions from its TV production studios that offset revenues from the new season of Netflix’s Arrested Development.
Its broadcast TV station Fox is still dogged by lower ratings for its show American Idol that dragged down advertising revenue 7 per cent and segment OIBDA to $US213 million from $US235 million. Total revenue rose 16 per cent to $US7.2 billion for the quarter ending June, compared with the same quarter last year, the company said this morning.
Net income was $US977 million, or 42 cents per share, from $US596 million, or 25 cents per share, in the same quarter last year.
Read the full story here.
9:45am: In economic news today, there’ll be data released on the AiG Performance of Construction Index, home loans, investment lending and owner-occupied home loan values for June.
In company news, there’s the inaugural quarterly report for 21st Century Fox, and FlexiGroup full-year results.
9:41am: Here’s a look at analysts’ rating changes:
- Virgin Australia cut to underweight at JPMorgan, Morgan Stanley
- Alacer Gold cut to sector perform at RBC Capital
- Jetset Travelworld cut to underweight at Morgan Stanley
- Wotif.com cut to underweight at Morgan Stanley
- Qantas downgraded to equal weight at Morgan Stanley
- iinet cut to underperform at Credit Suisse
- Tatts Group cut to neutral at Bank of America Merrill Lynch
- Amcor raised to buy at Citi
- ASX raised to overweight at JPMorgan
9:38am: Wall Street fell overnight as Fed “taper fear” rose, after Dallas Fed president Richard Fischer said “the Fed was closer to slowing bond purchases and warned investors not to rely on stimulus”.
And Atlanta Fed President Dennis Lockhart stated that if current employment trends and economic growth projection hold true, the “removal” of asset purchases by the Fed should processed.
These views are known knows, IG’s Evan Lucas notes:
- The Fed has made it clear that tapering will happen and that the complete cessing of monetary stimulus is expected by (but is not a certainty) mid-2014. The moves last night are not just down to these news headlines.
- Last night was basically trading 101. That is you sell at the highs and buy at the lows, with the S&P at record highs, taking profit is easy. The US markets are so far away from the lows most have brought in at profit it glaring.
- One other factor that will put last night’s US trade in perspective, volume turnover of US$4.35 billion is the lowest booking of the year
9:33am: The Australian market looks set to open lower following falls on Wall Street overnight amid warnings of weaker company profits.
On the ASX24, the SPI futures contract was down 19 points at 5041.
Here’s a round-up on what you need2know this morning:
- SPI futures are 19 points lower at 5041
- The $A is higher at 89.86 US cents
- In New York, the S&P500 was 0.57% lower at 1697.37
- In Europe, the FTSE100 lost 0.2% to 6604.21
- China iron ore gained 0.92% to $US131.40 a metric tonne
- Gold fell 1.5% to $US1283.60 an ounce
- WTI crude oil declined $US1.26 to $US105.30 a barrel
- Reuters/Jefferies CRB index shed 0.64% at 281.37
Here’s our full wrap.
9:30am: Good morning everyone! Welcome to the Markets Live blog for Wednesday.
Contributors: Max Mason, Jens Meyer
This blog is not intended as investment advice
BusinessDay with agencies
Accommodation
- Rent-a-home.com.au
- Melbourne accommodation
- Corporate short-term rentals
- Search 27,000+ holiday properties
Compare and Save
Skip to:
Check out today’s best deals
- SMH Home
- NSW
- National Times
- World
- National
- Environment
- Business
- Digital Life
- Entertainment
- Life & Style
- Travel
- Cars
- Exec Style
- Sport
- Weather
Source Article from http://www.smh.com.au/business/markets-live/markets-live-stocks-nosedive-20130807-2re79.html
Comments are now closed